-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T6LemYHSyG5z04ne5E76+UY8FlA/SbjzhxTERtAo2r72kTF1f06Oh1HhulVcYLR9 WQ1aWasRez6XSajqxECo7Q== 0000718446-00-000008.txt : 20000511 0000718446-00-000008.hdr.sgml : 20000511 ACCESSION NUMBER: 0000718446-00-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000510 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARATHON BANCORP CENTRAL INDEX KEY: 0000718446 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 953770539 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-12510 FILM NUMBER: 624273 BUSINESS ADDRESS: STREET 1: 11150 W OLYMPIC BL CITY: LOS ANGELES STATE: CA ZIP: 90064 BUSINESS PHONE: 3109969100 MAIL ADDRESS: STREET 1: 11150 W OLYMPIC BLVD CITY: LOS ANGELES STATE: CA ZIP: 90064 10QSB 1 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 MARCH 31, 2000 ------------------------ 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, CA 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 May 1, 2000, there were 3,837,019 shares of no par Common Stock issued and outstanding.
Consolidated Statements of Financial Condition Marathon Bancorp and Subsidiary MARCH 31, December 31, ---------------- -------------- ASSETS 2000 1999 ---------------- -------------- Cash and Due From Banks $ 4,415,000 $ 7,891,000 Federal Funds Sold 6,760,000 1,000,000 ---------------- -------------- TOTAL CASH AND CASH EQUIVALENTS 11,175,000 8,891,000 Interest-Bearing Deposits With Financial Institutions 100,000 100,000 Investment Securities: Securities Available for Sale 6,049,000 8,590,000 Securities Held to Maturity (approximate market value:2000-$12,412,000; 12,816,000 12,878,000 1999 - $12,539,000) ---------------- -------------- TOTAL INVESTMENT SECURITIES 18,865,000 21,468,000 Federal Home Loan and Federal Reserve Bank stock, at cost 485,000 482,000 Loans 54,725,000 50,102,000 Less Allowance for Credit Losses ( 887,000) ( 853,000) ---------------- -------------- NET LOANS 53,838,000 49,249,000 Premises and Equipment 306,000 325,000 Cash Surrender Value of Life Insurance 3,531,000 1,559,000 Accrued Interest and Other Assets 1,090,000 1,045,000 ---------------- -------------- TOTAL ASSETS $ 89,390,000 $ 83,119,000 ================ ============== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-Bearing Demand $ 28,223,000 $ 27,529,000 Interest-Bearing Demand 3,776,000 3,130,000 Money Market and Savings 28,984,000 25,848,000 Time Deposits 18,551,000 15,048,000 TOTAL DEPOSITS 79,534,000 71,555,000 Accrued Interest and Other Liabilities 600,000 553,000 Federal Home Loan Bank Advance - 1,875,000 ---------------- -------------- TOTAL LIABILITIES 80,134,000 73,983,000 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, 3,837,019 and 3,830,019 Shares Issued and Outstanding at March 31, 2000 and December 31, 1999, respectively 13,672,000 13,654,000 Accumulated Deficit ( 4,174,000) ( 4,319,000) Accumulated Other Comprehensive Income - Net Unrealized Gains (Losses) on Available-for-Sale Securities ( 242,000) ( 199,000) ---------------- -------------- TOTAL SHAREHOLDERS' EQUITY 9,256,000 9,136,000 ---------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 89,390,000 $ 83,119,000 ================ ==============
Consolidated Statements of Operations Marathon Bancorp and Subsidiary Three Months Ended March 31, -------------------- 2000 1999 -------------------- ---------------- INTEREST INCOME Interest and Fees on Loans $ 1,143,000 $ 871,000 Interest on Investment Securities - Taxable 284,000 251,000 Other Interest Income 88,000 66,000 -------------------- ---------------- TOTAL INTEREST INCOME 1,515,000 1,188,000 INTEREST EXPENSE Interest on Demand Deposits 8,000 8,000 Interest on Money Market and Savings 242,000 182,000 Interest on Time Deposits 239,000 148,000 Other Interest Expense 1,000 - -------------------- ---------------- TOTAL INTEREST EXPENSE 490,000 338,000 NET INTEREST INCOME 1,025,000 850,000 Provision for Credit Losses 30,000 - -------------------- ---------------- NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 995,000 850,000 NONINTEREST INCOME Service Charges and Fees on Deposits 62,000 76,000 Dividends on Cash Surrender Value of Life Insurance 43,000 21,000 Other Noninterest Income 24,000 21,000 -------------------- ---------------- TOTAL NONINTEREST INCOME 129,000 118,000 NONINTEREST EXPENSE Salaries and Employee Benefits 501,000 420,000 Occupancy Expenses 137,000 132,000 Furniture and Equipment 27,000 29,000 Professional Services 23,000 26,000 Business Promotion and Donations 16,000 21,000 Stationery and Supplies 13,000 14,000 Data Processing Services 131,000 115,000 Messenger and Courier Services 20,000 19,000 Insurance and Assessments 37,000 33,000 Legal Fees and Costs 12,000 45,000 Net Operating Cost of Other Real Estate Owned - ( 1,000) Other Expenses 64,000 58,000 -------------------- ---------------- TOTAL NONINTEREST EXPENSE 981,000 911,000 GAIN (LOSS) BEFORE INCOME TAXES 143,000 57,000 Income Taxes (Benefit) ( 2,000) ( 5,000) -------------------- ---------------- NET INCOME (LOSS) $ 145,000 $ 62,000 ==================== ================ Per Share Data: Net Income (Loss) - Basic $ 0.04 $ 0.02 Net Income (Loss) - Diluted $ 0.04 $ 0.02 Return on Average Assets 0.68% 0.34% Return on Average Equity 6.32% 2.90%
Consolidated Statements of Cash Flows Marathon Bancorp and Subsidiary Three Months Ended March 31, 2000 1999 ----------------- ------------------ Net Income $ 145,000 $ 62,000 Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Depreciation and Amortization 30,000 32,000 Provision for Credit Losses 30,000 - Net Amortization of Premiums and Discounts on Investment Securities 83,000 9,000 Net Change in Deferred Loan Origination Fees 55,000 3,000 Net Increase in Cash Surrender Value of Life Insurance ( 37,000) - Net Change in Accrued Interest, Other Assets and Other Liabilities ( 84,000) ( 6,000) ----------------- ------------------ NET CASH PROVIDED BY OPERATING ACTIVITIES 222,000 100,000 INVESTING ACTIVITIES Net Change in Interest-Bearing Deposits with Financial Institutions - - Purchases of Available-for-Sale Securities ( 3,492,000) ( 2,512,000) Purchases of Held-to-Maturity Securities - ( 902,000) Proceeds from Maturities of Available-for-Sale Securities 6,052,000 3,000,000 Proceeds from Maturities of Held-to-Maturity Securities - 3,489,000 Purchase of Federal Home Loan & Federal Reserve Bank Stock - ( 13,000) Net Change in Loans ( 4,674,000) ( 3,616,000) Purchase of Life Insurance ( 1,935,000) - Purchases of Premises and Equipment ( 11,000) ( 63,000) ----------------- ------------------ NET CASH USED BY INVESTING ACTIVITIES ( 4,060,000) ( 617,000) FINANCING ACTIVITIES Net Change in Demand Deposits, Money Market and Savings 4,476,000 1,273,000 Net Change in Time Deposits 3,503,000 ( 1,800,000) Payback of Federal Home Loan Bank Advance ( 1,875,000) - Proceeds from Exercise of Stock Options 18,000 16,000 ----------------- ------------------ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 6,122,000 ( 511,000) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,284,000 ( 1,028,000) Cash and Cash Equivalents at Beginning of Year 8,891,000 9,249,000 ----------------- ------------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $ 11,175,000 $ 8,221,000 ================= ================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest Paid $ 570,000 $ 355,000 Income Taxes Paid $ 4,000 $ -
Consolidated Statement of Equity Marathon Bancorp and Subsidiary Accumulated Common Shares Other ---------------------- Comprehensive Accumulated Comprehensive Shares Amount Income Deficit Income Total ------ ------ ------ ------- ------ ----- BALANCE, January 1, 2000 3,830,019 $13,654,000 $( 4,319,000) $ ( 199,000) $ 9,136,000 Exercise of Stock Options 7,000 18,000 18,000 COMPREHENSIVE INCOME: Net Income $ 145,000 145,000 145,000 Net Change in Unrealized Gain (Loss) on Available- for-Sale Securities ( 43,000) ( 43,000) ( 43,000) ---------------- TOTAL COMPREHENSIVE INCOME $ 102,000 ================ BALANCE, MARCH 31, 2000 3,837,019 $13,672,000 $( 4,174,000) $ ( 242,000) $ 9,256,000 ========= =========== ============== ================ ==============
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 1999 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 March 31, 2000 and December 31, 1999, results of operations and changes in cash flows for the three-month period ended March 31, 2000 and 1999. The results of operations for the three-month period ended March 31, 2000 are not necessarily indicative of what the results of operations will be for the full year ending December 31, 2000. (2) EARNINGS PER SHARE (EPS) Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Accordingly, the basic weighted average number of shares used to compute the net income per share were 3,833,327 and 3,823,619 respectively for the three-month period ended March 31, 2000 and March 31, 1999. There was no dilution to change the basic average number of shares, therefore the diluted EPS was the same. 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 1999 Annual Report on Form 10-KSB. FINANCIAL HIGHLIGHTS OVERVIEW Marathon Bancorp recorded a first quarter profit increase for the fourth consecutive year. Net income of $145,000 for the first quarter of 2000 compares to $62,000 for first quarter of 1999, $11,000 for the first quarter of 1998 and a loss in the first quarter of 1997. Per share earnings were $0.04 for March 31, 2000 compared to $0.02 for March 31, 1999. At March 31, 2000 total assets were $89,390,000 an increase over year-end of 7.5%. Total loans were $54,725,000, an increase of 9.2% and deposits increased 11.2% to $79,534,000. RESULTS OF OPERATIONS Net Interest Income Net interest income before provision for credit losses increased 21% or $175,000 when comparing the first quarter of 2000 with the first quarter of 1999. Both the total interest income earned and interest expense were up from the levels of 1999. Interest income rose 28% or $327,000 over the same period last year. All the categories of interest income increased. Interest and fees on loans increased from the increase in volume and the rise in prime rate over the last year of 100 basis points. Interest on investment securities also increased rising by 13% with the portfolio yield increasing 5.57% to 5.87%. Other interest income, made up of mostly of interest on fed funds sold, increased 33% do to the rise in the fed funds target rate set by the Federal Reserve Board. Interest expense rose $152,000 or 45% due to a number of factors. The rise in interest rates, increase in the volume of deposits and the mix of deposits all attributed to the increase. The time certificates of deposit and our high yield investors money market account saw the most growth over the last year and represents our highest liability costs. Noninterest Income Noninterest income increased during the first quarter of 2000 by 9% when compared to the first quarter of 1999. Service charges on deposit accounts decreased due to higher earnings credits that decrease the net fees received on business account relationships. The dividends earned on the cash value of life insurance increased with the increase in this investment. Other noninterest income earned from fees increased by 14%. Noninterest Expense Noninterest expense increased with the Company being in a growth mode as compared to the reorganization cleanup mode of the last two years. Increases in loan staff, the staffing of our new loan production office opened in October 1999 and other benefits increased the human resources costs by $81,000 or 19% compared to last year's first quarter. Occupancy costs increased with the costs incurred by the loan production office. Equipment, professional services, business promotion and supply and stationary costs decreased. Data processing costs increased $16,000. Legal fees and costs represented the largest change decreasing $33,000 or 73%. Provision for Credit Losses: Loans classified by the Bank as substandard or doubtful decreased from $2,318,000 at December 31, 1999 to $1,783,000 at March 31, 2000. Nonperforming loans, which consist of loans past due over 90 days plus loans on nonaccural, totaled $117,000 at March 31, 2000 compared to $3,000 at December 31, 1999. The Company continued to have no other real estate owned. Based upon management's assessment and the increase in the loan portfolio the Bank felt that an increase in the reserve for credit losses was necessary and therefore made a provision to the credit loss reserve of $30,000 for the quarter. During the first quarter, the Bank recorded charge-offs of only $7,000 while collecting recoveries on loans charged off of $11,000. The net change to the reserve for credit losses was $34,000. Based upon these factors and management's assessment of the overall quality of the loan portfolio, its internal migration analysis and economic conditions they felt the current level of the reserve for credit losses was adequate at March 31, 2000. ASSETS AND LIABILITIES The Company continues to focus on improving the balance sheet and the return on assets. The asset growth in the first quarter of 2000 was 8% and was one of the best first quarter performances in the Company's history. The loan portfolio increased with additions to the commercial loan portfolio and the construction loans. Most of these loans are floating rate loans tied to Wall Street Journal prime rate. The short-term fed funds increased to $6,760,000 from the $1,000,000 reported at year-end and the cash and due from banks was reduced. Deposits for the quarter increased significantly growing $7,979,000 or 11% from the totals at year-end 1999. Noninterest-bearing deposits increased 3% while the interest-bearing deposits increased by 17%. The Company has normally seen low deposit growth during the first quarter when its customers pay year-end expenses and tax bills. LIQUIDITY AND CAPITAL Asset/Liability Management The Company's Asset/Liability Committee is responsible for managing the risks associated with changing interest rates and their impact on earnings, as well as, the liquidity needs of the Company. Management monitors its liquidity position continuously in relation to trends in loans and deposits, and relates the data to short and long term expectations. In order to serve customers effectively, funds must be available to meet their credit needs as well as their withdrawals of deposited funds. Assets that are normally considered liquid are federal funds sold, available for sale investment securities, cash and due from banks, and securities purchased under agreements to resell. The ratio of liquid assets to deposits was 24% as of March 31, 2000 and the loan to deposit ratio was 69%. Interest rate risk management focuses on the maturity and repricing of interest earning assets in relationship to the interest bearing liabilities that fund them. 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. The Company measures interest rate sensitivity by distributing the maturities and repricing periods 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. 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. The Company is asset sensitive and has been able to decrease its asset sensitivity during the last twelve-month period by an increase in the investment portfolio and a lengthening of maturities. The Company's cumulative gap as a percent of total assets at March 31, 2000 was 26.8% Capital 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. The adequately capitalized risk-based capital ratio required by the federal regulators is 8.0 percent and the well-capitalized ratio is 10.0 percent. The Tier I capital to risk-weighted assets required by the federal regulators is 4.0 percent and 6.0 percent to be well-capitalized. At March 31, 2000 the Company and the Bank had a risk based capital ratio of 14.8 percent, and a Tier 1 capital leverage ratio of 11.1 percent. 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 On March 23, 2000, proxy materials for 2000 Annual Meeting of Shareholders were mailed to all shareholders of record as of March 6, 2000. The meeting took place on April 17, 2000. Shareholders were asked to vote on the matters shown below. Of the total 3,837,019 shares outstanding and entitled to vote 3,179,237 shares were represented either in person or by properly executed proxies. The results of the voting on the matters are shown below: Matter 1. Election of Directors. To elect seven (7) persons to the board of directors to serve until the 2001annual meeting of Shareholders and until their successors are elected and have been qualified. For Withhold Authority for Robert J. Abernethy 2,972,688 206,549 Craig C. Collette 3,146,885 32,352 Frank Jobe, M.D. 2,904,257 274,980 C. Thomas Mallos 2,972,080 207,157 Robert Oltman 2,990,580 188,657 Ann Pappas 2,972,080 207,157 Nick Patsaouras 2,972,080 207,157 Matter 2. Other Business. There was 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: May 10, 2000 Craig D. Collette ------------------- Craig D. Collette President and Chief Executive Officer Howard J. Stanke ------------------ Howard J. Stanke Executive Vice President and Chief Financial Officer EX-27 2
9 1000 U.S.DOLLARS 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1 4,415 51,311 6,670 0 6,049 12,816 12,412 54,725 887 89,390 79,593 0 600 0 0 0 13,672 (4,174) 83,390 1,143 284 88 1,515 489 490 1,025 7 0 981 143 143 0 0 145 .04 .04 5.29 117 0 0 0 853 7 11 887 887 0 887
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