SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 14a-11(c) or sec. 14a-12

MARATHON BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] Fee not required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Definitive Proxy Materials will be forwarded to shareholders on or about April
1, 1998. The Registrant expects to register the stock options and underlying
securities referred to in the 1998 Stock Option Plan in the proxy materials in a
Form S-8 registration statement.
2

MARATHON BANCORP
11150 W. OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90064

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 11, 1998

TO THE SHAREHOLDERS
OF MARATHON BANCORP:

NOTICE IS HEREBY GIVEN that, pursuant to the call of its board of directors, the
1998 Annual Meeting of Shareholders (the "Meeting") of Marathon Bancorp (the
"Bancorp") will be held at the Bancorp's main office located at 11150 W. Olympic
Boulevard, Los Angeles, California, on Monday, May 11, 1998 at 4:00 p.m. for the
purpose of considering and voting upon the following matters:

1. ELECTION OF DIRECTORS. To elect seven (7) persons to the board of
directors to serve until the 1999 Annual Meeting of Shareholders and
until their successors are elected and have been qualified. The persons
nominated by management to serve as directors are:

Robert J. Abernethy Robert Oltman
Craig D. Collette Ann Pappas
Frank Jobe, M.D. Nick Patsaouras
C. Thomas Mallos

2. APPROVAL OF STOCK OPTION PLAN. To approve the Marathon Bancorp 1998
Stock Option Plan.

3. OTHER BUSINESS. To transact such other business as may properly come
before the Meeting or any adjournment thereof.

The board of directors has fixed the close of business on March 20, 1998 as the
record date for determination of shareholders entitled to notice of, and to vote
at, the Meeting or any adjournment thereof.

BY ORDER OF THE BOARD OF DIRECTORS

March 20, 1998 Robert L. Oltman, Secretary

YOU ARE URGED TO VOTE IN FAVOR OF MANAGEMENT'S PROPOSAL BY SIGNING AND RETURNING
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING IN PERSON. THE ENCLOSED PROXY IS SOLICITED BY THE BANCORP'S BOARD OF
DIRECTORS. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE IT PRIOR TO THE TIME IT IS
VOTED BY NOTIFYING THE SECRETARY OF THE BANCORP IN WRITING OF REVOCATION OF THE
PROXY, BY FILING A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE
MEETING AND VOTING IN PERSON. PLEASE INDICATE ON THE PROXY WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING SO THAT WE CAN ARRANGE FOR ADEQUATE ACCOMMODATIONS.

MARATHON BANCORP

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

MAY 11, 1998

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of Proxies
for use at the 1998 Annual Meeting of Shareholders (the "Meeting") of Marathon
Bancorp (the "Company") to be held at Marathon National Bank (the "Bank")
located at 11150 W. Olympic Boulevard, Los Angeles, California, on Monday, May
11, 1998 at 4:00 p.m., and at any and all adjournments thereof.

It is anticipated that this Proxy Statement and the accompanying Notice and form
of Proxy will be mailed on or about April 1, 1998 to shareholders eligible to
receive notice of, and to vote at, the Meeting.

REVOCABILITY OF PROXIES
- -----------------------

A form of Proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to and may revoke
it at any time before it is exercised by filing with the Secretary of the
Company an instrument revoking it or a duly executed Proxy bearing a later date.
In addition, the powers of the proxyholders will be suspended if the person
executing the Proxy is present at the Meeting and elects to vote in person by
advising the chairman of the Meeting of his or her election to vote in person,
and votes in person at the Meeting. Subject to such revocation or suspension,
all shares represented by a properly executed Proxy received in time for the
Meeting will be voted by the proxyholders in accordance with the instructions
specified on the Proxy. UNLESS OTHERWISE DIRECTED IN THE ACCOMPANYING PROXY, THE
SHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR
ELECTION OF DIRECTORS NAMED HEREIN AND FOR APPROVAL OF THE 1998 STOCK OPTION
PLAN. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE MEETING, THE PROXY WILL
BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.

PERSONS MAKING THE SOLICITATION
- -------------------------------

This solicitation of Proxies is being made by the board of directors (the
"Board") of the Company. The expense of preparing, assembling, printing and
mailing this Proxy Statement and the materials used in the solicitation of
Proxies for the Meeting will be borne by the Company. It is contemplated that
Proxies will be solicited principally through the use of the mail, but
directors, officers and employees of the Company and the Bank may solicit
Proxies personally or by telephone, without receiving special compensation
therefore. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries

for their reasonable expenses in forwarding these Proxy materials to
shareholders whose stock in the Company is held of record by such entities. In
addition, the Company may use the services of individuals or companies it does
not regularly employ in connection with this solicitation of Proxies, if
management determines it to be advisable.

VOTING SECURITIES

There were issued and outstanding 3,811,819 shares of the Company's common stock
("Common Stock") on March 20, 1998, which has been fixed as the record date for
the purpose of determining shareholders entitled to notice of, and to vote at,
the Meeting (the "Record Date"). On any matter submitted to the vote of the
shareholders, each holder of Common Stock will be entitled to one vote, in
person or by Proxy, for each share of Common Stock he or she held of record on
the books of the Company as of the Record Date. In connection with the election
of directors, shares may be voted cumulatively if a shareholder present at the
Meeting gives notice at the Meeting, prior to the voting for election of
directors, of his or her intention to vote cumulatively. If any shareholder of
the Company gives such notice, then all shareholders eligible to vote will be
entitled to cumulate their shares in voting for election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of shares held in his or her name as of the Record Date, multiplied by
the number of directors to be elected. These votes may be cast for any one
nominee, or may be distributed among as many nominees as the shareholder sees
fit. If cumulative voting is declared at the Meeting, votes represented by
Proxies delivered pursuant to this Proxy Statement may be cumulated in the
discretion of the proxies, in accordance with management's recommendation. The
effect of broker nonvotes is that such votes are not counted for any purpose in
determining whether a matter has been approved; however such votes are counted
for purposes of determining a quorum. The effect of a vote of abstention on any
matter is that such vote is not counted as a vote for or against the matter and
will be disregarded in the calculation of the votes cast; however such votes are
counted for purposes of determining a quorum.

BENEFICIAL OWNERSHIP OF COMMON STOCK

Management of the Company knows of no person who owns, beneficially or of
record, either individually or together with associates, 5 percent or more of
the outstanding shares of the Company's common stock, except as set forth in the
table below. The following table sets forth, as of February 20, 1998, the number
and percentage of shares of the Company's outstanding common stock beneficially
owned, directly or indirectly, by each of the Company's directors and named
officers and by the directors and named officers of the Company as a group. The
shares "beneficially owned" are determined under Securities and Exchange
Commission rules, and do not necessarily indicate ownership for any other
purpose. In general, beneficial ownership includes shares over which a director
or named officer has sole or shared voting or investment power and shares which
such person has the right to acquire within 60 days of February 20, 1998. Unless
otherwise indicated, the persons listed below have sole voting and investment
powers. Management is not aware of any arrangements which may, at a subsequent
date, result in a change of control of the Company.

Common Stock Beneficially Owned as of
February 20, 1998
-------------------------------------
Number of Percent of
Name of Beneficial Owner Shares Class
- ------------------------ ------ -----

Directors and Named Executive Officers:
Nikolas Patsaouras 37,910(1) 1.0
Robert J. Abernethy 107,299 2.8
Craig D. Collette 39,223(2) 1.0
Frank W. Jobe, M.D 74,190 2.0
C. Thomas Mallos 47,878(3) 1.3
Robert L. Oltman 190,922(4) 5.0
Ann Pappas 60,011(5) 1.6
Timothy J. Herles 40,880(6) 1.1

Total for all directors, named
executive officers and all
executive officers (numbering 9) 608,313(7) 15.8

Principal Shareholder:
- ----------------------
Oppenheimer-Spence Financial
Services Partnership L.P. 224,897(8) 5.9

- ----------
(1) Mr. Patsaouras has shared voting and investment powers as to 37,500 of
these shares.

(2) Mr. Collette has shared voting and investment powers as to 33,223
shares. The amount includes 6,000 shares acquirable by exercise of stock
options.

(3) Mr. Mallos has shared voting and investment powers as of 45,108 of these
shares.

(4) Mr. Oltman has shared voting and investment powers as to 2,942 of these
shares. His address is c/o Marathon Bancorp, 11150 West Olympic
Boulevard, Los Angeles, California
90064.

(5) Ms. Pappas has shared voting and investment powers as to 59,896 of these
shares.

(6) Mr. Herles has shared voting and investment powers as to 1,065 of these
shares. The amount includes 39,696 shares acquirable by exercise of
stock options.

(7) This amount includes 45,696 shares acquirable by exercise of stock
options within 60 days of February 20, 1998.

(8) The Schedule 13D filing by the partnership indicates that it has sole
voting power and sole dispositive power of all of these shares. The
business address of the partnership is 119 West 57th Street, New York,
New York 10019.

SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
- ---------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and more than ten-percent shareholders are required by
Securities Exchange Commission regulation to furnish the Company with copies of
all Section 16(a) forms they file.

Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during 1997 its officers,
directors and more than ten-percent shareholders complied with all filing
requirements applicable to them, except as to one late form each by Mr. Oltman
and Dr. Jobe due to inadvertent error.

PROPOSAL 1:
ELECTION OF DIRECTORS

NOMINEES
- --------

The Company's Bylaws presently provide that the number of directors of the
Company shall not be less than seven (7) nor more than twelve (12) until changed
by an amendment to the Bylaws adopted by the Company's shareholders. The Bylaws
further provide that the exact number of directors shall be seven (7) until
changed by a Bylaw or Bylaw amendment duly adopted by the Company's shareholders
or board of directors.

The persons named below, all of whom are currently members of the board of
directors, have been nominated for election as directors to serve until the 1999
Annual Meeting of Shareholders and until their successors are elected and have
qualified. Unless otherwise instructed, the proxyholders will vote the Proxies
received by them for the election of the nominees named below. Votes of the
proxyholders will be cast in such a manner as to effect, if possible, the
election of all seven (7) nominees, as appropriate, (or as many thereof as
possible under the rules of cumulative voting). The seven nominees for directors
receiving the most votes will be elected directors. In the event that any of the
nominees should be unable to serve as a director, it is intended that the Proxy
will be voted for the election of such substitute nominee, if any, as shall be
designated by the board of directors. The board of directors has no reason to
believe that any of the nominees named below will be unable to serve if elected.
Additional nominations for directors may only be made by complying with the
nomination procedures which are included in the Notice of Annual Meeting of
Shareholders accompanying this Proxy Statement.

The following table sets forth as of March 20, 1998, the names of, and certain
information concerning, the persons nominated by the board of directors for
election as directors of the Company.

Year First
Name and Title Appointed Principal Occupation
Other than Director Age Director During Past Five Years
- ------------------- --- -------- ----------------------

Nikolas Patsaouras 54 1982 President of Patsaouras & Associates
Chairman (consulting engineers).

Robert J. Abernethy 58 1983 President, American Standard Development Co.

Craig D. Collette 55 1997 President and Chief Executive Officer of the
Company and the Bank. Former President and
Chief Operating Officer of Transworld Bank
from June 1996 to January 1997, and former
President and Chief Executive Officer of
Landmark Bank from January 1979 to April 1996.

Frank W. Jobe, M.D. 72 1985 Orthopedic Surgeon

C. Thomas Mallos 61 1982 President, C. Thomas Mallos, Accountancy Corp.

Robert L. Oltman 60 1982 President, Oltman Management Company.

Ann Pappas 69 1982 Restaurateur.

All of the nominees named above have served as members of the Company's board of
directors during the past year. All nominees will continue to serve if elected
at the Meeting until the 1999 Annual Meeting of Shareholders and until their
successors are elected and have qualified. None of the directors were selected
pursuant to any arrangement or understanding other than with the directors and
officers of the Company acting within their capacities as such. There are no
family relationships among any of the directors and executive officers of the
Company. No director or executive officer of the Company serves as a director of
any company which has a class of securities registered under, or which is
subject to the periodic reporting requirements of, the Securities Exchange Act
of 1934, or of any company registered as an investment company under the
Investment Company Act of 1940, except for Mr. Abernethy who is a director of
Public Storage Inc.

THE BOARD OF DIRECTORS AND COMMITTEES
- -------------------------------------

The Company's board of directors held twelve (12) meetings during 1997. None of
the directors attended less than 75 percent of all board of directors meetings
and committee meetings (of which they were a member) that were held in 1997,
except for Dr. Jobe.

There were no standing committees of the Company's board of directors. In 1997,
the Bank had a standing Audit Committee, Personnel and Compensation Committee.
The Bank's Audit Committee, which consisted of Thomas Mallos (chairman) and
Messrs. Patsaouras, Oltman and Ms. Pappas, met five times during 1997. The Audit
Committee reviews the audits of the Bank and considers the adequacy of its
auditing procedures. The Bank's Personnel and Compensation Committee, which
consisted of Mr. Patsaouras (chairman) and Mallos, Oltman, Abernethy and Ms.
Pappas, met two

times in 1997. The Personnel and Compensation Committee reviews and approves
compensation arrangements of the Bank's senior officers.

EXECUTIVE OFFICERS
- ------------------

The following table provides certain information as of March 20, 1998 (except as
otherwise disclosed) regarding the persons, other than Mr. Collette, who is
currently serving as the President and Chief Executive Officers of the Company
and the Bank.

Principal Occupation
Name Age During Past Five Years
---- --- ----------------------

Timothy J. Herles 57 Executive Vice President/Senior Credit Officer
of the Bank since 1982.

Adrienne Caldwell 55 Senior Vice President/Operations
Administration of the Bank since 1990.

Howard J. Stanke 49 Executive Vice President/Chief
Financial Officer of the Company and Bank
effective June 9, 1997. Mr. Stanke was
previously Executive Vice President/Chief
Financial Officer of Transworld Bancorp and
Transworld Bank and was with Transworld Bancorp
and Bank from 1978 to May, 1997.

EXECUTIVE COMPENSATION
- ----------------------

SUMMARY COMPENSATION TABLE
--------------------------

Long Term Compensation
----------------------------------
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------- ----------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------------------------- ------ -------- -------- ------------ ----------- ---------- --------- ---------------
Restricted
Name and Other Annual Stock LTIP All Other
Principal Salary Bonus Compensation Award(s) Options/ Payouts Compensation(2)
Position Year ($) ($) ($)(1) ($) SARs ($) ($)
- -------------------------------- ------ -------- -------- ------------ ----------- ---------- --------- ---------------

Craig D. Collette(3) 1997 $155,833 $ 0 $7,700 0 30,000 0 $ 0
President and
Chief Executive Officer
of the Company and the Bank

Timothy J. Herles 1997 $102,372 $ 0 $8,400 0 0 0 $1,040
Executive Vice President and 1996 $100,000 $ 0 $8,400 0 0 0 $1,040
Chief Credit Officer of the Bank 1995 $100,000 $ 0 $8,400 0 0 0 $1,040

- ----------
(1) These amounts represent the automobile allowance.

(2) These amounts represent excess life insurance premiums.

(3) Mr. Collette commenced employment on January 22, 1997.

OPTION/SAR GRANTS TABLE
-----------------------

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Individual Grants
- -------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- ----------------- ----------------------- ---------------- ---------------- -----------
% of Total
Number of Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Share) Date
---- ---------- ----------- --------- ----

Craig D. Collette 30,000(1) 39.0% $2.63 2/18/2007
Timothy Herles 15,000(1) 19.5% $4.00 9/15/2007

- ----------
(1) The stock options are incentive stock options as provided in Section 422
of the Internal Revenue Code. The vesting of the stock options is 20%
per year from the date of the option grant.

OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
---------------------------------------------

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUE

(a) (b) (c) (d) (e)
- -------------------- --------------------- ---------------- ------------------ -------------------------
Number of Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Year-End (#) Year-End ($)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable
- -------------------- --------------------- ---------------- ------------------ -------------------------

Craig D. Collette 0 N/A 6,000/24,000(1) $11,220/44,880(1)
Timothy J. Herles 0 N/A 39,696/15,000(1) $0/7,500(1)

- ----------
N/A - means not applicable.

(1) Options only.

EMPLOYMENT AGREEMENT
- --------------------

The Company and the Bank have an employment agreement with Mr. Craig D.
Collette. Pursuant to Mr. Collette's employment agreement, Mr. Collette is to
serve for a term of five years commencing January 15, 1997 as the President and
Chief Executive Officer of the Company and the Bank. The base annual salary for
Mr. Collette is $170,000 per year, with increases to be determined at the
discretion of the Boards of Directors of the Bank and the Company. The agreement
provides Mr. Collette with four weeks vacation, health, disability and life
insurance benefits, $700 per month for car allowance, stock options to acquire
30,000 shares of Common Stock with vesting at 20% per year, salary continuation
benefits as described below, and indemnification for matters incurred in
connection with any action against the executive which arose out of and was
within the scope of his employment, provided that the executive acted in good
faith and in a manner the executive reasonably believed to be in the best
interests of the Company and the Bank and with respect to a criminal matter if
the executive also had no reasonable cause to believe his conduct was unlawful.
If the Company and the Bank terminate Mr. Collette without cause, Mr. Collette
shall be entitled to (i) two years then base salary in a lump sum at the time of
termination, and (ii) continuation of insurance benefits for 24 months. Upon any
merger or consolidation where the Company and the Bank are not the surviving or
resulting corporations, or upon any transfer of all or substantially all of the
assets of the Company and the Bank, and Mr. Collette not be retained for the
remaining term of the agreement in a comparable position of the resulting
corporation, Mr. Collette shall be paid two years of his then base salary in a
lump sum within ten days of such termination.

On January 16, 1998, the Bank and Mr. Collette entered into a salary
continuation agreement to provide salary continuation benefits to Mr. Collette.
If Mr. Collette continues in the employ of the Bank until age 65 ("Retirement
Age"), he will receive from the Bank under the salary continuation agreement
$150,000 per year for 10 years beginning at his reaching Retirement Age. In the
event Mr. Collette terminates employment due to disability prior to age 65, he
will receive the salary continuation benefits in the amount of $150,000 per year
for 10 years beginning at his reaching Retirement Age. In the event Mr. Collette
dies while actively employed by the Bank prior to reaching Retirement Age, his
beneficiary will receive from the Bank benefits in the amount of $150,000 per
year for 10 years beginning with the month following his death or the total
benefit value in a lump sum 30 days following his death at the choice of the
beneficiary. In the event of termination without cause Mr. Collette shall
receive a benefit amount of $150,000 to be paid each year for 10 years beginning
at Retirement Age. In the event of termination due to early retirement or
voluntary termination other than due to a change of control, Mr. Collette shall
receive an annual benefit amount beginning after Retirement Age for 10 years
that is based on his years of service with the Bank and subject to a maximum
annual benefit amount of $150,000 per year. In the event of a change in control
of the Bank while Mr. Collette is in active service with the Bank, he will
receive beginning on the first day of the month following the consummation of
the change in control $150,000 per year for 10 years. In the event Mr. Collette
is terminated for cause he will forfeit any benefits from the salary
continuation agreement.

DIRECTOR COMPENSATION
- ---------------------

No directors fees are paid by the Company. Each nonemployee director of the Bank
receives $250 per meeting for his or her attendance at all regular or special
meetings of the Bank, and $25 per committee meeting of the Bank. The maximum a
Bank director (other than the Chairman) may receive for attendance at the Bank's
board and committee meetings is $500 per month. The

Chairman receives additional directors fees of $1,500 per month from the Bank
with a maximum of directors fees of $2,000 per month.

In addition, the Bank pays for some of the directors' insurance premiums for
medical, dental and vision coverage and for all of the directors basic and
voluntary life insurance premiums.

Beginning in July 1998, Mr. Collette pursuant to his employment agreement will
be entitled to receive directors fees for regular and special meetings of the
Company and the Bank to the extent that directors fees are paid, but will not be
entitled to receive directors fees for committee meetings.

LIMITATION OF LIABILITY AND INDEMNIFICATION
- -------------------------------------------

The Articles of Incorporation and Bylaws of the Company provide for
indemnification of agents including directors, officers and employees to the
maximum extent allowed by California law including the use of an indemnity
agreement. The Company's Articles further provide for the elimination of
director liability for monetary damages to the maximum extent allowed by
California law. The indemnification law of the State of California generally
allows indemnification in matters not involving the right of the corporation, to
an agent of the corporation if such person acted in good faith and in a manner
such person reasonably believed to be in the best interests of the corporation,
and in the case of a criminal matter, had no reasonable cause to believe the
conduct of such person was unlawful. California law, with respect to matters
involving the right of a corporation, allows indemnification of an agent of the
corporation, if such person acted in good faith, in a manner such person
believed to be in the best interests of the corporation and its shareholders;
provided that there shall be no indemnification for: (i) amounts paid in
settling or otherwise disposing of a pending action without court approval; (ii)
expenses incurred in defending a pending action which is settled or otherwise
disposed of without court approval; (iii) matters in which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the court in which the proceeding is or was pending shall determine that
such person is entitled to be indemnified; or (iv) other matters specified in
the California General Corporation Law.

The Company's Bylaws provide that the Company shall to the maximum extent
permitted by law have the power to indemnify its directors, officers and
employees. The Company's Bylaws also provide that the Company shall have the
power to purchase and maintain insurance covering its directors, officers and
employees against any liability asserted against any of them and incurred by any
of them, whether or not the Company would have the power to indemnify them
against such liability under the provisions of applicable law or the provisions
of the Company's Bylaws. Each of the directors and executive officers of the
Company has an indemnification agreement with the Company that provides that the
Company shall indemnify such person to the full extent authorized by the
applicable provisions of California law and further provide advances to pay for
any expenses which would be subject to reimbursement.

Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act") may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing, the Company has
been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.

PROPOSAL 2:
ADOPTION OF THE MARATHON BANCORP
1998 STOCK OPTION PLAN

INTRODUCTION
- ------------

On March 23, 1998, the Marathon Bancorp 1998 Stock Option Plan (the "Plan") was
adopted by the Board of Directors of the Company subject to approval by the
Company's shareholders. The Plan provides for the granting of options to
purchase shares of Company common stock ("Common Stock") at option prices per
share which must not be less than one hundred percent (100%) of the fair market
value per share of Common Stock at the time each option is granted. It is
intended that options granted pursuant to the Plan qualify for treatment either
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code"), or as "nonqualified stock options,"
as shall be determined and designated upon the grant of each option. The Plan
provides that 700,000 shares of the Company's authorized but unissued Common
Stock will be available for issuance under the Plan.

The Company currently has the 1990 Stock Option Plan which expires on March 19,
2000 and of which there remain 346,410 shares of Common Stock available for
stock option grants under such plan, and the Company also has the 1983 Stock
Option Plan which expires on September 9, 1998 and of which there remain 324,144
shares of Common Stock available for stock option grants under such plan.
Subject to shareholder approval of the Plan, the 1983 Stock Option Plan and the
1990 Stock Option Plan will be terminated and no further option grants will be
made pursuant to the 1983 Stock Option Plan or the 1990 Stock Option Plan. The
Board of Directors believes it is advisable for the shareholders to adopt the
Plan in order to have options available so that the Company will have an
additional means of retaining and attracting competent officers, directors and
management level employees for the Company and its subsidiaries, and for
inducing high levels of performance and efforts for the benefit of the Company
and its shareholders.

SUMMARY OF THE PLAN
- -------------------

The Plan will be administered by the Board of Directors. All options under the
Plan will be granted at an exercise price of not less than 100 percent of the
fair market value of the shares of Common Stock on the date of grant, except for
an incentive stock option granted to an optionee who at the time of the grant
owns more than 10% of the total combined voting power of all classes of stock of
the Company or a subsidiary of the Company in which case the option price shall
not be less than 110% of the fair market value of such stock. The purchase price
of any shares purchased upon exercise is payable in full in cash or, subject to
applicable law, with Common Stock previously acquired by the optionee and held
by the optionee for a period of at least six months. The equivalent dollar value
of shares used to effect a purchase shall be the fair market value of the Common
Stock on the date of exercise.

Options granted pursuant to the Plan shall be for a term of up to ten (10)
years, except for certain incentive stock options described below. Each option
shall be exercisable in installments and upon such conditions as the Board of
Directors shall determine. Options granted shall vest over a period no greater
than five years, and no less than 20% of such option shall vest annually.
Optionees shall have the right to exercise all or a portion of the option at any
time or from time to time with respect to the vested part of their stock
options. If any option shall expire without being exercised in full,

the shares will again become available for granting of stock options under the
Plan. The Plan shall expire on March 23, 2008.

Incentive stock options may be granted to full-time salaried officers and
management level employees of the Company or a subsidiary. No director who is
not also a full-time salaried officer or management level employee may be
granted an incentive stock option pursuant to the Plan. No incentive stock
option with a term of more than five (5) years may be granted to any person who
at the time of grant owns stock possessing more than 10% of the total combined
voting power or value of all classes of stock of the Company or a subsidiary of
the Company. Nonqualified stock options may be granted to directors, full-time
salaried officers and management level employees of the Company or its
subsidiaries.

TAX CONSEQUENCES TO THE OPTIONEE
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The following describes, generally, the major federal income tax consequences
relating to stock options issued under the Plan. If all of the requirements of
the Plan are met, generally no taxable income will result to an optionee upon
the grant of an incentive or nonqualified stock option.

INCENTIVE STOCK OPTIONS. If the optionee is employed by the Company (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised and otherwise satisfies the requirements of the
Plan and applicable law, the optionee will not recognize taxable income upon the
exercise of the option. If the optionee is not employed by the Company (or a
subsidiary) continuously from the date of grant until at least three months
before the option is exercised for reason other than death or disability, the
optionee will recognize ordinary income at the time the option is exercised. The
Company will be allowed a deduction for federal income tax purposes only if and
to the extent that the optionee recognizes ordinary income. Upon exercise of an
incentive stock option, the excess of the fair market value of the shares
received over the option price at the time of exercise is treated as an item of
tax preference which may result in the imposition of the alternative minimum
tax.

On a subsequent sale of shares acquired by the exercise of an incentive stock
option, gain or loss will be recognized in an amount equal to the difference
between the amount realized on the sale and the optionee's tax basis of the
shares sold. If a disposition (generally a sale, exchange, gift or similar
lifetime transfer of legal title) of stock received pursuant to an incentive
stock option does not take place until more than two years after the grant of
such option and more than one year after the exercise of such option, any gain
or loss realized on such disposition will be treated as long-term capital gain
or loss. Under such circumstances, the Company will not be entitled to a
deduction for income tax purposes in connection with the exercise of the option.

If a disposition of stock received pursuant to an exercise of an incentive stock
option occurs within two years after the grant of such option or one year after
the exercise of such option, the optionee must treat any gain realized as
ordinary income to the extent of the lesser of (i) the fair market value of such
stock as of the date of exercise less the option price, or (ii) the amount
realized on disposition of the stock less the option price. Such ordinary income
realized is deductible by the Company for federal income tax purposes. Any
additional amount realized on the disposition will be taxable as either
long-term or short-term capital gain, depending on the holding period.

NONQUALIFIED STOCK OPTIONS. In general, when an optionee exercises a
nonqualified stock option, the optionee recognizes ordinary income in the amount
of the excess of the fair market value of the shares received upon exercise over
the aggregate amount paid for those shares, and the Company may deduct as an
expense the amount of income so recognized by the optionee. For capital gains
purposes, the holding period of the shares begins upon the exercise of the
option, and the optionee's basis in the shares is equal to the fair market value
of the shares on the date of exercise.

If, upon exercise of a nonqualified option, the optionee pays all or part of the
purchase price by delivering to the Company shares of already-owned stock, there
are no federal income tax consequences to the optionee or the Company to the
extent of the number of shares so delivered. As to any additional shares issued,
the optionee recognizes ordinary income equal to the aggregate fair market value
of the additional shares received, less any cash paid to the Company, and the
Company is allowed to deduct as an expense the amount of such income. For
purposes of calculating tax upon disposition of the shares acquired, the holding
period and basis of the new shares, to the extent of the number of old shares
delivered, is the same as for those old shares. The holding period for the
additional shares begins on the date the option is exercised, and the basis in
those additional shares is equal to the taxable income recognized by the
optionee, plus the amount of any cash paid to the Company.

Upon a subsequent disposition of the shares received on exercise, the difference
between the amount realized on such disposition and the fair market value of the
shares on the date of exercise generally will be treated as a separate capital
gain or loss.

EXCISE TAX. In addition, the exercise of outstanding options that become
exercisable upon certain major corporate events may result in all or a portion
of the difference between the fair market value of the option shares and the
exercise price of any shares issuable in respect to such options being
characterized "parachute payments." A 20% excise tax is imposed on the optionee
on any amount so characterized and the Company will be denied any tax deduction
for such amount.

WITHHOLDING TAXES. The Company is generally required to withhold applicable
payroll taxes with respect to compensation income recognized by optionees. The
Company is also generally required to make certain information reports to the
Internal Revenue Service with respect to any income of an optionee attributable
to transactions involving the grant or exercise of options and/or the
disposition of shares acquired on exercise of options.

OTHER TERMS AND CONDITIONS
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Options under the Plan shall not be transferable by the optionee during the
optionee's lifetime. In the event of termination of employment or cessation of
directorship as a result of the optionee's death or disability, to the extent
exercisable on the date employment or directorship terminates, the option shall
remain exercisable for up to one (1) year (but not beyond the end of the
original option term) by the disabled optionee or, in the event of death of the
optionee, by the person or persons to whom rights under the option shall have
passed by will or the laws of descent and distribution. In addition, if an
optionee dies during the three month period referred to below, the option shall
expire one year after the date of such death or the date the option expires
whichever is earlier.

If an optionee's employment is terminated, unless termination was for cause, or
if an optionee's directorship is terminated the optionee's option shall expire
three months after such termination, but

the optionee shall have the right, for a three-month period after such
termination, to exercise that portion of the option which was exercisable
immediately prior to such termination. If an optionee's employment is terminated
for cause (which shall include malfeasance or gross misfeasance in the
performance of duties or conviction of a crime involving moral turpitude), the
option shall expire within 30 days of the date of termination. However, in no
event may the option be exercised after the end of the original option term.

In the event of certain changes in the outstanding Common Stock, such as stock
dividends, stock splits, recapitalization, reclassification, reorganization,
merger, stock consolidation or otherwise, appropriate and proportionate
adjustments shall be made in the number, kind and exercise price of shares
covered by any unexercised options or portions thereof. In the event of a
liquidation of the Company or upon a reorganization, merger or consolidation of
the Company with one or more corporations, the result of which the Company is
not the surviving corporation or the Company becomes a subsidiary of another
corporation, a sale of substantially all of the assets of the Company to another
corporation, or upon a sale representing more than 80% of equity securities
voting power of the Company to any person or entity (any one of which shall be
referred to as a "Terminating Event"), the Plan shall terminate and all options
theretofore granted shall completely vest and become immediately exercisable.
All outstanding options not exercised by the time of the Terminating Event shall
at such time terminate. However, any options not exercised at the time of a
Terminating Event shall not terminate if they have been assumed or substituted
by the successor corporation.

Options may be exercised by the payment of the option price in cash or
qualifying Common Stock with an equivalent dollar value of shares of Common
Stock based on the fair market value of the shares of Common Stock on the date
of exercise.

The Board of Directors reserves the right to suspend, amend or terminate the
Plan, and, with the consent of the optionee, make such modifications of the
terms and conditions of his/her option as it deems advisable, except that the
Board of Directors may not, without further approval of a majority of the
shareholders, increase the maximum number of shares covered by the Plan, change
the minimum option price, increase the maximum term of options under the Plan or
permit options to be granted to anyone other than a director, officer or
management level employee.

No option granted pursuant to the Plan shall be exercisable until all necessary
regulatory and shareholder approvals are obtained. No grants under the Plan have
been made; however, it is anticipated that options may be granted to directors
and executive officers of the Company in the near future.

Adoption of the Plan requires the affirmative vote of a majority of the
outstanding shares of Common Stock represented and voting at the Meeting.

MANAGEMENT RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ADOPTION OF THE MARATHON
BANCORP 1998 STOCK OPTION PLAN.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Some of the Company's directors and executive officers and their immediate
families as well as the companies with which they are associated are customers
of, or have had banking transactions with, the Bank in the ordinary course of
the Bank's business, and the Bank expects to have banking transactions with such
persons in the future. In management's opinion, all loans and commitments to
lend included in such transactions were made in compliance with applicable laws
on substantially the same terms, including interest rates and collateral, as
those prevailing for comparable transactions with other persons of similar
creditworthiness and, in the opinion of management, did not involve more than a
normal risk of collectibility or present other unfavorable features.

INDEPENDENT ACCOUNTANTS

The firm of Vavrinek, Trine, Day & Co. LLP served as independent public
accountants for the Company and the Bank through the year 1997 and has been
selected to be the Company's independent public accountants for the year 1998.
All services rendered were approved by the Company's board of directors, which
has determined the firm of Vavrinek, Trine, Day & Co. LLP to be independent. It
is expected that one or more representatives of Vavrinek, Trine, Day & Co. LLP
will be present at the Meeting and will be given the opportunity to make a
statement, if desired, and to respond to appropriate questions.

SHAREHOLDER PROPOSALS

The deadline for shareholders to submit proposals to be considered for inclusion
in the Proxy Statement for the Company's 1999 Annual Meeting of Shareholders is
December 7, 1998.

OTHER MATTERS

Management does not know of any matters to be presented at the Meeting other
than those set forth above. However, if other matters come before the Meeting,
it is the intention of the persons named in the accompanying Proxy as
proxyholders to vote the shares represented by the Proxy in accordance with the
recommendations of management on such matters, and discretionary authority to do
so is included in the Proxy.

MARATHON BANCORP

Dated: March 23, 1998 Robert L. Oltman, Secretary

The Annual Report to Shareholders for the fiscal year ended December 31, 1997 is
being mailed concurrently to the Company's shareholders.

A COPY OF THE COMPANY'S 1997 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WILL BE PROVIDED TO THE COMPANY'S SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE SECRETARY, MARATHON BANCORP, 11150 W. OLYMPIC
BOULEVARD, LOS ANGELES, CALIFORNIA 90064.

PROXY

MARATHON BANKCORP

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Messrs. Craig D. Collette and Nikolas Patsaouras as
proxyholders, with full power of substitution, to represent, vote and act with
respect to all shares of common stock of Marathon Bancorp (the "Bancorp") which
the undersigned would be entitled to vote at the meeting of shareholders to be
held on May 11, 1998 at 4:00 p.m. at the offices of Marathon National Bank
located at 11150 W. Olympic Blvd. Los Angeles, California or any adjournments
thereof, with all the powers the undersigned would possess if personally present
as follows:

1. To elect seven persons to be directors.

Robert J. Abernethy Robert L. Oltman
Craig D. Collette Ann Pappas
Frank W. Jobe, M. D. Nikolas Patsaouras
C. Thomas Mallos

[ ] FOR ALL NOMINEES LISTED ABOVE [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary below)

(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name of the space below.)

- --------------------------------------------------------------------------------

2. To approve the Marathon Bancorp 1998 Stock Option Plan as described more
fully in the accompanying proxy statement.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. Transaction of such other business as may properly come before the
meeting and any adjournment or adjournments thereof.

PLEASE SIGN AND DATE BELOW

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR ELECTION OF
DIRECTORS NAMED ON THE REVERSE SIDE AND "FOR" APPROVAL OF THE 1998 STOCK OPTION
PLAN. The Proxy confers authority to vote and shall be voted in accordance with
such recommendation unless a contrary instruction is indicated, in which case,
the shares represented by the Proxy will be voted in accordance with such
instruction. IF NO INSTRUCTION IS SPECIFIED WITH RESPECT TO THE ELECTION OF
DIRECTORS OR APPROVAL OF THE 1998 STOCK OPTION PLAN, THE SHARES REPRESENTED BY
THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT. IF
ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY CONFERS AUTHORITY TO
AND SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF MANAGEMENT.

(Please date this Proxy and sign your name exactly as it appears on your stock
certificates. Executors, administrators, trustees, etc., should give their full
title. If a corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in partnership name by
an authorized person. All joint owners should sign.)

[ ] I DO [ ] DO NOT EXPECT TO ATTEND THE MEETING.

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(Number of Shares)

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(Please Print Your Name)

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(Date)

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(Signature of Shareholder)

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE BY NOTIFYING THE SECRETARY OF THE BANCORP IN WRITING OF
REVOCATION OF THE PROXY, BY FILING A DULY EXECUTED PROXY BEARING A LATER DATE OR
BY ATTENDING THE MEETING AND VOTING IN PERSON.