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, 1997
                                    
   		                         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        (I.R.S. Employer Identification No.)
   incorporation or origination)
   
  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.   $5,295,000	     

  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, 1997.  The amount is   
$13,212,425.  Solely for the purpose of this calculation, all directors and 
officers are regarded as affiliates.   

  As of March 1, 1998, there were 3,811,819 shares of no par common Stock 
issued and outstanding.

                                     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.  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.  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
------------------
 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 
the adoption of SFAS No. 123 are disclosed in Part II, Item 7, Note I of  
"NOTES TO CONSOLIDATED FINANCIAL STATEMENTS". 
 In June 1997, the Financial Accounting Standards Board issued Statement
No. 130, "Reporting Comprehensive Income".  This statement, which is 
effective for the year ending December 31, 1998, establishes 
standards of disclosure and financial statement display for reporting 
comprehensive income and its components.
	In June 1997, the Financial Accounting Standards Board issued Statement 
No. 131, "Disclosures about Segments of an Enterprise and
Related Information."  This statement changes current practice under SFAS 
14 by establishing a new framework on which to base segment reporting 
(referred to as the management approach) and also requires certain related 
disclosures about products and services, geographic areas and major 
customers.  The disclosures are required for the year ending December 31, 
1998.


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, 1997, 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.
	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.
 On December 16, 1996, the Company entered into a memorandum of 
understanding with the Federal Reserve Bank (FRB) under which the 
Company agreed, among other things, to refrain from paying cash dividends 
except with the prior approval of the FRB, submit annual statements of 
planned sources and uses of cash, and submit annual progress reports.
	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.
		As of December 31, 1997, 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, 1997, required reserves were approximately $890,000.


Employees
---------
	At December 31, 1997, 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.


<TABLE>
Changes in Net Interest Income

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
                            --------  -------  -------   ------- ----  ------
                              <C>      <C>       <C>        <C>  <C>    <C>
Loans                        $46,590   $3,714     8.0%   $(250)  $(71)  $(321)
Other earning assets:
 Interest bearing deposits with
  financial institutions         511       27     5.3%     (18)   (2)     (20)
 Investment Securities         9,128      564     6.2%      83     6       89
 Fed funds sold & Securities
  purchased under resale 
      agreements               7,819      425     5.4%     (188)   (10)   198
                             -------   ------     ----    ------ ------ ------
Tot 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      (1,009)
                              -------
                              $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>

<TABLE>
Changes in Net Interest Income
                              <C>      <C>      <C>      <C>     <C>    <C>
Year Ended December 31, 1996
( 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                         $49,670   $4,035   8.1%   $(309)  $(468)  $(777)
Other earning assets:
 Interest-bearing deposits with
   financial institutions         832       47   5.7%      11    (  4)      7
 Investment Securities          7,775      476   6.1%    (410)     37    (373)
 Fed funds sold & Securities
   purchased under resale 
   agreements                  11,206      623   5.6%     262     (14)    248
                               ------     ----  -----    -----   -----  -----
Total interest earning assets $69,483   $5,180   7.5%  $ (447)  $(448)  $(895)
Non earning assets:
 Cash & due from banks          6,247
 Other assets                   3,666
 Allowance for loan loss         (602)
                              -------
                              $78,794

Interest-bearing liabilities:
 Deposits:
   Demand                      $6,628   $   62   0.9%  $  (11)  $  (0) $  (11)
   Money  market and savings   27,566      723   2.6%     (83)    (10)    (93)
   Time certificate of deposit  8,463      392   4.6%     (51)     20     (31)
   Federal funds purchased          -        -     -      (10)      -     (10)
                               ------    -----   ----   ------  ------  -----
Total interest-bearing
 liabilities                   42,657    $1,177  2.8%   $(154)   $   9  ($145)

Noninterest-bearing liabilities
 and shareholders equity:
Noninterest-bearing demand     31,762
Other liabilities                 261
Shareholders' equity            4,114
                               ------
                              $78,794

Net interest income                      $4,003
Net interest spread                              4.7%
Net yield on earning assets                      5.8%
</TABLE>

Investment Securities

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

<TABLE>
                               	Total                             		Estimated
	                           Amortized     	Gross Unrealized           	Market
YEAR END 1997                   	Cost       	Gains	   Losses            Value
( in thousands)             ---------      -------    -------          ------
                                <C>          <C>       <C>               <C>
Securities available for sale:
  U.S. Treasury Securities    $   998       $    5     $    -          $1,003
  U.S. Government and Agency
    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

YEAR END 1996
Securities available for sale:
  US. Treasury Securities      $1,004       $    3     $    -          $1,007
  Mortgage-backed securities       19            5          -              24
  Federal Reserve Bank            120            -          -             120
                               ------        -----      -----           -----             
          Total                $1,143       $    8     $    -          $1,151

Securities held to maturity:
  Mortgage-backed securities   $5,969       $    -     $ (266)         $5,703
                               ------         ----      -----           -----        
          Total                $5,969       $    -     $ (266)         $5,703
</TABLE>

Investment Securities - continued

The following table shows the maturities of investment securities at 
December 31, 1997 and the weighted average yields of those securities.        

<TABLE>
                                    Over 1   Over 5
                                     Year    Years
                          1 Year   Through   Through     Over          Average
(in thousands)           or less  5 Years   10 Years  10 Years   Total   Yield 
                             <C>    <C>        <C>       <C>     <C>     <C>
Securities available for sale:
 U.S. Treasury Securities $    -   $   998   $     -  $    -   $   998    6.0%
 U.S. Government Agency 
   Securities              3,492         -         -       -     3,492    5.6%
 Federal Reserve Stock         -         -         -     256       256    5.8%
 Other                       499         -         -       -       499    6.1%
                          ------    ------    ------   ------  -------   -----
    Total                 $3,991   $   998   $     -  $  256   $ 5,245    5.7%

Securities held to maturity:
 U.S. Government Agency 
   Securities            $   500   $ 3,001   $     -  $    -   $ 4,051    6.0%
 Mortgage-Backed Securities    -         -         -   4,702     4,702    6.5%
 Municipal Securities        100       294         -       -       394    6.0%
                            ----    ------    ------   ------  -------   -----
    Total                $   600    $3,845   $     -  $4,702   $ 9,147    6.3%

</TABLE>

Loan Portfolio

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

                                         % of                       % of
(in Thousands)               1997       Total          1996        Total
                            -----      ------         -----       ------
                            <C>         <C>           <C>            <C>
Commercial Loans           15,925         34%        14,056          30%
Real Estate Loans:        
  Construction                  -          -            457           1%
  Real Estate Mortgage     29,630         64%        32,039          67%
Installment loans           1,009          2%           895           2%
                           ------        ----        ------         ----
                           46,696        100%        47,447         100%
Deferred net loan
 origination costs            211                       249
Allowance for Loan Losses    (747)                   (1,088)
                           ------                    ------   
   Net Loans               46,028                    46,608

</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>
 
Commercial and Construction Loans                          	  December 31,       
( in thousands)                                      1997             1996
                                                    -----           ------
COMMERCIAL LOANS                                    <C>               <C>
Aggregate maturities of loan balances due:
  In one year or less:
    Interest rates are floating or adjustable    $ 14,558         $ 10,039
    Interest rates are fixed or predetermined       1,357                -
  After one year but within five years:
    Interest rates are fixed or predetermined           -            4,012
  After five years:
    Interest rates are fixed or predetermined           -                5
      Total commercial loans                       15,925           14,056

REAL ESTATE CONSTRUCTION LOANS
Aggregate maturities of loan balances due
  in one year or less and interest rates
  are floating or adjustable                            -              457
                                                   ------           ------
    Total commercial and construction loans        15,925           14,513

</TABLE>

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, 1997, loans on nonaccrual totaled $965,000, 
compared with $568,000 at year end 1996. The reduction in interest 
income associated with nonaccrual loans was approximately $119,000 
during 1997, and $147,000 during 1996.  At December 31, 1997 loans 
past due 90 days or more and still accruing interest totaled $1,155,000 
and there were no loans past due ninety days or more and still accruing 
interest at December 31, 1996.  At December 31, 1997 and 1996, the 
Bank had classified $115,000 and $69,000, respectively, of its loans as 
impaired and recorded the full amount as specific reserve in the 
allowance for loan losses.  In addition, the Bank classified $499,500 and 
$2,354,900, respectively, of its loans as impaired without a specific 
reserve.  The average recorded investment of impaired loans during the 
year ended December 31, 1997 and 1996 was approximately $1,985,000 
and $2,433,000 respectively.  Interest income of $90,000 and $73,000, 
respectively, was recognized on impaired loans during the years ended 
December 31, 1997 and 1996.  There were no restructured loans at 
December 31, 1997. There were no loans at December 31, 1997 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, 1997, 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, 1997 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.
	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.

<TABLE>
                                                              <C>       <C>
Loan Charge-offs and Recoveries
(in thousands)                                                  1997     1996
Balance of allowance for loan losses at beginning of year      1,088      720
Loans charged off:
     Commercial                                                 (392)    (297)
     Real estate                                                (396)       -
     Installment                                                (152)      (6)
                                                                 ----    -----
        Total loans charged off                                 (940)    (303)

Recoveries of loans previously charged off:
     Commercial                                                  288        69
     Real estate                                                   -         -
     Installment                                                  10         1
                                                                ----      ----
        Total loan recoveries                                    298        70
Net loans charged off                                           (642)     (233)
Provision charged to operating expense                           301       601
                                                                ----     -----
Balance of allowance for loan losses at end of year              747     1,088
                                                              
Amount of loans outstanding at end of the year                46,775    47,696
Average amount of loans outstanding                           46,590    49,670
Ratio of net charge-offs to average loans outstanding           1.38%     0.47%
Ratio of allowance for loan losses at the end of the
     year to average loans outstanding                          1.60%     2.19%
Ratio of allowance for loan losses at the end of the
     year to loans outstanding at the end of the year           1.60%     2.29%

</TABLE>
 
	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.  
<TABLE>

Allowance for Loan Losses                    
December 31,                         1997                       1996  
( in thousands)                          Percent of               Percent of
                            Allowance  Loans in Each  Allowance  Loans in Each 
                            for Loan    Category to    for Loan   Category to 
                              Losses    Total Loans     Losses    Total Loans
                            ---------   ----------     -------   ------------
                                <C>        <C>           <C>           <C>
Commercial loans               294           34%          372          30%
Real  estate loans:
     Construction                -            -             -           1%
     Mortgage                  353           64%          660          67%
Installment/Consumer loans     100            2%           56           2%
                              ----          ---           ---         ---
  Total allowance for
    loan losses                747          100%        1,088         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 allocated to each loan category is not the total 
amount available for future losses that might occur within such 
categories, since even on the above basis there is an unallocated portion 
of the allowance and the total allowance is a general reserve applicable to 
the entire portfolio.
	Although management believes the level of the allowance for 
loan losses as of December 31, 1997, 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.  However, as described in 
section entitled "Formal Agreement;  Restrictions on Transfers of Funds 
to the Company by the Bank," the Bank's capital status may preclude the 
Bank from access to borrowings from the Federal Reserve System 
through the discount window.

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>
                                              	1997    	           1996
                                         Average   Average   Average  Average
Deposits                                 Balance     Rate    Balance    Rate
(in thousands)
                                             <C>      <C>     <C>     <C>
Demand, non-interest-bearing              26,929              31,762
Demand, interest bearing                   5,975      0.9%     6,628    0.9%
Money market and savings                  22,926      2.7%    27,566    2.7%
Time certificates of deposit               9,049      5.2%     8,463    4.6%
                                         --------    ----     ------    ----
         Total Deposits                   64,879              74,419
</TABLE>
	The following is a maturity schedule of time certificates of 
deposit of $100,000 or more at the end of the past two years:
<TABLE>
Time Certificates of Deposit                                                          
                                                               <C>      <C>
December 31,                                                    1997    1996

Three months or less                                           1,859   3,443
Over three months through six months                           1,305   2,360
Over six months through twelve months                          1,823   2,298
Over twelve months                                               100     161
                                                                ----   -----
        Total                                                  5,087   8,262
</TABLE>

The Bank had no brokered deposits at December 31, 1997 and 1996.


Selected Financial Ratios
-------------------------
	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.                              
<TABLE>
                                                           <C>           <C>
                                                            1997         1996
Return on average assets                                   (0.5)%       (1.2)%
Return on average shareholders' equity                     (6.6)%      (22.8)%
Average shareholders' equity to average assets               7.8%         5.2%  
Shareholders' equity to total assets at year end             6.9%         4.6%  
</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 $545,000 during 1998, $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 1997.



                                  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, 1997 and 1996 ranged as follows:

By               1997                             1996
Quarter 	1st   	2nd   	3rd	 4th       	1st	     2nd     	3rd     	4th 
Price
   High		3	   3 1/2  4     	5 1/4      3 7/8  3 9/16  2 37/64 	3
   Low	 	2 1/2  2 1/4  2 1/4  3 3/4     	2 61/64	 1 19/32 	1 19/32	 1 19/32


Principal market makers at December 31, 1997:

Buford Capital		     				Sutro & Co., Inc
Hoefer & Arnett, Inc					Torrey Pines Securities

The Transfer Agent and Registrar is ChaseMellon Shareholder Services, 
Los Angeles, California

At December 31, 1997 there were approximately 319 holders of record 
of the Company's common shares.


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

	1997 was a year of rebuilding for Marathon Bancorp.  Management 
was restructured and the Company was recapitalized and returned to 
profitability.  The Company recorded a net loss for the year of $364,000 
but recorded a profit in both the third and fourth quarters.  This result 
compared to a loss of $939,000 for the year ended 1996. Basic per share 
earnings were $0.02 for the fourth quarter and $(0.15) for the year 1997 
and $(0.75) for the fourth quarter and $(0.75) for the year 1996.
	Both assets and deposits increased during 1997.  Deposits grew 
$7,564,000, or 12.0% while assets increased $12,676,000, or 19.1%.  
Shareholders' equity was increased by a private offering of common 
stock in March and a public offering in June that raised a total of 
$5,527,000, net of expenses.  The Company was also released from its 
formal agreement with the Office of the Comptroller of the Currency.

RESULTS OF OPERATIONS

Net Interest Income

	Net interest income is the Company's largest source of earnings.  Net 
interest income represents the difference between interest income and 
fees from earnings assets and interest paid on interest-bearing liabilities.  
Net interest income for 1997 decreased $417,000 from 1996 and was 
$1,167,000 less than 1995.  The reason for the decrease from 1996 to 
1997 was a reduction in the interest earned on federal funds sold due to a 
lower base of investible funds in 1997 and loss of interest on loans 
placed on nonaccrual.  Average assets in 1997 were $70,568,000 
compared to $78,668,000 in 1996.  The reason for the decrease from 
1995 was based on a smaller loan portfolio in 1997 versus 1995.
	The interest income earned on the loan portfolio was the main 
contributing factor to the decrease in interest income.  In 1997 a 
combination of loans on nonaccrual, loans put in other real estate owned 
and a restructuring of the loan portfolio reduced the outstanding volume 
of loans.  The nonearning loans plus the decline in the portfolio were 
both instrumental in the reduction in interest income.  The decline in the 
average balance in fed funds sold of approximately $3.4 million along 
with a small decline in the average rate earned caused a drop of  
$218,000 in interest earned on fed funds sold.  Interest earned on 
investment securities increased by $89,000 due to an increase in volume 
that was partially offset by a drop in overall investment yield due to 
lower market rates.
	Interest expense was down 3%, or $33,000 from 1996 and 14%, or 
$178,000 from 1995.  This decrease was due to a decline in the volume 
of interest bearing deposits.  Although interest bearing deposits increased 
in the fourth quarter, the average balance outstanding for 1997 was less 
than 1996 or 1995.  The average rate paid did
increase from 2.75% in 1995 to 2.8% in 1996 to 3.6% in 1997.   The net 
interest margin, which is net interest income divided by earning assets, 
decreased from 5.8% in 1996 to 5.5% in 1997.

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 stringent 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's reviews are based upon previous loan 
loss experience, current economic conditions, composition of the loan 
portfolio, the value of collateral and other relative factors.  The 
Company's lending is concentrated in Los Angeles County and 
surrounding areas, which have experienced adverse economic conditions 
and declining real estate values.  These factors adversely affected our 
customers in recent years but conditions started to improve during 1997.  
	Nonperforming loans, consisting of loans past due over 90 days plus 
loans on nonaccrual, totaled $2,120,000 at December 31, 1997 versus 
$568,000 at year end 1996.  Loans classified by the Bank as doubtful or 
substandard at year end 1997 equaled $2,983,000 versus $5,942,000 at 
year end 1996.
	The allowance for credit losses, which provides a financial buffer for 
the risk of losses inherent in the lending process, is increased by the 
provision for loan losses charged against income, decreased by the 
amount of loans charged off and increased by recoveries.  There is no 
precise method of predicting specific losses, which ultimately may be 
charged off, and the conclusion that a loan may become uncollectible, 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.
	Based upon management's assessment of the overall quality of the 
loan portfolio, the balance in the allowance for loan losses and the 
external economic conditions, the Bank made a $301,000 provision for 
loan losses occurring 1997 versus $601,000 in 1996 and $561,000 in 
1995.  Loans totaling $940,000 were charged off during the year, and 
$298,000 was recovered leaving the allowance for loan losses at 1.6% of 
gross loans outstanding at December 31, 1997.

Noninterest Income

	Noninterest income increased  $345,000, or 156.8% from 1996 to 
1997.  The Company has made a concerted effort to increase service 
charges as a means to increase overall revenue and improved the service 
charge income from $197,000 in 1996 to $285,000 in 1997.  Over the 
past few years the Company has lagged behind the industry in 
noninterest income generation.  This will continue to be an item that 
management will focus on in 1998.  Two new fee based products will be 
introduced in the first quarter; cash management and ACH origination. 
	Gain on the sale of other real 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 increased over 
1996 and 1995.  The primary reason is a 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. 

Noninterest Expense

	The Company continued to decrease its noninterest expenses, which 
declined  $347,000, or 7.6% from 1996 and $1,641,000, or 28% from 
1995.  Major reduction in costs associated with the carrying values and 
expenses from OREO was the most apparent item.  Net operating costs 
of carrying OREO were only $34,000 down from $238,000 in 1996 and 
$203,000 in 1995.  Provision for OREO losses was only $35,000 in 1997 
compared to $151,000 in 1996 and $1,148,000 in 1995.  There were also 
reductions in legal fees and litigation settlements.
The lawsuit with Countrywide Mortgage that was discussed in the 
offering circular was settled for $150,000.  
	Occupancy expenses increased over both 1995 and 1996 due to the 
move back into the offices that had been repaired from the earthquake 
damage of 1994.  The Company's move in the fourth quarter of 1996 has 
increased rental expense for premises.  The lease was renegotiated with 
our lessor in the third quarter of 1997 and the Company was able to 
negotiate a lower rental rate, new signage and the payment of relocation 
costs.  
	The Company's major insurance policies were also renegotiated and 
the renewals were less expensive but overall costs of insurance and 
assessments arose from an increase in the FDIC insurance costs.  The 
rate the Company paid in both 1996 and 1997 was $0.27 per $100 of 
deposits due to the low capital base and the Bank's regulatory rating.  
The new capital raised in 1997 will lower the cost of insurance in the 
second half of 1998 to a rate of approximately $0.17 per $100 of 
deposits.  Further rate reductions should come in the beginning of 1999 
as the Bank's regulatory rating improves.

Assets and Liabilities

	Assets grew $12,676,000, or 19.1% between year-end 1996 and 
December 31, 1997.  The fourth quarter of the year showed the most 
growth increasing $10,048,000 over September 30, 1997.  The average 
assets for the year were $70,568,000. The Company usually increases in 
deposits during the fourth quarter and has some decrease during the first 
quarter causing a spike in assets at year-end.  Due to the need for 
liquidity, cash and fed funds sold were at a higher than normal level at 
December 31, 1997.  During the year the investment portfolio was 
increased by $7,276,000 making better use of excess funds not in the 
loan portfolio.  Most of the investments were made in U.S. agency 
securities, with one to three year maturities.  The Company has a large 
net operating loss carryforward for taxes and therefore does not make 
any tax-free investments. The loan portfolio declined $921,000 as the 
loan department's major focus has been on retention and cleanup of 
problem loans. New loan production will be the focus for 1998.
	Other real estate owned declined $1,837,000, or 147% since 
December 31, 1996.  During 1997 three new properties totaling 
approximately $1,418,000 were added to OREO and four properties were 
sold totaling $3,363,000.  The properties were sold at a net profit of 
$112,000 to the Company.  At year end there were three properties in 
OREO with one property in the amount of $709,000 placed in escrow in 
January 1998.
	Deposits increased from $62,881,000 at December 31, 1996 to 
$70,445,000 at year-end 1997 funding the increase in assets.  Demand 
deposits had the largest growth increasing $6,092,000, or 23.6%.  Time 
deposits over $100,000 also increased by $2,388,000 to $5,087,000, 
which is 7.2% of total deposits. Money market, savings and interest 
bearing demand deposits were stable and approximately the same as the 
prior year.
	As discussed earlier there was both a private common stock offering 
of $767,000 in March of 1997 and a public offering that raised a net 
amount of $4,760,000.  This helped to increase equity from $3,043,000 
to $8,201,000 at December 31, 1997 and bring the Company to a well 
capitalized position , as defined by the regulatory agencies.  

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. 
	 The Company's cumulative one-year gap position at December 31, 
1997 was $5.4 million or 7.7% 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 1998.
 	Immediately adjustable loans are defined as loans that are tied to the 
prime rate 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 an adjustable rate loans. 


<TABLE>
INTEREST RATE SENSITIVITY
                        <C>         <C>     <C>         <C>      <C>    <C>
		                   Immediately    	>0-3   	>3-6    	>6-12    	>1-5      	>5
(in thousands)       	Adjustable  	Months 	Months	   Months	   Years	   Years
Assets
	Securities	           $   500  	$  6,016	$   124  	$ 1,050 	$ 2,299 	$ 4,407
	Fed funds sold	         8,700          -       -        	-       	-       	- 
	Loans                 	14,815      5,705	  2,508    	4,022	  18,353   	1,372
		Total Earning Assets  24,015	    11,721 	 2,632     5,072  $20,652 	$ 5,779

Sources
	Interest bearing
  deposits             	27,808     	4,299	   2,735    3,230	     441       	-
	Demand deposits            	-         	-        	-       -       	-  	31,932
		Total Sources	       $27,808  	$  4,299	$  2,735 	$ 3,230  $   441 	$31,932

Cumulative Gap        	$(3,793)	 $  3,629	$  3,526 	$ 5,368 	$25,579  $  (574)

Percent of earning assets	(5.4)       5.2     	5.0     	7.7    	36.6    	(0.8)
</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 
do fluctuate but management maintains a weekly report of the balances 
of its largest volume customers to correctly gauge balance fluctuations.
	As the statement of cash flows indicates operating activities and 
investing activities used $4,353,000 in cash during the year while 
financing activities raised $13,091,000 increasing the cash and cash 
equivalents to $16,027,00 at December 31, 1997.  The additional cash 
equivalents were mainly invested in fed funds sold.  Liquidity is high at 
year-end and gives the Company the ability to deal with any deposit 
fluctuations during the first quarter of 1998 and provides funds for 
increasing the loan portfolio.

Capital

	The Company's capital position is a strong.  Risk-based capital at the 
end of 1997 was 16.5% up from 7.4% at December 31, 1996.  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 15.2% and the Tier I leverage ratio 
is 10.8%.  The Company is categorized as well capitalized.  Note K to 
the financial statements goes into greater detail.
	The Bank was released from its formal agreement with the Office of 
the Controller of the Currency in the fourth quarter.  The Company is 
still under a memorandum of understanding with the Federal Reserve 
Bank.  For 1998 the Company will look to earnings as a source of 
additional capital and at this juncture foresees no problems in 
maintaining proper capital ratios. 


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MARATHON BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<TABLE>
<S>                                                                    <C>
December 31,                                                             1997
                                                                    ---------
ASSETS
Cash and due from banks                                         $   7,327,000
Federal funds sold                                                  8,700,000
Investment securities - Note B:
  Securities available for sale                                     5,249,000
  Securities held to maturity                                       9,147,000
                                                                 ------------
  TOTAL INVESTMENT SECURITIES                                      14,396,000

Loans - Note C                                                     46,775,000
 Less allowance for credit losses                                 (   747,000)
                                                                 ------------
  NET LOANS                                                        46,028,000

Premises and Equipment- Note D                                        416,000
Other real estate owned                                             1,248,000
Accrued interest and other assets                                     954,000
                                                                 ------------
  TOTAL ASSETS                                                   $ 79,069,000 

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits - Note E
  Noninterest-bearing demand                                     $ 31,932,000
  Interest-bearing demand                                           5,871,000
  Money market and savings                                         21,938,000
  Time deposits under $100,000                                      5,617,000
  Time deposits 100,000 and over                                    5,087,000
                                                                 ------------
  TOTAL DEPOSITS                                                   70,445,000

Accrued interest and other liabilities                                423,000
                                                                  -----------
  TOTAL LIABILITIES                                                70,868,000
Commitments and Contingencies - Note H           

Shareholders' Equity - Note I                                     
Preferred shares - No par value, 1,000,000 share authorized,
  no shares issued and outstanding
Common shares - No par value, 9,000,000 shares authorized,
  issued and outstanding: 3,811,819 in 1997                        13,607,000
Net unrealized gain on securities available for sale                    3,000
Accumulated deficit                                               ( 5,409,000)
                                                                 ------------
TOTAL SHAREHOLDERS' EQUITY                                          8,201,000

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $ 79,069,000
</TABLE>
See accompanying notes to consolidated financial statements.




MARATHON BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
                                                      <C>          <C> 
                                                    Year Ended December 31,
                                                      1997             1996
                                                   ----------      ---------
INTEREST INCOME
  Interest and fees on loans                     $  3,714,000    $  4,035,000
  Interest on investment securities - taxable         564,000         475,000
  Other interest income                               452,000         670,000
                                                    ---------      ----------
   TOTAL INTEREST INCOME                            4,730,000       5,180,000
INTEREST EXPENSE
  Interest on demand deposits                          56,000          62,000
  Interest on money market and savings                621,000         723,000 
  Interest on time deposits                           467,000         392,000
  Other interest expense                                    -               -
                                                    ---------       ---------
   TOTAL INTEREST EXPENSE                           1,144,000       1,177,000
                                                    ---------       ---------
NET INTEREST INCOME                                 3,586,000       4,003,000
Provision for credit losses                           301,000         601,000
                                                     --------       ---------
NET INTEREST INCOME AFTER PROVISION FOR
  CREDIT LOSSES                                     3,285,000       3,402,000
NONINTEREST INCOME 
  Service charges and fees on deposit accounts        285,000         197,000
  Gain on sale of OREO                                112,000               -
  Other noninterest income                            168,000          23,000 
                                                    ---------       ---------
TOTAL NONINTEREST INCOME                              565,000         220,000
NONINTEREST EXPENSE
  Salaries and employee benefits                    1,552,000       1,435,000
  Occupancy expenses                                  616,000         531,000
  Furniture and equipment                              99,000         146,000
  Professional services                               501,000         555,000
  Business Promotion                                   71,000          61,000
  Stationary and supplies                              92,000          71,000
  Data processing services                            512,000         471,000 
  Messenger and courier services                      154,000         269,000 
  Insurance and assessments                           385,000         321,000
  Litigation                                           25,000         189,000
  Customer checks                                      31,000          61,000
  Provision for OREO losses                            35,000         151,000
  Net operating cost of OREO                           34,000         238,000
  Other expenses                                      105,000          60,000
                                                    ---------       ---------
    TOTAL NONINTEREST EXPENSE                       4,212,000       4,559,000 
                                                    ---------       --------- 
LOSS BEFORE INCOME TAXES                           (  362,000)     (  937,000)
  Income taxes - Note F                                 2,000           2,000
                                                    ---------       ---------
NET LOSS                                          $(  364,000)    $(  939,000)
                                                   ----------      ----------
Per Share Data - Note G:
  Net Loss - Basic                                $(     0.15)    $(     0.75)
  Net Loss - Diluted                              $(     0.15)    $(     0.75)

</TABLE>
See accompanying notes to consolidated financial statements.

MARATHON BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                     <C>            <C>
                                                      Year Ended December 31,
                                                         1997         1996
OPERATING ACTIVITIES
 Net loss                                         $(   364,000)  $(   939,000)
 Adjustments to reconcile net loss to net cash
 provided by operating activities:
  Depreciation and Amortization                        131,000        141,000
  Provision for credit losses                          301,000        601,000
  Provision for OREO losses                             35,000        151,000
  Loss (gain) on sale of OREO                      (   112,000)        69,000  
  Net amortization of premiums and discounts 
   on investment securities                        (    22,000)        23,000
  Net change in deferred loan origination fees          38,000    (   185,000)
  Decrease in income tax refunds receivable                  -              -
  Net change in accrued interest, other assets
   and other liabilities                           (   158,000)       282,000
                                                  -------------    ----------
  NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (   151,000)       143,000
INVESTING ACTIVITITES
  Net decrease (increase in interest-bearing deposits
   with financial institutions                         996,000    (   499,000)
  Purchases of available for sale securities       ( 6,088,000)   ( 1,088,000)
  Purchases of held to maturity securities         ( 4,946,000)             -
  Proceeds from maturities of avaliable for sale
   securities                                        2,018,000      3,281,000
  Proceeds from maturities of held for sale
   securities                                        1,757,000        504,000
  Net decrease in loans                                518,000        758,000
  Proceeds from sale of OREO                         1,632,000      1,082,000
  Purchases of furniture, fixtures and equipment   (    89,000)   (   173,000)
                                                   -----------    -----------
  NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES ( 4,202,0000     3,945,000
FINANCING ACTIVITIES
  Net change in demand deposits, money market 
   and savings                                       5,122,000    (18,831,000)
  Net change in time deposits                        2,442,000    (   818,000)
  Proceeds from issuance of common shares            5,527,000              -
                                                   -----------    -----------
  NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES  13,091,000    (19,649,000)
                                                   -----------    -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     8,738,000    (15,561,000)
  Cash and cash equivalents at beginning of year     7,289,000     22,850,000
                                                   -----------    -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR          $ 16,027,000   $  7,289,000
                                                   -----------    -----------
Supplemental Disclosures of Cash Flow Information:
 Interest paid                                    $  1,140,000   $  1,157,000
 Income taxes paid (refunded)                     $      2,000   $      2,000

</TABLE>
See accompanying notes to consolidated financial statements.


MARATHON BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN 
SHAREHOLDERS' EQUITY
<TABLE>
                                                            Net
                                                         Unrealized
                                                        Appreciation
                                                       (Depreciation)
                                                        on Available
                          Common Shares     Accumulated    for Sale
                        Shares      Amount     Deficit   Securities     Total
                       -------    ---------  ----------- --------- ----------
                          <C>      <C>        <C>        <C>          <C>
Balance, 
January 1, 1996      1,248,764  $ 8,080,000  $(4,106,000)  $1,000  $3,975,000 

Net loss                                      (  939,000)           ( 939,000)

Net changes in unrealized
 appreciation on available
 for sale securities                                        7,000       7,000
                     ---------   ----------   -----------   -----   ---------   
Balance,
December 31, 1996    1,248,764    8,080,000   (5,045,000)   8,000   3,043,000

Net loss                                      (  364,000)           ( 364,000)

Issuance of common
 stock net of expenses
 of $240,000         2,563,055    5,527,000                         5,527,000
 
Net changes in unrealized
 appreciation on available
 for sale securities                                       (5,000)  (   5,000) 
                     ---------    ---------   -----------   -----   ---------
Balance,
December 31, 1997    3,811,819  $13,607,000  $(5,409,000)  $3,000  $8,201,000
                     ---------   ----------   ----------    -----   ---------

</TABLE>
See accompanying notes to consolidated financial statements.


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 and Federal Funds Sold
----------------------------------------------
 For the purposes of reporting cash flows, cash and due from banks 
includes cash on hand and amounts due from banks.  Cash flows from 
loans originated by the Bank, deposits and federal funds sold are reported 
net.
 The Bank maintains amounts due from banks which exceed federally 
insured limits.  In addition, federal funds sold were placed with three 
institutions.  The Bank has not experienced any losses in such accounts.

Cash Equivalents
----------------
 For the purpose of presentation in the statements of cash flows, cash and 
cash equivalents are defined as those amounts included in the statements 
of financial condition captions "Cash and Due from Banks" and "Federal 
Funds Sold."


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES - Continued

Securities Available for Sale
-----------------------------
 Securities that are to be held for indefinite periods of time and not 
intended to be held to maturity are classified as available for sale and are 
carried at fair value, with unrealized gains or losses excluded from 
earnings and reported as a separate component of shareholders' equity, 
net of income tax effect.  Securities held for indefinite periods of time 
include assets that the Bank intends to use as part of its asset/liability 
management strategy and that may be sold for liquidity purposes or in 
response to changes in interest rates, prepayment risks or other factors.  
Net realized gains and losses from the sale of securities available for sale 
are included in other operating income using the specific identification 
method.

Securities Held to Maturity
---------------------------
 Investment securities that the Company has the intent and ability to hold 
to maturity are classified as held to maturity and are carried at cost, 
adjusted for accretion of discounts and amortization of premiums over 
the period to maturity using the interest method.  Net accreted discounts 
and amortized premiums are included in interest income.  At the time of 
acquisition, the Bank identifies those securities which it does have the 
positive intent and ability to hold to maturity.

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.


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES - Continued

Allowance for Credit Losses
---------------------------
 The allowance for credit losses is based on an analysis of the loan 
portfolio and reflects an amount which, in management's judgment, is 
adequate to provide for potential losses.  Management's estimates are 
based on previous and expected loan loss experience, current and 
projected economic conditions, the composition of the loan portfolio, the 
value of collateral and other relevant factors.  Although management 
believes the level of the allowance as of December 31, 1997 is adequate 
to absorb losses inherent in the loan portfolio, additional decline in the 
local economy and rising interest rates may result in increasing losses 
that cannot reasonably be predicted at this date.  The allowance is 
increased by provisions for loan losses charged against income and 
recoveries of previously charged-off loans.  Loan losses are charged 
against the allowance when, in management's judgment, the 
collectability of the loan is doubtful.

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.


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES - Continued

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.
 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.



NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES - Continued

Current Accounting Pronouncements
---------------------------------
 In June 1997, the Financial Accounting Standards Board issued 
Statement No. 130, "Reporting Comprehensive Income".  This 
statement, which is effective for the year ending December 31, 1998, 
establishes standards of disclosure and financial statement display for 
reporting comprehensive income and its components.
 In June 1997, the Financial Accounting Standards Board issued 
Statement No. 131, "Disclosures about Segments of an Enterprise and 
Related Information."  This statement changes current practice under 
SFAS 14 by establishing a new framework on which to base segment 
reporting (referred to as the management approach) and also requires 
certain related disclosures about products and services, geographic areas 
and major customers.  The disclosures are required for the year ending 
December 31, 1998.

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


NOTE B - INVESTMENT SECURITIES

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

<TABLE>
                                             Gross       Gross      Estimated
                                  Amortized  Unrealized  Unrealized    Fair
                                    Cost      Gains       Losses      Value
Available for Sale Securities      <C>         <C>       <C>          <C>
 December 31, 1997
  U.S. Treasury Securities       $  998,000   $ 5,000   $      -   $1,003,000
  U.S. government and
    Agency Securities             3,492,000         -     (1,000)   3,491,000
  Federal Reserve Stock             256,000         -          -      256,000
  Other                             499,000         -          -      499,000
                                  ---------     -----      ------   ---------
                                 $5,245,000   $ 5,000   $( 1,000)  $5,249,000

Held to Maturity Securities:
  December 31, 1997:
  U.S. Government and
    Agency Securities            $4,051,000   $     -   $( 4,000)  $4,047,000
  Municipal Securities              394,000     1,000          -      395,000
  Mortgage-Backed Securities      4,702,000     3,000    (68,000)   4,637,000
                                  ---------    ------    --------   ---------
                                 $9,147,000   $ 4,000   $(72,000)  $9,079,000
</TABLE>

 Investment securities carried at approximately $300,000 at December 31, 
1997, 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 1997 or 1996.  Net unrealized gain of 
$3,000 and $8,000 on securities available for sale were credited to 
shareholders' equity in 1997 and 1996, respectively.



 The scheduled maturities of securities held to maturity and securities 
available for sale at December 31, 1997, were as follows:

<TABLE>
                   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                $3,991,000     $ 3,990,000    $   600,000   $   600,000
Due from One Year
  to Five Years          998,000       1,003,000      3,845,000     3,842,000 
Mortgage-Backed
 Securities                    -               -      4,702,000     4,637,000
Federal Reserve Stock    256,000         256,000              -             -
                       ---------        --------      ---------     ---------
                      $5,245,000     $ 5,249,000    $ 9,147,000   $ 9,079,000
                       ---------       ---------      ---------     ---------
</TABLE>

NOTE C - LOANS

 The following is a summary of the components of loans at December 31, 
1997:

<TABLE>
<S>                                                 <C>
                                                         1997   
                                                      ----------   
Commercial Loans                                     $ 15,925,000
Real Estate-Construction                                        -
Real Estate-Other                                      29,630,000
Consumer                                                1,009,000
                                                       ----------
                                                       46,564,000
Net Deferred Loan Costs                                   211,000
                                                       ----------
                                                     $ 46,775,000
</TABLE>

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>
<S>                                                     <C>           <C>
                                                            1997         1996
                                                     -----------   ----------
Recored Investment in Impaired Loans                 $   965,000  $   568,000

Related Allowance for credit Losses                  $   115,000  $    69,000

Average Recorded Investment in Impaired Loans        $ 1,985,000  $ 2,433,000

Interest Income Recognized from Cash Payments        $     9,000  $    73,000
 
</TABLE>

 Loans having carrying value of $1,419,000 and $2,436,000 were 
transferred to other real estate owned in 1997 and 1996, respectively.  
During 1997 and 1996, loans totaling $1,695,000 and $704,000, 
respectively, were made to facilitate the sale of other real estate owned.

 A summary of changes in the allowance for credit losses follows:

<TABLE>  
<S>                                                      <C>          <C>
                                                            1997         1996
                                                       ---------    ---------
Balance, January 1                                   $ 1,088,000  $   720,000
Provision for Loan Losses                                301,000      601,000
Loans Charged Off                                     (  940,000)  (  303,000)
Recoveries                                               298,000       70,000
                                                      ----------   ----------
Balance, December 31                                 $   747,000  $ 1,088,000
                                                      ----------   ----------
</TABLE>


NOTE D - PREMISES AND EQUIPMENT

 The following is a summary of the major components of premises and 
equipment at December 31, 1997:

<TABLE>
<S>                                                       <C>
                                                           1997 
                                                       ---------
Furniture, fixtures and Equipment                    $ 1,246,000 
Leasehold Improvements                                   480,000
                                                       ---------
                                                       1,726,000
Less Accumulated Depreciation and Amortization        (1,310,000)
                                                       --------- 
                                                     $   416,000
                                                       ---------
</TABLE>

NOTE E - DEPOSITS

 At December 31, 1997, the scheduled maturities of certificates of deposit 
are as follows:
<TABLE>
<S>                              <C> 
1998                         $10,265,000
1999 through 2002                439,000
                              ----------
                             $10,704,000
                              ----------
</TABLE>
 
NOTE F - INCOME TAXES

 The income tax provision (benefit) for the years ended December 31, 
1997 and 1996 is comprised of the following:
 
<TABLE>
<S>                                                    <C>             <C>
                                                         1997           1996
                                                  -----------    -----------
Current Taxes:
  Federal                                          $        -    $         -
  State                                                 2,000          2,000
                                                    ---------      ---------
                                                        2,000          2,000
Deferred                                               79,000     (  245,000)
Net Change in Valuation Allowance                   (  79,000)       245,000
                                                    ---------      ---------
                                                   $    2,000    $     2,000 
</TABLE>

NOTE F - INCOME TAXES - Continued

 For federal income tax purposes, the Company has net operating loss 
carryforwards of approximately $4,145,000 which expire in 2008 - 2012.  
For state income tax purposes, the Company has incurred net operating 
loss carryforwards of approximately $4,045,000, which expire in 1998 - 
2002, to offset future taxes payable, adjusted for the fifty percent 
reduction, as required by state tax law.  During 1997, state net operating 
loss carryforwards of approximately $1,392,000 expired.
 At December 31, 1997, the components of the net deferred tax asset are 
comprised of the following:

<TABLE>
<S>                                                             <C>
                                                                   1997
                                                               --------
Deferred Tax Assets:
  Allowance for Credit Losses Due to Tax Limitations        $   307,000
  Other Real Estate Owned                                       317,000
  Net Operating Loss and Tax Credit Carryforwards             1,837,000
  Premises and Equipment Due to Depreciation Difference          52,000
  Other Assets/Liabilities                                        8,000
                                                             ----------
                                                              2,521,000
Valuation Allowance                                          (2,385,000)
Deferred Tax Liabilities:
  Recapture of Federal Credit Reserve                        (   47,000)
  Other Assets/Liabilities                                   (   89,000)
                                                             ----------
                                                             (  136,l00)
Net deferred Taxes                                          $         -
                                                             ----------
</TABLE>

 The Company has no current tax asset or liability at December 31, 1997.


NOTE F - INCOME TAXES - Continued

 The principal reasons for the difference between the federal statutory 
income tax rate of 35% in 1997 and 1996, and income tax expense for 
the years ended December 31, 1997 and 1996 are as follows:

<TABLE>
<S>                                             <C>            <C>
                                                   1997             1996
                                            -----------       ----------
Tax Benefit at Statutory Rate                $( 127,000)      $( 329,000)
State Franchise Tax Net of Valuation 
  Allowance                                       2,000            2,000
Federal Valuation Allownance                    139,000          323,000
Loss of State NOL Carryforward                        -                -
Surtax Exemption                                      -                -
Other, Net                                    (  12,000)           6,000
                                             ----------        ---------
Tax Expense                                  $    2,000       $    2,000
                                             ----------        ---------
</TABLE>

NOTE G - EARNINGS PER SHARE (EPS)

 The following is a reconciliation of net income and shares outstanding to 
the loss and number of share used to compute EPS:

<TABLE>
<S>                                  <C>        <C>          <C>      <C>
                                          1997                   1996
                                    Loss       Shares       Loss      Shares
                                   ------      ------       ----      ------
Net Loss as Reported             $(364,000)         -   $(939,000)         -
Weighted Average Shares     
  Outstanding During the Year            -   2,465,127          -   1,248,764
                                  ---------  ---------   --------   ---------
    Used in Basic EPS            $(364,000)  2,465,127  $(939,000)  1,248,764

Dilutive Effective of Outstanding
  Stock Options                          -           -          -           -
                                  --------   ---------   ---------  ---------
 Used in Dilutive EPS            $(364,000)  2,465,127  $(939,000)  1,248,764
                                  --------   ---------   --------   ---------
</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.


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, 1997 are as follows:
<TABLE>
<S>                            <C>

1998                       $  545,000
1999                          594,000 
2000                          594,000 
2001                          594,000
2002                          396,000
                             --------
                           $2,723,000
                            --------- 
</TABLE>

 Rent expense was $563,000 and $265,000 for the years ended December 
31, 1997 and 1996, respectively.  Sublease rental income was $85,000 in 
1997 and $10,000 in 1996.
 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 pinion that the disposition of all suits 
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, 
1997.

<TABLE>
<S>                                 <C>
                                       1997
                                   ----------
Commitments to Extend Credit      $ 7,225,000
Other Letters of Credit               188,000
                                   ----------
                                  $ 7,413,000
                                   ----------
</TABLE>

 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 436,822 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>
<S>                                                 <C>         <C>
                                                    Number of Shares
                                                   1997           1996
                                                ---------       --------
Options Outstanding, January 1                    294,145       330,811
Granted at Option Prices of:
  $3.09 in 1997                                    76,888             -
  $2.75 in 1996                                         -         1,500
  $1.75 in 1995                                         -             -
Cancelled                                      (  243,003)    (  38,166)
                                                ---------      --------
Options outstanding, December 31                  128,030       294,145
Shares Available for Future Grant
 At December 31                                   308,792       142,677
                                                ---------      --------
Shares Available Under Stock Option Plans         436,822       436,822

</TABLE>

 At December 31, 1997 the weighted average exercise price was $4.13, 
the weighted average remaining contractual life was 6.2 years, and 
50,342 options were exercisable at a weighted average price of $5.74.
 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 
5.8% for 1997 and 6.5% for 1996; volatility of 51% for 1997 and 55% 
for 1996; and expected lives of ten years.  The estimated fair value of 
options granted during 1997 and 1996 were $2.15 and $2.07 per share, 
respectively.

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 loss 
and loss per share for the year ended December 31, 1997 and 1996 would 
have been changed to the pro forma amounts indicated below:

<TABLE>
<S>                                        <C>          <C>
                                             1997           1996  
                                         ----------    -----------
Net Loss to Common Shareholders:     
  As Reported                           $( 364,000)    $( 939,000)
  Pro Forma                             $( 381,000)    $( 957,000)

Per Share Data:
  Net Loss - Basic
    As Reported                         $(    0.15)    $(    0.75)
    Pro Forma                           $(    0.15)    $(    0.75)

  Net Loss - Diluted
    As Reported                         $(    0.15)    $(    0.75)
    Pro Forma                           $(    0.15)    $(    0.76)

</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.

 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:

<TABLE> 
<S>                                           <C>           <C>
(in thousands)                                       1997
                                         Carry Value      Fair Value 
                                         -----------      ----------
Financial Assets:
  Cash and Due From banks                $  7,327         $  7,327
  Federal Funds Sold                     $  8,700         $  8,700
  Interest-Bearing Deposits              $      -         $      -
  Investment Securities                  $ 14,396         $ 14,160
  Loans, Net                             $ 46,028         $ 46,160

Financial Liabilities:
  Deposits                               $ 70,445         $ 70,448

</TABLE>

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, 1997, that the Bank meets all capital 
adequacy requirements to which it is subject.
 On December 16, 1996, the Company entered into a memorandum of 
understanding with the Federal Reserve Bank (FRB) under which the 
Company agreed, among other things, to refrain from paying cash 
dividends except with the prior approval of the FRB, submit annual 
statements of planned sources and uses of cash, and submit annual 
progress reports.
 As of December 31, 1997, 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):
 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, 1997, required reserves were approximately $890,000.

<TABLE>
                                                Amount of Capital Required
                                           To Be Categorized 
                             Actual          as Adequately       To Be
(in thousands)                                Capitalized    Well-Capitalized
                       ----------------  ------------------  -----------------
                       Amount Percentage  Amount Percentage  Amount Percentage
<S>                         <C>    <C>    <C>       <C>       <C>     <C>
As of December 31, 1997
  Total Risk-based      $ 8,891   16.5%   $ 4,319   8.0%    $ 5,398   10.0%   
  Tier 1 Risk-Based     $ 8,216   15.2%   $ 2,159   4.0%    $ 3,239    6.0% 
  Tier 1 Leverage       $ 8,216   10.8%   $ 3,017   4.0%    $ 3,772    5.0%

</TABLE>
 

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>
<S>                                                                      <C>  
                                                                      1997
Assets
Cash in Marathon National Bank                                     $   20,000 
Investment in Marathon National Bank                                8,239,000
                                                                    ---------
  Total Assets                                                     $8,239,000

Liabilities and Shareholders' Equity
Accrued Expenses                                                   $   38,000
Shareholders' Equity 
 Common Shares                                                     13,607,000
 Accumulated Deficit                                               (5,409,000)
 Net Unrealized Gain on Securities Available for Sale                   3,000
                                                                    _________
  Total Shareholders' equity                                        8,201,000

  Total Liabilities and Shareholders' Equity                       $8,239,000
                                                                    ---------
                                                       Year Ended December 31,
Condensed Statements of Operations                         1997          1996
Operating Expenses                                  $(    7,000)   $        -              
Equity in Undistributed Ner Loss of Marathon 
  National Bank                                      (  357,000)    ( 939,000)
                                                    -----------     ---------
  Net Loss                                          $(  364,000)   $( 939,000)

                                                     Year Ended December 31,
                                                           1997          1996
Condensed Statements of Cash Flows
Operating Activities
Net Loss                                            $(363,000)     $( 939,000)
Adjustments to Reconcile Net Loss to Net Cash Used
 by Operating Activities - Equity in Undistributed
 Net Loss of Marathon National Bank                   357,000         939,000
                                                     --------        --------
  Net Cash Used by operating Activities                 7,000               -
 
Investing Activities
Investment in Marathon National Bank               (5,501,000)              -
                                                   ----------          ------
Net Cash Used by Investing Activitites             (5,501,000)              -
 
Financing Activities
Proceeds from Issuance of Common Shares             5,527,000               -
                                                    ---------         -------
  Net Cash Provided by Financing Activities         5,527,000               -

Increase (Decrease) in Cash & Cash Equivalents         19,000               -
Cash and Cash Equivalents at Beginning of year          1,000           1,000
                                                   ----------         -------
  Cash and Cash Equivalents at End of Year         $   20,000        $  1,000

</TABLE>
 





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, 1997, and the 
related consolidated statements of operations, changes in stockholders 
equity and cash flows for each of the two years in the period ended 
December 31, 1997.  These consolidated financial statements are the 
responsibility of the Marathon Bancorps management.  Our 
responsibility is to express an opinion on these consolidated financial 
statements based on our audit.
 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 audit provides a reasonable basis for 
our opinion.
 In our opinion, such consolidated financial statements present fairly, in 
all material respects, the financial position of Marathon Bancorp and 
Subsidiary as of December 31, 1997, and the results of its operations and 
their cash flows for each of the two years in the period ended December 
31, 1997, in conformity with generally accepted accounting principles.
 As discussed in Note K to the consolidated financial statements, 
Marathon Bancorp entered into a memorandum of understanding with 
the Federal Reserve Bank of San Francisco.  Failure on the part of 
Marathon Bancorp to meet the terms of the agreement may subject the 
Company to significant regulatory sanctions.


/S/ VAVRINEK, TRINE, DAY & CO., LLP

January 27, 1998
Laguna Hills, California







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
---------- 
	Directors:
Name                       Position with Company                     Director
                                                                        Since
Nikolas Patsaouras (1)&(2) Chairman of the Board of the Company & 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

(1) Member of the Audit Committee
(2) Member of the Personnel and Compensation Committee. 


	Executive officers of the Company and the Bank were:

NamePosition         Age

Craig D. Collette          President and Chief Executive Officer
                           of the Company and Bank                        55   
Timothy J. Herles          Executive Vice President and
                           Senior Credit Officer of the Bank              57
Howard J. Stanke           Executive Vice President and Chief Financial
                           Officer of the Company and Bank                49
Adrienne Caldwell          Senior Vice President- Operations
                           Administration of the Bank                     55


	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 Effective June 9, 1997.  Mr. Stanke 
was previously Executive Vice president/Chief Financial Officer of TransWorld 
Bancorp and TransWorld Bank. 

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


ITEM 10.  EXECUTIVE COMPENSATION

	The following table sets forth a comprehensive overview of the 
compensation of the Banks executive officers with salary and bonus exceeding 
$100,000 during the fiscal year ended December 31, 1997.  Comparative data is 
also provided for the previous two fiscal years.

<TABLE>
<S>  <C>       <C>    <C>     <C>    <C>    <C>      <C>      <C>      <C>
                                             Long Term Compensation
                Annual Compensation             Awards       Payouts

       (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  Options   Payouts  sation
   Position        Year   $     $       $(1)    $       SARs       $      $(2)
----------------  ----- --------- --  ------  ---     -------     ---     ---
Craig D. Colette   1997  $155,833 $0  $7,700   $0      30,000      $0      $0
(3) President &
Chief Executive
Officer of the
Company & Bank

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

(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 Companys common stock, 
except as set forth in the table below.  The following table sets forth, as of 
February 20, 1998, the number and percentage of shares of the Companys 
outstanding common stock beneficially owned, directly or indirectly, by each of 
the Companys 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>
<S>                                          <C>                  <C>
                                         Common Stock Beneficially Owned as of 
                                               February 20, 1998
                                            Number of           Percent Of
Name of Beneficial Owner                      Shares              Class

Directors and Named Executive Officers:
---------------------------------------
Nickolas Patsaouras                            37,910 (1)            1.0 
Robert J. Abernethy                           107,299                2.8 
Craig D. Collette                              39,233 (2)            1.0 
Frank W. Jobe, M.D.                            74,190                2.0 
C. Thomas Mallos                               47,878 (3)            1.3 
Robert L. Oltman                              190,922 (4)            5.0 
Ann Pappas                                     60,011 (5)            1.6 
Timothy J. Herles                              40,880 (6)            1.1 

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

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

(1) Mr. Patsaouras has shared voting and investment powers as to 37,500 of 
these shares. 
(2) Mr. Collette has shared voting and investment powers as to 33,233 shares.  
The amount includes 6,000 shares acquirable by exercise of stock options.
(3) Mr. Mallos has shared voting and investment powers as of 45,108 of these 
shares.
(4) Mr. Oltman has shared voting and investment powers as to 2,942 of these 
shares.  His addressis c/o Marathon Bancorp, 11150 West Olympic 
Boulevard, Los Angeles, California 90064.
(5) Ms. Pappas has shared voting and investment powers as to 59,896 of these 
shares. 
(6) Mr. Herles has shared voting and investment powers as to 1,065 of these 
shares.  The amount includes 39,696 shares acquirable by exercise of stock 
options. 
(7) This amount includes 45,696 shares acquirable by exercise of stock options 
within 60 days of February 20, 1998.
(8) The Schedule 13D filing by the partnership indicates that it has sole voting 
power and sole dispositive power of all of these shares.  The business 
address of the partnership is 119 West 57th Street, New York, New York 
10019.





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

	The Company filed a report on Form 8-K on October 30, 1997 which 
was amended on December 23, 1997.The 8-K reportee on Item 4. Changes in 
Registrant's certifying accountants and there were no financial	statements
or exhibits. 

	(c)  Exhibits

	See Exhibit Index at Page 47 this Form 10-KSB.



       

                           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 23rd day 
of March 1998.

							
	MARATHON BANCORP (Registrant)

Howard J. Stanke                 
----------------
Howard J. Stanke
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.

Signature                  		 		Title                       Date           
------------------   ------------------------   ---------------
Nikolas Patsaouras				Chairman of the Board		   March 23, 1998
------------------
Nikolas Patsaouras                 


Craig D. Collette					Director and President		  March 23, 1998
-----------------
Craig D. Collette					and CEO


C. Thomas Mallos			  	Director		              		March 23, 1998
----------------
C. Thomas Mallos		


------------------- 		Director               			March 23, 1998
Robert J. Abernethy


-------------------   Director              				March 23,1998
Frank W. Jobe, M.D.


Robert L. Oltman  				Director and Secretary	  	March 23, 1998
----------------
Robert L. Oltman


Ann Pappas         			Director               			March 23, 1998
----------
Ann Pappas                           




                          EXHIBIT INDEX



Exhibit No.        Description                             Page

21.		Subsidiaries of Company		                         				 48

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

27.  Financial data Schedule


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 Registration Nos. 2-90321 and 
33-40408 on Form S-8 of Marathon Bancorp and subsidiary of our report dated 
January 27, 1998 which report includes an explanatory paragraph relating to 
certain regulatory matters discussed in footnote K, included in the Annual 
Report on Form 10-KSB for the year ended December 31, 1997.



Laguna Hills, California
March 27, 1998


	 


</TABLE>