UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934
                               (FEE  REQUIRED)

           FOR  THE  FISCAL  YEAR  ENDED               DECEMBER  31,  1998
                                                       -------------------

                                   OR

     [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                                (NO FEE REQUIRED)

                     COMMISSION FILE NUMBER          0-12510
                                                     -------

                                MARATHON BANCORP
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                                    CALIFORNIA                    95-3770539
----------------------------------------------                    ----------
(STATE  OR  OTHER  JURISDICTION OF INCORPORATION OR ORIGINATION)        (I.R.S.
                                                   EMPLOYER IDENTIFICATION  NO.)

 11150  WEST  OLYMPIC  BOULEVARD,  LOS  ANGELES,  CALIFORNIA              90064
---------------------------------------------------------------------     ------
  (ADDRESS  OF  PRINCIPAL  EXECUTIVE  OFFICES)                       (ZIP  CODE)

                   ISSUER'S TELEPHONE NUMBER:  (310) 996-9100
                                               --------------

 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT:      NONE
                                                                        -------

      SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:

                           COMMON STOCK, NO PAR VALUE
                           --------------------------
                                (TITLE OF CLASS)
     CHECK  WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION  13  OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 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 
                                                                          ---
     CHECK  IF  THERE  IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM
405 OF REGULATION S-B IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST  OF  REGISTRANT'S  KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED  BY  REFERENCE  IN PART III OF THIS FORM 10-KSB OR ANY AMENDMENT TO
THIS  FORM  10-KSB.  [  ]

     STATE  ISSUER'S  REVENUES  FOR  ITS  MOST  RECENT  FISCAL  YEAR $5,463,000.

     STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
COMPUTED  BY  REFERENCE TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE
BID  AND  ASKED  PRICES  OF  SUCH  STOCK,  AS  OF  MARCH  1,  1999.  THE  AMOUNT
IS$8,917,066.  SOLELY  FOR  THE  PURPOSE  OF THIS CALCULATION, ALL DIRECTORS AND
OFFICERS  ARE  REGARDED  AS  AFFILIATES.

  AS OF MARCH 1, 1999, THERE WERE 3,826,819 SHARES OF NO PAR COMMON STOCK ISSUED
AND  OUTSTANDING.

<PAGE>
                                     PART I
                                     ------
ITEM  1.  BUSINESS
------------------

GENERAL
-------

     Marathon  Bancorp  (the  Company)  is a California corporation organized on
October 12, 1982, and, as a bank holding company, is subject to the Bank Holding
Company  Act  of 1956, as amended (the BHC Act).  The Company commenced business
on  August  29, 1983 when the Company acquired all of the issued and outstanding
shares of Marathon National Bank (the Bank), which is the sole active subsidiary
of  the  Company  and  its  principal asset.  The Company has not engaged in any
other  activities  to  the  date  of  this filing.  All references herein to the
Company  include  the  Bank,  unless  the  context  requires  otherwise.

THE  BANK
---------

     The  Bank  was  organized  on  November  8,  1982  as  a  national  banking
association.  The  application  to  organize the Bank was accepted for filing by
the  Office  of  the  Comptroller of the Currency (the Comptroller) on March 11,
1982,  and preliminary approval was granted on September 8, 1982.  On August 29,
1983,  the  Bank  received  from  the  Comptroller a Certificate of Authority to
Commence  the  Business of Banking.  The Bank is a member of the Federal Reserve
System,  and its deposits are insured under the Federal Deposit Insurance Act to
the  extent  of  applicable  limits.
     The  Bank  is  located  at  11150  West  Olympic  Boulevard,  Los  Angeles,
California.  The  Bank's  primary  marketing  area  rests principally within the
counties  of Los Angeles (including the San Fernando Valley and South Bay areas)
and  Orange.   The  Bank markets its services mainly to commercial and wholesale
businesses,  professionals  and  discerning individuals living or working in the
west  Los  Angeles  area.

BANK  SERVICES
--------------

     The Bank offers a wide range of commercial banking services to individuals,
businesses  and professional firms located in its primary marketing area.  These
services  include personal and business checking, interest-bearing money market,
savings  accounts  (including  interest-bearing  negotiable  order of withdrawal
accounts)  and  time  certificates  of  deposit.  The  Bank  also  offers  cash
management  services,  ACH origination, night depository  bank by mail services,
as  well  as  traveler's  checks (issued by an independent entity) and cashier's
checks.  The  Bank  acts  as  an  authorized depository for deposits of the U.S.
Bankruptcy Court for the Southern, Central and Northern districts of California.
The  Bank  also  acts  as a merchant depository for cardholder drafts under both
VISA  and  MasterCard.  In  addition,  the  Bank  provides  note  and collection
services  and  direct  deposit  of  social security and other government checks.
     The  Bank  engages  in  a  full complement of lending activities, including
revolving  lines  of  credit, working capital and accounts receivable financing,
short  term  real  estate  construction  financing,  mortgage loans and consumer
installment  loans,  with  particular  emphasis  on  short  and  medium  term
obligations.  Additionally,  the  Bank  has  become  an  active  Small  business
Administration  (SBA)  lender.  The  Bank's  commercial  lending  activities are
directed principally toward small to medium sized businesses, wholesalers, light
manufacturing  concerns  and  professional  firms.  The  Bank's consumer lending
activities  include  loans  for  automobiles,  recreational  vehicles,  home
improvements  and other personal needs.  The Bank also issues VISA credit cards.

COMPETITION
-----------

     The  banking  business  in  California  generally, and in the Bank's market
areas  specifically, is highly competitive with respect to both making loans and
attracting  deposits.  The  Bank  competes  for  loans  and  deposits with other
commercial  banks,  savings  and  loan  associations, industrial loan companies,
finance  companies,  money  market  funds,  credit  unions  and  other financial
institutions,  including  a number of institutions that are much larger than the
Bank.  There  has  been increased competition for loan and deposit business over
the  past  several  years  as  a  result  of  changes  in the financial services
industry.  Recent  years  have  seen  an  unprecedented  consolidation  in  the
financial  institutions  industry  as  large  numbers  of  banks have merged and
combined,  resulting  in  greater concentration of assets and lending ability, a
trend  which  is  expected  to  continue.

<PAGE>
In addition, the enactment of interstate banking legislation in California makes
it  easier for bank holding companies with headquarters outside of California to
enter  the California market, presenting an additional source of competition for
the  Bank.  Many  of  the  major commercial banks operating in the Bank's market
areas  offer  certain  services  that  the  Bank  does  not  offer directly.  In
addition,  banks  with greater capitalization have larger lending limits and are
thereby able to serve larger borrowing customers.  The Company competes for loan
and  deposit  business  by  providing  innovative  and responsive service to its
customers.

YIELDS  EARNED  AND  RATES  PAID
--------------------------------

     Banking  is  a business that depends to a large part on rate differentials.
The  difference  between  the  interest rate received by the Bank on its earning
assets  and  the  interest  rate  it  pays  on its deposits and other borrowings
comprises the most significant component of the Bank's earnings.  These interest
rates are sensitive to many factors beyond the Bank's control.  Accordingly, the
earnings  and  growth  of  the  Company  are  affected  by  economic conditions,
including  inflation,  recession  and  unemployment.

RECENT  LEGISLATION  AND  OTHER  CHANGES
----------------------------------------

     From  time  to  time,  legislation  is  enacted  which  has  the  effect of
increasing  the  cost  of  doing  business,  limiting  or  expanding permissible
activities  or  affecting  the  competitive  balance  between  banks  and  other
financial  institutions.  Proposals to change the laws and regulations governing
the  operations  and  taxation  of  banks  and  other financial institutions are
frequently  made  in  Congress, in the California legislature and before various
bank  regulatory  agencies.  The  likelihood of any major changes and the impact
such  changes  might  have  on  the  Bancorp and Bank are impossible to predict.
     It  is  likely  that  other  bills  affecting  the business of banks may be
introduced  in  the  future  by  the  United  States  Congress  or  California
legislature.

ACCOUNTING  CHANGES
-------------------

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
133,  "Accounting  for  Derivative  Instruments  and  Hedging Activities".  This
Statement  establishes  accounting  and  reporting  standards  for  derivative
instruments and for hedging activities.  This new standard is effective for 2000
and  is  not  expected  to  have  a  material  impact  on  the Bank' s financial
statements.

SUPERVISION  AND  REGULATION
----------------------------

     The  Company  and  the  Bank  are  subject  to  various  regulatory capital
requirements  administered  by  the  federal  banking agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possible
additional discretionary actions by regulators that, if undertaken, could have a
direct  material  effect  on  the Company's financial statements.  Under capital
adequacy  guidelines  and the regulatory framework for prompt corrective action,
the  Company  and  Bank  must  meet  specific  capital  guidelines  that involve
quantitative  measures of the assets, liabilities, and certain off-balance-sheet
items  as calculated under regulatory accounting practices.  The capital amounts
and  classification  are also subject to qualitative judgments by the regulators
about  components,  risk  weightings  and  other  factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require the Company and Bank to maintain minimum amounts and ratios of total and
Tier  1  capital  (as  defined  in  the regulations) to risk-weighted assets (as
defined),  and  of  Tier  1 capital (as defined) to average assets (as defined).
Management  believes,  as  of December 31, 1998, that the Bank meets all capital
adequacy  requirements  to  which it is subject. See Part II, Item 7, Note K for
the  Bank's  capital  ratio  requirements  and  current  ratios.

<PAGE>
     MARATHON BANCORP: Marathon Bancorp is a registered bank holding company and
is  subject  to  regulation  under the BHC Act.  The Company files quarterly and
annual  reports  with  the  FRB,  as well as other information which the FRB may
require  under the BHC Act.  The FRB is empowered to conduct examinations of the
Company  and  its  subsidiaries.

     The  FRB  has the power to require the Company to terminate activities, and
to  terminate  control  of  or  liquidate  or  divest  certain  subsidiaries  or
affiliates  when  it  believes  that  the  activity  or  subsidiary or affiliate
constitutes  a  risk  to  the  financial  safety,  soundness or stability of the
Company's  banking  subsidiaries.  The  FRB  also  has the authority to regulate
provisions  of  certain  holding  company  debt, such as the authority to impose
interest  rate ceilings and reserve requirements on such debt.  The Company may,
under  certain circumstances, be required to file written notice with and obtain
approval  from  the  FRB prior to purchasing or redeeming its equity securities.

     Under  the  BHC  Act  and  regulations  adopted  by  the  FRB, bank holding
companies  and  their  non-banking  subsidiaries  are  prohibited from requiring
certain tie-in arrangements in connection with any extension of credit, lease or
sale of property or furnishing of services.  Further, the Company is required by
the  FRB  to  maintain  certain  levels  of  capital.

     The  Company must obtain approval from the FRB prior to acquiring more than
5%  of the outstanding shares of any class of voting securities or substantially
all  of  the  assets of any bank or bank holding company.  The Company must also
obtain  FRB  approval  prior  to any merger or consolidation of the Company with
another  bank  holding  Company.

     The BHC Act prohibits the Company, except in particular circumstances, from
acquiring  direct  or indirect control of more than 5% of the outstanding voting
shares of any company that is not a bank or a bank holding company.  The BHC Act
also  generally  prohibits  the  Company  from  engaging,  either  directly  or
indirectly,  in  activities other than those of banking, managing or controlling
banks  or  furnishing  related  services.  The  Company may, however, subject to
obtaining prior approval from the FRB, engage in activities or acquire interests
in  companies which engage in activities which are deemed by the Federal Reserve
Board  to  be  so  closely  related  to  banking.

     In  addition  to  regulation  and  supervision  by  the FRB, the Company is
subject  to the periodic reporting requirements with the Securities and Exchange
Commission  under  the Exchange Act, including but not limited to filing annual,
quarterly and other current reports with the Commission, and related substantive
and  procedural  requirements.

     THE  BANK:  The  Bank,  as  a national banking association chartered by the
Comptroller,  is  subject  to primary supervision, examination and regulation by
the  Comptroller.  It  is  also  a  member of the Federal Reserve System and, as
such,  is  subject  to  applicable  provisions  of  the  Federal Reserve Act and
regulation  by  the  FRB.  The  Bank is also subject to applicable provisions of
California  law,  insofar  as  they do not conflict with or are not preempted by
Federal  banking  law.

     Deposits  in  the  Bank  are  insured  by the FDIC, which currently insures
deposits  of  each member bank to a maximum of $100,000 per depositor.  For this
protection,  the Bank and all other insured banks pays statutory assessments and
is  subject  to  the  rules  and  regulations  of  the  FDIC.

     Various  requirements  and  restrictions affect the operations of the Bank,
including  reserves against deposits, interest rates payable on deposits, loans,
investments,  mergers  and  acquisitions, borrowings, dividends and locations of
branch offices.  In addition, the Bank is required to maintain certain levels of
capital.  Management  seeks to maintain adequate capital to support its size and
credit risks, and to ensure that the Company and the Bank are within established
regulatory  and  industry  standards.

<PAGE>

          As of December 31, 1998, the most recent notification from the Federal
Deposit Insurance Corporation categorized the Bank as well-capitalized under the
regulatory  framework  for  prompt corrective action (there are no conditions or
events  since that notification that management believes have changed the Bank's
category).

     Banking  regulations  require that all banks maintain a percentage of their
deposits  as  reserves  in cash or on deposit with the Federal Reserve Bank.  At
December  31,  1998,  required  reserves  were  approximately  $543,000.


EMPLOYEES
---------

     At  December  31,  1998,  the  Company  employed  34  personnel.

                             STATISTICAL DISCLOSURE
                             ----------------------

     The  following  tables  and  data  set  forth,  for  the  respective  years
indicated,  selected  statistical  information  relating  to  the  Company.
     The Company's operating results depend primarily on the level of the Bank's
net interest income, which is the difference between interest income on interest
earning assets and interest expense on interest bearing liabilities.  The Bank's
net  interest income is determined by the average outstanding balances of loans,
investments,  deposits  and  borrowings,  and  the  respective average yields on
interest-earning  assets  and the average costs on interest bearing liabilities,
and  the  relative  amount  of  loans  and  investments compared to deposits and
borrowings.  The  Bank's  volumes  and  rates  on  interest  earning  assets and
interest bearing liabilities are affected by market interest rates, competition,
the  demand  for  bank financing, the availability of funds, and by management's
responses  to  these  factors.
     The  following  tables  set  forth the Company's daily average balances for
each  principal  category  of asset and liability and shareholders' equity.  The
tables also present the amounts and average rates of interest earned and paid on
each  category  of  interest earning asset and interest bearing liability, along
with  the  net  interest  income and net yield on earning assets for the periods
indicated.
     In addition, the tables set forth changes in the components of net interest
income for the periods indicated.  The total change is segmented into the change
attributable  to  variations in volume and the change attributable to variations
in  interest  rates.  The  changes  in interest due to both rate and volume have
been  allocated  to  the  changes  due  to  volume and rate in proportion to the
relationship  of  the  absolute  dollar amounts of the change in both.  Interest
foregone  on loans in nonaccrual status is not included in the tables, while the
average  balance  of  loans  in  nonaccrual  status  is  included.


<PAGE>
<TABLE>
<CAPTION>


CHANGES  IN  NET  INTEREST  INCOME

Year  Ended  December  31,  1998


<S>                                   <C>        <C>        <C>       <C>       <C>           <C>
( in thousands). . . . . . . . . . .  YTD        Interest   Average      Change from prior Year
                                      Average    Income/    Yield/           Due to change in:
Net Interest Income Analysis . . . .  Balance    Expense    Rate      Volume    Rate          Total
                                      ---------  ---------  --------  --------  ------------  -------

Loans. . . . . . . . . . . . . . . .  $ 44,849   $   3,729      8.3%  $  (139)  $       154   $   15 
Other earning assets:
   Interest bearing deposits with. .         0           0      0.0%      (27)            0      (27)
      financial institutions
   Investment Securities . . . . . .    14,587         839      5.8%      337           (62)     275 
   Fed funds sold & Securities . . .     8,394         454      5.4%       31            (2)      29 
                                      ---------  ---------  --------  --------  ------------  -------
      purchased under resale
      agreements
Total  interest earning assets . . .  $ 67,830   $   5,022      7.4%  $   202   $        90   $  292 
Non earning assets:
   Cash & due from banks . . . . . .     4,118 

   Other assets. . . . . . . . . . .     3,161 
   Allowance for loan loss . . . . .      (733)
                                      ---------                                                      
                                      $ 74,376 

Interest-bearing liabilities:
   Deposits:

   Demand. . . . . . . . . . . . . .  $  4,209   $      40      1.0%  $   (17)  $         1   $  (16)
   Money  market and savings . . . .    22,163         674      3.0%      (21)           74       53 
   Time certificate of deposit . . .    13,419         692      5.2%      226            (1)     225 
   Federal funds purchased . . . . .         -           -        -         -             -        - 
Other interest bearing liabilities:
   Mortgage indebtedness . . . . . .       175           1      0.6%        -             1        1 
                                      ---------  ---------  --------  --------  ------------  -------
Total interest-bearing liabilities .  $ 39,791   $   1,407      3.5%  $    88   $        75   $  263 
Noninterest-bearing liabilities
   And shareholders equity
Noninterest-bearing demand . . . . .    25,629 
Other liabilities. . . . . . . . . .       618 
Shareholders' equity . . . . . . . .     8,338 
                                      ---------                                                      
                                      $ 74,376 

Net interest income. . . . . . . . .  $  3,615 

Net interest spread. . . . . . . . .       3.9%

Net yield on earning assets. . . . .       5.3%

</TABLE>


<TABLE>
<CAPTION>


CHANGES  IN  NET  INTEREST  INCOME


<S>                                  <C>        <C>        <C>       <C>       <C>           <C>

Year Ended December 31, 1997
( in thousands) . . . . . . . . . .  YTD        Interest   Average   Change    from prior    Year
                                     Average    Income/    Yield/    Due       to change     in:
Net Interest Income Analysis. . . .  Balance    Expense    Rate      Volume    Rate          Total
                                     ---------  ---------  --------  --------  ------------  -------

Loans . . . . . . . . . . . . . . .  $ 46,590   $   3,714      8.0%  $  (250)  $       (71)  $ (321)
Other earning assets:
   Interest bearing deposits with .       511          27      5.3%      (18)           (2)     (20)
      financial institutions
   Investment Securities. . . . . .     9,128         564      6.2%       83             6       89 
   Fed funds sold & Securities. . .     7,819         425      5.4%     (188)          (10)    (198)
                                     ---------  ---------  --------  --------  ------------  -------
      purchased under resale
      agreements
Total  interest earning assets. . .  $ 64,048   $   4,730      7.4%  $  (373)  $       (77)  $ (450)
Non earning assets:
   Cash & due from banks. . . . . .     4,423 

   Other assets . . . . . . . . . .     3,107 
   Allowance for loan loss. . . . .     (1009)
                                     ---------                                                      
                                     $ 70,569 

Interest-bearing liabilities:
   Deposits:
   Demand . . . . . . . . . . . . .  $  5,975   $      56      0.9%  $    (6)  $         0   $   (6)
   Money  market and savings. . . .    22,926         621      2.7%     (122)           20     (102)
   Time certificate of deposit. . .     9,049         467      5.2%       27            48       75 
   Federal funds purchased. . . . .         -           -        -         -             -        - 
                                     ---------  ---------  --------  --------  ------------  -------
Total interest-bearing liabilities.  $ 37,950   $   1,144      3.0%  $  (101)  $        68   $  (33)
Noninterest-bearing liabilities
   and shareholders equity:
Noninterest-bearing demand. . . . .    26,929 
Other liabilities . . . . . . . . .       201 
Shareholders' equity. . . . . . . .     5,489 
                                     ---------                                                      
                                     $ 70,569 

Net interest income . . . . . . . .  $  3,586 

Net interest spread . . . . . . . .       4.4%

Net yield on earning assets . . . .       5.6%

</TABLE>

INVESTMENT  SECURITIES
----------------------
<TABLE>
<CAPTION>

     The  following  table  shows  the  carrying  amount  of  the  portfolio  of
investment  securities  at  the  end  of  each  of  the  past  two  years:


                                                     Gross     
                                           Total   Unrealized   Estimated
                                        Amortized  -------------  Market
      YEAR  END  1998                        Cost  Gains  Losses  Value
                                         ---------- -----  ----- --------
<S>                                          <C>      <C>  <C>    <C>

( in thousands)
Securities available for sale:
     U.S. Treasury Securities . . . . . . .  $ 1,000  $ 2  $  -   $ 1,002
     U.S. Government and Agency Securities.    4,497    1   (10)    4,488
     Federal Reserve Stock. . . . . . . . .      248    -     -       248
     Other. . . . . . . . . . . . . . . . .      264    -    (1)      263
                                             -------  ---  -----  -------
          Total . . . . . . . . . . . . . .  $ 6,009  $ 3  $(11)  $ 6,001

Securities held to maturity:
     U.S. Government and Agency Securities.  $ 8,800  $14  $ (8)  $ 8,806
     Municipal Securities . . . . . . . . .    3,982   35   (21)    3,996
     Mortgage-Backed Securities . . . . . .    1,509    1    (6)    1,504
                                             -------  ---  -----  -------
          Total . . . . . . . . . . . . . .  $14,291  $50  $(35)  $14,306

YEAR END 1997
Securities available for sale:
     US. Treasury Securities. . . . . . . .  $   998  $ 5  $  -   $ 1,003
     Mortgage-backed Securities . . . . . .    3,492    -    (1)    3,491
     Federal Reserve Stock. . . . . . . . .      256    -     -       256
     Other. . . . . . . . . . . . . . . . .      499    -     -       499
                                             -------  ---  -----  -------
          Total . . . . . . . . . . . . . .  $ 5,245  $ 5  $ (1)  $ 5,249

Securities held to maturity:
     U.S. Government and Agency Securities.  $ 4,051  $ -  $ (4)  $ 4,047
     Mortgage-backed securities . . . . . .    4,702    3   (68)    4,637
     Municipal Securities . . . . . . . . .      394    1     -       395
                                             -------  ---  -----  -------
          Total . . . . . . . . . . . . . .  $ 9,147  $ 4  $(72)  $ 9,079
</TABLE>




<PAGE>
INVESTMENT  SECURITIES  -  CONTINUED
------------------------------------
<TABLE>
<CAPTION>


The  following  table  shows  the  maturities of investment securities at December 31, 1998 and the
weighted  average  yields  of  those  securities.

<S>                               <C>       <C>            <C>        <C>       <C>            <C>
                                                   OVER 1     OVER 5
                                                     YEAR      YEARS  
                                  1 YEAR . . . .  THROUGH    THROUGH    OVER                 AVERAGE
(in thousands) . . . . . . . . .  OR LESS         5 YEARS   10 YEARS  10 YEARS         TOTAL  YIELD

Securities available for sale:
     U.S. Treasury Securities. .  $  1,000  $           -  $       -  $      -  $       1,000  5.9%
     U.S. Government Agency. . .     2,497          1,500        500         -          4,497  5.3%
        Securities
     Federal Reserve Stock . . .         -              -          -       248            248  6.0%
     Other . . . . . . . . . . .         -            264          -         -            264  5.5%
                                  --------  -------------  ---------  --------  -------------  ----
          Total. . . . . . . . .  $  3,497  $       1,764  $     500  $    248  $       6,009  5.4%

Securities held to maturity:
     U.S. Government Agency. . .  $      -  $       8,800  $       -  $      -  $8,800      -  5.9%
        Securities
     Mortgage-Backed Securities.         -              -          -     1,509          1,509  5.9%
     Municipal Securities. . . .       292          3,690          -         -          3,982  5.5%
                                  --------  -------------  ---------  --------  -------------  ----
          Total. . . . . . . . .  $    292  $      12,490  $       -  $  1,509  $      14,291  5.8%
</TABLE>

LOAN  PORTFOLIO
---------------
<TABLE>
<CAPTION>

     The  following  table sets forth the amount of loans outstanding at the end
of  the  past  two  years:

<S>                                   <C>       <C>       <C>      <C>
 (in Thousands). . . . . . . . . . .             % OF               % OF 
                                         1998    TOTAL     1997     TOTAL
                                      --------  --------  -------  ------

Commercial Loans . . . . . . . . . .  $16,640        39%  $15,925     34%
Real Estate Loans:
     Construction. . . . . . . . . .    1,215         3%        -      - 
     Real Estate Mortgage. . . . . .   24,246        57%   29,630     64%
                                      --------            -------        
          Total real estate loans. .   25,461              29,630 
Installment loans. . . . . . . . . .      677         1%    1,009      2%
                                      --------  --------  -------  ------
                                       42,778       100%   46,564    100%
Deferred net loan origination costs.      214                 211 
Allowance for Loan Losses. . . . . .     (733)               (747)
                                      --------             --------            
          Net Loans. . . . . . . . .  $42,259             $46,028 
</TABLE>


     The  following  table  shows  the  amounts  of  commercial  and real estate
construction loans outstanding  at the end of the past two years which, based on
remaining  scheduled  repayments of principal, are due in one year or less, more
than  one  year but less than five years, and more than five years.  The amounts
are  classified  according  to  the  sensitivity  to  changes in interest rates.
<TABLE>
<CAPTION>


COMMERCIAL  AND  CONSTRUCTION  LOANS
DECEMBER  31,
<S>                                                   <C>      <C>
 ( in thousands) . . . . . . . . . . . . . . . . . .     1998     1997
                                                      -------  -------
COMMERCIAL LOANS
Aggregate maturities of loan balances due:
     In one year or less:
          Interest rates are floating or adjustable.  $ 8,720  $14,558
          Interest rates are fixed or predetermined.    3,544    1,357
     After one year but within five years:
          Interest rates are fixed or predetermined.    4,251        -
     After five years:
          Interest rates are fixed or predetermined.      125        -
                                                      -------  -------
               Total commercial loans. . . . . . . .  $16,640  $15,925

REAL ESTATE CONSTRUCTION LOANS
Aggregate maturities of loan balances due
     in one year or less and interest rates
     are floating or adjustable. . . . . . . . . . .  $ 1,215  $     -
                                                      -------  -------
          Total commercial and construction loans. .  $17,855  $15,925
</TABLE>


<PAGE>
------
RISK  ELEMENTS  -  NONACCRUAL,  PAST  DUE  AND  RESTRUCTURED  LOANS
-------------------------------------------------------------------

     Nonaccrual  loans  are those for which the Bank has discontinued accrual of
interest  because  there  exists  reasonable  doubt  as  to  the full and timely
collection  of  either  principal  or  interest  or  such  loans  have  become
contractually past due ninety days with respect to principal or interest.  Under
certain  circumstances, interest accruals are continued on loans past due ninety
days  which,  in  management's  judgment,  are considered to be well secured and
fully  collectible  as to both principal and interest.  When a loan is placed in
nonaccrual  status,  all interest previously accrued but uncollected is reversed
against  current period income.  Income on such loans is then recognized only to
the extent that cash is received and where the future collection of principal is
probable.  Accrual  of  interest is resumed only when principal and interest are
brought  fully  current  and  when,  in  management's  judgment,  such loans are
estimated  to  be  collectible  as  to  both  principal  and  interest.
     Restructured commercial loans are those for which the Bank has, for reasons
related  to  borrowers' financial difficulties, granted concessions to borrowers
(including  reductions  of  either  interest  or  principal)  that  it would not
otherwise  consider,  whether  or  not  such  loans are secured or guaranteed by
others.  Loan  restructurings  involving  only  a  modification  of  terms  are
accounted  for  prospectively  from  the time of restructuring.  Accordingly, no
gain  or loss is recorded at the time of such restructurings unless the recorded
investment in such loans exceeds the total future cash receipts specified by the
new  loan  terms.

     At  December  31, 1998, loans on nonaccrual totaled $258,000, compared with
$965,000  at  year  end  1997.  The reduction in interest income associated with
nonaccrual  loans  was  approximately  $15,000  during 1998, and $119,000 during
1997.  At  December  31,  1998 loans past due 90 days or more and still accruing
interest totaled $1,000 and 1,155,000 at year end 1997. At December 31, 1998 and
1997,  the Bank had recorded as specific reserves for its impaired loans $84,000
and  $115,000, respectively, in the allowance for loan losses.  In addition, the
Bank  classified $1,990,000 and $2,983,000, respectively, of its loans without a
specific  reserve.  The average recorded investment of impaired loans during the
year  ended December 31, 1998 and 1997 was approximately $242,000 and $1,985,000
respectively.  Interest  income  of  $12,000  and  $9,000,  respectively,  was
recognized  on impaired loans during the years ended December 31, 1998 and 1997.
There  were  no  restructured loans at December 31, 1998. There were no loans at
December  31, 1998 where the known credit problems of a borrower caused the Bank
to  have  serious  doubts  as to the ability of such borrower to comply with the
then  present  loan  repayment  terms, and which would result in such loan being
included  as  a  nonaccrual,  past due or restructured loan at some future date.
The Bank has not made loans to borrowers outside the United States.  At December
31,  1998, the Company had no loan concentrations exceeding ten percent of total
gross  loans  outstanding.

SUMMARY  OF  LOAN  LOSS  EXPERIENCE
-----------------------------------

     The allowance for loan losses is established by a provision for loan losses
charged against current period income.  Losses are charged against the allowance
when,  in  management's  judgment,  the  collectability of a loan's principal is
doubtful.  The  accompanying financial  statements require the use of management
estimates  to  calculate  the  allowance  for  loan losses.  These estimates are
inherently  uncertain  and depend on the outcome of future events.  Management's
estimates  are  based  upon  previous  loan  loss  experience,  current economic
conditions,  volume, growth, and composition of the loan portfolio, the value of
collateral  and  other  relative factors.  The Bank's lending is concentrated in
Los  Angeles  County  and  surrounding  areas,  which  have recently experienced
adverse  economic  conditions,  including  declining real estate  values.  These
factors  have  adversely  affected  borrowers' ability to repay loans.  Although
management  believes  the  level  of  the  allowance  as of December 31, 1998 is
adequate  to absorb losses inherent in the loan portfolio, additional decline in
the  local  economy  and  increases  in interest rates may result in losses that
cannot  reasonably  be  predicted  at  this  date.  Such  losses  may also cause
unanticipated  erosion  of  the  Bank's  capital.
<PAGE>
<TABLE>
<CAPTION>


     The following table summarizes the changes in the allowance for loan losses
arising  from  loan  losses,  recoveries  on  loans  previously  charged off and
provisions  for  loan  losses  charged  to  operating  expense.

<S>                                                         <C>       <C>
 LOAN CHARGE-OFFS AND RECOVERIES (in thousands). . . . . .     1998      1997 
                                                            --------  --------
Balance of allowance for loan losses at beginning of year.  $   747   $ 1,088 
Loans charged off:
     Commercial. . . . . . . . . . . . . . . . . . . . . .     (113)     (392)
     Real estate . . . . . . . . . . . . . . . . . . . . .    (  54)     (396)
     Installment . . . . . . . . . . . . . . . . . . . . .    (  27)     (152)
                                                            --------  --------
        Total loans charged off. . . . . . . . . . . . . .     (194)     (940)

Recoveries of loans previously charged off:
     Commercial. . . . . . . . . . . . . . . . . . . . . .      115       288 
     Real estate . . . . . . . . . . . . . . . . . . . . .        -         - 
     Installment . . . . . . . . . . . . . . . . . . . . .        9        10 
                                                            --------  --------
        Total loan recoveries. . . . . . . . . . . . . . .      124       298 
                                                            --------  --------
Net loans charged off. . . . . . . . . . . . . . . . . . .    (  70)     (642)
Provision charged to operating expense . . . . . . . . . .       56       301 
                                                            --------  --------
Balance of allowance for loan losses at end of year. . . .  $   733   $   747 

                                                               1998      1997 
                                                            --------  --------
Amount of loans outstanding at end of the year . . . . . .  $42,992   $46,775 
Average amount of loans outstanding. . . . . . . . . . . .  $44,849   $46,590 
Ratio of net charge-offs to average loans outstanding. . .     0.16%     1.38%
Ratio of allowance for loan losses at the end of the
     year to average loans outstanding . . . . . . . . . .     1.63%     1.60%
Ratio of allowance for loan losses at the end of the
     year to loans outstanding at the end of the year. . .     1.70%     1.60%
</TABLE>


<TABLE>
<CAPTION>

     The  following  table  sets  forth  the  Company's allocation of the allowance for loan losses to specific loan
categories  at  the  end  of  the  past two years.  The allocations are based upon the same factors as considered by
management  in  determining  the  amount of additional provisions to the allowance for loan losses and the aggregate
level  of  the  allowance.

ALLOWANCE  FOR  LOAN  LOSSES                                     December  31,
                                 -----------------------------------------------------------------------------------
                                                     1998                                      1997
                                 ----------------------------------------------    ---------------------------------


<S>                                    <C>                   <C>                   <C>             <C>

 ( in thousands). . . . . . . . . . .                        PERCENT OF LOANS IN                 PERCENT OF LOANS IN
                                       ALLOWANCE FOR         EACH CATEGORY TO      ALLOWANCE FOR   EACH CATEGORY TO
                                       LOAN LOSSES           TOTAL LOANS           LOAN LOSSES     TOTAL LOANS
Commercial loans. . . . . . . . . . .  $                552                   39%  $          294                34%
Real  estate loans:
     Construction . . . . . . . . . .                     -                    3%               -                 - 
     Mortgage . . . . . . . . . . . .                   127                   57%             353                64%
Installment/Consumer loans. . . . . .                    54                    1%             100                 2%
                                       --------------------  --------------------  --------------  -----------------
     Total allowance for loan losses.  $                733                  100%  $          747               100%
</TABLE>

     The  allowance  for  loan losses should not be interpreted as an indication
that  future charge-offs will occur in these amounts or proportions, or that the
allocation  indicates  future  charge-off  trends.  Furthermore,  the  portion


<PAGE>
     Although  management believes the level of the allowance for loan losses as
of  December  31,  1998,  is  adequate  to  absorb  losses  inherent in the loan
portfolio,  currently  unanticipated  conditions  and events, such as additional
declines  in  the  local  economy and increases in interest rates, may result in
losses  that  cannot  reasonably  be  predicted  at  this  date.

SOURCES  OF  FUNDS
------------------

     Deposits traditionally have been the primary source of the Bank's funds for
use  in  lending  and  other  investments.  The Bank also derives funds from net
earnings,  receipt  of  interest  and  principal  on outstanding loans and other
sources,  including the sale of  investment securities.  The Bank is a member of
the  Federal  Reserve  System  and  may borrow through that system under certain
conditions

DEPOSITS
--------

     The  Bank's  deposit  products include noninterest-bearing demand deposits,
interest-bearing  demand  deposits,  money market and savings accounts, and time
certificates  of deposit.  The majority of the Bank's deposits are obtained from
its  primary  marketing  area.
     The  distribution of average deposits and the average rates paid thereon is
summarized  for  the  periods  indicated  below:
<TABLE>
<CAPTION>
                                       1998                       1997
                                       ----                       ----
<S>                              <C>        <C>             <C>        <C>
DEPOSITS. . . . . . . . . . .    AVERAGE    AVERAGE          AVERAGE   AVERAGE
(in thousands). . . . . . . .    BALANCE       RATE          BALANCE      RATE

Demand, non-interest-bearing.  $  25,629                    $ 26,929 
Demand, interest bearing. . .      4,209       1.0%            5,975      0.9%
Money market and savings. . .     22,163       3.0%           22,926      2.7%
Time certificates of deposit.     13,419       5.2%            9,049      5.2%
                               --------------------         ------------------          
         Total Deposits . . .  $  65,420                    $ 64,879 

</TABLE>


<TABLE>
<CAPTION>

     The  following  is  a  maturity schedule of time certificates of deposit of
$100,000  or  more  at  the  end  of  the  past  two  years:

TIME  CERTIFICATES  OF  DEPOSIT
<S>                                    <C>     <C>
(in thousands) DECEMBER 31, . . . . .    1998    1997
                                       ------  ------
Three months or less. . . . . . . . .  $5,464  $1,859
Over three months through six months.     813   1,305
Over six months through twelve months   1,116   1,823
Over twelve months. . . . . . . . . .     990     100
                                       ------  ------
        Total . . . . . . . . . . . .  $8,383  $5,087
</TABLE>

The  Bank  had  no  brokered  deposits  at  December  31,  1998  and  1997.

<PAGE>
SELECTED  FINANCIAL  RATIOS
---------------------------
<TABLE>
<CAPTION>

The  following  table sets forth the ratios of net loss to average assets and to
average  shareholders'  equity, and the ratio of average shareholders' equity to
average  assets.
                                                 1998    1997
<S>                                               <C>    <C>
Return on average assets . . . . . . . . . . . .  0.60%  (0.5)%
Return on average shareholders' equity . . . . .   5.3%  (6.6)%
Average shareholders' equity to average assets .  11.2%    7.8%
Shareholders' equity to total assets at year end  11.6%   10.4%
</TABLE>


ITEM  2.  PROPERTIES
--------------------

     The Bank leases 14,900 square feet of office space and 5,600 square feet of
retail  banking  space  at 11150 West Olympic Boulevard, Los Angeles, California
under  a  noncancelable  operating lease, which expires on August 31, 2002.  The
lease  provides for annual rental payments of approximately $594,000 during 1999
- 2001 and $396,000 in 2002.  In addition, the Bank pays its proportionate share
of  increases  in  common  operating  expenses.

ITEM  3.  LEGAL  PROCEEDINGS
----------------------------

     The Company and the Bank are subject to pending or threatened legal actions
which  arise  in  the  normal course of business.  Based on current information,
management  is  of the opinion that the disposition of all suits will not have a
material  effect  on  the  Company's  consolidated  financial  statements.

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
---------------------------------------------------------------------

     No  matters  were  submitted  to  shareholders during the fourth quarter of
1998.
 
                                  PART II
                                  -------

ITEM  5.  MARKET  FOR  THE  REGISTRANT'S  COMMON  SHARES AND RELATED SHAREHOLDER
--------------------------------------------------------------------------------
MATTERS
-------


     The  Bancorp's common shares are traded over-the-counter.  The high and low
market  prices for each quarterly period ended December 31, 1998 and 1997 ranged
as  follows:
                            1998                                1997
                            ----                                ----
By  Quarter       1st     2nd     3rd     4th       1st     2nd     3rd     4th 
-----------       ---     ---     ---     ---       ---     ---     ---     ----
Price
   High         4 7/8   4 7/64  3 55/64  3 7/64     3      3 1/2    4      5 1/4
   Low          3 5/8   3       2 43/64  2          2 1/2  2 1/4    2 1/4  3 3/4


Principal  market  makers  at  December  31,  1998:

Hoefer  &  Arnett,  Inc.                    Sutro  &  Co.,  Inc
Ryan,  Beck  &  Co.                         Torrey  Pines  Securities

The  Transfer  Agent and Registrar is U.S. Stock Transfer Corporation, Glendale,
California

At  December  31,  1998  there  were  approximately 291 holders of record of the
Company's  common  shares. 
<PAGE>


ITEM  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION
---------------------------------------------------------------------------
AND  RESULTS  OF  OPERATIONS
----------------------------

FINANCIAL  HIGHLIGHTS  OVERVIEW

     1998  was  a  successful year for Marathon Bancorp.  The Company recorded a
profit  for  the  year  of $445,000 after six years of losses.  The Company also
registered  six  consecutive profitable quarters.  Per share earnings were $0.12
on  a book value of $2.27 per share, which compares to a loss last year of $0.15
per  share  and  a  book  value  of  $2.15.
     The  Bancorp  and  its  subsidiary  have  been released from all regulatory
agreements  and has no restrictions placed on them. The current asset quality is
excellent, there is no other real estate owned on the books and nonaccrual loans
totaled  only  $258,000  at year-end 1998. Regulatory risked based capital ratio
was  18.22%  at  year-end  1998.

RESULTS  OF  OPERATIONS

NET  INTEREST  INCOME
     Net  interest  income the Company's largest source of earnings increased to
$3,615,000  compared  to  $3,586,000  for  the  year 1997 although less than the
$4,003,000  for  1996.  The  margins during 1998 were negatively affected by the
reduction  in  short-term  rates  initiated  by  the  Federal Reserve Bank.  The
Federal  Reserve  Bank  lowered  the  target rate of overnight fed funds by .75%
during  1998,  as  well  as  lowering the Federal Reserve's discount rate a like
amount.  With  our commercial loans being tied to the floating prime rate, which
also declined .75% during 1998, and a good portion of our mortgage loans tied to
the  11th  district  cost  of  funds the decline hurt the Company's net interest
margin.  The  decline  in  rates  in  the bond market throughout 1998 also was a
factor.  The  net  interest  margin  declined from 5.6% in 1997 to 5.3% in 1998.
This  decline  was offset by the increase in earning assets the Company was able
to produce by liquidating the OREO, reducing nonaccrual loans and improving cash
management.
     The loan portfolio's average balance during the year was down slightly from
1997  averaging  $44.9  million compared to an average of $46.6 million in 1997.
The  increase  in  assets was invested in the investment portfolio which rose an
average  $5,459,000  over  1997.  Cash  and  due  from banks was reduced from an
average  $4,423,000  in  1997  to  $4,118,00  in  1998.
     On  the  liability  side  of the ledger the overall cost of funds increased
while  rates  declined because of a higher percentage of certificates of deposit
in  the deposit mix. Certificates of deposit averaged 20.5% during 1998 compared
to  14.0%  in  1997.  This  was  a  negative  element to the net interest margin
causing  interest  expense  to increase from $1,144,000 in 1997 to $1,407,000 in
1998.



PROVISION  FOR  CREDIT  LOSSES
     Part of the risk in lending is the fact that losses will be experienced and
that  the  amount of such losses will vary from time to time, depending upon the
risk characteristics of the portfolio as affected by economic conditions and the
financial  experience  of  borrowers.  Management  of the Company has instituted
credit  policies  designed to minimize the level of losses and nonaccrual loans.
     These  policies  require  extensive  evaluation  of new credit requests and
continuing review of existing credits in order to identify, monitor and quantify
evidence  of  deterioration  of  quality  or  potential loss in a timely manner.
Management  reviews  current economic conditions, previous loan loss experience,
composition  of the portfolio and many other relative factors in determining the
allowance  for  credit  losses.
     Nonperforming  loans,  which  consist  of  loans past due over 90 days plus
loans  on nonaccrual, totaled $259,000 at December 31, 1998 versus $2,120,000 at
year-end  1997.  Loans  classified  by  the  Bank  as doubtful or substandard at
year-end  1998  equaled  $1,990,000  versus  $2,983,000  at  year-end  1997.
     The  allowance for credit losses, which buffers the risk of losses inherent
in  the  lending  process, is increased by the provision for loan losses charged
against income and by recoveries. It is decreased by the amount of loans charged
off.  There is no precise method of predicting specific losses, which ultimately
may  be charged off, and the conclusion that a loan may become uncollectable, in
whole  or  in  part,  is  a matter of judgement.  Similarly, the adequacy of the
allowance and accompanying provision for loan losses can be determined only on a
judgmental  basis  after  full  review,  including  consideration  of  economic
conditions  and  their effects on specific borrowers, borrowers' financial data,
and  evaluation  of  underlying  collateral  for secured lending.  This year the
Company also took into consideration the effect of  the year 2000 ("Y2K") on our
borrowers.
     Based  upon  management's  assessment  of  the  overall quality of the loan
portfolio,  and  the  other factors previously discussed the Bank made a $56,000
provision  to  the  loan loss reserve. This compares to $301,000 provided during
1997. Loans totaling $194,000 were charged off during the year, and $124,000 was
recovered  leaving  the  allowance  for  loan  losses  at  1.6%  of  gross loans
outstanding  at  December  31,  1998.

NONINTEREST  INCOME

     Noninterest  income decreased  $124,000, or 22% from 1997 to 1998. Over the
past  few  years  the  Company  has  been  underperforming in noninterest income
generation.  Service  charges  decreased  due  to  some of the largest customers
increasing  their  balances  to  decrease  service charges. This is an item that
management  has  been  working  on.  A  new  fee  based  cash management product
introduced  in  1998  generated  $10,000.  The  Company  is  looking  into  fee
generating services that it may be able to offer through partnerships with other
banking  organizations,  such  as  insurance  services  and investment products.



     Gain  on  the  sale of other real estate owned (OREO) realized in 1997 came
from a gain of  $107,000 on the sale of one property and $5,000 from the sale of
two  other  properties.  Other  noninterest  income would have shown an increase
except  for  the  fact  that 1997 included a one-time net settlement of $123,000
paid  to  the  Company for costs associated with the relocation of the Company's
offices  due  to  the  1994  Northridge  earthquake.  The net change without the
one-time  entry  was $93,000.  Increases in bankcard merchant discount, research
fees, check printing fees and other non-deposit related fees were the factors in
the  increase.

NONINTEREST  EXPENSE
     Noninterest  expenses declined again in 1998.  Noninterest expense was down
$460,000,  or  12.3%  from  1997  and  $807,000, or 21.5% less than 1996.  Human
resource  expense  was  held  to a gain of only $4,000 while most of the expense
categories  declined.  Occupancy costs declined with the renegotiated lease that
was  signed  in  the third quarter of 1997 reducing rental costs.  Furniture and
equipment  costs  increased  due  to  the  purchase  of  newer personal computer
equipment  needed  to  bring the Company into Y2K compliance.  This will further
increase  depreciation  costs  in  1999  by  approximately  $10,000  as  the new
equipment  left  to  be  purchased  of approximately $50,000, will be put on the
books  in  1999.
     Professional  services  decreased in cost due to renegotiation of contracts
with  our  accountants and other service providers. Chargeable services provided
to customers in the data processing and courier costs declined in 1998, which in
turn  was  part  of  the  reason  for  reduced  service charge income.  With the
reduction  in OREO, nonperforming and classified assets the legal costs and OREO
costs  were  substantially  reduced.
     As  noted  in  last  year's  Annual Report the improvement in the Company's
capital  position and balance sheet enabled us to receive reduced FDIC insurance
and  OCC assessments as well as the ability to negotiate reduced insurance rates
on  other  Bank  and  Company  insurance  policies.

ASSETS  AND  LIABILITIES
     Average  assets  for  1998  increased  by  $3,807,000,  or  5.4%  over 1997
although,  year-end total assets declined from 1997 to 1998 by $4,669,000.  This
was  due  to  the  buildup  of deposits of approximately $6 million in two major
account  relationships  during the last two weeks of 1997, which flowed back out
in  the  first  two  weeks  of  1998. The increase in assets was invested in the
investment portfolio and diversified over U. S. agency and municipal securities.
The  investment  portfolio  at year-end increased to $20,292,000, an increase of
$5,896,000 or 41.0% over December 31, 1997. The Company was able to maintain the
average  yield  on  earning  assets  of  7.4%  achieved  in  1997 in a market of
decreasing  rates  while  maintaining  high  quality  in  the  assets.
     Other  real  estate  owned  which  consisted  of  three properties totaling
$1,248,000  at  the  end  of 1997 was brought to zero, with the properties being
sold  at  a  net  loss  of  only  $30,000  and  net  operating costs of $22,000.



     Average  deposits  for  1998  increased  by  $541,000,  or  1%.  The mix of
deposits  changed somewhat with noninterest-bearing deposits having declined and
certificates of deposit increasing with customers looking for better yields in a
declining  rate  economy  in 1998.  We also lost two major deposit customers who
moved  their  accounts  to  larger  institutions.

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.  Gap
analysis measures interest rate risk in terms of the mismatch between the stated
repricing  and maturities of the Company's earning assets and liabilities within
defined  time  frames.
     In  order  to  appropriately reflect the repricing structure of the Company
balance sheet, management has made certain adjustments to the balances reflected
in  the following table to account for the behavioral characteristics of certain
core  deposits that do not have specified contractual maturities (i.e., checking
with  interest,  savings, money markets).  In addition, the investment portfolio
is  shown  as  repricing at specified call date, if applicable, and not maturity
date. At year-end the cumulative gap position showed an asset sensitivity of $29
million  or  43%  of  earning  assets  as  shown  in the following interest rate
sensitivity  table.  This  means that the Company is asset sensitive and that an
increase  in interest rates would likely cause earnings to increase, as a larger
portion  of  assets  than  liabilities  would reprice in 1999, and a decrease in
rates  would  decrease  earnings.
     Immediately  adjustable  loans  are  defined  as loans that are tied to the
prime  rate  or  other  indexes,  which  can  change  at  any time.  Immediately
adjustable  deposits are those deposits on which the Company can adjust the rate
without  notice.  The  Company  uses  adjustable deposits and demand deposits to
fund  adjustable  rate  loans.  The  remaining  assets  and  liabilities  are
categorized  by  either  the next time the asset or liability may be repriced or
the  maturity  date,  whichever is sooner.  The Company does not use off-balance
sheet  interest  rate  instruments  to hedge interest rate risk, but does employ
interest  rate  floors on adjustable rate loans. The floors help to mitigate the
loss  of  net  interest  income  in  a  declining  rate  environment.


<PAGE>
                           INTEREST  RATE  SENSITIVITY
<TABLE>
<CAPTION>

                         Immediately   >0-3    >3-6    >6-12    >1-5     >5
(in  thousands)           Adjustable   Months  Months  Months   Years    Years
---------------           ----------   ------  ------  ------   -----    -----


<S>                          <C>      <C>      <C>     <C>      <C>      <C>
Assets
  Securities. . . . . . . .  $     -  $ 8,471  $1,934  $ 4,301  $ 5,587  $    -
  Fed funds sold. . . . . .    4,175        -       -        -        -       -
  Cash value life insurance        -    1,280       -        -        -       -
  Loans . . . . . . . . . .   14,313    5,235   2,494   13,062    6,313   1,575
---------------------------  -------  -------  ------  -------  -------  ------
    Total Earning Assets. .  $18,488  $14,986  $4,428  $17,363  $11,900  $1,575

Sources
  Savings . . . . . . . .          -      259       -        -      517     259
  Checking with interest.          -      663       -        -    2,650      -
  Money market. . . . . .     12,986        -       -        -    6,718   3,358
  Time CD's . . . . . . .          -    7,530   2,425    2,173    1,202       -
  Demand deposits . . . .          -        -       -        -        -   4,478
-------------------------    -------  -------  -------  -------  ------- ------
    Total Sources . . . .    $12,986  $ 8,452   2,425  $ 2,173  $11,087 $28,095

Cumulative Gap. . . . . .    $ 5,502  $12,036  14,039  $29,229  $30,042 $ 3,522

Gap as a percent of total
      earning assets. . .      8.0     17.5     20.4     42.5     43.7      5.1
</TABLE>

LIQUIDITY  MANAGEMENT
     Liquidity  refers to the Company's ability to maintain cash flow sufficient
to  meet  the needs of depositors and borrowers and to fund its operations.  The
Company continues to have a stable base of core deposits that provide a low-cost
source  of  stable  funds.  These  deposits fluctuate but management maintains a
weekly report of the balances of its largest volume customers to correctly gauge
balance  fluctuations.
     Using  the statement of cash flows to measure changes from year-end 1997 to
1998,  it  indicates,  that  operating  activities and investing activities used
$1,571,000  in  cash  during the year while financing activities used $5,207,000
decreasing  the  cash  and  cash  equivalents to $9,249,00 at December 31, 1998.
Again  the  main  reason  for  this,  as  discussed  earlier, was the buildup of
deposits  the  last two weeks of 1997 that was left in cash equivalent fed funds
and which flowed back out the first two weeks of 1998. Liquidity remained strong
at  year-end  1998  and  gives  the Company the ability to deal with any deposit
fluctuations  as well as providing funds for increasing the loan portfolio.  The
Bank also has lines of credit to purchase fed funds with two correspondent banks
and  a  reverse repurchase agreement with a major investment bank for additional
liquidity  if  needed.

<PAGE>
CAPITAL
     The Company's capital position is strong.  Risk-based capital at the end of
1998  was  18.2% up from 16.5% at December 31, 1997.  The adequately capitalized
risk-based  ratio  required  by  the  federal  regulators  is  8.0% and the well
capitalized  required  ratio  is 10.0%.  Tier I risk-based capital ratio for the
Company  is  16.9%  and  the  Tier  I  leverage  ratio is 11.2%.  The Company is
categorized  as  well capitalized.  Note K to the financial statements goes into
detail  on  the  Company's  and  Bank's  capital  position
     The Bank was released from its memorandum of understanding with the Federal
Reserve  Bank  during  the  second  quarter  of 1998.  For 1999 the Company will
continue  to  look to earnings as a source of additional capital and foresees no
problems  in  maintaining  proper  capital  ratios.

YEAR  2000  READINESS
     Back in June of 1997 the Company and Bank started addressing the problem by
performing  a search for all equipment and systems that could be affected by the
Year  2000.  We then put together a plan to address the impact on our operations
and  what  we  were  going  to  do  to  correct  the  problem.
     We  have  inventoried  all our equipment and have upgraded or purchased new
equipment  to  be  Y2K  compliant.  Our software systems are supplied by outside
vendors and the Bank has received new versions that we have been assured are Y2K
compliant.  This  includes  all  our  mission  critical systems. The Banks' main
processing  is  outsourced  to Fiserv Service Bureau and all of its software has
been  upgraded  to  be  Year  2000  compliant.
     The  Bank  has  finished  the  renovation  and  most  of the validation and
implementation  phases  of  its Y2K plan. Currently we are finishing the testing
mode  for  Year  2000  readiness  and  all  mission  critical  systems have been
implemented.  Testing  is  being  done for the significant dates both before and
after January 1, 2000, not just for the millennium date change alone. Testing is
due to be completed by May 31, 1999.The company has spent approximately $105,000
through  February  1999  towards  the  Y2K project and anticipates minimal costs
during  the  remainder  of  1999. We are working with our clients to verify that
they  also  are  prepared  for  the  century  date  change.
     We  are confident that we will be well prepared for the date change and are
finishing  the  contingency  plans to be implemented, if needed, to minimize any
interruptions  for  our  customers.





ITEM  7.  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA
---------------------------------------------------------
<TABLE>
<CAPTION>
                                   MARATHON BANCORP AND SUBSIDIARY

                                     CONSOLIDATED BALANCE SHEET
<S>                                                               <C>
                                                                                       December 31,
                                                                  ----------------------------------
ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               1998 
                                                                  ----------------------------------

Cash and Due From Banks. . . . . . . . . . . . . . . . . . . . .  $                       5,074,000 
Federal Funds Sold . . . . . . . . . . . . . . . . . . . . . . .                          4,175,000 
                                                                  ----------------------------------
     TOTAL CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . .                          9,249,000 

Investment Securities:
   Securities Available for Sale . . . . . . . . . . . . . . . .                          6,001,000 
   Securities Held to Maturity . . . . . . . . . . . . . . . . .                         14,291,000 
                                                                  ----------------------------------
     TOTAL INVESTMENT SECURITIES . . . . . . . . . . . . . . . .                         20,292,000 

Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         42,992,000 
   Less Allowance for Credit Losses. . . . . . . . . . . . . . .  (                      733,000)
                                                                  ----------------------------------
     NET LOANS . . . . . . . . . . . . . . . . . . . . . . . . .                         42,259,000 

Premises and Equipment . . . . . . . . . . . . . . . . . . . . .                            346,000 
Other Real Estate Owned. . . . . . . . . . . . . . . . . . . . .                                  - 
Cash Surrender Value of Life Insurance . . . . . . . . . . . . .                          1,280,000 
Accrued Interest and Other Assets. . . . . . . . . . . . . . . .                            974,000 
                                                                  ----------------------------------
    TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . .  $                      74,400,000 
                                                                  ==================================


LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
   Noninterest-Bearing Demand. . . . . . . . . . . . . . . . . .  $                      24,478,000 
   Interest-Bearing Demand . . . . . . . . . . . . . . . . . . .                          3,314,000 
   Money Market and Savings. . . . . . . . . . . . . . . . . . .                         24,098,000 
   Time Deposits Under $100,000. . . . . . . . . . . . . . . . .                          4,945,000 
   Time Deposits $100,000 and Over . . . . . . . . . . . . . . .                          8,383,000 
                                                                  ----------------------------------
     TOTAL DEPOSITS. . . . . . . . . . . . . . . . . . . . . . .                         65,218,000 

Accrued Interest and Other Liabilities . . . . . . . . . . . . .                            524,000 
                                                                  ----------------------------------
     TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . .                         65,742,000 
Commitments and Contingencies - Note H

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,
      Issued and Outstanding: 3,820,819. . . . . . . . . . . . .                         13,630,000 
   Accumulated Deficit . . . . . . . . . . . . . . . . . . . . .  (                       4,964,000)
   Accumulated Other Comprehensive Income - Net Unrealized
      Gains (Losses) on Available-for-Sale Securities. . . . . .  (                          8,000)
                                                                  ----------------------------------
     TOTAL SHAREHOLDERS' EQUITY. . . . . . . . . . . . . . . . .                          8,658,000 
                                                                  ----------------------------------
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY. . . . . . . . .  $                      74,400,000 
                                                                  ==================================
</TABLE>



See  accompanying  notes  to  consolidated  financial  statements.


<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                Year Ended December 31,
                                                                                -----------------------
                                                                          1998                         1997
                                                                          ----                         ----
<S>                                                       <C>                      <C>
INTEREST INCOME
    Interest and Fees on Loans . . . . . . . . . . . . .  $            3,729,000   $               3,714,000 
    Interest on Investment Securities - Taxable. . . . .                 839,000                     564,000 
    Other Interest Income. . . . . . . . . . . . . . . .                 454,000                     452,000 
                                                          -----------------------  --------------------------
       TOTAL INTEREST INCOME . . . . . . . . . . . . . .               5,022,000                   4,730,000 
INTEREST EXPENSE
    Interest on Demand Deposits. . . . . . . . . . . . .                  40,000                      56,000 
    Interest on Money Market and Savings . . . . . . . .                 674,000                     621,000 
    Interest on Time Deposits. . . . . . . . . . . . . .                 692,000                     467,000 
    Other Interest Expense . . . . . . . . . . . . . . .                   1,000                           - 
                                                          -----------------------  --------------------------
       TOTAL INTEREST EXPENSE. . . . . . . . . . . . . .               1,407,000                   1,144,000 
                                                          -----------------------  --------------------------
NET INTEREST INCOME. . . . . . . . . . . . . . . . . . .               3,615,000                   3,586,000 
Provision for Credit Losses. . . . . . . . . . . . . . .                  56,000                     301,000 
                                                          -----------------------  --------------------------
NET INTEREST INCOME AFTER
     PROVISION FOR CREDIT LOSSES . . . . . . . . . . . .               3,567,000                   3,285,000 
                                                          -----------------------  --------------------------
NONINTEREST INCOME
    Service Charges and Fees on Deposits . . . . . . . .                 236,000                     285,000 
    Gain on Sale of Other Real Estate Owned. . . . . . .                       -                     112,000 
    Dividends on Cash Surrender Value of Life Insurance.                  67,000                           - 
    Other Noninterest Income . . . . . . . . . . . . . .                 138,000                     168,000 
                                                          -----------------------  --------------------------
       TOTAL NONINTEREST INCOME. . . . . . . . . . . . .                 441,000                     565,000 
                                                          -----------------------  --------------------------
NONINTEREST EXPENSE
    Salaries and Employee Benefits . . . . . . . . . . .               1,556,000                   1,552,000 
    Occupancy Expenses . . . . . . . . . . . . . . . . .                 585,000                     616,000 
    Furniture and Equipment. . . . . . . . . . . . . . .                 103,000                      99,000 
    Professional Services. . . . . . . . . . . . . . . .                 120,000                     214,000 
    Business Promotion . . . . . . . . . . . . . . . . .                  75,000                      71,000 
    Stationery and Supplies. . . . . . . . . . . . . . .                  64,000                      92,000 
    Data Processing Services . . . . . . . . . . . . . .                 452,000                     512,000 
    Messenger and Courier Services . . . . . . . . . . .                 121,000                     154,000 
    Insurance and Assessments. . . . . . . . . . . . . .                 250,000                     385,000 
    Legal Fees and Costs . . . . . . . . . . . . . . . .                 200,000                     312,000 
    Provision for OREO Losses. . . . . . . . . . . . . .                       -                      35,000 
    Loss on Sale of Other Real Estate Owned. . . . . . .                  30,000                           - 
    Net Operating Cost of Other Real Estate Owned. . . .                  22,000                      34,000 
    Other Expenses . . . . . . . . . . . . . . . . . . .                 174,000                     136,000 
                                                          -----------------------  --------------------------
     TOTAL NONINTEREST EXPENSE . . . . . . . . . . . . .               3,752,000                   4,212,000 
                                                          -----------------------  --------------------------
GAIN (LOSS) BEFORE INCOME TAXES. . . . . . . . . . . . .                 248,000   (                 362,000)
Income Taxes (Benefit) . . . . . . . . . . . . . . . . .  (             197,000)                       2,000 
                                                          -----------------------  --------------------------
     NET INCOME ( LOSS). . . . . . . . . . . . . . . . .  $              445,000   (                 364,000)
                                                          =======================  ==========================
Per Share Data:
     Net Income (Loss) - Basic . . . . . . . . . . . . .  $                 0.12   (                   0.15)
     Net Income (Loss) - Diluted . . . . . . . . . . . .  $                 0.12   (                   0.15)

</TABLE>



See  accompanying  notes  to  consolidated  financial  statements.


MARATHON BANCORP AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                  Year Ended December 31,
                                                                                  -----------------------
                                                                                 1998                  1997
                                                                                 ----                  ----
<S>                                                               <C>                     <C>
OPERATING ACTIVITIES
   Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . .  $             445,000   $ (          364,000)
   Adjustments to Reconcile Net Loss to Net Cash Provided
      (Used) by Operating Activities:
         Depreciation and Amortization . . . . . . . . . . . . .                144,000                131,000 
         Provision for Credit Losses . . . . . . . . . . . . . .                 56,000                301,000 
         Provision for OREO Losses . . . . . . . . . . . . . . .                      -                 35,000 
         Loss (Gain) on Sale of Other Real Estate Owned. . . . .                 30,000     (          112,000)
         Net Amortization of Premiums and Discounts
            on Investment Securities . . . . . . . . . . . . . .    (            24,000)    (           22,000)
         Net Change in Deferred Loan Origination Fees. . . . . .    (             3,000)                38,000 
         Net Increase in Cash Surrender Value of Life Insurance.    (            58,000)                     - 
         Net Change in Accrued Interest, Other Assets
             and Other Liabilities . . . . . . . . . . . . . . .                 84,000     (          158,000)
                                                                  ----------------------  ---------------------
        NET CASH PROVIDED  (USED)
           BY OPERATING ACTIVITIES . . . . . . . . . . . . . . .                674,000     (          151,000)
INVESTING ACTIVITIES
   Net Change in Interest-Bearing Deposits with
      Financial Institutions . . . . . . . . . . . . . . . . . .                      -                996,000 
   Purchases of  Available-for-Sale Securities . . . . . . . . .      (       9,217,000)     (       6,088,000)
   Purchases of Held-to-Maturity Securities. . . . . . . . . . .      (      15,135,000)     (       4,946,000)
   Proceeds from Maturities of Available-for-Sale Securities . .              8,508,000              2,018,000 
   Proceeds from Maturities of Held-to-Maturity Securities . . .              9,961,000              1,757,000 
   Net Decrease in Loans . . . . . . . . . . . . . . . . . . . .              4,172,000                518,000 
   Proceeds from Sale of Other Real Estate Owned . . . . . . . .                762,000              1,632,000 
   Purchase of Life Insurance. . . . . . . . . . . . . . . . . .      (       1,222,000)                     - 
   Purchases of Furniture, Fixtures and Equipment. . . . . . . .      (          74,000)     (          89,000)
                                                                  ----------------------  ---------------------
        NET CASH PROVIDED  (USED)
          BY INVESTING ACTIVITIES. . . . . . . . . . . . . . . .      (       2,245,000)     (       4,202,000)
FINANCING ACTIVITIES
   Net Change in Demand Deposits, Money Market and Savings . . .      (       7,854,000)             5,122,000 
   Net Change in Time Deposits . . . . . . . . . . . . . . . . .              2,624,000              2,442,000 
   Proceeds from Exercise of Stock Options . . . . . . . . . . .                 23,000                      - 
   Proceeds from Issuance of Common shares . . . . . . . . . . .                      -              5,527,000 
                                                                  ----------------------  ---------------------
       NET CASH PROVIDED  (USED)
         BY FINANCING ACTIVITIES . . . . . . . . . . . . . . . .      (       5,207,000)            13,091,000 
                                                                  ----------------------  ---------------------

INCREASE (DECREASE) IN
   CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . .      (       6,778,000)             8,738,000 
Cash and Cash Equivalents at Beginning of Year . . . . . . . . .             16,027,000              7,289,000 
                                                                  ----------------------  ---------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . .  $           9,249,000   $         16,027,000 
                                                                  ======================  =====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Interest Paid . . . . . . . . . . . . . . . . . . . . . . . .  $           1,386,000   $          1,140,000 
   Income Taxes Paid . . . . . . . . . . . . . . . . . . . . . .  $               3,000   $              2,000 
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


                         MARATHON BANCORP AND SUBSIDIARY

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                                                                                       Other
                                        Common  Stock             Comprehensive       Accumulated    Comprehensive
                                      Shares          Amount          Income          Deficit          Income      Total
                                      ------          ------          ------          -------          ------      -----


<S>                                   <C>        <C>              <C>               <C>            <C>           <C>  

BALANCE, JANUARY 1, 1997. . .         1,248,764   $    8,080,000                    $ (5,045,000)  $     8,000   $3,043,000

Issuance of Common Shares
  Net of Expenses of $240,000         2,563,055        5,527,000                                                  5,527,000 
COMPREHENSIVE INCOME:
  Net Loss. . . . . . . . . .                                      $(    364,000)     (  364,000)                (  364,000)
  Net Change in Unrealized
    Gain (Loss) on Available-
    for-Sale Securities . . .                                       (      5,000)                   (    5,000)  (    5,000)
                                                                   --------------
TOTAL COMPREHENSIVE INCOME. .                                      $(    369,000)
                                                                   ==============
                                    -----------       ----------                     ------------    ----------  ----------
BALANCE, DECEMBER 31, 1997. .         3,811,819       13,607,000                      (5,409,000)        3,000    8,201,000

Exercise of Stock Options . .             9,000           23,000                                                     23,000 

COMPREHENSIVE INCOME:
  Net Income. . . . . . . . .                                      $     445,000         445,000                    445,000 
  Net Change in Unrealized
    Gain (Loss) on Available-
    for-Sale Securities . . .                                       (     11,000)                   (   11,000)  (   11,000)
                                                                   --------------
TOTAL COMPREHENSIVE INCOME. .                                      $     434,000 
                                                                   ==============
                                     ----------   --------------                      ------------  -----------  ----------  
BALANCE, DECEMBER 31, 1998. .         3,820,819   $   13,630,000                      $(4,964,000) $(    8,000)  $8,658,000
                                     ===========  ==============                      ============ ============  ==========
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.


<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Basis  of  Presentation
-----------------------

The  accounting and reporting policies of Marathon Bancorp (the Company) and its
wholly  owned  subsidiary,  Marathon National Bank (the Bank), are in accordance
with  generally  accepted  accounting principles and conform to practices within
the  banking  industry.

Principles  of  Consolidation
-----------------------------

The  consolidated  financial  statements include the accounts of the Company and
the  Bank,  after  elimination  of  all  material  intercompany transactions and
balances.

Nature  of  Operations
----------------------

The  Bank maintains a single branch office and corporate headquarters located in
the  west  side of Los Angeles city.  The Bank offers a wide range of commercial
banking  services  primarily to professionals and small to medium size companies
located  throughout  the  greater  Los  Angeles  area.

Use  of  Estimates  in  the  Preparation  of  Financial  Statements
-------------------------------------------------------------------

The  preparation  of  financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  and  disclosure of
contingent  assets  and  liabilities at the date of the financial statements and
the  reported  amounts  of  revenues  and  expenses during the reporting period.
Actual  results  could  differ  from  those  estimates.

Cash  and  Due  From  Banks
---------------------------

Banking  regulations  require  that  all  banks  maintain  a percentage of their
deposits  as  reserves  in  cash  or  on  deposit with the federal reserve bank.

The  Company  maintains  amounts  due  from banks which exceed federally insured
limits.  The  Company  has  not  experienced  any  losses  in  such  accounts.

Investment  Securities
----------------------

Bonds,  notes,  and  debentures  for  which the Bank has the positive intent and
ability  to  hold  to  maturity  are reported at cost, adjusted for premiums and
discounts  that are recognized in interest income using the interest method over
the  period  to  maturity.




<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

Investment  Securities  -  Continued
------------------------------------

Investments  not  classified  as  trading  securities  nor  as  held to maturity
securities  are classified as available-for-sale securities and recorded at fair
value.  Unrealized gains or losses on available-for-sale securities are excluded
from  net  income and reported as an amount net of taxes as a separate component
of  other  comprehensive  income  included in shareholders' equity.  Premiums or
discounts on held-to-maturity and available-for-sale securities are amortized or
accreted  into  income  using  the interest method.  Realized gains or losses on
sales  of  held-to-maturity  or available-for-sale securities are recorded using
the  specific  identification  method.

Loans
-----

Loans  receivable  that  management  has  the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at their outstanding
unpaid  principal  balances  reduced  by  any  charge-offs or specific valuation
accounts  and  net  of  any  deferred  fees  or  costs  on  originated loans, or
unamortized  premiums  or  discounts  on  purchased  loans.

Loan  origination  fees and certain direct origination costs are capitalized and
recognized  as  an  adjustment  of  the  yield  of  the  related  loan.

The  accrual of interest on impaired loans is discontinued when, in management's
opinion,  the  borrower may be unable to meet payments as they become due.  When
interest  accrual  is  discontinued,  all  unpaid  accrued interest is reversed.
Interest  income is subsequently recognized only to the extent cash payments are
received.

For  impairment  recognized  in  accordance  with Financial Accounting Standards
Board  (FASB) Statement of Financial Accounting Standards No. 114, Accounting by
Creditors  for  Impairment of a Loan (SFAS No. 114), as amended by SFAS 118, the
entire  change in the present value of expected cash flows is reported as either
provision  for  loan losses in the same manner in which impairment initially was
recognized,  or  as  a reduction in the amount of provision for loan losses that
otherwise  would  be  reported.


<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

Allowance  for  Credit  Losses
------------------------------

The  allowance for credit losses is increased by charges to income and decreased
by charge-offs (net of recoveries).  Quarterly detailed reviews are performed to
identify  the risks inherent in their loan portfolio, assess the overall quality
of  their  loan  portfolio  and to determine the adequacy of their allowance for
loan  losses and the related provision for loan losses to be charged to expense.
Loans identified as less than "acceptable" are reviewed individually to estimate
the  amount of probable losses that need to be included in the allowance.  These
reviews  include  analysis  of  financial  information  as well as evaluation of
collateral  securing  the credit.  Additionally, the Bank considers the inherent
risk  present  in  the  "acceptable" portion of their loan portfolio taking into
consideration  historical losses on pools of similar loans, adjusted for trends,
conditions  and other relevant factors that may affect repayment of the loans in
these  pools.

Premises  and  Equipment
------------------------

Premises  and  equipment  are  stated at cost, less accumulated depreciation and
amortization.  Depreciation  on furniture, fixtures and equipment is computed on
the  straight-line method over the estimated useful lives of the related assets,
which  range  from three to seven years.  Leasehold improvements are capitalized
and  amortized  over  the term of the lease or the estimated useful lives of the
improvements,  whichever  is  shorter,  using  the  straight-line  method.

Other  Real  Estate  Owned
--------------------------

Other  real  estate  owned (OREO), which represents real estate acquired through
foreclosure  in  satisfaction of commercial and real estate loans, is carried at
the  lower of cost or estimated fair value less selling costs.  Any loan balance
in  excess  of  the  fair  value  of  the  real  estate  acquired at the date of
foreclosure  is  charged  to  the  allowance  for  loan  losses.  Any subsequent
valuation  adjustments  are  charged  to  provision  for  other real estate loan
losses.  Operating income or expenses and gains or losses on disposition of such
properties are recorded in current operations under net operating costs of other
real  estate  owned.

Income  Taxes
-------------

Deferred  income  taxes are computed using the asset and liability method, which
recognizes  a  liability or asset representing the tax effects, based on current
tax  law,  of  future  deductible or taxable amounts attributable to events that
have  been  recognized  in  the  consolidated financial statements.  A valuation
allowance  is established to reduce the deferred tax asset to the level at which
it  is  "more  likely than not" that the tax asset or benefits will be realized.
Realization  of  tax  benefits of deductible temporary differences and operating
loss carryforwards depends on having sufficient taxable income of an appropriate
character  within  the  carryforward  periods.

Disclosure  About  Fair  Value  of  Financial  Instruments
----------------------------------------------------------

SFAS  No.  107 specifies the disclosure of the estimated fair value of financial
instruments.  The  Bank's  estimated  fair value amounts have been determined by
the  Bank  using  available  market  information  and  appropriate  valuation
methodologies.

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

Disclosure  About  Fair  Value  of  Financial  Instruments  -  Continued
------------------------------------------------------------------------

However,  considerable  judgment  is  required  to develop the estimates of fair
value.  Accordingly, the estimates are not necessarily indicative of the amounts
the  Company  could  have  realized  in  a  current market exchange.  The use of
different market assumptions and/or estimation methodologies may have a material
effect  on  the  estimated  fair  value  amounts.

Although  management is not aware of any factors that would significantly affect
the  estimated  fair  value  amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since the balance sheet date
and,  therefore,  current  estimates of fair value may differ significantly from
the  amounts  presented  in  the  accompanying  Notes.

Earnings  Per  Shares  (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.

Stock-Based  Compensation
-------------------------

Statement  of  Financial  Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to record
compensation  cost  for  stock-based  employee compensation plans at fair value.
The Company has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board Opinion No.
25,  "Accounting  for  Stock  Issued to Employees," and related Interpretations.
Accordingly,  compensation  cost for stock options is measured as the excess, if
any,  of the quoted market price of the Company's stock at the date of the grant
over  the  amount  an  employee  must  pay  to acquire the stock.  The pro forma
effects  of  adoption  are  disclosed  in  Note  I.

Current  Accounting  Pronouncements
-----------------------------------

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS 133,
"Accounting  for Derivative Instruments and Hedging Activities".  This Statement
establishes  accounting  and  reporting standards for derivative instruments and
for  hedging  activities.  This  new  standard  is effective for 2000 and is not
expected  to  have  a  material  impact  on  the  Bank'  s financial statements.

Reclassifications
-----------------

Certain  reclassifications were made to prior years' presentations to conform to
the  current  year.  These  reclassifications  are of a normal recurring nature.




<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  B  -  INVESTMENT  SECURITIES
<TABLE>
<CAPTION>

The  following  is  a  summary  of data for the major categories of securities as of
December  31,  1998:

                                     Gross      Gross      Estimated
                                   Amortized  Unrealized  Unrealized        Fair
                                      Cost      Gains       Losses          Value
                                      ----      -----       ------          -----
<S>                               <C>          <C>      <C>              <C>
AVAILABLE-FOR-SALE SECURITIES:
   DECEMBER 31, 1998:
      U.S. Treasury Securities .  $ 1,000,000  $ 2,000  $            -   $ 1,002,000
      U.S. Government and
         Agency Securities . . .    4,497,000    1,000    (     10,000)    4,488,000
      Federal Reserve Stock. . .      248,000        -               -       248,000
      Other. . . . . . . . . . .      264,000        -    (      1,000)      263,000
                                  -----------  -------  ---------------  -----------
                                  $ 6,009,000  $ 3,000  $ (     11,000)  $ 6,001,000
                                  ===========  =======  ===============  ===========


HELD-TO-MATURITY SECURITIES:
   DECEMBER 31, 1998:
      U.S. Government and
         Agency Securities . . .  $ 8,800,000  $14,000  $(       8,000)  $ 8,806,000
      Municipal Securities . . .    3,982,000   35,000   (      21,000)    3,996,000
      Mortgage-Backed Securities    1,509,000    1,000   (       6,000)    1,504,000
                                  -----------  -------  ---------------  -----------
                                  $14,291,000  $50,000  $(      35,000)  $14,306,000
                                  ===========  =======  ===============  ===========

</TABLE>




<PAGE>
MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  B  -  INVESTMENT  SECURITIES  -  CONTINUED

Investment  securities  carried at approximately $1,000,000 at December 31, 1998
were  pledged  to  secure public deposits and other purposes as required by law.

The  actual  maturity  of mortgage-backed securities may differ from contractual
maturities  because  borrowers  may  have  the  right to prepay such obligations
without  penalty.

There  were  no sales of securities in 1998 or 1997.  Net unrealized gain (loss)
of  $(8,000)  and  $3,000  on  securities  available  for  sale were credited to
shareholders'  equity  in  1998  and  1997,  respectively.

The scheduled maturities of securities held to maturity and securities available
for  sale  at  December  31,  1998,  were  as  follows:
<TABLE>
<CAPTION>


                          Available-for-Sale Securities:  Held-to-Maturity Securities:
                          ------------------------------  ----------------------------
                                  Amortized                Amortized
                                    Cost      Fair Value      Cost     Fair Value
                                    ----      ----------      ----     ----------
<S>                               <C>         <C>         <C>          <C>

Due in One Year or Less. . . . .  $3,497,000  $3,499,000  $   292,000  $   294,000
Due From One Year to Five Years.   1,764,000   1,754,000   12,490,000   12,508,000
Due From Five Years to Ten Years     500,000     500,000            -            -
Mortgage-Backed Securities . . .           -           -    1,509,000    1,504,000
Federal Reserve Stock. . . . . .     248,000     248,000            -            -
                                  ----------  ----------  -----------  -----------
                                  $6,009,000  $6,001,000  $14,291,000  $14,306,000
                                  ==========  ==========  ===========  ===========

</TABLE>
NOTE  C  -  LOANS

The  following  is  a  summary  of the components of loans at December 31, 1998:
<TABLE>
<CAPTION>
                                           1998
                                           ----
<S>                                        <C>

Commercial loans . . . . .                 $16,640,000
Real Estate - Construction                   1,215,000
Real Estate - Other. . . .                  24,246,000
Consumer . . . . . . . . .                     677,000
                                           -----------
                                            42,778,000
Net Deferred Loan Costs. .                     214,000
                                           -----------
                                           $42,992,000
                                           ===========

</TABLE>
<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  C  -  LOANS  -  CONTINUED

The  following  is  a  summary  of the investment in impaired loans, the related
allowance  for  credit  losses, and income recognized thereon as of December 31:
<TABLE>
<CAPTION>
                                                1998
                                                ----


<S>                                            <C>

Recorded Investment in Impaired Loans . . . .  $258,000
                                               ========

Related Allowance for Credit Losses . . . . .  $ 84,000
                                               ========

Average Recorded Investment in Impaired Loans  $242,000
                                               ========

Interest Income Recognized from Cash Payments  $ 12,000
                                               ========
</TABLE>

Loans  having  carrying  value  of  $977,000 and $1,419,000, were transferred to
other  real  estate  owned in 1998 and 1997, respectively.  During 1998 and 1997
loans  totaling $1,434,000 and $1,695,000, respectively, were made to facilitate
the  sale  of  other  real  estate  owned.

A  summary  of  changes  in  the  allowance  for  credit  losses  follows:
<TABLE>
<CAPTION>
                               1998           1997
<S>                        <C>            <C>


Balance, January 1. . . .  $    747,000   $  1,088,000 
Provision for Loan Losses        56,000        301,000 
Loans Charged Off . . . .   (   194,000)   (   940,000)
Recoveries. . . . . . . .       124,000        298,000 
                           -------------  -------------
Balance, December 31. . .  $    733,000   $    747,000 
                           =============  =============
</TABLE>

MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  D  -  PREMISES  AND  EQUIPMENT

The  following is a summary of the major components of premises and equipment at
December  31,  1998.
<TABLE>
<CAPTION>

<S>                                             <C>
                                                        1998 
                                                -------------

Furniture, Fixtures and Equipment. . . . . . .  $  1,320,000 
Leasehold Improvements . . . . . . . . . . . .       480,000 
                                                -------------
                                                   1,800,000 
Less Accumulated Depreciation and Amortization   ( 1,454,000)
                                                -------------

                                                $    346,000 
                                                =============
</TABLE>
NOTE  E  -  DEPOSITS

At December 31, 1998, the scheduled maturities of certificates of deposit are as
follows:
<TABLE>
<CAPTION>

<S>                 <C>
              
1999 . . . . . . .  $12,126,000
2000 through 2003.    1,202,000
                    -----------
                     13,328,000
                    ===========             

</TABLE>

NOTE  F  -  INCOME  TAXES

The  income  tax  provision  (benefit) for the years ended December 31, 1998 and
1997  is  comprised  of  the  following:
<TABLE>
<CAPTION>
<S>                                <C>            <C>
                                           1998            1997 
                                   -------------  --------------
Current Taxes:
   Federal. . . . . . . . . . . .  $          -   $           - 
   State. . . . . . . . . . . . .         3,000           2,000 
                                   -------------  --------------
                                          3,000           2,000 
Deferred. . . . . . . . . . . . .       239,000          79,000 
Net Change in Valuation Allowance   (   439,000)   (     79,000)
                                   -------------  --------------

                                   $(   197,000)  $       2,000 
                                   =============  ==============

</TABLE>

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  F  -  INCOME  TAXES  -  CONTINUED

For  federal  income  tax  purposes,  the  Company  has  net  operating  loss
carryforwards  of  approximately  $4,478,000  which  expire in 2008 - 2018.  For
state  income  tax  purposes,  the  Company  has  incurred  net  operating  loss
carryforwards  of  approximately  $2,312,000,  which  expire  in 1999 - 2003, to
offset  future  taxes  payable,  adjusted  for  the  fifty percent reduction, as
required  by state tax law.  During 1998, state net operating loss carryforwards
of  approximately  $1,967,000  expired.

At  December 31, 1998 the components of the net deferred tax asset are comprised
of  the  following:
<TABLE>
<CAPTION>
<S>                                                        <C>
                                                                    1998 
                                                           --------------
Deferred Tax Assets:
    Allowance for Credit Losses Due to Tax Limitations. .  $     302,000 
    Other Real Estate Owned . . . . . . . . . . . . . . .              - 
    Net Operating Loss and Tax Credit Carryforwards . . .      1,826,000 
    Premises and Equipment Due to Depreciation Difference         74,000 
    Other Assets/Liabilities. . . . . . . . . . . . . . .         32,000 
                                                           --------------
                                                               2,234,000 

Valuation Allowance . . . . . . . . . . . . . . . . . . .    ( 1,946,000)

Deferred Tax Liabilities:
    Recapture of Federal Credit Reserve . . . . . . . . .              - 
    Other Assets/Liabilities. . . . . . . . . . . . . . .   (     88,000)
                                                           --------------
                                                            (     88,000)
                                                           --------------

Net Deferred Assets . . . . . . . . . . . . . . . . . . .  $     200,000 
                                                           ==============
</TABLE>

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  F  -  INCOME  TAXES  -  CONTINUED

The  principal  reasons  for the difference between the federal statutory income
tax  rate of 35% in 1998 and 1997 and income tax expense (benefit) for the years
ended  December  31,  1998  and  1997  are  as  follows:
<TABLE>
<CAPTION>
<S>                                   <C>             <C>
                                               1998            1997 
                                      --------------  --------------

Tax Benefit at Statutory Rate. . . .  $      87,000   $ (   127,000)
State Franchise Tax Net of Valuation
   Allowance . . . . . . . . . . . .          3,000           2,000 
Federal Valuation Allowance. . . . .   (    267,000)        139,000 
Other, Net . . . . . . . . . . . . .   (     20,000)   (     12,000)
                                      --------------  --------------

Tax Benefit. . . . . . . . . . . . .  $(    197,000)  $       2,000 
                                      ==============  ==============

</TABLE>

NOTE  G  -  EARNINGS  PER  SHARE  (EPS)

The  following  is  a reconciliation of net income and shares outstanding to the
income  and  number  of  share  used  to  compute  EPS:
<TABLE>
<CAPTION>

<S>                             <C>       <C>            <C>            <C>
                                        1998                      1997 
                                  --------------------   ------------------------
                                  Income       Shares       Loss         Shares
                                  ------      --------   -------------  ---------           
Net Income (Loss) as Reported.  $445,000                 $(   364,000)          -
Weighted Average Shares
   Outstanding During the Year         -     3,817,498              -   2,465,127
                                --------  -------------  -------------  ---------
      USED IN BASIC EPS. . . .   445,000     3,817,498    (   364,000)  2,465,127
Dilutive Effect of Outstanding
   Stock Options . . . . . . .         -             -              -           -
                                --------  -------------  -------------  ---------
      USED IN DILUTIVE EPS . .  $445,000     3,817,498   $(   364,000)  2,465,127
                                ========  =============  =============  =========

</TABLE>

The  impact  of stock options have been excluded from the computation of diluted
EPS  since  their  effect  would  be  to  reduce  the  loss  per  share.

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES

The  Bank  has  an  operating  lease  commitment  covering its banking premises.
Minimum  rental  commitments under this and all other operating leases that have
initial  or  remaining noncancellable terms in excess of one year as of December
31,  1998  are  as  follows:
<TABLE>
<CAPTION>
           <S>         <C>
           1999 . . .  594,000
           2000 . . .  594,000
           2001 . . .  594,000
           2002 . . .  396,000
                       -------
                     2,178,000
                    ==========         
</TABLE>


Rent expense was $523,000 and $563,000 for the years ended December 31, 1998 and
1997,  respectively.  Sublease  rental income was $92,000 in 1998 and $85,000 in
1997.

The  Company  and  the  Bank  are subject to pending or threatened legal actions
which  arise  in  the  normal course of business.  Based on current information,
management  is  of  the  opinion that the disposition of all litigation will not
have  a  material  effect  on  the  Company's consolidated financial statements.

In  the  normal course of business, the Bank is a party to financial instruments
with  off  balance sheet risk, which are intended to meet the financing needs of
its customers.  These financial instruments include commitments to extend credit
and  letters  of  credit,  which are not reflected in the consolidated financial
statements.  These  instruments  involve, to varying degrees, elements of credit
and  interest  rate risk in excess of the amounts recognized in the consolidated
financial  statements.  The Bank's exposure to credit loss commitments to extend
credit  and  letters  of  credit  is  represented by the contractual or notional
amount  of  those  instruments.

The  following  is  a  summary  of  contractual or notional amounts of financial
instruments  with  off  balance  sheet  risk  as  of  December  31,  1998.
<TABLE>
<CAPTION>



<S>                           <C>

                                    1998
                              ----------

Commitments to Extend Credit  $8,676,000
Letters of Credit. . . . . .     175,000
                              ----------

                              $8,851,000
                              ==========


</TABLE>
MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES  -  CONTINUED

Commitments  to extend credit are agreements to lend a customer as long as there
is  no  violation  of  any  condition  established in the contract.  Commitments
generally  have  fixed  expiration  dates  or  other termination clauses and may
require  payment of a fee.  Since many of the commitments are expected to expire
without  being  drawn  upon,  the  total  commitment  amounts do not necessarily
represent  future  cash  requirements.

The  Bank  uses the same credit policies in making off balance sheet commitments
and  conditional obligations as it does for balance sheet instruments.  The Bank
evaluated  each customer's creditworthiness on a case by case basis.  The amount
of  collateral  obtained,  if  deemed  necessary  by  the Bank upon extension of
credit, is based on management's credit evaluation.  The collateral held varies,
but  may  include accounts receivable, inventory, property, plant and equipment,
and  income  producing  commercial  and  residential  properties.


NOTE  I  -  STOCK  OPTION  PLAN

The Company has stock option plans which authorize the issuance of up to 700,000
shares  of the Company's unissued common shares to officers, directors and other
key  personnel.  Option  prices  shall  be equal to the fair market value at the
date of grant.  Options granted under the stock option plan expire not more than
ten  years  after  the date of grant and must be fully paid when exercised.  Set
forth below is the status of options granted, giving retroactive effect to stock
dividends  declared,  if  any:
<TABLE>
<CAPTION>



<S>                               <C>                <C>
                                           Number of Shares
                                  -------------------------------              
                                              1998          1997 
                                  -----------------  ------------

Options Outstanding, January 1 .           128,030       294,145 
Granted at Option Prices of:
   $3.75 in 1998 . . . . . . . .           325,610             - 
   $3.09 in 1997 . . . . . . . .                 -        76,888 
   $2.75 in 1996 . . . . . . . .                 -             - 
Exercised. . . . . . . . . . . .     (       9,000)            - 
Canceled . . . . . . . . . . . .      (     35,684)  (   243,003)
                                  -----------------  ------------
Options Outstanding, December 31           408,956       128,030 
                                  =================  ============
</TABLE>

At December 31, 1998 the weighted average exercise price was $3.77, the weighted
average  remaining  contractual  life  was  8.9  years,  and 22,436 options were
exercisable  at  a  weighted  average  price  of  $5.92.

The fair value of each option grant was estimated on the date of grant using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions used:  no dividend yield; risk-free rates of 4.50% for 1998 and 5.8%
for  1997;  volatility  of 37% for 1998, and 51% for 1997; and expected lives of
ten  years.  The  estimated  fair  value of options granted during 1998 and 1997
were  $2.12  and  $2.15,  per  share,  respectively.

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  I  -  STOCK  OPTION  PLAN  -  CONTINUED

The  Company  applies  Accounting  Principles  Board  Opinion No. 25 and related
Interpretations  in  accounting  for  its  stock  options.  Accordingly,  no
compensation  cost  has  been  recognized  for  its  stock  option  plan.  Had
compensation  cost  for the Company's stock option plan been determined based on
the  fair value at the grant dates for awards under the plan consistent with the
method  of  SFAS  No. 123, the Company's net income (loss) and income (loss) per
share  for  the year ended December 31, 1998 and 1997 would have been changed to
the  pro  forma  amounts  indicated  below:
<TABLE>
<CAPTION>
<S>                                        <C>       <C>

                                               1998            1997 
                                           --------  ---------------
Net Income (Loss) to Common Shareholders:
   As Reported. . . . . . . . . . . . . .  $445,000  $  (   364,000)
   Pro Forma. . . . . . . . . . . . . . .  $322,000  $  (   381,000)

Per Share Data:
   Net Income (Loss) - Basic
      As Reported . . . . . . . . . . . .  $   0.12  $(        0.15)
      Pro Forma . . . . . . . . . . . . .  $   0.08  $(        0.15)

   Net Income (Loss) - Diluted
      As Reported . . . . . . . . . . . .  $   0.12  $(        0.15)
      Pro Forma . . . . . . . . . . . . .  $   0.08  $(        0.15)
</TABLE>

NOTE  J  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

The  fair  value  of  a financial instrument is the amount at which the asset or
obligation  could be exchanged in a current transaction between willing parties,
other  than in a forced or liquidation sale.  Fair value estimates are made at a
specific  point  in  time  based  on relevant market information and information
about  the  financial instrument.  These estimates do not reflect any premium or
discount  that  could  result  from  offering  for  sale  at one time the entire
holdings  of  a particular financial instrument.  Because no market value exists
for a significant portion of the financial instruments, fair value estimates are
based  on  judgments regarding future expected loss experience, current economic
conditions,  risk  characteristics  of  various financial instruments, and other
factors.  These  estimates  are  subjective in nature, involve uncertainties and
matters  of  judgment  and,  therefore,  cannot  be  determined  with precision.
Changes  in  assumptions  could  significantly  affect  the  estimates.

Fair  value  estimates  are  based  on financial instruments both on and off the
balance  sheet  without  attempting  to estimate the value of anticipated future
business  and  the  value  of  assets  and  liabilities  that are not considered
financial  instruments.  Additionally,  tax  consequences  related  to  the
realization  of  the  unrealized gains and losses can have a potential effect on
fair  value  estimates  and  have  not been considered in many of the estimates.


<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  J  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  -  CONTINUED

The  following  methods  and assumptions were used to estimate the fair value of
significant  financial  instruments:

Financial  Assets
-----------------

The  carrying  amounts  of  cash,  short term investments, due from customers on
acceptances, and bank acceptances outstanding are considered to approximate fair
value.  Short  term investments include federal funds sold, securities purchased
under  agreements to resell, and interest bearing deposits with banks.  The fair
values  of  investment  securities,  including available for sale, are generally
based  on  quoted  market prices.  The fair value of loans are estimated using a
combination of techniques, including discounting estimated future cash flows and
quoted  market  prices  of  similar  instruments  where  available.

Financial  Liabilities
----------------------

The carrying amounts of deposit liabilities payable on demand, commercial paper,
and  other  borrowed  funds are considered to approximate fair value.  For fixed
maturity  deposits, fair value is estimated by discounting estimated future cash
flows  using  currently  offered  rates  for  deposits  of  similar  remaining
maturities.  The  fair  value  of  long  term  debt  is based on rates currently
available  to  the  Bank  for  debt with similar terms and remaining maturities.

Off  Balance  Sheet  Financial  Instruments
-------------------------------------------

The  fair value of commitments to extend credit and standby letters of credit is
estimated  using  the  fees  currently charged to enter into similar agreements.
The  fair  value  of  these  financial  instruments  is  not  material.

The  estimated  fair value of financial instruments at December 31 is summarized
as  follows  (dollar  amounts  in  thousands):
<TABLE>
<CAPTION>



<S>                              <C>          <C>
                                        1998
                                 -----------------------         
                                 Carry Value  Fair Value
-------------------------------  -----------  ----------       
Financial Assets:
   Cash and Due From Banks. . .  $     5,074    $ 5,074
   Federal Funds Sold . . . . .  $     4,175    $ 4,175
   Investment Securities. . . .  $    20,292    $20,307
   Loans, Net . . . . . . . . .  $    42,259    $41,949
   Cash Value of Life Insurance  $     1,280    $ 1,280

Financial Liabilities:
   Deposits . . . . . . . . . .  $    65,218    $65,256
</TABLE>

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  K  -  REGULATORY  MATTERS

The  Company  and  Bank  are  subject to various regulatory capital requirements
administered  by  the federal banking agencies.  Failure to meet minimum capital
requirements  can  initiate  certain  mandatory  and  possible  additional
discretionary  actions  by  regulators  that, if undertaken, could have a direct
material  effect  on the Company's financial statements.  Under capital adequacy
guidelines  and  the  regulatory  framework  for  prompt  corrective action, the
Company and Bank must meet specific capital guidelines that involve quantitative
measures  of  the  assets,  liabilities,  and certain off-balance-sheet items as
calculated  under  regulatory  accounting  practices.  The  capital  amounts and
classification are also subject to qualitative judgments by the regulators about
components,  risk  weightings  and  other  factors.

Quantitative  measures  established  by  regulation  to  ensure capital adequacy
require  the  Company and Bank to maintain minimum amounts and ratios (set forth
in  the table below) of total and Tier 1 capital (as defined in the regulations)
to  risk-weighted  assets  (as  defined),  and of Tier 1 capital (as defined) to
average assets (as defined).  Management believes, as of December 31, 1998, that
the  Company  and  Bank meet all capital adequacy requirements to which they are
subject.

As  of  December 31, 1998, the most recent notification from the Federal Deposit
Insurance  Corporation  categorized  the  Bank  as  well-capitalized  under  the
regulatory  framework  for  prompt corrective action (there are no conditions or
events  since that notification that management believes have changed the Bank's
category).  To  be  categorized  as  well-capitalized,  the  Bank  must maintain
minimum  ratios  as set forth in the table below.  The following table also sets
forth  the  Bank's  actual  capital  amounts  and  ratios  (dollar  amounts  in
thousands):
<TABLE>
<CAPTION>

                                          Amount of Capital Required
                                          --------------------------
                                          To Be Categorized as           To Be
                             Actual       Adequately Capitalized   Well-Capitalized
                         ---------------  ----------------------   ----------------
                        Amount Percentage   Amount    Percentage   Amount Percentage
                         ----- ----------   ------     ---------   ------ ----------
<S>                      <C>     <C>        <C>       <C>           <C>     <C>

AS OF DECEMBER 31, 1998
   Total Risk-Based . .  $9,323  18.2%       $4,096   8.0%          $5,120  10.0%
   Tier 1 Risk-Based. .  $8,681  16.9%       $2,048   4.0%          $3,072   6.0%
   Tier 1 Leverage. . .  $8,681  11.2%       $3,087   4.0%          $3,859   5.0%

</TABLE>

The  Company  is  subject  to  similar  requirements administered by its primary
regulator,  the  Federal  Reserve  Board.  For  capital  adequacy  purposes, the
Company  must  maintain total capital to risk-weighted assets, Tier 1 capital to
risk-weighted  assets  and  Tier  1  capital to average assets of 8.0%, 4.0% and
4.0%,  respectively.  Its  total capital to risk-weighted assets, Tier 1 capital
to  risk-weighted  assets and Tier 1 capital to average assets was 18.2%, 16.9%,
and  11.2%,  respectively,  at  December  31,  1998.

<PAGE>
                         MARATHON BANCORP AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  L  -  CONDENSED  FINANCIAL  INFORMATION  OF  PARENT  COMPANY  ONLY

Marathon  Bancorp  operates  Marathon  National  Bank.  The  earnings  of  the
subsidiary  are  recognized  on  the  equity  method  of  accounting.  Condensed
financial  statements  of  the  parent  company  only  are  presented  below:
<TABLE>
<CAPTION>
<S>                                                                   <C>                     <C>
                                                                      December 31,
                                                                      ----------------------                        
CONDENSED BALANCE SHEETS . . . . . . . . . . . . . . . . . . . . . .                   1998 
                                                                      ----------------------                        
ASSETS
Cash in Marathon National Bank . . . . . . . . . . . . . . . . . . .  $               4,000 
Investment in Marathon National Bank . . . . . . . . . . . . . . . .              8,674,000 
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  5,000 
                                                                      ----------------------                        
   TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . .  $           8,683,000 
                                                                      ======================                        
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued Expenses . . . . . . . . . . . . . . . . . . . . . . . . . .  $              25,000 
Shareholders' Equity
   Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . .             13,630,000 
   Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . . .      (       4,964,000)
   Accumulated Other Comprehensive Income. . . . . . . . . . . . . .  (              8,000)
                                                                      ----------------------                        
   TOTAL SHAREHOLDERS' EQUITY. . . . . . . . . . . . . . . . . . . .              8,658,000 
                                                                      ----------------------                        
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY. . . . . . . . . . . .  $           8,683,000 
                                                                      ======================                        

                                                                                    Year ended December 31,
                                                                                    -----------------------  
CONDENSED STATEMENTS OF OPERATIONS . . . . . . . . . . . . . . . . .                   1998                    1997 
                                                                      ----------------------  ----------------------
Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . .  (             21,000)    (              7,000)
Equity in Undistributed Net Income (Loss) of Marathon National Bank.                466,000    (            357,000)
                                                                      ----------------------  ----------------------
Net Income (Loss). . . . . . . . . . . . . . . . . . . . . . . . . .  $             445,000   $(            364,000)
                                                                      ======================  ======================

                                                                                    Year Ended December 31,
                                                                                    -------------------------     
CONDENSED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . .                   1998                    1997 
                                                                      ----------------------  ----------------------
OPERATING ACTIVITIES
Net Income (Loss). . . . . . . . . . . . . . . . . . . . . . . . . .  $             445,000   $(            364,000)
Adjustments to Reconcile Net Income (Loss) to Net Cash Used by
   Operating Activities - Equity in Undistributed Net Income Loss
   of Marathon National Bank . . . . . . . . . . . . . . . . . . . .   (            466,000)                357,000 
Net Change in Other Assets and Other Liabilities . . . . . . . . . .   (             18,000)                      - 
                                                                      ----------------------  ----------------------
   NET CASH USED BY OPERATING ACTIVITIES . . . . . . . . . . . . . .   (             39,000)    (             7,000)

INVESTING ACTIVITIES
Investment in Marathon National Bank . . . . . . . . . . . . . . . .                      -       (       5,501,000)
                                                                      ----------------------  ----------------------
   NET CASH USED BY INVESTING ACTIVITIES . . . . . . . . . . . . . .                      -       (       5,501,000)

FINANCING ACTIVITIES
Proceeds from Exercise of Stock Options. . . . . . . . . . . . . . .                 23,000 
Proceeds from Issuance of Common Shares. . . . . . . . . . . . . . .                                      5,527,000 
                                                                      ----------------------  ---------------------
   NET CASH PROVIDED
      BY FINANCING ACTIVITIES. . . . . . . . . . . . . . . . . . . .                 23,000               5,527,000 
                                                                      ----------------------  ---------------------
INCREASE (DECREASE) IN
   CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . .    (            16,000)                 19,000 
Cash and Cash Equivalents at Beginning of Year . . . . . . . . . . .                 20,000                   1,000 
                                                                      ----------------------  ----------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . .  $               4,000   $              20,000 
                                                                      ======================  ======================
</TABLE>

<PAGE>
                        INDEPENDENT AUDITORS' REPORT


The  Board  of  Directors  and  Shareholders
Marathon  Bancorp

We  have audited the accompanying consolidated balance sheet of Marathon Bancorp
and  Subsidiary as of December 31, 1998, and the related consolidated statements
of  operations, changes in stockholder's equity and cash flows for the two years
ended  December  31,  1998.  These  consolidated  financial  statements  are the
responsibility  of  the Marathon Bancorp's management.  Our responsibility is to
express  an  opinion  on  these  consolidated  financial statements based on our
audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about  whether  the consolidated financial statements are
free  of  material  misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit  also  includes  assessing  the accounting principles used and significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We  believe that our audits provide a reasonable basis
for  our  opinion.

In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Marathon Bancorp and
Subsidiary  as  of  December 31, 1998, and the results of its operations and its
cash  flows  for each of the two years in the period ended December 31, 1998, in
conformity  with  generally  accepted  accounting  principles.


/s/ Vavrinek, Trine, Day & Co., LLP
    Vavrinek, Trine, Day & Co., LLP

January  22,  1999
Laguna  Hills,  California


<PAGE>

ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
--------------------------------------------------------------------------------
FINANCIAL  DISCLOSURE
---------------------

     No  information  is  required  in  response  to  this  item.

                               PART III
                               -------

ITEM  9.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT
------------------------------------------------------------------
<TABLE>
<CAPTION>

     Directors:
<S>                           <C>                                                            <C>
Name . . . . . . . . . . . .  Position with Company                                          Director
                              Since
Nikolas Patsaouras (1) & (2)  Chairman of the Board of the Company and Bank                      1982
Robert Abernethy (2) . . . .  Director                                                           1983
Craig D. Collette. . . . . .  President and Chief Executive Officer of the Company and Bank      1997
Frank W. Jobe, M.D.. . . . .  Director                                                           1985
C. Thomas Mallos (1) & (2) .  Director                                                           1982
Robert l. Oltman  (1) & (2).  Director                                                           1982
Ann Pappas (1) & (2) . . . .  Director                                                           1982
<FN>
(1)     Member  of  the  Audit  Committee
(2)     Member  of  the  Personnel  and  Compensation  Committee.
</TABLE>

<TABLE>
<CAPTION>
     Executive  officers  of  the  Company  and  the  Bank  were:
<S>                <C>                                                                        <C>
Name. . . . . . .  Position                                                                   Age

Craig D. Collette  President and Chief Executive Officer of the Company and Bank               56
Timothy J. Herles  Executive Vice President and Senior Credit Officer of the Bank              58
Howard J. Stanke.  Executive Vice President, Chief Financial Officer of the Company and Bank   50
Adrienne Caldwell  Executive Vice President, Operations Administration of the Bank             56
</TABLE>


     CRAIG D. COLLETTE has been the President and Chief Executive Officer of the
Company  and  Bank  since  January  1997.  Mr. Collette has been a banker for 29
years  in the Southern California banking community.  Prior to joining the Bank,
Mr.  Collette  was President, COO and Director of TransWorld Bank, Sherman Oaks,
CA  and, for approximately 18 years, was President, CEO and Director of Landmark
Bank,  La  Habra,  CA

     TIMOTHY J. HERLES has been Executive Vice President of the Bank since April
1983,  and  has  served  in  various  positions  including  Cashier,  Chief
Administrative  Officer,  Compliance  Officer  and  Senior Credit Officer, which
position  he  currently  holds.

     HOWARD J. STANKE has been Executive Vice President /Chief Financial Officer
of the Company and Bank since June 9, 1997.  Mr. Stanke was previously Executive
Vice  President/Chief  Financial  Officer  of  TransWorld Bancorp and TransWorld
Bank.

     ADRIENNE  CALDWELL  has  been  Executive  Vice  President-Operations
Administration  of  the  Bank  since  March  1986.

<PAGE>

ITEM  10.  EXECUTIVE  COMPENSATION
----------------------------------

     The following table sets forth a comprehensive overview of the compensation
of the Bank's executive officers with salary and bonus exceeding $100,000 during
the  fiscal year ended December 31, 1998.  Comparative data is also provided for
the  previous  two  fiscal  years.

<TABLE>
<CAPTION>

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

<S>                                <C>   <C>       <C>  <C>        <C>      <C>       <C>       <C>

Craig D. Collette (3) . . . . . .  1998  $170,102  $ 0  $8,400       0       5,000        0      $1,800
President and . . . . . . . . . .  1997  $160,714  $ 0  $8,400       0      30,000        0      $1,238
Chief Executive Officer
Of the Company and the Bank

Timothy J. Herles . . . . . . . .  1998  $101,089  $ 0  $8,400       0      34,184        0      $1,940
Executive Vice President and. . .  1997  $102,372  $ 0  $8,400       0           0        0      $1,490
Chief Credit Officer of the Bank.  1996  $100,000  $ 0  $8,400       0           0        0      $1,210

<FN>

(1)     These  amounts  represent  the  automobile  allowance
(2)     These  amounts  represent  excess  life  insurance  premiums.
(3)     Mr.  Collette  commenced  employment  on  January  22,  1997.
</TABLE>


ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT
--------------------------------------------------------------------------------

     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 23, 1999, 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.  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.
<TABLE>
<CAPTION>

<S>                                       <C>                                    <C>          <C>
                                                            Common Stock Beneficially Owned as of
                                                                       February 23, 1999
                                                                    Number of           Percent Of
Name of Beneficial Owner . . . . . . . .                              Shares              Class
--------------------------------------------------------------------------------------------------       

Directors and Named Executive Officers:
----------------------------------------                                                           
Nikolas Patsaouras. . . . . . . . . . .                                  37,910  (1)        0.99
Robert J. Abernethy. . . . . . . . . . .                                107,793             2.82 
Craig D. Collette. . . . . . . . . . . .                                 47,723  (2)        1.24
Frank W. Jobe, M.D.. . . . . . . . . . .                                 74,190             1.94 
C. Thomas Mallos . . . . . . . . . . . .                                 47,878  (3)        1.25
Robert L. Oltman . . . . . . . . . . . .                                191,032  (4)        4.99
Ann Pappas . . . . . . . . . . . . . . .                                 60,011  (5)        1.57
Timothy J. Herles  . . . . . . . . . . .                                  9,696  (6)        0.03


Total for all directors, named
executive officers and all
executive officers (numbering 10). . . .                                602,679  (7)       15.75

Principal Shareholder:
----------------------------------------                                                           
Oppenheimer-Spence Financial
Services Partnership L.P.. . . . . . . .                                224,897  (8)        5.88

<FN>

(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 47,723
shares.
(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 3,052 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 1,184 of these
shares.  The  amount  includes  8,512  acquirable  by exercise of stock options.
(7)     This  amount  includes  19,458  shares  acquirable  by exercise of stock
options  within  60  days  of  February  23,  1999.
(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.

</TABLE>





ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS
-------------------------------------------------------------

     It  is  against  Bank  policy  to  make  loans  to  directors,  officers or
employees.


ITEM  13.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON FORM 8-K
--------------------------------------------------------------------------------

     (A)  FINANCIAL  STATEMENTS  AND  SCHEDULES
          -------------------------------------


     All  schedules are omitted because they are not applicable, not material or
because  the  information  is  included in the financial statements or the notes
thereto.


     (B)  REPORTS  ON  FORM  8-K
          ----------------------

     N/A

     (C)  EXHIBITS
          --------

     See  Exhibit  Index  at  Page  48  this  Form  10-KSB.



<PAGE>


                               SIGNATURES
                               ----------


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned, thereunto duly authorized, on the 22nd day of
March  1999.

                                        MARATHON  BANCORP  (Registrant)

                                        Howard  J.  Stanke
                                        ------------------
                                        Howard  J.  Stanke
                                        Executive Vice President &
                                        Chief  Financial  Officer

     `Pursuant  to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
registrant  and  in  the  capacities  and  on  the  dates  indicated.


                                     

     `Pursuant  to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
registrant  and  in  the  capacities  and  on  the  dates  indicated.
<TABLE>
<CAPTION>
<S>                  <C>                         <C>
SIGNATURE . . . . .  TITLE                 DATE
-------------------  --------------------------                



Nikolas Patsaouras.  Chairman of the Board       March 22, 1999
-------------------                                            
Nikolas Patsaouras


Craig D. Collette .  Director,President &        March 22, 1999
-------------------  CEO                                          
Craig D. Collette .  


C. Thomas Mallos. .  Director                    March 22, 1999
-------------------                                            
C. Thomas Mallos


Robert J. Abernethy  Director                    March 22, 1999
-------------------                                            
Robert J. Abernethy


------------------   Director                    March 22, 1999
Frank W. Jobe, M.D.


Robert L. Oltman. .  Director and Secretary      March 22, 1999
-------------------                                            
Robert L. Oltman


Ann Pappas. . .      Director                    March 22, 1999
-------------------                                            
Ann Pappas
</TABLE>


                                    EXHIBIT INDEX
                                    -------------
<TABLE>
<CAPTION>
<S>                         <C>                                       <C>

EXHIBIT NO.                  DESCRIPTION                             PAGE
------------------------                                              


21. . . . . . . . . . . . .  Subsidiaries of Company                   48

23. . . . . . . . . . . . .  Consent of Vavrinek, Trine, Day & Co LLP  49

27. . . . . . . . . . . . .  Financial Data Schedule

</TABLE>




                                   EXHIBIT 21.


                        SUBSIDIARIES OF MARATHON BANCORP
                        --------------------------------



MARATHON  NATIONAL  BANK,  incorporated  under  the  laws  of the United States.


MARATHON  BANCORP  MORTGAGE CORPORATION, (an inactive subsidiary),  incorporated
Under the  laws  of  California.


                                 EXHIBIT 23.



INDEPENDENT  AUDITORS'  CONSENT


Board  of  Directors  and  Shareholders
Marathon  Bancorp
Los  Angeles,  California

We  consent  to  the incorporation by reference in the Registration Statement of
Marathon  Bancorp on Form S-8 of our report dated January 22, 1999, on our audit
of  the  consolidated balance sheet of Marathon Bancorp as of December 31, 1998,
and  the related consolidated statements of operations, changes in stockholder''
equity and cash flows for each of the two years in the period ended December 31,
1998,  which  report  is  incorporated by reference in the 1998 Annual Report on
Form  10-KSB.


/s/ Vavrinek, Trine, Day & Co., LLP
    Vavrinek, Trine, Day & Co., LLP

March  25,  1999
Laguna  Hills,  California