Overview

Marathon Bank’s primary source of income is net interest income, which is the difference between interest income earned on loans and investments and interest expense paid on deposits and borrowings. The bank’s financial performance is also impacted by non-interest income, non-interest expenses, and provisions for credit losses.

Key points:

• Net interest income increased by $58,000 or 4.1% in the three months ended March 31, 2025 compared to the same period in 2024, due to an increase in the average yield on interest-earning assets.

• The bank recorded a recovery of credit losses of $42,000 in the three months ended March 31, 2025, compared to a recovery of $122,000 in the same period in 2024. The decrease was primarily related to a decrease in the loan portfolio.

• Non-interest income increased by $60,000 or 40.8% in the three months ended March 31, 2025, primarily due to an increase in other income related to a settlement of litigation.

• Non-interest expenses decreased by $991,000 or 39.5% in the three months ended March 31, 2025, primarily due to a decrease in expenses associated with foreclosed assets.

• Net income was $148,000 for the three months ended March 31, 2025, an increase of $780,000 or 123.5% from a net loss of $631,000 in the same period in 2024.

Overall, Marathon Bank’s financial performance improved in the three months ended March 31, 2025 compared to the same period in 2024, driven by higher net interest income, lower credit loss provisions, and lower non-interest expenses.

Financial Condition

Total assets increased $17.6 million or 8.0% to $236.8 million at March 31, 2025 from $219.2 million at June 30, 2024, primarily due to increases in cash and cash equivalents and loans, net.

Key changes in assets:

• Cash and cash equivalents increased $13.2 million or 126.0% to $23.7 million, primarily due to an increase in deposits.
• Debt securities available for sale decreased $1.4 million or 21.4% to $5.2 million, primarily due to maturities and paydowns.
• Loans, net increased $5.3 million or 2.9% to $190.4 million, primarily due to growth in commercial real estate and consumer loans.

Total deposits increased $13.0 million or 7.5% to $186.0 million, primarily due to an increase in demand, NOW and money market deposits. FHLB advances increased $2.0 million or 15.4% to $15.0 million.

Stockholders’ equity increased $659,000 to $29.9 million, primarily due to net income and an increase in the fair value of the available-for-sale securities portfolio.

Asset Quality

The bank had no non-accrual loans or loans past due 90 days or more at March 31, 2025 or June 30, 2024. Non-performing assets, consisting entirely of real estate owned, were $1.4 million at both March 31, 2025 and June 30, 2024.

The allowance for credit losses was $1.6 million or 0.85% of total loans at March 31, 2025, compared to $1.8 million or 0.91% of total loans at March 31, 2024. The decrease in the allowance was primarily related to a decrease in the loan portfolio and improved economic conditions.

Liquidity and Capital Resources

Marathon Bank maintains a strong liquidity position, with access to funding sources such as the Federal Home Loan Bank, Federal Reserve Bank, and correspondent bank. The bank’s cash flows from operating, investing, and financing activities provided sufficient liquidity to meet its obligations.

At March 31, 2025, Marathon Bank was classified as “well capitalized” for regulatory capital purposes.

Outlook

Overall, Marathon Bank’s financial performance improved in the three months ended March 31, 2025 compared to the same period in 2024, driven by higher net interest income, lower credit loss provisions, and lower non-interest expenses. The bank’s asset quality remains strong, and it maintains a solid liquidity and capital position. The bank’s outlook appears positive, though it remains cautious about potential economic uncertainties that could impact its future performance.