Marathon Bancorp, Inc. (MBBC)

Marathon Bancorp, Inc. operates as the mid-tier holding company for Marathon Bank, a Wisconsin-chartered savings bank headquartered in Wausau, Wisconsin, founded in 1902 ¹. The company conducts business from its main office and four branch offices located in Marathon, Ozaukee, and Waukesha Counties, Wisconsin ². The primary market area for deposits includes the communities where banking offices are maintained, while the primary lending market area is broader, including select businesses and customers in Southeastern Wisconsin ³. The company faces competition from large money center and regional banks, community banks, credit unions, savings institutions, mortgage banking firms, consumer finance companies, money market funds, brokerage firms, mutual funds, insurance companies, and fintech and internet banking companies ⁴. As of June 30, 2025, the company's market share of deposits represented 2.99% of FDIC-insured deposits in Marathon County, ranking ninth out of 17 institutions; 0.53% in Ozaukee County, ranking 13th out of 15 institutions; and 0.06% in Waukesha County, ranking 34th out of 34 institutions ⁵.

The company's core business model consists of taking deposits from the general public and investing those deposits, together with funds generated from operations, in commercial and multifamily real estate loans, one- to four-family residential real estate loans, and to a lesser extent, commercial and industrial loans, construction loans, and consumer loans ⁶. The company also invests in debt securities, which have historically consisted of mortgage-backed securities issued by U.S. government sponsored enterprises, municipal securities, corporate debt securities, and U.S. government and agency securities ⁷. The company offers a variety of deposit accounts, including checking accounts, savings accounts, money market accounts, and certificate of deposit accounts ⁸. The company borrows funds, primarily from the Federal Home Loan Bank of Chicago, to fund operations as necessary ⁹. At June 30, 2026, the company had total consolidated assets of $261.0 million, total deposits of $189.8 million, and total stockholders' equity of $48.0 million ¹⁰.

The company's lending activities are focused on commercial and multifamily real estate loans, which are intended to increase the overall yield earned on loans and manage interest rate risk ¹¹. The company generally sells fixed-rate conforming one- to four-family residential real estate loans, generally on a servicing-retained basis, while holding adjustable-rate one- to four-family residential real estate loans in its portfolio to manage duration and repricing ¹². At June 30, 2026, the loan portfolio composition included one- to four-family residential real estate loans of $63,540 thousand, representing 29.0% of total loans; multi-family loans of $53,939 thousand, representing 24.6%; commercial real estate loans of $95,912 thousand, representing 43.7%; construction loans of $137 thousand, representing 0.1%; commercial and industrial loans of $2,749 thousand, representing 1.3%; and consumer loans of $2,979 thousand, representing 1.3% ¹³. The total loan portfolio was $219,256 thousand, with deferred loan fees of $121 thousand and an allowance for losses of $1,746 thousand, resulting in total loans, net of $217,389 thousand ¹⁴.

Commercial real estate lending is a key strategic focus, with $95.9 million in commercial real estate loans at June 30, 2026, representing 43.7% of the total loan portfolio ¹⁵. These loans are generally secured by office and industrial buildings, warehouses, small retail facilities, and other special purpose commercial properties, primarily in Southeastern Wisconsin ¹⁶. At June 30, 2026, $85.2 million of the commercial real estate portfolio was secured by non-owner-occupied commercial real estate ¹⁷. The average loan size of commercial real estate loans was $999,000, and the largest loan was a $4.9 million loan secured by a restaurant, which was performing in accordance with its repayment terms ¹⁸. Multifamily real estate loans totaled $53.9 million, or 24.6% of the total loan portfolio, partly due to purchases of participation interests totaling $6.0 million ¹⁹. The average multifamily loan size was $1.1 million, and the largest was an approximately $4.5 million loan secured by multiple non-owner-occupied rental properties, performing in accordance with its repayment terms ²⁰.

One- to four-family residential real estate lending totaled $63.5 million, representing 29.0% of the total loan portfolio, with no residential mortgages held for sale ²¹. At June 30, 2026, 27.9% of these loans were fixed-rate, and 72.1% were adjustable-rate ²². The company had $25.2 million in jumbo loans, representing 39.6% of one- to four-family residential real estate loans, with an average loan size of $1.7 million ²³. Commercial and industrial loans totaled $2.7 million, representing 1.3% of the portfolio, with an average loan size of $60,000 and the largest loan being a $378,000 loan to a trucking company ²⁴. Construction loans totaled $137,000, or 0.1% of the portfolio, with $13,000 in undrawn amounts ²⁵. Consumer loans totaled $3.0 million, or 1.4% of the portfolio, including $2.7 million in home equity lines of credit and $10,700 in unsecured consumer loans ²⁶.

In 2024, the company opened a new branch in Brookfield, Wisconsin, and in 2018, it opened a branch in Mequon, Wisconsin ²⁷. The company anticipates opening a new branch in New Holstein, Wisconsin in the fourth quarter of 2026 ²⁸. On April 21, 2025, the company completed its conversion from the mutual holding company form of organization to the stock holding company form of organization, and the Mutual Holding Company ceased to exist ²⁹. In connection with the Conversion, the company sold 1,693,411 shares of its common stock, including 135,472 shares issued to the Employee Stock Ownership Plan, at a price of $10.00 per share to the public ³⁰. Each outstanding share of Company common stock owned by public stockholders was converted into new shares based on an exchange ratio of 1.3728-to-1 ³¹. The company generated gross proceeds of $16.9 million from the Conversion, with offering expenses of $1.7 million netted against gross proceeds ³². The company provided a term loan to the ESOP to finance the purchase of 135,472 shares, combining an existing ESOP loan of $777,212 with a new loan, resulting in a new term loan of $2.1 million to be repaid in annual installments over 25 years ³³.

The company's financial performance for the fiscal year ended June 30, 2026 reflects a focus on growing the loan portfolio and increasing yield through commercial real estate and multifamily lending. The company originated $5.0 million of one- to four-family residential real estate loans and sold $5.1 million during the year ended June 30, 2026, compared to originations of $5.9 million and sales of $6.1 million in the prior year ³⁴. The company's total assets grew to $261.0 million at June 30, 2026, from $202.571 million in total loans at June 30, 2025 ³⁵. The allowance for losses increased to $1,746 thousand from $1,708 thousand ³⁶. The company's net income and earnings per share figures are detailed in the financial statements, reflecting the overall trajectory of growth in the loan portfolio and strategic expansion into Southeastern Wisconsin ³⁷.

The company expects to continue its focus on originating commercial real estate and multifamily real estate loans to further increase the overall yield earned on its loans and assist in managing interest rate risk ³⁸. The company anticipates opening a new branch in New Holstein, Wisconsin in the fourth quarter of 2026 ³⁹. The company expects further growth in the Southeastern Wisconsin market area, including the Milwaukee metropolitan area ⁴⁰. The company intends to continue to be a significant one- to four-family residential mortgage lender in its market areas, subject to market conditions and the interest rate environment ⁴¹.

The company's growth strategy includes expanding its commercial real estate lending infrastructure, with a particular focus on the Southeastern Wisconsin market, including the Milwaukee metropolitan area, to grow commercial real estate and multifamily loan portfolios ⁴². The company has enhanced its suite of deposit products, including remote deposit capture, commercial cash management, and mobile deposits, to accommodate business customers and grow core deposits ⁴³. The company also expects to continue purchasing loan participations secured by properties primarily in Wisconsin, with outstanding balances of $7.7 million at June 30, 2026, representing 3.5% of the loan portfolio ⁴⁴.

The company's margin and cost outlook is influenced by its strategy to increase the overall yield earned on loans through commercial real estate and multifamily lending ⁴⁵. The company generally sells conforming fixed-rate one- to four-family residential real estate loans to government-sponsored enterprises and through the Federal Home Loan Bank's Mortgage Partnership Finance Program, which may impact net interest margin ⁴⁶. The company's cost structure includes offering expenses of $1.7 million related to the Conversion, which were netted against gross proceeds ⁴⁷.

The company's operational outlook includes the anticipated opening of a new branch in New Holstein, Wisconsin in the fourth quarter of 2026 ⁴⁸. The company has invested in technology and compliance operations, including upgrades to credit, underwriting, information technology, and compliance operations since 2014 ⁴⁹. The company uses the premises, equipment, and furniture of Marathon Bank, and employs only persons who are officers of Marathon Bank to serve as officers of Marathon Bancorp ⁵⁰.

The company's capital allocation strategy includes the repayment of the ESOP term loan of $2.1 million in annual installments over 25 years ⁵¹. The company generated gross proceeds of $16.9 million from the Conversion, with offering expenses of $1.7 million ⁵². The company's cash flow depends on earnings from the investment of net proceeds retained and any dividends received from Marathon Bank ⁵³.

The company faces headwinds including inflation, tariffs, and changes in the interest rate environment that could reduce margins and yields, mortgage banking revenues, the fair value of financial instruments, or the level of loan originations, or increase defaults, losses, and prepayments on loans ⁵⁴. General economic conditions, either nationally or in market areas, that are worse than expected could adversely affect the business ⁵⁵. Events involving the failure of financial institutions may adversely affect the business and the market price of common stock ⁵⁶.

The company's growth is subject to competition among depository and other financial institutions, and adverse changes in the securities or secondary mortgage markets, including the ability to sell loans in the secondary market ⁵⁷. Changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, could impact operations ⁵⁸. The company's ability to enter new markets successfully and capitalize on growth opportunities is a key factor, as is the ability to successfully integrate any assets, liabilities, customers, systems, and management personnel acquired ⁵⁹.

Management's message emphasizes the company's transformation from a traditional thrift institution to a modernized community bank with a strengthened commercial real estate lending platform ⁶⁶. The strategic priorities include continuing to grow commercial real estate and multifamily loan portfolios to increase yield and manage interest rate risk, expanding into Southeastern Wisconsin, and enhancing deposit products to grow core deposits ⁶⁷. Management also highlights the successful completion of the Conversion to a stock holding company, which generated gross proceeds of $16.9 million and positioned the company for future growth ⁶⁸. The company remains committed to being a significant one- to four-family residential mortgage lender in its market areas, subject to market conditions and the interest rate environment ⁶⁹.

For the fiscal year ended June 30, 2026, the company reported total interest income of $13.5 million, compared to $12.4 million in the prior year ⁷⁰. Net interest income was $9.8 million, compared to $9.1 million in the prior year ⁷¹. The company reported net income of $1.2 million for the year ended June 30, 2026, compared to $1.1 million in the prior year ⁷². Diluted earnings per share were $0.40 for the year ended June 30, 2026, compared to $0.37 in the prior year ⁷³. The company's return on average assets was 0.47% for the year ended June 30, 2026, compared to 0.46% in the prior year ⁷⁴. Return on average equity was 2.55% for the year ended June 30, 2026, compared to 2.43% in the prior year ⁷⁵. The company's net interest margin was 4.02% for the year ended June 30, 2026, compared to 3.98% in the prior year ⁷⁶. The efficiency ratio was 78.5% for the year ended June 30, 2026, compared to 80.2% in the prior year ⁷⁷. The company's allowance for credit losses on loans was $1,746 thousand at June 30, 2026, compared to $1,708 thousand at June 30, 2025 ⁷⁸. Non-performing assets totaled $66 thousand at June 30, 2026, compared to $67 thousand at June 30, 2025 ⁷⁹. The company's total stockholders' equity was $48.0 million at June 30, 2026, compared to $46.5 million at June 30, 2025 ⁸⁰.

The company's loan portfolio is concentrated in commercial real estate and multifamily loans, which represented 43.7% and 24.6% of total loans at June 30, 2026, respectively ⁶⁰. These loans generally have larger balances and involve greater risk than residential real estate loans, with repayment dependent on the successful operation and management of the properties ⁶¹. Adverse conditions in the real estate market or economy could impair borrowers' business operations, leading to increased defaults and losses ⁶². The company also faces interest rate risk, as most adjustable-rate loans do not adjust for up to five years after origination, limiting their effectiveness in compensating for rapid interest rate increases ⁶³. Additionally, the company's market share of deposits is relatively small in some counties, such as 0.06% in Waukesha County, ranking 34th out of 34 institutions, which may limit its competitive position ⁶⁴. The company's ability to access cost-effective funding is a risk, as it relies on deposits and borrowings from the Federal Home Loan Bank of Chicago ⁶⁵.