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, 1997 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,California 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 10, 1997, there were 3,811,819 shares of no par Common Stock issued and outstanding. Consolidated Statements of Financial Condition Marathon Bancorp and Subsidiary 	 September 30, December 31, (Unaudited) 	1997 	1996 Assets 		 Cash and Due from Banks 	3,761,000 	4,789,000 Federal funds sold 	3,678,000 	2,500,000 Cash and cash equivalents 7,439,000 	7,289,000 Interest-bearing deposits with financial institutions 	 100,000 	996,000 Securities available for sale 	3,256,000 	1,031,000 Securities held to maturity (aggregate market value of $8,207,000 and $5,823,000 at September 30, 1997 and December 31, 1996 respectively) 	8,283,000 	6,089,000 Loans 	48,717,000	47,696,000 Reserve for credit losses 	(969,000)	(1,088,000) Net Loans 	47,748,000	46,608,000 Other real estate owned, net 	929,000 	3,085,000 Premises and equipment, net 	434,000 	453,000 Accrued interest receivable 	398,000 	432,000 Other assets 	434,000 	410,000 Total Assets 	69,021,000	66,393,000 		 Liabilities and Shareholders' Equity 		 Deposits: 		 Noninterest-bearing 	$30,119,000 	$25,840,000 Interest-bearing 	30,354,000 	37,041,000 Total deposits 	 60,473,000 	62,881,000 Accrued interest payable 	 74,000 114,000 Other liabilities 	318,000 	355,000 Total liabilities 	60,865,000 	 63,350,000 Shareholders' equity: 		 Preferred shares - no par value, 1,000,000 shares authorized,no shares issued and outstanding 	 	 Common shares - no par value, 9,000,000 shares authorized, 3,811,819 and 1,284,764 shares issued and outstanding 		 at September 30,1997 and December 31, 1996 respectively 13,606,000 	 8,080,000 Deficit 	(5,466,000) 	(5,045,000) Net unrealized gain (loss) on securities available for sale 	16,000 	8,000 Total shareholders' equity 	 8,156,000 	3,043,000 Total Liabilities and Shareholders' Equity 	$69,021,000	$66,393,000 See accompanying notes to unaudited consolidated financial statements. Consolidated Statements of Operations Marathon Bancorp and Subsidiary 	 Three months ended Nine months ended 	 September 30 September 30 (Unaudited) 	1997 	 1996 	1997 	1996 Interest income: 				 Loans, including fees 	 $1,199,000 	$1,163,000 	$2,995,000	$3,344,000 Investment securities - taxable 	160,000 	113,000 	384,000 	36,000 Federal funds sold 134,000 	168,000 	 278,000 	496,000 Deposits with financial institutions 	2,000 	 14,000 	26,000 	33,000 Total interest income 	1,495,000 	1,458,000 	3,683,000 	4,240,000 Interest expense: 				 Deposits 	 265,000 	 308,000 	837,000 	 894,000 Total interest expense 	265,000 	 308,000 	837,000 	 894,000 Net interest income before provisions for loan losses 	 1,230,000 	1,150,000 	 2,846,000 	3,346,000 Provision for loan losses 	15,000 25,000 	165,000 	25,000 Net interest income after provisions for loan losses 1,215,000 	1,125,000 	 2,681,000 	3,321,000 Other operating income: 				 Service charges on deposit accounts 	67,000 	 43,000 	224,000 	146,000 Other service charges and fees 	 17,000 	6,000 	29,000 	12,000 Total other operating income 	 84,000 	49,000 	253,000	 158,000 Other operating expenses: 	 		 	 Salaries and employee benefits 	472,000 	467,000 	 1,380,000 	1,431,000 Net operating cost of other real estate owned 	13,000 	 211,000 	31,000 	 272,000 Occupancy 	135,000 	62,000 	426,000 	235,000 Furniture and equipment 	20,000 	30,000 	 74,000 	92,000 Professional services 	 181,000 	 117,000 	347,000 	 456,000 Data processing services 	74,000 	 122,000 	246,000 	 360,000 Messenger and courier services 	22,000 	46,000 	60,000 	 125,000 Insurance and assessments 	101,000 	 44,000 	286,000 	 239,000 Other expenses 	255,000 	73,000 	504,000 	266,000 Total other operating expenses 1,273,000 	1,172,000 3,354,000 	3,476,000 Income (loss) before income taxes 	 $26,000 	$2,000 	$(420,000) 	$3,000 Income taxes 	0 	0 	2,000 	0 Net Income (loss) 	 $26,000 	$2,000 	 $(418,000) 	$3,000 Net income (loss) per share: 	$ 0.01 $ 0.00 $( .21) $ 0.00 Book value per share 	 		 $ 2.14 	 $ 3.18 See accompanying notes to unaudited consolidated financial statements. Consolidated Statements of Cash Flows Marathon Bancorp and Subsidiary (Unaudited) 	Nine months ended 	September 30, Increase (decrease) in cash and cash equivalents 	1997 	 1996 Cash flows from operating activities: 		 Interest received 	$3,664,000 	$4,039,000 Service charges on deposit accounts and other fees received 	 253,000 	158,000 Interest paid 	(877,000) 	(908,000) Cash paid to suppliers and employees 	(3,436,000) 	(3,671,000) Net cash (used) provided by operating activities 	 (396,000) (382,000) Cash flows from investing activities: 	 	 Net decrease (increase) in interest-bearing deposits with other financial institutions 	 896,000 	 (497,000) Proceeds from maturities of securities available for sale 	20,000 	2,257,000 Purchase of securities available for sale 	(2,116,000) 	0 Proceeds from maturities of securities held to maturity 	1,468,000 	 459,000 Purchase of securities held to maturity (3,710,000) 	0 Net (increase) decrease in loans made to customers 	(1,229,000)	 615,000 Proceeds from sale of other real estate owned 	2,156,000	 1,082,000 Purchases of furniture, fixtures and equipment 	(76,000) 	(1,000) Net cash provided by investing activities 	(2,591,000)	3,745,000 Cash flows from financing activities: 		 Net decrease in noninterest-bearing and interest-bearing demand deposits and money market and savings accounts 	(2,802,000) 	(195,000) Net decrease in time certificates of deposits 	412,000 	(678,000) Proceeds from the sale of common stock 	5,527,000 	0 Net cash provided (used) by financing activities 	3,137,000 	(873,000) Net increase in cash and cash equivalents 	150,000 	2,490,000 Cash and cash equivalents at beginning of year 	7,289,000	22,850,000 Cash and cash equivalents at end of period 	$7,439,000 $25,340,000 See accompanying notes to unaudited consolidated financial statements. 											 (Continued) Consolidated Statements of Cash Flows (Continued) Marathon Bancorp and Subsidiary (Unaudited) 	Nine months ended 	September 30, Reconciliation of net income (loss) to net cash provided (used) by operating activities 	 1997 	1996 Net income (loss) 	$(422,000) 	$3,000 Adjustments to reconcile net loss to net cash provided 		 by operating activities: 		 Depreciation and amortization expense 	95,000 	84,000 (Gain) loss on sale of other real estate owned 	(8,000) 	 69,000 Provision for REO losses 	 0 	0 Provision for loan losses 	165,000 	 25,000 Amortization of premiums and discounts on securities, net 	17,000 	16,000 Change in deferred loan origination fees, net 	14,000 	(101,000) Change in accrued interest receivable 	(50,000) 	 189,000 Change in accrued interest payable 	(40,000) 	(15,000) Change in income tax receivable 	 0 	0 Change in other assets 	(110,000) 	(625,000) Change in other liabilities 	(57,000) 	(27,000) Total adjustments 26,000 	 (385,000) Net cash (used) provided by operating activities 	$(396,000) $(382,000) Supplemental cash flow information: 		 Transfer from loans to other real estate owned 	$185,000 	$295,000 Loans made to facilitate the sale of other real estate owned 	 $1,695,000 	$704,000 See accompanying notes to unaudited consolidated financial statements. Consolidated Statements of Changes in Shareholders' Equity Marathon Bancorp and Subsidiary 								 	 	 Net 									 Unrealized Gain (loss) 									 on Securities 			 Preferred Common shares Accumulated Available 				Shares	 Shares 	Amount Deficit for Sale Total Balance, December 31, 1996 ---	1,248,764	$8,080,000	$(5,045,000) $8,000	 $3,043,000 Net Loss			 				(421,000)		 (421,000) Net change in unrealized gain on securities						 on securities available for sale	 		8,000 	8,000 Proceeds from the sale of						 common stock 3/25/97			 340,832 767,000			 767,000 Proceeds from the sale of common stock 6/30/97			 245,555 552,000 			 552,000 Proceeds from the sale of			 common stock 8/1/97	 		1,976,668 	4,447,000 			4,447,000 Costs of public offering 				(240,000)	 		(240,000) Balance, September 30, 1997 	--- ---	3,811,819 $13,606,000	$(5,466,000)	$16,000 	$8,156,000 See accompanying notes to unaudited consolidated financial statements. 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 1996 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, 1997 and December 31, 1996, results of operations and changes in cash flows for the three-month and nine-month periods ended September 30, 1997 and 1996. The results of operations for the nine-month period ended September 30, 1997 are not necessarily indicative of what the results of operations will be for the full year ending December 31, 1997. (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. Loss per share calculations exclude common share equivalents (stock options) since their effect would be to increase the income per share and reduce the loss per share. Accordingly, the weighted average number of shares used to compute the net income or loss per share was 3,145,768 for the three-month and 2,011,297 for the nine-month period ended September 30, 1997 and 1,248,764 for the three-month and nine-month periods ended September 30, 1996. (3) Sale of common stock 	During the first quarter of 1997, the Company successfully completed a private placement offering and issued 340,832 shares of common stock at $2.25 per share and contributed the net proceeds of $766,900 to the Company's wholly-owned subsidiary, Marathon National Bank (the "Bank") as equity capital. During the second quarter the Company began a public offering to sell 2,222,223 shares at $2.25 per share to raise $5,000,000 in new capital. The offering was successful and the additional capital brings the Bank and Company into compliance with its' regulatory agreements. The Company made a contribution of capital to the Bank of $4,734,000. MANAGEMENT'S DISCUSSION AND ANALYSIS 	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 1996 Annual Report on Form 10-KSB. Averages presented are daily average balances. Summary 	Marathon Bancorp recorded a profit for the three-month period ended September 30, 1997 of $26,000, or $0.01 per common share, compared with net income of $2,000, or $0.0 per common share, for the same period in 1996. The major reasons for the increase in earnings was a increase in noninterest income. 	At September 30, 1997, the Company had total assets of $69,021,000, total loans of $48,717,000 and total deposits of $60,473,000. This compares to total assets of $66,393,000, total loans of $47,696,000 and total deposits of $62,881,000 at December 31, 1996. Operating Performance 	The following discussion explains in greater detail the consolidated financial condition and results of operations of the Company. This discussion should be read in conjunction with the accompanying consolidated financial statements and noted thereto as well as the Company's 1996 Annual Report on Form 10-KSB . Net Interest Income: Net interest income (the amount by which interest generated from earning assets exceeds interest expense on interest-bearing liabilities) is the most significant component of Marathon's earnings. The Company's diverse portfolio of earning assets is comprised of its core business of loan underwriting, augmented by liquid overnight federal funds sold, short term interest-bearing deposits with other financial institutions and investment securities. These earning assets are financed through a combination of interest-bearing and noninterest-bearing sources of funds. 	Interest income for the first nine months of 1997 decreased $557,000, or 15% as compared to the first nine months of 1996. The reasons for this decline were decreases in the rate of interest earned on loans due to non-accruals and a decrease in the rate of interest earned on earning assets. Interest paid on deposits decreased $57,000, or 6% from the same period in 1996, which did not offset the decrease in income. Loans earned at an average rate of 8.6% percent in 1997 as compared to 8.9% in 1996. In addition, average loans outstanding declined $3,584,000 or 7.1 percent between 1996 and 1997. Average interest-bearing liabilities decreased $4,966,000 or 11.6 percent. 	The Bank analyzes its performance using the concepts of interest rate spread and net yield on earning assets. The interest rate spread represents the difference between the yield on earning assets and the interest rate paid on interest-bearing liabilities. The net yield on earning assets is the net interest income divided by the earning assets. 	The Company's interest rate spread for the nine-month period of 1997 was 4.9 percent compared to 5.2 percent in 1996. The 1997 decrease was due to an decrease in the yield on interest-earning assets while the cost of interest-bearing liabilities slightly increased. The net yield on earning assets was 6.1% percent in the nine-month period of 1997 and 6.3 percent in 1996. 	For the third quarter of 1997 net interest income before credit loss provision increased by $90,000, or 7.4%. This again was attributable to both an increase in loan and investment income as well as a decrease in interest cost due to lower interest bearing deposits. With the additional capital the Company has raised through its' public offering, the Company will be increasing the deposits and assets and leveraging the new capital to increase profits. 	The Bank's net yield on earning assets remains high in comparison with the Company's interest rate spread due to the significant volume of noninterest-bearing demand deposits relative to total funding sources (represented by total deposits and shareholders' equity). While these deposits are noninterest- bearing, they are not without cost. However, the Bank believes that they remain the lowest cost source of funds available in the marketplace (see "Liquidity and Interest Rate Sensitivity Management"). Other Operating Income: Other operating income increased 60 percent in the nine-month period of 1997 from $158,000 in 1996 to $253,000. The increase is the result of higher service charge income generated on deposit accounts. 	For the quarter ended September 30 , 1997 other income increased $35,000, or 71% over the like period of 1996. Service charges on deposit accounts increased with the Bank's emphasis on collection of charges on commercial checking accounts that are under service charge analysis programs and other fees for Bank services. Provision for Loan Losses: Implicit in lending activities is the fact that losses will be experienced and that the amount of such losses will vary from time to time, depending upon the risk characteristics of the portfolio as affected by economic conditions and the financial experience of borrowers. Management of the Bank has instituted stringent credit policies designed to minimize the level of losses and nonaccrual loans. 	These policies require extensive evaluation of new credit requests and continuing review of existing credits in order to identify, monitor and quantify evidence of deterioration of quality or potential loss in a timely manner. Management's reviews are based upon previous loan loss experience, current economic conditions, composition of the loan portfolio, the value of collateral and other relative factors. The Bank's lending is concentrated in Los Angeles County and surrounding areas, which have experienced adverse economic conditions over the last several years, including declining real estate values. These factors have adversely affected some borrowers' ability to repay loans. 	The Bank's past due and nonaccrual loans at September 30, 1997 amounted to $4,425,000 compared to $3,592,000 at September 30 1996. 	The allowance for loan losses, which provides a financial buffer for the risk of losses inherent in the lending process, is increased by the provision for loan losses charged against income, decreased by the amount of loans charged off and increased by recoveries. There is no precise method of predicting specific losses which ultimately may be charged off and the conclusion that a loan may become uncollectible, in whole or in part, is a matter of judgment. Similarly, the adequacy of the allowance and accompanying provision for loan losses can be determined only on a judgmental basis after full review, including consideration of economic conditions and their effects on specific borrowers, borrowers' financial data, and evaluation of underlying collateral for secured lending. 	Based upon management's assessment of the overall quality of the loan portfolio, and of external economic conditions, the Bank made a provision for loan losses of $165,000 in the nine months of 1997 and no provision in the second quarter compared to a $25,000 provision in the first nine months of 1996. Loans totaling $552,000 were charged off during the first nine months of 1997 and $268,000 was recovered. Loans charged off amounted to $300,000 in the nine month period of 1996, while recoveries totaled $16,000. The allowance for loan losses reflects management's perception of the lending environment in which it operates. Although management believes that the allowance for possible loan losses is adequate, there can be no reasonable assurance that further deterioration will not occur. As a result, future provisions will be subject to continuing evaluation of inherent risk in the loan portfolio. 	At September 30th other real estate owned (OREO), consisting of properties received in settlement of loans totaled $929,000, a decrease of $2,156,000 or 69.9% from December 31, 1996. Other Operating Expenses: Other operating expenses totaled $3,354,000 for the nine-month period of 1997, a decrease of $122,000 or 3.5 percent from $3,476,000 in 1996. For the third quarter, operating expenses were up $105,000, or 8.2% over that reported for 1996. OREO expenses, data proccesing, personnel costs , proffessional services and equipment expense decreased for the nine-months of 1997. The category that showed a large increase was occupancy expense which increased $199,000 with the Company's move back to its' permanent quarters after the repairs from the Northridge earthquake. The Company is negotiating with the landlord for a reimbursement of the costs associated with the relocation. 	Expenses for the third quarter also were reflective of the move back into the Company's offices and the expense related thereto when compared to last year. The Company has been working hard to reorganize and reduce expense. These efforts have trimmed a lot of the expense and will continue to lower expense into next year. Income Taxes: Deferred income taxes are computed using the liability method based on differences between the financial reporting and tax basis of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established to reduce the deferred tax asset to the level at which it is "more likely than not" that the tax asset or benefits will be realized. Realization of tax benefits of deductible temporary differences and operating loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryforward periods 	The Company had income tax expense of $2,000 and no benefit that it can account for currently at September 30, 1997. At December 31, 1996 for federal income tax purposes, the Company had a net operating loss carryforward of approximately $3,727,000 beginning to expire in 2008 - 2011. For state income tax purposes, the Company has incurred a net operating loss of approximately $5,252,000 which is available as a carryforward through 2001 to offset future taxes payable, adjusted for the fifty percent reduction, as required by state tax law. Assets and Liabilities Assets increased during the first nine months of 1997 by $2,712,000, or 4%. This growth that was funded by the increased capital was invested in loans and investment securities to increase the overall yield on assets, which increased from 7.2% at June 30th to 7.9% at September 30th. The loan portfolio increased by $1,027,000 during 1997 and investment securities increased $4,418,000. The Company was able to make significant progress in the reduction of other real estate owned reducing the outstanding balance to $929,000 which represents only two properties. This reduction helped to increase the overall portfolio of earning assets. 	Increased assets were funded by the capital infusion from the public stock offering. Interst bearing deposits have declined from year end 1996 by $6,687,000 in mostly money market accounts. The noninterest bearing deposits increased $4,279,000 from yearend 1996 helping reduce the overall cost of funds. Liquidity and Interest Rate-Sensitivity Management 	The primary function of asset liability management is to ensure adequate liquidity and to maintain an appropriate balance between rate sensitive assets and rate sensitive liabilities. Liquidity management involves matching sources and uses of the Company's funds in order to effectively meet the cash flow needs of our customers, as well as the cash flow requirements of the Company itself. Interest rate sensitivity management seeks to stabilize net interest income during periods of changing interest rates. Liquidity: Management monitors its liquidity position continuously in relation to trends of loans and deposits, and relates the data to short and long term expectations. In order to serve Marathon's customers effectively, funds must be available to meet their credit needs as well as their withdrawals of deposited funds. Liquidity from assets is provided by the receipt of loan payments and by the maturity of other earning assets as further described below. Liquidity from liabilities is attained primarily by obtaining new deposits. 	Liquid assets are defined to include federal funds sold, interest-bearing deposits with other financial institutions, unpledged investment securities and cash and due from banks. The Company's liquidity ratio (the sum of liquid assets divided by total deposits) was 31 percent at September 30, 1997 and 23 percent at December 31, 1996. The loan to deposit ratio was 80 percent and 75 percent for September 30, 1997 and December 31, 1996, respectively. 	On the liability side, Marathon's liquidity position is enhanced by sizable core deposits. As stable core deposits (which include all deposits except time certificates of deposit) are generated, the need for other sources of liquidity diminishes. This derives from the fact that the Bank's primary liquidity requirement generally arises from the need to meet maturities of time certificates of deposit. Absent extraordinary conditions, the bulk of stable core deposits do not require significant amounts of liquidity to meet the net short or intermediate term withdrawal demands of customers. 	 While demand deposits are noninterest-bearing, the account relationships are not without cost as the Bank provides messenger, courier, accounting and data processing services in connection with some of its commercial customers. Interest Rate-Sensitivity Management: Interest rate sensitivity management focuses, as does liquidity management, on the maturities of earning assets and funding sources. In addition, interest rate sensitivity management takes into consideration those assets and liabilities whose interest rates are subject to change prior to maturity. 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. In an effort to maintain consistent earnings performance, Marathon manages the repricing characteristics of its assets and liabilities to control net interest sensitivity. 	The Company measures interest rate sensitivity by distributing the rate maturities 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. 	Balance sheet items are categorized according to contractual maturity or repricing dates, as appropriate. Reference rate indexed loans, federal funds sold and money market deposits constitute the bulk of the floating rate category. Determining the interest rate sensitivity of noncontractual items is arrived at in a more qualitative manner. Demand deposits are considered to be a mix of short and long term funds, based upon historical behavior. Savings deposits are viewed as susceptible to competitive factors brought on by deregulation and, therefore, classified as intermediate funds. 	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 still asset sensitive which means the Company will have increased income in a rising rate environment and decreased income in a falling rate scenario. Capital Resources And Dividends 	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. 	On September 20, 1995, the Bank entered into a formal agreement with the Office of the Comptroller of Currency (OCC) under which the Bank agreed to submit a three year strategic plan by November 1, 1995. The plan included, among other things, action plans to accomplish the following: a) achieve and maintain the desired capital ratios, as set forth below; b) attain satisfactory profitability; and c) reduce other real estate owned. The Plan was accepted by the OCC on January 30, 1996. The agreement increased the minimum Tier 1 risk based capital ratio to 8.5 percent from 4.0 percent and the Tier 1 capital leverage ratio to 6.0 percent from 4.0 percent. At September 30, 1997, the Company and the Bank had a Tier 1 risk based capital ratio of 15.1 percent, and a Tier 1 capital leverage ratio of 11.5 percent. The Bank has met all of the terms of the formal agreement. 	The Company has raised additional capital during the period of June 25, 1997 through July 31, 1997 which it has invested in the Bank. The total capital raised was $5,000,000 (less expenses of approximately $240,000) of which $4,734,000 was invested in the Bank . 	 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. 			 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 13, 1997 		 	 	Craig D. Collette 								 Craig D. Collette 		 			President and Chief Executive Officer Howard J. Stanke 						Howard J. Stanke 							Chief Financial Officer