Marathon Bancorp Inc(MBBC) - 2024 Q4 - Annual Report

Financial Performance - Net interest income decreased to $5.840 million for the year ended June 30, 2024, down from $6.700 million in 2023, reflecting a decrease of 12.8%[275] - Non-interest income fell to $726,000 in 2024, down from $1.301 million in 2023, a decrease of 44.3%[275] - The efficiency ratio increased to 106.64% in 2024, compared to 73.54% in 2023, indicating a decline in operational efficiency[275] - The return on average assets decreased to (0.08)% in 2024, down from 0.71% in 2023, indicating a decline in profitability[275] - Net loss for the year ended June 30, 2024, was $187,000, a decrease of $1.9 million, or 111.2%, from net income of $1.7 million for the year ended June 30, 2023[290] Asset and Liability Changes - Total assets decreased from $238,779,000 in 2023 to $219,234,000 in 2024, a decline of approximately 8.5%[271] - Loans receivable, net decreased from $197,714,000 in 2023 to $183,448,000 in 2024, representing a reduction of about 7.2%[271] - Deposits decreased from $197,254,000 in 2023 to $172,981,000 in 2024, a decrease of approximately 12.3%[271] - Cash, cash equivalents, and interest-bearing deposits in other financial institutions decreased from $15,537,000 in 2023 to $10,672,000 in 2024, a decline of about 31.5%[271] - Total assets decreased by $19.6 million, or 8.2%, to $219.2 million at June 30, 2024, from $238.8 million at June 30, 2023[275] - Total deposits decreased by $24.3 million, or 12.3%, to $173.0 million at June 30, 2024, compared to $197.3 million at June 30, 2023[280] - Gross loans decreased by $14.6 million, or 7.3%, to $185.3 million at June 30, 2024, from $199.9 million at June 30, 2023[278] Funding and Borrowings - Federal Home Loan Bank (FHLB) advances increased from $8,000,000 in 2023 to $13,000,000 in 2024, an increase of 62.5%[271] - FHLB advances increased by $5.0 million to $13.0 million at June 30, 2024, compared to $8.0 million in 2023, to support funding needs[281] - Interest paid on FHLB borrowings increased by $545,000 to $648,000 for the year ended June 30, 2024, due to a higher average balance and rate on borrowings[296] - As of June 30, 2024, the company had a $79.5 million line of credit with the Federal Home Loan Bank of Chicago, with $13.0 million in borrowings outstanding[309] Income and Expenses - Interest income increased by $453,000, or 5.0%, to $9.4 million for the year ended June 30, 2024, compared to $9.0 million for the year ended June 30, 2023[291] - Loan interest income rose by $455,000, or 5.6%, to $8.6 million for the year ended June 30, 2024, with an average yield increase of 28 basis points to 4.46%[292] - Interest expense increased by $1.3 million, or 57.6%, to $3.6 million for the year ended June 30, 2024, driven by a $766,000 increase in interest on deposits[294] - Total non-interest expenses increased to $7.0 million for the year ended June 30, 2024, compared to $5.9 million for the year ended June 30, 2023, largely due to a $1.0 million increase in expenses related to foreclosed assets[307] - Non-interest income decreased by $576,000 to $726,000 for the year ended June 30, 2024, primarily due to the absence of gains from life insurance and foreclosed assets[303] Credit Losses and Allowances - The allowance for credit losses on loans is based on management's estimates of expected credit losses over the contractual term of loans[255] - The evaluation of credit losses includes qualitative assessments of economic conditions expected over a 24-month period[256] - The allowance for credit losses was $1.8 million, or 0.97%, of loans outstanding at June 30, 2024, down from $2.2 million, or 1.08%, at June 30, 2023[300] Tax and Cash Flow - Income tax benefit for the year ended June 30, 2024, was $59,000, a decrease of $504,000 compared to an expense of $445,000 for the year ended June 30, 2023, primarily due to a decrease in income before taxes of $2.4 million[308] - Net cash provided by operating activities was $417,000 for the year ended June 30, 2024, down from $2.0 million for the year ended June 30, 2023[311] - Net cash provided by investing activities was $17.7 million for the year ended June 30, 2024, compared to $14.4 million used in investing activities for the year ended June 30, 2023[311] - Net cash used in financing activities was $19.4 million for the year ended June 30, 2024, compared to $15.8 million provided by financing activities for the year ended June 30, 2023[311] Capital and Commitments - The company was classified as "well capitalized" for regulatory capital purposes as of June 30, 2024[313] - Outstanding commitments to originate loans were $1.3 million, and commitments to sell loans were $418,000 as of June 30, 2024[314] - Time deposits scheduled to mature in one year or less totaled $44.8 million as of June 30, 2024, with expectations of substantial renewal[314] Accounting and Valuation - The company did not record a cumulative-effect adjustment related to its available-for-sale securities upon adoption of CECL on July 1, 2023[266] - The fair value of certain assets is determined in accordance with FASB Accounting Standards Codification Topic 820, which prioritizes valuation inputs into three levels[270] - The company eliminated its state net deferred tax asset balances as of July 1, 2023, resulting in deferred tax expense of approximately $112,000 for the year ended June 30, 2024[308] Economic Impact - The primary impact of inflation on operations is reflected in increased operating costs, with interest rates having a more significant impact on performance than inflation[317]