MBBC 10-K & 10-Q changes, risk factors and insider trading
Marathon Bancorp, Inc. · Nasdaq · Savings Institutions, Not Federally Chartered · CIK 1835385 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not required of a smaller reporting company.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
Allowance for Credit Losses on Available for Sale (“AFS”) Securities.see in full comparisonPrior to implementation of CECL, unrealized losses on AFS debt securities caused by a credit event would require the direct write-down of the AFS security through the other-than-temporary impairment approach; however, theThe new standard requires credit losses to be presented as an ACL. The Company is still required to conduct an impairment evaluation on AFS securities to determine whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If these situations apply, the guidance continues to require the Company to reduce the security's amortized cost basis down to its fair value through earnings. The Company also evaluates the unrealized losses on AFS securities to determine if a security's decline in fair value below its amortized cost basis is due to credit factors. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of a decline in the fair value of the security due to a credit factor. This includes, but is not limited to, the extent to which fair value is less than amortized cost, the current interest rate environment, changes to rating of security or security issuer, and adverse conditions specifically related to the security among other factors. If this assessment indicates that a credit loss exists, the present value of the expected cash flows of the security is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost, an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis under the CECL standard, and declines due to non-credit factors are recorded in recorded in AOCI, net of taxes. If a credit loss is recognized in earnings, subsequent improvements to the expectation of collectability will be recognized through the ACL. If the fair value of the security increases above its amortized cost, the unrealized gain will be recorded inaccumulated other comprehensive income (“AOCI”),AOCI, net of taxes, on theunauditedconsolidated balance sheets. Accrued interest receivable on AFS securities is excluded from the estimate of credit losses.
“Interest expense on deposits increased $96,000, or 3.3%, to $3.0 million for the year ended June 30, 2025 as compared to $2.9 million for the year ended June 30, 2024 due to an increase in the average rate paid on all deposit categories (except savings deposits which remained unchanged), offset by a decrease in the average balances of all deposit categories except for demand, NOW and money market deposits. The average rate paid on deposits increased by 12 basis points to 1.97% for the year ended June 30, 2025 from 1.85% for the year ended June 30, 2024. …”see in full comparison
“The decrease in interest expense on deposits was due to a decrease in the average rate paid on deposits offset by an increase in the average balance of deposits. The average rate paid on deposits decreased by seven basis points to 1.90% for the year ended June 30, 2026 from 1.97% for the year ended June 30, 2025 due to declining interest rates and a shift in customer funds from fixed-rate certificates of deposit into more liquid deposit products with variable rates. …”see in full comparison
“Net Interest Income. Net interest income increased by $2.2 million, or 35.8%, to $8.2 million for the year ended June 30, 2026 from $6.0 million for the year ended June 30, 2025. Net interest rate spread increased by 55 basis points to 3.11% for the year ended June 30, 2026 from 2.56% for the year ended June 30, 2025, reflecting a 54 basis points increase in the average yield on interest-earning assets and a one basis point decrease in the average interest rate paid on interest-bearing liabilities. …”see in full comparison
“Non-interest income increased by $23,000 to $749,000 for the year ended June 30, 2025 from $726,000 for the year ended June 30, 2024 due primarily to an increase in other income. The increase in other income was related to a small recovery in connection with a settlement of litigation relating to our foreclosed asset, net (OREO). There were no other significant changes in the components comprising non-interest income when comparing the two years.”see in full comparison
“Loan interest income increased by $2.4 million, or 28.1%, to $11.1 million for the year ended June 30, 2026, as compared to $8.6 million for the year ended June 30, 2025, due to an increase in the average yield on loans and an increase in the average balance of loans. The average yield on the loan portfolio increased by 60 basis points from 4.73% for the year ended June 30, 2025 to 5.33% for the year ended June 30, 2026. …”see in full comparison
Full comparison: every changed paragraph (41)
The discussion and analysis of the financial condition and results of operations are based on our audited consolidated financial statements, which are prepared in conformity with U.S. GAAP.Generally Accepted Accounting Principles (“GAAP”). The preparation of these audited consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We consider the accounting policies discussed below to be significant accounting policies and estimates. The estimates and assumptions that we use are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.
In 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period.
Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.
As of June 30, 20252026 and June 30, 2024,2025, the allowance for credit losses totaled $1.7 million and $1.8 million, respectively.million. Due to the nature and composition of Marathon Bank's lending activities, a significant portion of the allowance for credit losses is allocated to the one- to four-family residential loan portfolio and the commercial real estate and multifamily real estate loan portfolios. As of June 30, 20252026 and June 30, 2024,2025, the allowance for credit losses allocated to the one- to four-family residential loan portfolio and the commercial real estate and multifamily real estate loan portfolios waswere $1.1$1.746 million and $461,000,$1.708 million, respectively, or 65.7%96.9% and 32.8%,98.7% of the total allowance for credit losses, respectively.
Changes in the Wisconsin unemployment rate, the Wisconsin annual housing price index and the Wisconsin annual gross domestic product could have a material impact on the model’s estimation of the allowance for credit losses. Marathon Bank’s methodology for maintaining its allowance for credit losses includesmay include various levels within each of the aforementioned criteria. Set forth below is a hypothetical change to the next level within Marathon Bank’s allowance calculation. ChangingUtilizing these levels as of June 30, 2025,2026 fromand thoseshocking actually used on June 30, 2025them to the next highestlevel orof lowest leveldistress resulted in an increase in Marathon Bank’s allowance for credit losses of $139,000,$292,000, or 8.1%.17.1%.
Allowance for Credit Losses on Available for Sale (“AFS”) Securities. Prior to implementation of CECL, unrealized losses on AFS debt securities caused by a credit event would require the direct write-down of the AFS security through the other-than-temporary impairment approach; however, theThe new standard requires credit losses to be presented as an ACL. The Company is still required to conduct an impairment evaluation on AFS securities to determine whether the Company has the intent to sell the security or it is more likely than not that it will be required to sell the security before recovery. If these situations apply, the guidance continues to require the Company to reduce the security's amortized cost basis down to its fair value through earnings. The Company also evaluates the unrealized losses on AFS securities to determine if a security's decline in fair value below its amortized cost basis is due to credit factors. The evaluation is based upon factors such as the creditworthiness of the underlying borrowers, performance of the underlying collateral, if applicable, and the level of credit support in the security structure. Management also evaluates other factors and circumstances that may be indicative of a decline in the fair value of the security due to a credit factor. This includes, but is not limited to, the extent to which fair value is less than amortized cost, the current interest rate environment, changes to rating of security or security issuer, and adverse conditions specifically related to the security among other factors. If this assessment indicates that a credit loss exists, the present value of the expected cash flows of the security is compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost, an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis under the CECL standard, and declines due to non-credit factors are recorded in recorded in AOCI, net of taxes. If a credit loss is recognized in earnings, subsequent improvements to the expectation of collectability will be recognized through the ACL. If the fair value of the security increases above its amortized cost, the unrealized gain will be recorded in accumulated other comprehensive income (“AOCI”),AOCI, net of taxes, on the unaudited consolidated balance sheets. Accrued interest receivable on AFS securities is excluded from the estimate of credit losses.
Total Assets. Total assets increased $19.5$22.2 million, or 8.9%,9.3%, to $261.0 million at June 30, 2026, from $238.8 million at June 30, 2025 from $219.3 million at June 30, 2024.2025. The increase was primarily due to an increase in loans, net of $17.3$16.6 million, or 9.5%,8.3% and an increase in cash and cash equivalents of $3.9$6.4 million, or 37.4%.44.7%. These increases were offset by a decrease in debt securities available for sale of $1.4$1.3 million, or 21.3%.million. The remaining asset categories showed no significant changes when comparing June 30, 20252026 with June 30, 2024.2025.
Cash and Cash Equivalents. Total cash and cash equivalents increased $3.9$6.4 million, or 37.4%,44.7%, to $20.8 million at June 30, 2026, from $14.4 million at June 30, 2025 from $10.5 million at June 30, 2024,2025, primarily due to the net proceeds raised from the Company’s Conversion of $13.9 million, an increase in deposits of $2.2$14.5 million, or 1.3%, an increase in borrowings of $2.0$5.0 million, ornet 15.4%income of $1.8 million and a decrease in debt securities available for sale of $1.4$1.3 million, orall 21.3%.of These increases in cash and cash equivalentswhich were offset by an increase in loansloans, net of $17.3$16.6 million, or 9.5%.million.
Debt Securities Available for Sale. Total debt securities available for sale decreased by $1.4$1.3 million, or 21.3%,24.6%, fromto $6.6$3.9 million at June 30, 20242026 tofrom $5.2 million at June 30, 2025.2025 The decrease was primarily relateddue to the$1.3 maturitymillion of adebt $1.0securities millionavailable corporatefor bond,sale callsmaturing ofor municipalbeing bondscalled andduring paydownsthe ofyear mortgage-backedended securities.June 30, 2026.
Loans. Gross loans increased $16.7 million, or 8.3%, to $219.3 million at June 30, 2026, from $202.6 million at June 30, 2025. The increase was primarily due to an increase in one-to-four-family residential loans of $7.2 million, or 12.8%, an increase in multi-family real estate loans of $6.1 million, or 12.8% and an increase in commercial real estate loans of $4.0 million, or 4.4%. These increases were due to a strategic decision to grow all of these portfolios. The remaining categories of loans showed no substantial changes.
Foreclosed Assets. Foreclosed assets, net remained unchanged at $996,000 when comparing June 30, 2026 with June 30, 2025.
Deposits. Total deposits increased by $14.5 million, or 8.3%, to $189.7 million at June 30, 2026, from $175.2 million at June 30, 2025 primarily due to an increase in demand, NOW and money market deposits of $7.2 million, or 14.9%, and an increase in certificates of deposit balances of $7.8 million, or 11.7%. The increase in demand, NOW and money market deposits was due to the Company’s increased focus on relationship management by obtaining customers’ commercial deposit balances when granting loans to new customers. The increase in certificates of deposit balances was due to offering higher rates on specific terms (specials) to attract new customers and meet internal lending demand.
Loans. Gross loans increased $17.3 million, or 9.5%, to $202.6 million at June 30, 2025 from $185.3 million at June 30, 2024. The increase was primarily due to an increase in commercial real estate loans of $17.6 million, or 23.6% and an increase in multi-family real estate loans of $2.7 million, or 6.0%. The increase in commercial real estate loans was related to a strategic focus capitalizing on market conditions, specifically focusing on higher-quality, well-capitalized assets from existing and new relationships. The increase in multi-family real estate loans was related to the improved lending conditions and the sustained demand for rental housing. Consumer loans (primarily home equity loans) also increased $348,000, or 21.6%, due to an improvement in rates and housing market stability. These increases were offset by decreases in the remaining categories of loans with the most significant decrease noted in one-to-four-family residential loans which decreased by $1.5 million, or 2.6%. The decrease in one-to-four-family residential loans was primarily related to the paydown of a $3.4 million residential loan. The construction loans decrease of $580,000 was primarily related to construction loans being converted to permanent financings. The decrease in commercial and industrial loans was primarily due to repayments exceeding new loan growth.
Foreclosed Assets. Foreclosed assets, net decreased by $379,000, or 27.5%, to $1.0 million at June 30, 2025, due to the Company accepting an offer of $1.1 million for the sale of the property resulting in a provision for valuation allowance of $379,000 being recorded during the year ended June 30, 2025.
Deposits. Total deposits increased by $2.2 million, or 1.3%, to $175.2 million at June 30, 2025 from $173.0 million at June 30, 2024 due to an increase in demand, NOW and money market deposits of approximately $5.1 million due to the Bank’s growth and a movement of funds from matured certificates of deposit into more liquid deposit products.
Federal Home Loan Bank (FHLB) Advances. FHLB advances increased $2.0by $5.0 million to $20.0 million at June 30, 2026 from $15.0 million at June 30, 2025 compareddue to $13.0one millionnew borrowing during the year ended June 30, 2024 as the Bank borrowed an additional $2.0 million from the FHLB to help fund loan growth.2026.
Stockholders’ Equity. Total stockholders’ equity increased by $14.4$2.2 million, or 46.1%million to $45.7$48.0 million,million when comparing June 30, 20252026 with June 30, 20242025 primarily due to the net proceeds raised from the Company’s Conversionincome of $15.2$1.7 million offset by an increase in common shares held by the ESOP.million.
General. Net income was $1.8 million for the year ended June 30, 2026, an increase of $1.7 million, or 412.0%, from net income of $42,000 for the year ended June 30, 2025, an increase of $229,000, or 122.7%, from a net loss of $187,000 for the year ended June 30, 2024.2025. The increase in net income was primarily attributable to an increase in net interest income of $203,000$2.2 million, an increase in non-interest income of $79,000 and a decrease in non-interest expenses of $128,000.$9,000. Offsetting theseThese increases inwere netoffset incomeby wasan a decreaseincrease in the provision for (credit losses of $129,000, from a recovery of) credit losses of $96,000.$94,000 for the year ended June 30, 2025 to a provision for credit losses of $35,000 for the year ended June 30, 2026. The provision for income taxes also increased by $373,000.
Interest Income. Interest income increased by $120,000, or 1.3%, to $9.6 million for the year ended June 30, 2025 as compared to $9.4 million for the year ended June 30, 2024 primarily due to an increase in other interest income of $154,000 which was offset by a decrease in debt securities income of $45,000. Other interest income increased due to an increase in the average balance of cash and cash equivalents offset by a decrease in the average yield on cash and cash equivalents.
Loan interest income increased slightly by $11,000, or 0.1%, for the year ended June 30, 2025 as compared to the year ended June 30, 2024. The average yield on loans increased by 27 basis points which was offset by a decrease in the average balance of the loan portfolio of $10.5 million, or 5.4%. The average yield on the loan portfolio increased by 27 basis points from 4.46% for the year ended June 30, 2024 to 4.73% for the year ended June 30, 2025 as a result of higher interest rates. The average balance of the loan portfolio decreased by $10.5 million, or 5.4%, to $183.0 million for the year ended June 30, 2025 from $193.5 million for the year ended June 30, 2024. The decrease in the average balance of the loan portfolio was primarily related to repayments exceeding new loan growth.
Debt securities interest income decreased by $45,000, or 21.2%, to $169,000 for the year ended June 30, 2025 from $214,000 for the year ended June 30, 2024 due to a decrease of $1.8 million in the average balance of debt securities to $6.4 million for the year ended June 30, 2025 from $8.2 million for the year ended June 30, 2024. The average balance of debt securities continued to decrease due to the maturity of a $1.0 million corporate bond, calls of municipal bonds and paydowns of mortgage-backed securities. The average yield on debt securities increased slightly by four basis points to 2.64% for the year ended June 30, 2025 from 2.60% for the year ended June 30, 2024 as a result of the higher interest rate environment.
Interest Expense.Income. Interest expenseincome decreasedincreased by $83,000,$2.4 million, or 2.3%,24.6%, to $3.5$11.9 million for the year ended June 30, 2026 compared to $9.5 million for the year ended June 30, 2025 as compared to the year ended June 30, 2024,primarily due to a decrease of $179,000 in interest paid on borrowings offset by an increase ofin $96,000 inloan interest paid on deposits.income.
Loan interest income increased by $2.4 million, or 28.1%, to $11.1 million for the year ended June 30, 2026, as compared to $8.6 million for the year ended June 30, 2025, due to an increase in the average yield on loans and an increase in the average balance of loans. The average yield on the loan portfolio increased by 60 basis points from 4.73% for the year ended June 30, 2025 to 5.33% for the year ended June 30, 2026. The average balance of the loan portfolio increased by $24.7 million, or 13.5%, to $207.7 million for the year ended June 30, 2026 from $183.0 million for the year ended June 30, 2025. The increase in the average yield on the loan portfolio was the result of higher interest rates on new loan originations. The increase in the average balance of the loan portfolio was primarily related to new loan growth (multi-family real estate loans, one-to-four-family residential loans and commercial real estate loans).
Debt securities interest income decreased by $18,000, or 10.6%, to $151,000 for the year ended June 30, 2026 from $169,000 for the year ended June 30, 2025 due to a decrease of $1.6 million in the average balance of debt securities to $4.8 million for the year ended June 30, 2026 from $6.4 million for the year ended June 30, 2025. This decrease was offset by an increase in the average yield on the debt securities portfolio of 51 basis points to 3.15% for the year ended June 30, 2026 as compared to 2.64% for the year ended June 30, 2025. The average balance of debt securities continued to decrease as a result of securities calls and paydowns. The increase in the average yield on the debt securities portfolio was due to a $1.0 million floating rate corporate bond that was called in October 2025 that had a coupon rate of 10.17% for the last three months prior to being called. It was purchased in May 2021.
Interest Expense. Interest expense increased $188,000, or 5.4%, to $3.7 million for the year ended June 30, 2026 from $3.5 million for the year ended June 30, 2025, due to an increase in interest paid on FHLB borrowings. Interest expense on deposits decreased slightly when comparing the year ended June 30, 2026 to the year ended June 30, 2025.
The decrease in interest expense on deposits was due to a decrease in the average rate paid on deposits offset by an increase in the average balance of deposits. The average rate paid on deposits decreased by seven basis points to 1.90% for the year ended June 30, 2026 from 1.97% for the year ended June 30, 2025 due to declining interest rates and a shift in customer funds from fixed-rate certificates of deposit into more liquid deposit products with variable rates. The increase in the average balance of deposits was the result of the initiation of new loan relationships which increased the average balances of demand, NOW, money market and savings deposit accounts while the decrease in the average balance of certificates of deposit accounts was related to runoff due to rate competition by our competitors.
Interest expense on deposits increased $96,000, or 3.3%, to $3.0 million for the year ended June 30, 2025 as compared to $2.9 million for the year ended June 30, 2024 due to an increase in the average rate paid on all deposit categories (except savings deposits which remained unchanged), offset by a decrease in the average balances of all deposit categories except for demand, NOW and money market deposits. The average rate paid on deposits increased by 12 basis points to 1.97% for the year ended June 30, 2025 from 1.85% for the year ended June 30, 2024. The increase in the average rate paid on deposits was due to higher interest rates and increased competition for deposits. All categories of deposit average balances decreased (with the exception of demand, NOW and money market deposits) when comparing the year ended June 30, 2025 with the year ended June 30, 2024 with the total average balance of deposits decreasing by $5.0 million, or 2.2%, to $154.0 million for the year ended June 30, 2025. The decrease in the average balances of all deposits (with the exception of demand, NOW and money market deposits) was primarily related to us successfully migrating customer funds from fixed-rate certificate of deposit products into more liquid deposit products with potential variable-rate upside, coupled with the initiation of new loan relationships.
Interest paid on FHLB borrowings decreasedincreased $179,000,$242,000, from $648,000 for the year ended June 30, 2024 to $469,000 for the year ended June 30, 2025.2025 to $711,000 for the year ended June 30, 2026. The decreaseincrease in interest paid on borrowings was due to the average balance of FHLB advances decreasingincreasing by $4.7$7.0 million to $12.1$19.2 million for the year ended June 30, 20252026 from $16.8$12.1 million for the year ended June 30, 2024 as a result of repayments of borrowings. Offsetting the decrease in the average balance was an increase in the average rate paid on borrowings of two basis points from 3.84% for the year ended June 30, 2024 to 3.86% for the year ended June 30, 2025 due to an increase in borrowingFHLB costs.borrowings to fund additional loan growth. The average rate paid on borrowings decreased from 3.86% for the year ended June 30, 2025 to 3.71% for the year ended June 30, 2026 due to a decrease in the federal funds rate.
Net Interest Income. Net interest income increased by $2.2 million, or 35.8%, to $8.2 million for the year ended June 30, 2026 from $6.0 million for the year ended June 30, 2025. Net interest rate spread increased by 55 basis points to 3.11% for the year ended June 30, 2026 from 2.56% for the year ended June 30, 2025, reflecting a 54 basis points increase in the average yield on interest-earning assets and a one basis point decrease in the average interest rate paid on interest-bearing liabilities. The net interest margin increased to 3.59% for the year ended June 30, 2026 from 2.96% for the year ended June 30, 2025. The increase in the average yield on interest earning assets for the year ended June 30, 2026 compared to the year ended June 30, 2025 was primarily due to an increase in the average yield of all interest-earning asset categories (with the exception of cash and cash equivalents which decreased by 76 basis points due to a drop in the federal funds rate) which was associated with an increase in the percentage of commercial and multi-family real estate loans comprising the total loan portfolio which generally carry higher interest rates than the other categories of loans. Also, the Company has been retaining higher rate mortgages in its one-to-four-family residential loan portfolio. Net interest-earning assets increased by $14.0 million, or 36.8%, to $51.9 million for the year ended June 30, 2026 from $38.0 million for the year ended June 30, 2025.
Net Interest Income. Net interest income increased by $203,000, or 3.8%, to $6.0 million for the year ended June 30, 2025 from $5.8 million for the year ended June 30, 2024. Net interest-earning assets increased by $1.8 million, or 4.8%, to $38.0 million for the year ended June 30, 2025 from $36.2 million for the year ended June 30, 2024. Net interest rate spread remained the same at 2.40% for the years ended June 30, 2025 and 2024. The net interest margin increased to 2.84% for the year ended June 30, 2025 compared to 2.75% for the year ended June 30, 2024. The increase in the average yield on interest earning assets for the year ended June 30, 2025 compared to the year ended June 30, 2024 was primarily due to an increase in the average yield of loans, the Bank’s largest interest-earning asset category.
Provision for (Recovery of) Credit Losses. We charge (credit) provisions for (recovery of) credit losses to operations in order to maintain our allowance for credit losses on loans and reserve for unfunded commitments at a level that is considered reasonable and necessary to absorb expected credit losses inherent in the loan portfolio and expected losses on commitments to grant loans that are expected to be advanced at the consolidated balance sheet date. In determining the level of the allowance for credit losses, we consider our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current and future economic conditions, and the levels of non-performing and other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. We assess the allowance for credit losses on a quarterly basis and make provisions for (recovery of) credit losses in order to maintain the allowance.
Based on our evaluation of the above factors, we recorded a recoveryprovision offor credit losses of approximately $94,000$35,000 for the year ended June 30, 20252026 compared to a recovery of credit losses of $190,000$94,000 for the year ended June 30, 2024.2025. The increase in the provision when comparing the two periods was primarily related to an increase in the loan portfolio for the year ended June 30, 2026.
The decrease in the recovery when comparing the two years was primarily related to an increase in the loan portfolio for the year ended June 30, 2025. The recovery was related to the projected future economic conditions in our market area stabilizing over the next two years, an increase in prepayments in both consumer and commercial loans, which was impactful to the weighted average life of the loan portfolio and the continuous recoveries of two legacy charge-offs. These predictions align with the Bank’s historic charge-off history over the past 8-10 years.
To the best of our knowledge, we have recorded our best estimate of expected credit losses in the loan portfolio and for unfunded commitments at June 30, 2025.2026. However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increaseschanges into our provision for credit losses.estimate. In addition, the WDFI and the FDIC, as an integral part of their examination process, will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.
Non-interest income increased by $79,000 to $828,000 for the year ended June 30, 2026 from $749,000 for the year ended June 30, 2025. Other income increased by $48,000 as a result of the Company leasing the top floor of its Brookfield branch to new tenants and the receipt of an insurance reimbursement on the Company’s foreclosed assets.
Non-interest income increased by $23,000 to $749,000 for the year ended June 30, 2025 from $726,000 for the year ended June 30, 2024 due primarily to an increase in other income. The increase in other income was related to a small recovery in connection with a settlement of litigation relating to our foreclosed asset, net (OREO). There were no other significant changes in the components comprising non-interest income when comparing the two years.
Non-interest expenses were $6.9 million for the years ended June 30, 2026 and 2025; however, there were several significant changes in the categories comprising non-interest expenses. Increases were incurred in salaries and employee benefits, professional fees and other non-interest expenses. The increase in salaries and employee benefits, professional fees and other non-interest expenses were offset by a decrease in data processing and office expenses. The salaries and employee benefits increase was associated with increased compensation expense related to expansion of the Company’s ESOP and the hiring of additional personnel. The increase in professional fees was related to timing of various legal expenses while the increase in other non-interest expenses was due to the payment of the annual NASDAQ listing fee. The decrease in data processing and office expenses was related to a new contract with the Company’s core software provider which started in September 2025 and which we expect will reduce expense. This new contract is expected to save the Company approximately $185,000 annually.
Provision for (Benefit from) Income Taxes. Income tax expense was $341,000 for the year ended June 30, 2026, an increase of $373,000, as compared to an income tax benefit of $32,000 for the year ended June 30, 2025. The increase in income tax expense was primarily the result of an increase in income before provision for income taxes during the year ended June 30, 2026.
Non-interest expenses were $6.9 million for the year ended June 30, 2025 compared to $7.0 million for the year ended June 30, 2024. The decrease was related to a decrease in expenses associated with foreclosed assets, net, offset by an increase in salaries and employee benefits. The decrease in expenses associated with foreclosed assets, net was primarily related to the recording of a valuation allowance of $378,000 for the year ended June 30, 2025 compared to $937,100 during the year ended June 30, 2024 resulting from the Bank’s agreement to sell the property for $1.1 million. The increase in salaries and employee benefits and occupancy and equipment expenses was related to a new branch which opened in Brookfield, Wisconsin during January 2024.
Provision for (Recovery of) Income Taxes. Income tax benefit was $32,000 for the year ended June 30, 2025, a decrease of $27,000, as compared to an income tax benefit of $59,000 for the year ended June 30, 2024. The decrease in income tax benefit was primarily related to an increase in income (loss) before income tax expense (benefit) when comparing the year ended June 30, 2025 and 2024. This decrease was offset by a Wisconsin income tax provision of $112,000 related to a change in Wisconsin tax law that provides for a subtraction from the Bank’s state taxable income for loan and fee interest income from certain commercial and agricultural loans. Based upon the provisions of this new state tax law, management determined that the Company was highly unlikely to incur a material Wisconsin tax liability in the foreseeable future, instead generating Wisconsin net operating loss carryforwards that would never be realized. Since the state rate at which net deferred tax assets are expected to be realized is 0%, the Company eliminated its state net deferred tax asset balances as of July 1, 2023, resulting in deferred tax expense of approximately $112,000 for the year ended June 30, 2024.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $1.4$2.5 million and $417,000$1.4 million for the years ended June 30, 20252026 and 2024,2025, respectively. Net cash flows provided by (used in) investing activities, which consists primarily of disbursements for loan originations, the purchase of securities and the purchase of bank owned life insurance, offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $15.6 million used in investing activities for theboth yearyears ended June 30, 20252026 comparedand to $17.7 million provided by investing activities for the year ended June 30, 2024.2025. Net cash provided by (used in) financing activities, consisting of activity in stockholders’ equity accounts (capital raise),accounts, deposit accounts and borrowings was $19.6 million provided by financing activities for the year ended June 30, 2026 compared to $18.0 million provided by financing activities compared to $19.4 million used in financing activities for the yearsyear ended June 30, 2025 and 2024, respectively.2025.
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Management's Discussion & Analysis (MD&A)
Largest changes
see in full comparisonInterestThe decrease in interest expense on depositsremainedwassubstantially the same at $1.8 million when comparing the six months ended December 31, 2025due tothe six months ended December 31, 2024. Thea decrease in the average rate paid on depositswasoffset by an increase in the average balance of deposits. The average rate paid on deposits decreased by ten basis points to1.92%1.90% for thesixnine months endedDecemberMarch 31,20252026 from2.02%2.0% for thesixnine months endedDecemberMarch 31,20242025 due to declining interest rates and a shift in customer funds from fixed-rate certificates of deposit into more liquid deposit products with variable rates. The increase in the average balance of deposits was the result of the initiation of new loan relationships which increased the average balances of demand, NOW, money market and savings deposit accounts while the decrease in the averagebalancesbalance ofcertificatecertificates of deposit accounts was related tocustomerrunofffunds being transferreddue tohigherrateyielding certificate of deposit specials being offeredcompetition by our competitors.
“Deposits. Total deposits increased by $3.1 million, or 1.8%, to $178.4 million at December 31, 2025, from $175.2 million at June 30, 2025 primarily due to an increase in demand, NOW and money market deposits of $6.0 million, or 12.6%. This increase was offset by a decrease in certificates of deposit balances of $1.8 million, or 2.7%, and a decrease in non-interest-bearing demand deposits of $1.1 million, or 4.7%. Savings deposits showed no significant changes when comparing the two dates. …”see in full comparison
Net Interest Income. Net interest income increased bysee in full comparison$1.2$1.8 million, or41.9%,41.5%, to$4.0$6.1 million for thesixnine months endedDecemberMarch 31,20252026 from$2.8$4.3 million for thesixnine months endedDecemberMarch 31,2024.2025. Net interest rate spread increased by6461 basis points to3.11%3.12% for thesixnine months endedDecemberMarch 31,20252026 from2.47%2.51% for thesixnine months endedDecemberMarch 31,2024,2025, reflecting a5756 basis points increase in the average yield on interest-earning assets and asevenfive basis points decrease in the average interest rate paid on interest-bearing liabilities. The net interest margin increased to3.56%3.58% for thesixnine months endedDecemberMarch 31,20252026 from2.84%2.87% for thesixnine months endedDecemberMarch 31,2024.2025. The increase in the average yield on interest earning assets for thesixnine months endedDecemberMarch 31,20252026 compared to thesixnine months endedDecemberMarch 31,20242025 was primarily due to an increase in the average yield of all interest-earning asset categories (with the exception of cash and cash equivalents which decreased by7572 basis points due to a drop in the federal funds rate) was associated with an increase in the percentage of commercial and multi-family real estate loansmaking upcomprising the total loan portfolio which generally carry higher interest rates than the other categories of loans. Also, the Company has been retaining higher rate mortgages in its one-to-four-family residential loan portfolio. Net interest-earning assets increased by$15.0$16.2 million, or41.3%,45.6%, to$51.4$51.9 million for thesixnine months endedDecemberMarch 31,20252026 from$36.4$35.6 million for thesixnine months endedDecemberMarch 31,2024.2025.
Interest expense on deposits decreased bysee in full comparison$11,000,$55,000, or1.5%,7.2%, to$752,000$705,000 for the three months endedDecemberMarch 31,20252026 from$763,000$760,000 for the three months endedDecemberMarch 31,20242025 due to a decrease in the average rate paid on depositswhichandwasaoffsetslightby an increasedecrease in the average balance of deposits. The average rate paid on deposits decreased by1311 basis points to1.89%1.88% for the three months endedDecemberMarch 31,20252026 from2.02%1.99% for the three months endedDecemberMarch 31,20242025 due to declining interest rates and a shift in customer funds from fixed-rate certificates of deposit into more liquid deposit products with variable rates. Theincreasedecrease in the average balance of deposits wasthenotresult of the initiation of new loan relationships which increased the average balances of demand, NOW and money market deposits while the decrease in the average balances of certificate of deposit account balances was related to customer funds being transferred to higher yielding certificate of deposit specials being offered by our competitors.significant.
Net Interest Income. Net interest income increased bysee in full comparison$652,000,$594,000, or46.4%,40.6%, to $2.1 million for the three months endedDecemberMarch 31,20252026 from$1.4$1.5 million for the three months endedDecemberMarch 31,2024.2025. Net interest rate spread increased by7461 basis points to3.23%3.25% for the three months endedDecemberMarch 31,20252026 from2.49%2.64% for the three months endedDecemberMarch 31,2024,2025, reflecting a6560 basis points increase in the average yield on interest-earning assets and anineone basispointspoint decrease in the average interest rate paid on interest-bearing liabilities. The net interest margin increased to3.66%3.61% for the three months endedDecemberMarch 31,20252026 from2.85%2.97% for the three months endedDecemberMarch 31,2024.2025. The increase in the average yield on interest earning assets for the three months endedDecemberMarch 31,20252026 compared to the three months endedDecemberMarch 31,20242025 was primarily due to an increase in the average yield of all interest-earning asset categories (with the exception of cash and cash equivalents which decreased by4571 basis points due to a drop in the federal funds rate) associated with an increase in the percentage of commercial and multi-family real estate loansmaking upcomprising the total loan portfolio which generally carry higher interest rates than the other categories of loans. Also, the Company has been retaining higher rate mortgages in its one-to-four-family residential loan portfolio. Net interest-earning assets increased by$15.8$18.6 million, or43.3%,54.6%, to$52.2$52.7 million for the three months endedDecemberMarch 31,20252026 from$36.4$34.1 million for the three months endedDecemberMarch 31,2024.2025.
Loan interest income increased bysee in full comparison$1.3$1.9 million, or30.7%,30.8%, to$5.4$8.2 million for thesixnine months endedDecemberMarch 31,2025,2026, as compared to$4.1$6.3 million for thesixnine months endedDecemberMarch 31,2024,2025, due to an increase in the average yield on loans and an increase in the average balance of loans. The average yield on the loan portfolio increased by 63 basis points from4.65%4.68% for thesixnine months endedDecemberMarch 31,20242025 to5.28%5.31% for thesixnine months endedDecemberMarch 31,2025.2026. The average balance of the loan portfolio increased by$26.9$27.4 million, or15.1%,15.3%, to$204.5$206.6 million for thesixnine months endedDecemberMarch 31,20252026 from$177.7$179.2 million for thesixnine months endedDecemberMarch 31,2024.2025. The increase in the average yield on the loan portfolio was the result of higher interest rates on new loan originations. The increase in the average balance of the loan portfolio was primarily related to new loangrowth.growth (multi-family real estate loans and one-to-four-family residential loans).
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The allowance for credit losses (“ACL”) at DecemberMarch 31, 20252026 represents the Company’s current estimate of the lifetime credit losses expected from its loan portfolio. Management estimates the ACL by projecting a lifetime loss rate conditional on a forecast of economic parameters and other qualitative adjustments, for the loans’ expected remaining term.
Changes in the Wisconsin unemployment rate, the Wisconsin annual housing price index and the Wisconsin annual gross domestic product could have a material impact on the model’s estimation of the allowance for credit losses. Marathon Bank’s methodology for maintaining its allowance for credit losses includes various levels within each of the aforementioned criteria. Set forth below is a hypothetical change to the next level within Marathon Bank’s allowance calculation. Changing these levels as of DecemberMarch 31, 2025,2026, from those actually used on DecemberMarch 31, 20252026 to the next highest or lowest level resulted in an increase in Marathon Bank’s allowance for credit losses of $182,000,$148,000, or 10.9%.8.7%.
Comparison of Financial Condition at DecemberMarch 31, 20252026 and June 30, 2025
Total Assets. Total assets increased $9.2$10.2 million, or 3.8%,4.3%, to $248.0$249.0 million at DecemberMarch 31, 2025,2026, from $238.8 million at June 30, 2025. The increase was primarily due to an increase in loans, net of $11.1$10.9 million, or 5.5%,5.4% whichand wasan increase in interest earning deposits held in other financial institutions of $1.1 million or 454.8%. These increases were offset by decreases in debt securities available for sale and cash and cash equivalents of $1.1$1.2 million and $728,000,$759,000, respectively. The remaining asset categories showed no significant changes when comparing DecemberMarch 31, 20252026 with June 30, 2025.
Cash and Cash Equivalents. Total cash and cash equivalents decreased $728,000,$759,000, or 5.1%,5.3%, to $13.7$13.6 million at DecemberMarch 31, 2025,2026, from $14.4 million at June 30, 2025, primarily due to an increase in loans, net of $11.1$10.9 million, or 5.5%.5.4% Thisand increasea wasdecrease primarilyin deposits of $1.1 million, or 0.6%. These changes were offset by new borrowings of $4.0$9.0 million, or 26.7%, an increase in deposits of $3.1 million, or 1.8%,60.0%, and a decrease in debt securities available for sale of $1.1$1.2 million, or 21.9%.23.2%.
Debt Securities Available for Sale. Total debt securities available for sale decreased by $1.1$1.2 million, or 21.9%,23.2%, to $4.1$4.0 million at DecemberMarch 31, 20252026 due to $1.1 million of debt securities available for sale maturing or being called during the sixnine months ended DecemberMarch 31, 2025.2026.
Loans. Gross loans increased $11.1$10.9 million, or 5.5%,5.4%, to $213.7$213.5 million at DecemberMarch 31, 2025,2026, from $202.6 million at June 30, 2025. The increase was primarily due to an increase in one-to-four-family residential loans of $7.7$8.1 million, or 13.6%,14.4%, and an increase in multi-family real estate loans of $3.9$2.6 million, or 8.1%.5.5%. The increase in multi-family real estate loans and one-to-four-family residential loans was due to a strategic decision to grow both of these portfolios. The remaining categories of loans showed no substantial changes.
The following table presents the commercial real estate portfolio by industry sector at DecemberMarch 31, 20252026 and June 30, 2025.
Foreclosed Assets. Foreclosed assets, net remained unchanged at $996,000 when comparing DecemberMarch 31, 20252026 with June 30, 2025.
Deposits. Total deposits decreased by $1.0 million, or 0.6%, to $174.2 million at March 31, 2026, from $175.2 million at June 30, 2025 primarily due to a decrease in demand, NOW and money market deposits of $1.0 million, or 1.5%, and a decrease in certificates of deposit balances of $639,000, or 1.0%. These decreases were offset by an increase in savings deposits of $576,000, or 1.5%. These changes were attributable to the normal movement of deposits between accounts by the Bank’s customers.
Deposits. Total deposits increased by $3.1 million, or 1.8%, to $178.4 million at December 31, 2025, from $175.2 million at June 30, 2025 primarily due to an increase in demand, NOW and money market deposits of $6.0 million, or 12.6%. This increase was offset by a decrease in certificates of deposit balances of $1.8 million, or 2.7%, and a decrease in non-interest-bearing demand deposits of $1.1 million, or 4.7%. Savings deposits showed no significant changes when comparing the two dates. The increase in demand, NOW and money market deposits was due to the Company’s increased focus on relationship management by obtaining customers’ deposit balances when granting loans to new customers. The decrease in certificates of deposit balances was related to customer funds being transferred to higher yielding certificate of deposit specials being offered by our competitors. The decrease in non-interest-bearing demand deposits was due to a combination of seasonal business cash management and increased consumer spending.
Federal Home Loan Bank (FHLB) Advances. FHLB advances increased by $4.0$9.0 million to $19.0$24.0 million at DecemberMarch 31, 20252026 due to atwo new borrowingborrowings during the sixnine months ended DecemberMarch 31, 2025.2026.
Stockholders’ Equity. Total stockholders’ equity increased by $1.2$1.8 million to $46.9$47.5 million when comparing DecemberMarch 31, 20252026 with June 30, 2025 primarily due to net income of $946,000.$1.4 million.
Comparison of Operating Results for the Three Months Ended DecemberMarch 31, 20252026 and 20242025
General. Net income was $501,000$488,000 for the three months ended DecemberMarch 31, 2025,2026, an increase of $450,000,$339,000, or 880.7%,228.7%, from net income of $51,000$148,000 for the three months ended DecemberMarch 31, 2024.2025. The increase in net income was primarily attributable to an increase in net interest income of $652,000.$594,000 and an increase in non-interest income of $39,000. This increase was offset by an increase in non-interest expenses of $100,000$171,000 and an increase in the provision for income taxes of $87,000.$76,000. The provision for (recovery of) credit losses also increased from a recovery of credit losses for the three months ended March 31, 2025 of $41,833 to a provision for credit losses of $5,000 for the three months ended March 31, 2026.
Interest Income. Interest income increased by $683,000,$635,000, or 35.3%,27.2%, to $3.0 million for the three months ended DecemberMarch 31, 20252026 as compared to $2.3 million for the three months ended DecemberMarch 31, 20242025 primarily due to an increase in loan interest income of $719,000.$663,000.
Loan interest income increased by $719,000,$663,000, or 26.3%,31.0%, to $2.8 million for the three months ended DecemberMarch 31, 20252026 as compared to $2.0$2.1 million for the three months ended DecemberMarch 31, 2024,2025, due to an increase in the average yield on loans and an increase in the average balance of loans. The average yield on the loan portfolio increased by 7065 basis points from 4.68%4.85% for the three months ended DecemberMarch 31, 20242025 to 5.38%5.50% for the three months ended DecemberMarch 31, 2025.2026. The average balance of the loan portfolio increased by $31.6$28.6 million, or 18.0%,15.7%, to $207.2$210.8 million for the three months ended DecemberMarch 31, 20252026 from $175.6$182.2 million for the three months ended DecemberMarch 31, 2024.2025. The increase in the average yield on the loan portfolio was the result of higher interest rates on new loan originations. The increase in the average balance of the loan portfolio was primarily related to new loan growth.growth (multi-family real estate loans and one-to-four-family residential loans).
Debt securities interest income decreased by $14,000,$8,000, or 30.2%,19.2%, to $31,000$32,000 for the three months ended DecemberMarch 31, 20252026 from $45,000$40,000 for the three months ended DecemberMarch 31, 20242025 due to a decrease in the average balance of debt securities of $2.3$1.4 million, which was offset by a slightan increase in the average yield on the debt securities portfolio of eight33 basis points to 2.92% for the three months ended March 31, 2026 from 2.69% for the three months ended DecemberMarch 31, 2025 from 2.61% for the three months ended December 31, 2024.2025. The decrease in the average balance of debt securities continues to be related to securities calls and paydowns. The increase in the average yield on the debt securities portfolio was primarily due to the change in the mix of the securities portfolio as a result of securities calls and paydowns.
Interest Expense. Interest expense increased $32,000,$41,000, or 3.7%,4.7%, to $893,000$912,000 for the three months ended DecemberMarch 31, 20252026 from $861,000$871,000 for the three months ended DecemberMarch 31, 2024,2025, due to an increase of $43,000$95,000 in interest paid on FHLB borrowings which was offset by a decrease of $11,000$55,000 in interest paid on deposits.
Interest expense on deposits decreased by $11,000,$55,000, or 1.5%,7.2%, to $752,000$705,000 for the three months ended DecemberMarch 31, 20252026 from $763,000$760,000 for the three months ended DecemberMarch 31, 20242025 due to a decrease in the average rate paid on deposits whichand wasa offsetslight by an increasedecrease in the average balance of deposits. The average rate paid on deposits decreased by 1311 basis points to 1.89%1.88% for the three months ended DecemberMarch 31, 20252026 from 2.02%1.99% for the three months ended DecemberMarch 31, 20242025 due to declining interest rates and a shift in customer funds from fixed-rate certificates of deposit into more liquid deposit products with variable rates. The increasedecrease in the average balance of deposits was thenot result of the initiation of new loan relationships which increased the average balances of demand, NOW and money market deposits while the decrease in the average balances of certificate of deposit account balances was related to customer funds being transferred to higher yielding certificate of deposit specials being offered by our competitors.significant.
Interest paid on FHLB borrowings increased $43,000,$95,000, from $98,000$112,000 for the three months ended DecemberMarch 31, 20242025 to $141,000$207,000 for the three months ended DecemberMarch 31, 2025.2026. The increase in interest paid on borrowings was due to the average balance of FHLB advances increasing by $5.1$10.7 million to $15.1$22.6 million for the three months ended DecemberMarch 31, 20252026 from $10.0$11.9 million for the three months ended DecemberMarch 31, 2024.2025. The average rate paid on borrowings decreased slightly from 3.90%3.87% for the three months ended DecemberMarch 31, 20242025 to 3.76%3.77% for the three months ended DecemberMarch 31, 20252026 due to a decrease in the federal funds rate.
Net Interest Income. Net interest income increased by $652,000,$594,000, or 46.4%,40.6%, to $2.1 million for the three months ended DecemberMarch 31, 20252026 from $1.4$1.5 million for the three months ended DecemberMarch 31, 2024.2025. Net interest rate spread increased by 7461 basis points to 3.23%3.25% for the three months ended DecemberMarch 31, 20252026 from 2.49%2.64% for the three months ended DecemberMarch 31, 2024,2025, reflecting a 6560 basis points increase in the average yield on interest-earning assets and a nineone basis pointspoint decrease in the average interest rate paid on interest-bearing liabilities. The net interest margin increased to 3.66%3.61% for the three months ended DecemberMarch 31, 20252026 from 2.85%2.97% for the three months ended DecemberMarch 31, 2024.2025. The increase in the average yield on interest earning assets for the three months ended DecemberMarch 31, 20252026 compared to the three months ended DecemberMarch 31, 20242025 was primarily due to an increase in the average yield of all interest-earning asset categories (with the exception of cash and cash equivalents which decreased by 4571 basis points due to a drop in the federal funds rate) associated with an increase in the percentage of commercial and multi-family real estate loans making upcomprising the total loan portfolio which generally carry higher interest rates than the other categories of loans. Also, the Company has been retaining higher rate mortgages in its one-to-four-family residential loan portfolio. Net interest-earning assets increased by $15.8$18.6 million, or 43.3%,54.6%, to $52.2$52.7 million for the three months ended DecemberMarch 31, 20252026 from $36.4$34.1 million for the three months ended DecemberMarch 31, 2024.2025.
Provision for (Recovery of) Credit Losses. We charge (credit) provisions for (recovery of) credit losses to operations in order to maintain our allowance for credit losses on loans and reserve for unfunded commitments at a level that is considered reasonable and necessary to absorb expected credit losses inherent in the loan portfolio and expected losses on commitments to grant loans that are expected to be advanced at the consolidated balance sheet date. In determining the level of the allowance for credit losses, we consider our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current and future economic conditions, and the levels of non-performing and other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. We assess the allowance for credit losses on a quarterly basis and make provisions for (recovery of) credit losses in order to maintain the allowance.
Based on our evaluation of the above factors, we recorded a provision for credit losses of $33,000$5,000 for the three months ended DecemberMarch 31, 20252026 compared to a provisionrecovery forof credit losses of $8,000$42,000 for the three months ended DecemberMarch 31, 2024.2025. The increase in provision when comparing the two periods was primarily related to an increase in the loan portfolio for the three months ended DecemberMarch 31, 2025.2026.
The allowance for credit losses was $1.7 million, or 0.80%, of loans outstanding at DecemberMarch 31, 20252026 and $1.7$1.6 million, or 0.92%,0.85%, of loans outstanding at DecemberMarch 31, 2024.2025.
To the best of our knowledge, we have recorded our best estimate of expected losses in the loan portfolio and for unfunded commitments at DecemberMarch 31, 2025.2026. In addition, the WDFI and the FDIC, as an integral part of their examination process, will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.
Non-interest income increased slightly by $10,000$39,000 to $190,000$246,000 for the three months ended DecemberMarch 31, 20252026 from $180,000$207,000 for the three months ended DecemberMarch 31, 2024.2025. Other income increased by $11,000$28,000 as a result of the Company leasing the top floor of its Brookfield branch to new tenants.tenants Mortgageand bankingan incomeinsurance decreasedreimbursement as a result of less mortgage sales duringon the currentCompany’s three-monthforeclosed period.assets.
Non-interest expenses were $1.6$1.7 million for the three months ended DecemberMarch 31, 20252026 and $1.5 million for the three months ended DecemberMarch 31, 2024.2025. The increase was primarily related to an increase in salaries and employee benefits and professionalother feesnon-interest expenses which was offset by a decrease in data processing and office expenses. The salaries and employee benefits increase was associated with increased compensation expense related to the newexpansion branchof wethe openedCompany’s inESOP Brookfield,and Wisconsinthe inhiring Januaryof 2024.additional personnel. The increase in professionalother feesnon-interest expenses was relateddue to timingthe payment of variousthe legalannual expensesNASDAQ whilelisting thefee. The decrease in data processing and office expenses was related to a new contract with the Company’s core software provider which started in September 2025. This new contract is expected to save the Company approximately $185,000 annually.
Provision for Income Taxes. Income tax expense was $87,000$121,000 for the three months ended DecemberMarch 31, 2025,2026, an increase of $85,000,$76,000, as compared to income tax expense of $2,000$45,000 for the three months ended DecemberMarch 31, 2024.2025. The increase in income tax expense was primarily the result of an increase in income before provision for income taxes for the three months ended DecemberMarch 31, 2025 and the higher percentage of non-taxable income making up income before income taxes for the three months ended December 31, 2024.2026.
Comparison of Operating Results for the SixNine Months Ended DecemberMarch 31, 20252026 and 20242025
General. Net income was $946,000$1.4 million for the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $720,000,$1.1 million, or 318.4%,282.9%, from net income of $226,000$374,000 for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in net income was primarily attributable to an increase in net interest income of $1.2$1.8 million.million Thisand an increase wasin non-interest income of $45,000. These increases were offset by a decrease in the recovery of credit losses of $140,000,$187,000, from a recovery of credit losses of $147,000$189,000 for the sixnine months ended DecemberMarch 31, 20242025 to a recovery of credit losses of $7,000$2,000 for the sixnine months ended DecemberMarch 31, 2025,2026, and an increase in non-interest expenses of $183,000.$354,000. The provision for income taxes also increased by $148,000.$224,000.
Interest Income. Interest income increased by $1.2$1.9 million, or 27.2%, to $5.8$8.8 million for the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 20242025 primarily due to an increase in loan interest income.
Loan interest income increased by $1.3$1.9 million, or 30.7%,30.8%, to $5.4$8.2 million for the sixnine months ended DecemberMarch 31, 2025,2026, as compared to $4.1$6.3 million for the sixnine months ended DecemberMarch 31, 2024,2025, due to an increase in the average yield on loans and an increase in the average balance of loans. The average yield on the loan portfolio increased by 63 basis points from 4.65%4.68% for the sixnine months ended DecemberMarch 31, 20242025 to 5.28%5.31% for the sixnine months ended DecemberMarch 31, 2025.2026. The average balance of the loan portfolio increased by $26.9$27.4 million, or 15.1%,15.3%, to $204.5$206.6 million for the sixnine months ended DecemberMarch 31, 20252026 from $177.7$179.2 million for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in the average yield on the loan portfolio was the result of higher interest rates on new loan originations. The increase in the average balance of the loan portfolio was primarily related to new loan growth.growth (multi-family real estate loans and one-to-four-family residential loans).
Debt securities interest income decreased by $3,000,$11,000, or 3.5%,8.2%, to $88,000$120,000 for the sixnine months ended DecemberMarch 31, 20252026 from $91,000$131,000 for the sixnine months ended DecemberMarch 31, 20242025 due to a decrease of $1.9$1.7 million in the average balance of debt securities to $5.1$4.9 million for the sixnine months ended DecemberMarch 31, 20252026 from $7.0$6.6 million for the sixnine months ended DecemberMarch 31, 2024.2025. This decrease was offset by an increase in the average yield on the debt securities portfolio of 8262 basis points to 3.42%3.26% for the sixnine months ended DecemberMarch 31, 20252026 as compared to 2.60%2.64% for the sixnine months ended DecemberMarch 31, 2024.2025. The average balance of debt securities continued to decrease as a result of securities calls and paydowns. The increase in the average yield on the debt securities portfolio was due to a $1.0 million floating rate corporate bond that was called in October 2025 that had a coupon rate of 10.17% for the last three months prior to being called. It was purchased in May 2021.
Interest Expense. Interest expense increased $62,000,$103,000, or 3.5%,3.9%, to $1.8$2.7 million for the sixnine months ended DecemberMarch 31, 20252026 from $1.8$2.6 million for the sixnine months ended DecemberMarch 31, 2024,2025, due to an increase in interest paid on FHLB borrowings. Interest expense on deposits decreased slightly when comparing the nine months ended March 31, 2026 to the nine months ended March 31, 2025.
InterestThe decrease in interest expense on deposits remainedwas substantially the same at $1.8 million when comparing the six months ended December 31, 2025due to the six months ended December 31, 2024. Thea decrease in the average rate paid on deposits was offset by an increase in the average balance of deposits. The average rate paid on deposits decreased by ten basis points to 1.92%1.90% for the sixnine months ended DecemberMarch 31, 20252026 from 2.02%2.0% for the sixnine months ended DecemberMarch 31, 20242025 due to declining interest rates and a shift in customer funds from fixed-rate certificates of deposit into more liquid deposit products with variable rates. The increase in the average balance of deposits was the result of the initiation of new loan relationships which increased the average balances of demand, NOW, money market and savings deposit accounts while the decrease in the average balancesbalance of certificatecertificates of deposit accounts was related to customerrunoff funds being transferreddue to higherrate yielding certificate of deposit specials being offeredcompetition by our competitors.
Interest paid on FHLB borrowings increased $63,000,$158,000, from $218,000$330,000 for the sixnine months ended DecemberMarch 31, 20242025 to $281,000$488,000 for the sixnine months ended DecemberMarch 31, 2025.2026. The increase in interest paid on borrowings was due to the average balance of FHLB advances increasing by $4.2$6.4 million to $15.0$17.6 million for the sixnine months ended DecemberMarch 31, 20252026 from $10.8$11.1 million for the sixnine months ended DecemberMarch 31, 2024.2025. The average rate paid on borrowings decreased from 4.04%3.95% for the sixnine months ended DecemberMarch 31, 20242025 to 3.74%3.72% for the sixnine months ended DecemberMarch 31, 20252026 due to a decrease in the federal funds rate.
Net Interest Income. Net interest income increased by $1.2$1.8 million, or 41.9%,41.5%, to $4.0$6.1 million for the sixnine months ended DecemberMarch 31, 20252026 from $2.8$4.3 million for the sixnine months ended DecemberMarch 31, 2024.2025. Net interest rate spread increased by 6461 basis points to 3.11%3.12% for the sixnine months ended DecemberMarch 31, 20252026 from 2.47%2.51% for the sixnine months ended DecemberMarch 31, 2024,2025, reflecting a 5756 basis points increase in the average yield on interest-earning assets and a sevenfive basis points decrease in the average interest rate paid on interest-bearing liabilities. The net interest margin increased to 3.56%3.58% for the sixnine months ended DecemberMarch 31, 20252026 from 2.84%2.87% for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in the average yield on interest earning assets for the sixnine months ended DecemberMarch 31, 20252026 compared to the sixnine months ended DecemberMarch 31, 20242025 was primarily due to an increase in the average yield of all interest-earning asset categories (with the exception of cash and cash equivalents which decreased by 7572 basis points due to a drop in the federal funds rate) was associated with an increase in the percentage of commercial and multi-family real estate loans making upcomprising the total loan portfolio which generally carry higher interest rates than the other categories of loans. Also, the Company has been retaining higher rate mortgages in its one-to-four-family residential loan portfolio. Net interest-earning assets increased by $15.0$16.2 million, or 41.3%,45.6%, to $51.4$51.9 million for the sixnine months ended DecemberMarch 31, 20252026 from $36.4$35.6 million for the sixnine months ended DecemberMarch 31, 2024.2025.
Provision for (Recovery of) Credit Losses. We charge (credit) provisions for (recovery of) credit losses to operations in order to maintain our allowance for credit losses on loans and reserve for unfunded commitments at a level that is considered reasonable and necessary to absorb expected credit losses inherent in the loan portfolio and expected losses on commitments to grant loans that are expected to be advanced at the consolidated balance sheet date. In determining the level of the allowance for credit losses, we consider our past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current and future economic conditions, and the levels of non-performing and other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or conditions change. We assess the allowance for credit losses on a quarterly basis and make provisions for (recovery of) credit losses in order to maintain the allowance.
Based on our evaluation of the above factors, we recorded a recovery of credit losses of $7,000$2,000 for the sixnine months ended DecemberMarch 31, 20252026 compared to a recovery of credit losses of $147,000$189,000 for the sixnine months ended DecemberMarch 31, 2024.2025. The decrease in recovery when comparing the two periods was primarily related to an increase in the loan portfolio for the sixnine months ended DecemberMarch 31, 2025.2026. The recovery continues to be related to the projected future economic conditions in our market area stabilizing over the next two years, an increase in prepayments in both consumer and commercial loans, which was impactful to the weighted average life of the loan portfolio and the continuous recoveries of two legacy charge-offs.
The allowance for credit losses was $1.7 million, or 0.80%, of loans outstanding at DecemberMarch 31, 20252026 and $1.7$1.6 million, or 0.92%,0.85%, of loans outstanding at DecemberMarch 31, 2024.2025.
To the best of our knowledge, we have recorded our best estimate of expected credit losses in the loan portfolio and for unfunded commitments at DecemberMarch 31, 2025.2026. However, future changes in the factors described above, including, but not limited to, actual loss experience with respect to our loan portfolio, could result in material increaseschanges into our provision for credit losses.estimate. In addition, the WDFI and the FDIC, as an integral part of their examination process, will periodically review our allowance for credit losses, and as a result of such reviews, we may have to adjust our allowance for credit losses. However, regulatory agencies are not directly involved in establishing the allowance for credit losses as the process is our responsibility and any increase or decrease in the allowance is the responsibility of management.
Non-interest income increased slightly by $6,000$45,000 to $380,000$625,000 for the sixnine months ended DecemberMarch 31, 20252026 from $374,000$580,000 for the sixnine months ended DecemberMarch 31, 2024.2025. Other income increased by $10,000$37,000 as a result of the Company leasing the top floor of its Brookfield branch to new tenants.tenants Mortgageand bankingan incomeinsurance decreasedreimbursement as a result of less mortgage sales duringon the currentCompany’s six-monthforeclosed period.assets.
Non-interest expenses were $3.3$5.0 million for the sixnine months ended DecemberMarch 31, 20252026 compared to $3.1$4.6 million for the sixnine months ended DecemberMarch 31, 2024.2025. The increase was primarily related to an increase in salaries and employee benefits andbenefits, professional fees and other non-interest expenses which was offset by a decrease in data processing and office expenses. The salaries and employee benefits increase was associated with increased compensation expense related to expansion of the newCompany’s branchESOP weand openedthe inhiring Brookfield,of Wisconsinadditional in January 2024.personnel. The increase in professional fees was related to timing of various legal expenses while the increase in other non-interest expenses was due to the payment of the annual NASDAQ listing fee. The decrease in data processing and office expenses was related to a new contract with the Company’s core software provider which started in September 2025. This new contract is expected to save the Company approximately $185,000 annually.
Provision for Income Taxes. Income tax expense was $190,000$311,000 for the sixnine months ended DecemberMarch 31, 2025,2026, an increase of $148,000,$224,000, as compared to income tax expense of $42,000$87,000 for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in income tax expense was primarily the result of an increase in income before provision for income taxes during the sixnine months ended DecemberMarch 31, 2025.2026. The effective tax rate for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 was 16.75%17.8% and 15.71%,18.9%, respectively.
Non-performing assets include other real estate owned of $996,000 at DecemberMarch 31, 20252026 and June 30, 2025. During the year ended June 30, 2023, the Company foreclosed on collateral supporting a construction loan which was valued at $2.3 million and was included in foreclosed assets (OREO), net. The valuation was based on independent appraisals subject to certain discounts less estimated costs to sell. A subsequent independent appraisal was obtained in April 2024 subject to certain discounts less estimated costs to sell. After adjusting for estimated costs to sell, the revised valuation was $1.4 million resulting in a provision for valuation allowance of $937,100 being recorded during the year ended June 30, 2024. An offer to sell the property for $1.1 million was accepted by the Company in August 2025 resulting in a provision for valuation allowance of $378,767 being recorded during the year ended June 30, 2025. The sale contract was terminated during the currentthree quartermonths ended December 31, 2025 and the Company has relisted the property for $1.5 million. Non-performing loans at DecemberMarch 31, 20252026 consisted of two one-to four-family residential loans that were fully secured compared to one one-to four-family residential loan that was fully secured at June 30, 2025.
Set forth below is a schedule of classified loans as of DecemberMarch 31, 20252026 and June 30, 2025.
The allowance for credit losses (“ACL”) at DecemberMarch 31, 20252026 represents the Company’s current estimate of the lifetime credit losses expected from its loan portfolio. Management estimates the ACL by projecting a lifetime loss rate conditional on a forecast of economic parameters and other qualitative adjustments, for the loans’ expected remaining term.
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans, and proceeds from maturities of securities. We also have the ability to borrow from the Federal Home Loan Bank of Chicago. At DecemberMarch 31, 2025,2026, we had a $85.9$86.7 million line of credit with the Federal Home Loan Bank of Chicago, which had $19.0$24.0 million in borrowings outstanding as of that date. The Bank also has $16.5$19.8 million available to borrow from the Federal Reserve Bank which is pledged by multi-family loans and an unsecured Federal Funds purchasing limit of $5.0 million with the Bank’s correspondent bank. There were no borrowings under these arrangements at DecemberMarch 31, 2025.2026.
Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $1.9$2.0 million and $1.1$1.9 million of cash provided by operating activities for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. Net cash provided by (used in) investing activities, which consists primarily of disbursements for loan origination, the purchase of securities, and the purchase of premises and equipment offset by principal collections on loans, proceeds from the sale of securities and proceeds from maturing securities and pay downs on securities, was $9.8$10.8 million used in investing activities compared to $7.2$3.7 million providedused byin investing activities for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. Net cash provided by (used in) financing activities, consisting of activity in deposit accounts and borrowings, was $7.1$8.0 million provided by financing activities compared to $2.6$15.0 million being usedprovided inby financing activities for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively.
At DecemberMarch 31, 2025,2026, Marathon Bank was classified as “well capitalized” for regulatory capital purposes. See Note 10-Minimum Regulatory Capital Requirements in the accompanying consolidated financial statements for additional information.
Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. At DecemberMarch 31, 2025,2026, we had outstanding commitments to originate loans of $4.7$7.4 million, and no$672,700 outstanding commitments to sell loans. We anticipate that we will have sufficient funds available to meet our current lending commitments. Time deposits that are scheduled to mature in one year or less from DecemberMarch 31, 20252026 totaled $43.6$52.3 million, which include $2.3$10.8 million in brokered certificates of deposit. Management expects that a substantial portion of the maturing time deposits will be renewed. However, if a substantial portion of these deposits is not retained, we may utilize additional Federal Home Loan Bank advances or other borrowings, which may result in higher levels of interest expense.
MBBC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 5 Form 4 filings (4 insiders, 7 trade dates, 8,295 shares, about $119.7K) and open-market sales in 0 filings. Net open-market shares: 8,295 (purchases minus sales); net value about $119.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-18 | Spatz Nora |
Option exercise | 962 | $6.48 | $6.2K |
| 2026-09-18 | Spatz Nora |
Option exercise | 1,201 | $8.13 | $9.8K |
| 2026-06-28 | Cornish Terry |
Shares withheld for tax | 247 | $15.49 | $3.8K |
| 2026-06-28 | Knopf Michelle |
Shares withheld for tax | 225 | $15.49 | $3.5K |
| 2026-06-28 | Zillges Nicholas W |
Shares withheld for tax | 1,269 | $15.49 | $19.7K |
| 2026-06-28 | Spatz Nora |
Shares withheld for tax | 503 | $15.49 | $7.8K |
| 2026-06-28 | Selting-Buchberger Joy |
Shares withheld for tax | 522 | $15.49 | $8.1K |
| 2026-06-16 | Zillges Nicholas W |
Open-market purchase | 970 | $15.00 | $14.6K |
| 2026-06-15 | Werth Ann M |
Grant/award | 3,386 | — | — |
| 2026-06-15 | Wimmer Timothy R |
Grant/award | 3,386 | — | — |
| 2026-06-15 | Grimm Thomas L |
Grant/award | 3,386 | — | — |
| 2026-06-15 | Zientara Amy |
Grant/award | 3,386 | — | — |
| 2026-06-15 | Cornish Terry |
Grant/award | 3,500 | — | — |
| 2026-06-15 | Knopf Michelle |
Grant/award | 5,450 | — | — |
| 2026-06-15 | Zillges Nicholas W |
Grant/award | 16,934 | — | — |
| 2026-06-15 | Spatz Nora |
Grant/award | 6,450 | — | — |
| 2026-06-10 | Cornish Terry |
Open-market purchase | 219 | $14.75 | $3.2K |
| 2026-06-10 | Knopf Michelle |
Open-market purchase | 164 | $14.75 | $2.4K |
| 2026-06-10 | Zillges Nicholas W |
Open-market purchase | 170 | $14.75 | $2.5K |
| 2026-06-10 | Spatz Nora |
Open-market purchase | 602 | $14.75 | $8.9K |
| 2026-06-09 | Cornish Terry |
Open-market purchase | 693 | $14.50 | $10.0K |
| 2026-06-09 | Knopf Michelle |
Open-market purchase | 519 | $14.50 | $7.5K |
| 2026-06-09 | Zillges Nicholas W |
Open-market purchase | 537 | $14.50 | $7.8K |
| 2026-06-09 | Spatz Nora |
Open-market purchase | 1,904 | $14.50 | $27.6K |
| 2026-06-08 | Cornish Terry |
Open-market purchase | 71 | $14.24 | $1.0K |
| 2026-06-08 | Knopf Michelle |
Open-market purchase | 54 | $14.24 | $769 |
| 2026-06-08 | Zillges Nicholas W |
Open-market purchase | 55 | $14.24 | $783 |
| 2026-06-08 | Spatz Nora |
Open-market purchase | 197 | $14.24 | $2.8K |
| 2026-06-05 | Cornish Terry |
Open-market purchase | 116 | $14.25 | $1.7K |
| 2026-06-05 | Knopf Michelle |
Open-market purchase | 87 | $14.25 | $1.2K |
| 2026-06-05 | Zillges Nicholas W |
Open-market purchase | 90 | $14.25 | $1.3K |
| 2026-06-05 | Spatz Nora |
Open-market purchase | 320 | $14.25 | $4.6K |
| 2026-06-04 | Cornish Terry |
Open-market purchase | 27 | $13.77 | $372 |
| 2026-06-04 | Knopf Michelle |
Open-market purchase | 20 | $13.77 | $275 |
| 2026-06-04 | Zillges Nicholas W |
Open-market purchase | 21 | $13.77 | $289 |
| 2026-06-04 | Spatz Nora |
Open-market purchase | 74 | $13.77 | $1.0K |
| 2026-06-03 | Cornish Terry |
Open-market purchase | 263 | $13.75 | $3.6K |
| 2026-06-03 | Knopf Michelle |
Open-market purchase | 197 | $13.75 | $2.7K |
| 2026-06-03 | Zillges Nicholas W |
Open-market purchase | 203 | $13.75 | $2.8K |
| 2026-06-03 | Spatz Nora |
Open-market purchase | 722 | $13.75 | $9.9K |
| 2026-06-03 | Zientara Amy |
Option exercise | 899 | $6.48 | $5.8K |
| 2026-06-03 | Zientara Amy |
Option exercise | 3,599 | $8.13 | $29.3K |
| 2026-06-03 | Spatz Nora |
Option exercise | 1,200 | $8.13 | $9.8K |
| 2026-06-03 | Zillges Nicholas W |
Option exercise | 1,500 | $6.48 | $9.7K |
| 2026-06-03 | Grimm Thomas L |
Option exercise | 300 | $6.48 | $1.9K |
| 2026-06-03 | Wimmer Timothy R |
Option exercise | 3,599 | $8.13 | $29.3K |
| 2026-06-03 | Wimmer Timothy R |
Option exercise | 899 | $6.48 | $5.8K |
| 2026-05-16 | Cornish Terry |
Shares withheld for tax | 41 | $14.50 | $594 |
| 2026-05-16 | Selting-Buchberger Joy |
Shares withheld for tax | 56 | $14.50 | $812 |
| 2026-05-16 | Spatz Nora |
Shares withheld for tax | 30 | $14.50 | $435 |
| 2026-05-16 | Knopf Michelle |
Shares withheld for tax | 86 | $14.50 | $1.2K |
| 2026-05-05 | Werth Ann M |
Option exercise | 599 | $6.48 | $3.9K |
| 2026-05-05 | Werth Ann M |
Option exercise | 899 | $8.13 | $7.3K |
Well-known investors holding MBBC (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 10,984 | $167.8K | 0.0% | New position |