UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10- QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
---------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-12510
--------------------------------
MARATHON BANCORP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3770539
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No
11150 West Olympic Boulevard, Los Angeles, CA 90064
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 996-9100
---------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
-----
As of November 5, 1998, there were 3,820,819 shares of no par Common Stock
issued and outstanding.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Financial Condition
Marathon Bancorp and Subsidiary
<S> <C> <C>
September 30, December 31,
ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1998 1997
--------------- --------------
Cash and Due From Banks. . . . . . . . . . . . . . . . . . . . . . . . 4,314,000 7,327,000
Federal Funds Sold . . . . . . . . . . . . . . . . . . . . . . . . . . 4,700,000 8,700,000
Investment Securities
Securities Available for Sale . . . . . . . . . . . . . . . . . . . 4,251,000 5,249,000
Securities Held to Maturity (approximate market value:
1998 - $15,726,000; December 31, 1997 - $9,079,000) . . . . . . 15,613,000 9,147,000
--------------- --------------
TOTAL INVESTMENT SECURITIES . . . . . . . . . . . . . . . . . . 19,864,000 14,396,000
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,205,000 46,775,000
Less Allowance for Credit Losses. . . . . . . . . . . . . . . . . . (737,000) (747,000)
--------------- --------------
NET LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . 45,468,000 46,028,000
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . 365,000 416,000
Other Real Estate Owned. . . . . . . . . . . . . . . . . . . . . . . . 547,000 1,248,000
Accrued Interest and Other Assets. . . . . . . . . . . . . . . . . . . 1,945,000 954,000
--------------- --------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,203,000 $ 79,069,000
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-Bearing . . . . . . . . . . . . . . . . . . . . . . . . 25,304,000 31,932,000
Interest-Bearing. . . . . . . . . . . . . . . . . . . . . . . . . . 42,780,000 38,513,000
--------------- --------------
TOTAL DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . 68,084,000 70,445,000
Accrued Interest and Other Liabilities . . . . . . . . . . . . . . . . 751,000 423,000
--------------- --------------
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 68,835,000 70,868,000
Shareholders' Equity
Preferred Shares - No Par Value, 1,000,000 Shares Authorized,
No Shares Issued and Outstanding . . . . . . . . . . . . . . . . 0 0
Common Shares - No Par Value, 9,000,000 Shares Authorized,
Issued and Outstanding: 3,820,819 in 1998 and 3,811,819 in 1997. 13,630,000 13,607,000
Net Unrealized Gain on Securities Available for Sale. . . . . . . . 6,000 3,000
Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . . . . (5,268,000) (5,409,000)
--------------- --------------
TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . . . . . 8,368,000 8,201,000
--------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . . . . . $ 77,203,000 $ 79,069,000
=============== ==============
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
Marathon Bancorp and Subsidiary
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
-------------------- ------------------ ---------- ----------------
INTEREST INCOME
Interest and Fees on Loans . . . . . . . . . . $ 946,000 $ 939,000 $2,798,000 $ 2,709,000
Interest on Investment Securities - Taxable. . 218,000 161,000 562,000 384,000
Other Interest Income. . . . . . . . . . . . . 124,000 136,000 354,000 304,000
-------------------- ------------------ ---------- ----------------
TOTAL INTEREST INCOME. . . . . . . . . . . . 1,288,000 1,236,000 3,714,000 3,397,000
INTEREST EXPENSE
Interest on Demand Deposits. . . . . . . . . . 9,000 15,000 30,000 42,000
Interest on Money Market and Savings . . . . . 178,000 148,000 485,000 328,000
Interest on Time Deposits. . . . . . . . . . . 194,000 102,000 520,000 467,000
Other Interest Expense . . . . . . . . . . . . - - - -
-------------------- ------------------ ---------- ----------------
TOTAL INTEREST EXPENSE . . . . . . . . . . . 381,000 265,000 1,035,000 837,000
-------------------- ------------------ ---------- ----------------
NET INTEREST INCOME. . . . . . . . . . . . . . . . 907,000 971,000 2,679,000 2,560,000
Provision for Credit Losses. . . . . . . . . . . . - 15,000 - 165,000
-------------------- ------------------ ---------- ----------------
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES . . . . . . . . . . 907,000 956,000 2,679,000 2,395,000
-------------------- ------------------ ---------- ----------------
NONINTEREST INCOME
Service Charges and Fees on Deposits . . . . . 64,000 80,000 180,000 224,000
Other Noninterest Income . . . . . . . . . . . 45,000 16,000 135,000 69,000
-------------------- ------------------ ---------- ----------------
TOTAL NONINTEREST INCOME. . . . . . . . . . 109,000 96,000 315,000 293,000
-------------------- ------------------ ---------- ----------------
NONINTEREST EXPENSE
Salaries and Employee Benefits . . . . . . . . 369,000 372,000 1,154,000 1,134,000
Occupancy Expenses . . . . . . . . . . . . . . 133,000 136,000 403,000 426,000
Furniture and Equipment. . . . . . . . . . . . 32,000 26,000 90,000 89,000
Professional Services. . . . . . . . . . . . . 34,000 47,000 77,000 124,000
Business Promotion . . . . . . . . . . . . . . - 4,000 20,000 16,000
Office Supplies and Printing . . . . . . . . . 27,000 24,000 83,000 98,000
Data Processing Services . . . . . . . . . . . 108,000 110,000 326,000 366,000
Messenger and Courier Services . . . . . . . . 20,000 29,000 66,000 85,000
Insurance and Assessments. . . . . . . . . . . 50,000 101,000 223,000 286,000
Legal Costs. . . . . . . . . . . . . . . . . . 41,000 110,000 122,000 223,000
Net Loss on Sale of OREO . . . . . . . . . . . ( 2,000) 12,000 41,000 9,000
Net Operating Cost of Other Real Estate Owned. 5,000 1,000 21,000 22,000
Other Expenses . . . . . . . . . . . . . . . . 87,000 54,000 224,000 230,000
-------------------- ------------------ ---------- ----------------
TOTAL NONINTEREST EXPENSE. . . . . . . . . . 904,000 1,026,000 2,850,000 3,108,000
-------------------- ------------------ ---------- ----------------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . 112,000 26,000 144,000 ( 420,000)
Income Taxes. . . . . . . . . . . . . . . . . . 2,000 - 3,000 2,000
-------------------- ------------------ ---------- ----------------
NET INCOME (LOSS). . . . . . . . . . . . . . . . . $ 110,000 $ 26,000 $ 141,000 $ ( 422,000)
==================== ================== ========== ================
Per Share Data:
Net Income (Loss) - Basic . . . . . . . . . . $ 0.03 $ 0.01 $ 0.04 $( 0.21)
Net Income (Loss) - Diluted . . . . . . . . . $ 0.03 $ 0.01 $ 0.04 $( 0.21)
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Marathon Bancorp and Subsidiary
<S> <C> <C>
Nine Months Ended September 30,
---------------------------------
1998 1997
--------------------------------- --------------------
OPERATING ACTIVITIES
Net Income (Loss). . . . . . . . . . . . . . . . . . . . . . . . . . . $ 141,000 $ ( 422,000)
Adjustments to Reconcile Net Gain (Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization. . . . . . . . . . . . . . . . . . 109,000 95,000
Provision for Credit Losses. . . . . . . . . . . . . . . . . . . - 165,000
Provision for OREO Losses. . . . . . . . . . . . . . . . . . . . - -
Loss (Gain) on Sale of Other Real Estate Owned . . . . . . . . . 44,000 ( 8,000)
Net Amortization of Premiums and Discounts
on Investment Securities. . . . . . . . . . . . . . . . . . . ( 34,000) 17,000
Net Change in Deferred Loan Origination Fees . . . . . . . . . . 13,000 14,000
Net Change in Accrued Interest, Other Assets
and Other Liabilities. . . . . . . . . . . . . . . . . . . . ( 654,000) ( 257,000)
--------------------------------- --------------------
NET CASH USED BY OPERATING ACTIVITIES . . . . . . . . . . . . . . ( 381,000) ( 396,000)
INVESTING ACTIVITIES
Net Decrease in Interest-Bearing Deposits with Financial Institutions. - 896,000
Purchases of Available for Sale Securities. . . . . . . . . . . . . . ( 5,448,000) ( 2,116,000)
Purchases of Held to Maturity Securities . . . . . . . . . . . . . . . ( 12,782,000) ( 3,710,000)
Proceeds from Maturities of Available for Sale Securities. . . . . . . 6,500,000 20,000
Proceeds from Maturities of Held to Maturity Securities. . . . . . . . 6,290,000 1,468,000
Net Decrease in Loans. . . . . . . . . . . . . . . . . . . . . . . . . ( 430,000) ( 1,229,000)
Proceeds from Sale of Other Real Estate Owned. . . . . . . . . . . . . 1,634,000 2,156,000
Purchases of Furniture, Fixtures and Equipment . . . . . . . . . . . . ( 58,000) ( 76,000)
--------------------------------- --------------------
NET CASH USED BY INVESTING ACTIVITIES . . . . . . . . . . . . . . ( 4,294,000) ( 2,591,000)
FINANCING ACTIVITIES
Net Change in Demand Deposits, Money Market and Savings. . . . . . . . ( 6,845,000) ( 2,802,000)
Net Change in Time Deposits. . . . . . . . . . . . . . . . . . . . . . 4,484,000 412,000
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . 23,000 -
Proceeds from Issuance of Common shares. . . . . . . . . . . . . . . . - 5,527,000
--------------------------------- --------------------
NET CASH (USED) PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . ( 2,338,000) 3,137,000
--------------------------------- --------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . ( 7,013,000) 150,000
Cash and Cash Equivalents at Beginning of Year . . . . . . . . . . . . 16,027,000 7,289,000
--------------------------------- --------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD. . . . . . . . . . . . . . . . $ 9,014,000 $ 7,439,000
================================= ====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 997,000 $ 877,000
Income Taxes Paid (Refunded) . . . . . . . . . . . . . . . . . . . . . $ 3,000 $ 2,000
Loans Made to Facilitate the Sale of Other Real Estate Owned . . . . . $ 600,000 $ 1,695,000
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Equity
Marathon Bancorp and Subsidiary
<S> <C> <C> <C> <C> <C>
Net
Unrealized
Appreciation
(Depreciation)
on Available
Common shares Accumulated For Sale
--------------
Shares Amount Deficit Securities Total
-------------- ------------ ------------- ----------- ----------
BALANCE - JANUARY 1, 1998. . 3,811,819 $ 13,607,000 $( 5,409,000) $ 3,000 $8,201,000
Net Income . . . . . . . . . - - 141,000 - 141,000
Issuance of Common Shares. . 9,000 23,000 - - 23,000
Net Changes in Unrealized
Appreciation on Available
for Sale Securities. . . . - - - 3,000 3,000
-------------- ------------ ------------- ----------- ----------
BALANCE - SEPTEMBER 30, 1998 3,820,819 $ 13,630,000 $( 5,268,000) $ 6,000 $8,368,000
============== ============ ============= =========== ==========
</TABLE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATIONS
The unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-QSB and, therefore, do not include
all footnotes normally required for complete financial disclosure. While the
Company believes that the disclosures presented are sufficient to make the
information not misleading, reference may be made to the consolidated financial
statements and notes thereto included in the Company's 1997 Annual Report on
Form 10-KSB.
The accompanying consolidated statements of financial condition and the
related consolidated statements of operations and cash flows reflect, in the
opinion of management, all material adjustments necessary for fair presentation
of the Company's financial position as of September 30, 1998 and December 31,
1997, results of operations and changes in cash flows for the nine-month period
ended September 30, 1998 and 1997. The results of operations for the nine-month
period ended September 30, 1998 are not necessarily indicative of what the
results of operations will be for the full year ending December 31, 1998.
(2) INCOME OR LOSS PER SHARE
Income or loss per share is computed using the weighted average number of
common shares outstanding during the period. Basic per share calculations
exclude common share equivalents (stock options). Diluted per share
calculations take into account any diluting effects of stock options.
Accordingly, the weighted average number of shares used to compute both basic
and diluted net income or loss per share for the three-month period were
3,820,656 for September 30, 1998 and 3,145,768 for September 30, 1997 and for
the nine-month period 3,816,379 and 2,011,297 respectively .
MANAGEMENT'S DISCUSSION AND ANALYSIS
<PAGE>
The following discussion is intended to provide additional information
about Marathon Bancorp (the Company), its financial condition and results of
operations, which is not otherwise apparent from the consolidated financial
statements. Since Marathon National Bank (the Bank) represents a substantial
portion of the Company's activities and investments, the following relates
primarily to the financial condition and operations of the Bank. It should be
read in conjunction with the Company's 1997 Annual Report on Form 10-KSB.
FINANCIAL HIGHLIGHTS OVERVIEW
Marathon Bancorp recorded its fifth consecutive quarterly profit of
$110,000 compared to $26,000 for the second quarter of 1997. For the
nine-month period ended September 30, 1998 the Company recorded profits of
$141,000 compared to a loss of $422,000 for the first nine months of 1997.
Assets were $77,203,000 an increase of 12% over third quarter 1997 although less
than the numbers reported for yearend 1997, which were somewhat inflated with
yearend deposits.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income for the quarter ended September 30, 1998 decreased by
7% from the numbers reported for the third quarter of 1997 but increased 3%
from the second quarter of 1998. When comparing the year to date, net interest
income increased by $119,000 or 5% over 1997.
The net interest income can also be looked at as the net interest margin
earned on average earning assets for the period. The net interest margin for
the first nine months of 1998 was 5.3% compared to 5.5% for the nine month
period of 1997. The increase in net interest income is from an increase in
the earning assets in 1998; even though the margin between the two periods
decreased. During 1998 management has decreased the OREO from $929,000 at
September 30,1997 to $547,000 at September 30,1998 and decreased nonaccrual
loans from $2,470,000 last September 30th to $7,000 at September 30, 1998.
These changes along with better cash management has increased the average
earning assets.
The decrease in the net interest margin comes primarily from an increase in
the cost of funds due to a new high yield "Investors Money Market" account the
Bank introduced in the third quarter of 1997. This product has grown from
$1,818,000 at September 30, 1997 to $10,350,000 now. Time certificates of
deposit also increased during 1998. Interest income increased 4% over the same
quarter last year and increased 9% for the nine month period compared to last
year.
With the reduction in rates initiated by the Federal Reserve in October and
the anticipated further easing of rates, the net interest income of the Bank
will be under p ressure during the fourth quarter of 1998 and into 1999. We
would anticipate that the net interest margin will decline and have to be offset
with increased volume of earning assets.
NONINTEREST INCOME
Noninterest income increased 14% in the third quarter of 1998 compared to
the third quarter of 1997. For the nine months ended September 30, 1998
noninterest income gained $22,000, or 8% over the first nine months of 1997.
Income generated from noninterest loan income and other fee sources offset the
decrease in service charges generated from noninterest bearing demand deposits
which have decreased in 1998.
NONINTEREST EXPENSE
Noninterest expense posted declines for both the quarter and the nine month
periods ended September 30, 1998. The third quarter decreased $122,000, or 12%
and the year to date decreased $258,000, or 9%. Decreases for the third quarter
came in most line items but the largest was in insurance, which decreased 63%
do to the quality improvement in the Bank's balance sheet. This decreased the
FDIC insurance and along with better risk management allowed us to shop the
market for our fidelity and bond coverages; thereby obtaining reduced premiums
for other necessary insurance policies. Legal costs declined as the Bank has
settled insurance claims, sold OREO and improved the quality of its loan
underwriting.
Nine month expenses also showed declines in most categories with
substantial reductions in professional services, data processing, insurance,
legal and courier costs. Salary and employee benefits were up 2% from the prior
year and there was a net loss on sale of OREO for the nine month period of 1998.
The Company has done well in decreasing the noninterest costs and will look to
maintain expenses at these reduced levels.
PROVISION FOR CREDIT LOSSES:
The Bank made no provision for credit losses during the first half of 1998
compared to a provision of $165,000 during the first nine months of 1997.
During the first nine months of 1998, the Bank recorded charge-offs of $117,000
($12,000 in the third quarter) and collected $107,000 in loan loss recoveries
($27,000 in the third quarter) compared to charge-offs of $552,000 and
recoveries of $268,000 in 1997.
The Bank's internally classified loans at September 30, 1998 were
$1,918,828, or 4.2% of loans compared to $2,983,000 or 6.4% of loans at December
31, 1997. The classified loans at September 30, 1998 were only 22.9% of equity
capital. Additionally loans past due 30 days or more at September 30, 1998 were
$257,000, and nonaccrual loans $7,000 compared to loans past due of $1,955,000
and nonaccrual loans of $2,470,000 at September 30, 1997.
Based upon the improvement in the classified and past due loans,
management's assessment of the overall quality of the loan portfolio, its
internal migration analysis and current economic conditions management
determined the current level of the reserve for credit losses was adequate
without the need for further provisions.
ASSETS AND LIABILITIES
Assets increased over 3% since June 30th of this year and 12% over
September 30, 1997 but are less than the totals at December 31, 1997. The
reason for this was the unusual increase in the deposits of two major customers
at the end of 1997 that were withdrawn during the first week of 1998. The asset
growth during the last quarter has been centered in the investment portfolio
while the loan portfolio has been fairly static with new loan generation being
offset with loan payoffs. The cash position and federal funds sold were reduced
with the difference being invested in short-term U.S. Agency securities. New
investments have been in U.S. Agency securities and taxable municipal bonds and
the market value of the investment portfolio has improved.
Other real estate owned declined to $547,000 at September 30th compared to
$1,248,000 at December 31, 1997. The current amount represents one property
which was sold in the first week of November 1998 for a small profit.
Deposits continue to increase from the totals of September 30, 1997 of
$60,473,000 to $68,084,000 at the end of the third quarter 1998. The mix of
deposits has changed as pointed out in the net interest income discussion. The
interest-bearing deposits have increased while the noninterest bearing deposits
have declined. The changing mix is due to customers moving into higher yielding
investments.
LIQUIDITY AND CAPITAL
ASSET/LIABILITY MANAGEMENT
The main goals of asset/liability management are to manage the interest
rate risk while ensuring adequate liquidity for the Company. Management monitors
its liquidity position continuously in relation to trends in loans and deposits,
and relates the data to short and long term expectations. In order to serve
customers effectively, funds must be available to meet their credit needs as
well as their withdrawals of deposited funds. Assets that are normally
considered liquid are federal funds sold, available for sale investment
securities, cash and due from banks, and securities purchased under agreements
to resell. The ratio of liquid assets to deposits was 22% as of September 30,
1998 and the loan to deposit ratio was 68%.
Interest rate risk management focuses on the maturity and the repricing of
interest earning assets in relationship to interest bearing liabilities that
fund them. Net interest income can be vulnerable to fluctuations arising from a
change in the general level of interest rates to the extent that the average
yield on earning assets responds differently to such a change than does the
average cost of funds.
The Company measures interest rate sensitivity by distributing the
maturities and repricing periods of assets and supporting funding liabilities
into interest sensitivity periods, summarizing interest rate risk in terms of
the resulting interest sensitivity gaps. A positive gap indicates that more
interest sensitive assets than interest sensitive liabilities will be repriced
during a specified period, while a negative gap indicates the opposite
condition.
It is the Bank's policy to maintain an adequate balance of rate sensitive
assets to rate sensitive liabilities. Due to the fact that the Bank has a large
portfolio of noninterest bearing demand deposits the Company has historically
been asset sensitive with a positive gap. Currently the Company is asset
sensitive and has the risk that a drop in interest rates will tend to decrease
the net interest income while an increase in interest rates will increase
income. The Bank has implemented interest rate floors on approximately 85% of
the commercial loans and 55% of the real estate loans. This will help to
mitigate the interest lost with a decline in interest rates. The Company's
interest sensitivity is measured in both the change in net interest income and
the change in the economic value of equity, both of which the Company wants to
keep under 4% of equity capital for a decline of 100 basis points in rates.
CAPITAL
The Bank is required to meet certain minimum risk-based capital guidelines
and leverage ratios promulgated by the bank regulatory authorities. The risk
based capital standards establish capital requirements that are more sensitive
to risk differences between various assets, consider off balance sheet
activities in assessing capital adequacy, and minimize the disincentives to
holding liquid, low risk assets. The leverage ratio consists of tangible Tier 1
capital divided by average total assets.
The Company's capital position is strong. The adequately capitalized
risk-based capital ratio required by the federal regulators is 8.0 percent and
the well-capitalized ratio is 10.0 percent. At September 30, 1998 the Company
and the Bank had a risk based capital ratio of 16.5 percent, and a Tier 1
capital leverage ratio of 11.0 percent. The Company is under no special
regulatory restrictions.
YEAR 2000
The Company is well aware of the issues relating to the century date change
and the impact on computer systems and business operations. The Company started
its analysis of the problem in June 1997 when it sent letters to its vendors
that supplied computer services to the Company on the status of their Year 2000
plans. All the mission critical vendors were well on their way with plans to
make their products Year 2000 compliant. The Company then went on to develop
its own Year 2000 plan. The Company's Year 2000 Plan (the Plan) was submitted to
the Board of Directors for review in January 1998 and approved in February 1998.
The Plan includes the steps necessary for the Company to become year 2000
compliant as well as the steps to be taken to check that the major borrowers and
fund providers of the Company are also working to become compliant. The
Company's main computer processing is supplied by the Fiserv CBS Service Bureau
who has already modified and installed software that is year 2000 compliant. The
Bank, and the user group to which it belongs, has begun testing the software.
The Bank has also started testing other secondary software programs that have
already been modified and will continue testing during the fourth quarter and
the first quarter of 1999.
At this time the Bank has received updated year 2000 compliant software
from most of its vendors and does not foresee any of its vendors not delivering
year 2000 compliant software within a timeframe that will allow for sufficient
testing to insure year 2000 compliance. The Company has a contingency plan to
cover year 2000 issues. The costs to the Company will be both capital costs for
the purchase of new equipment and the expense for the maintenance and testing of
computer software. Some of these costs have already been expensed and others
will be ongoing over the next eighteen months, but they should not have a major
impact on future earnings.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARATHON BANCORP
Date: November 12, 1998 Craig D. Collette
-------------------
Craig D. Collette
President and
Chief Executive Officer
Howard J. Stanke
------------------
Howard J. Stanke
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,314
<INT-BEARING-DEPOSITS> 42,780
<FED-FUNDS-SOLD> 4,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,251
<INVESTMENTS-CARRYING> 15,613
<INVESTMENTS-MARKET> 15,726
<LOANS> 46,205
<ALLOWANCE> 737
<TOTAL-ASSETS> 77,203
<DEPOSITS> 68,084
<SHORT-TERM> 0
<LIABILITIES-OTHER> 751
<LONG-TERM> 0
0
0
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</TABLE>
