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,  2001
                                                       -------------------

                                   OR

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

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

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

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

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

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

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

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

                           COMMON STOCK, NO PAR VALUE
                           --------------------------
                                (TITLE OF CLASS)
     CHECK  WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION  13  OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH
SHORTER  PERIOD  THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2)
HAS  BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.     YES    X
                                                                             ---
NO

     CHECK  IF  THERE  IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM
405 OF REGULATION S-B IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST  OF  REGISTRANT'S  KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED  BY  REFERENCE  IN PART III OF THIS FORM 10-KSB OR ANY AMENDMENT TO
THIS  FORM  10-KSB.  [  ]

     STATE  ISSUER'S  REVENUES  FOR  ITS  MOST  RECENT  FISCAL YEAR $ 7,585,000.

     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 12, 2002.  THE AMOUNT IS
$12,497587.  SOLELY  FOR  THE  PURPOSE  OF  THIS  CALCULATION, ALL DIRECTORS AND
OFFICERS  ARE  REGARDED  AS  AFFILIATES.
     AS  OF  MARCH  12, 2002, THERE WERE 3,852,819 SHARES OF NO PAR COMMON STOCK
ISSUED  AND  OUTSTANDING.

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

GENERAL
-------

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

THE  BANK
---------

     The  Bank  was  organized  on  November  8,  1982  as  a  national  banking
association.  The  application  to  organize the Bank was accepted for filing by
the  Office  of  the  Comptroller of the Currency (the Comptroller) on March 11,
1982,  and preliminary approval was granted on September 8, 1982.  On August 29,
1983,  the  Bank  received  from  the  Comptroller a Certificate of Authority to
Commence  the  Business of Banking.  The Bank is a member of the Federal Reserve
System,  and its deposits are insured under the Federal Deposit Insurance Act to
the  extent  of  applicable  limits.

     The  Bank  is  located  at  11150  West  Olympic  Boulevard,  Los  Angeles,
California  with  a  loan  production office in Woodland Hills, 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  (through  third  party servicers).  In addition, the Bank
provides  note and collection services and direct deposit of social security and
other  government  checks.

     The  Bank  engages  in  a  full complement of lending activities, including
revolving  lines  of  credit, working capital and accounts receivable financing,
short  term  real  estate  construction  financing,  mortgage loans and consumer
installment  loans,  with  particular  emphasis  on  short  and  medium  term
obligations.  Additionally,  the  Bank  has  become  an  active  Small  business
Administration  (SBA)  lender.  The  Bank's  commercial  lending  activities are
directed principally toward small to medium sized businesses, wholesalers, light
manufacturing  concerns  and  professional  firms.  The  Bank's consumer lending
activities  include  loans  for  automobiles,  recreational  vehicles,  home
improvements  and  other  personal  needs.

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

     The banking and financial services industry in California generally, and in
the  Bank's  market areas specifically, is highly competitive.  The increasingly
competitive  environment is a result primarily of changes in regulation, changes
in  technology  and  product  delivery  systems,  and  the  accelerating pace of
consolidation  among financial services providers.  The Bank competes for loans,
deposits,  and  customers  with  other  commercial  banks,  savings  and  loan
associations,  securities and brokerage companies, mortgage companies, insurance
companies,  finance  companies,  money  market  funds,  credit unions, and other
nonbank  financial service providers.  Many of these competitors are much larger
in  total  assets and capitalization, have greater access to capital markets and
offer  a  broader  range  of  financial  services  that  the Bank does not offer
directly.  In  addition,  recent  federal  legislation  may  have  the effect of
further  increasing  the  pace  of  consolidation  within the financial services
industry.  See  "Item  1.  Business  -  Supervision  and  Regulation - Financial
Services  Modernization  Legislation."
     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.

ECONOMIC  CONDITIONS,  GOVERNMENT  POLICIES,  LEGISLATION,  AND  REGULATION
---------------------------------------------------------------------------
     The  Bank's  profitability,  like most financial institutions, is primarily
dependent  on  interest  rate differentials.  In general, the difference between
the  interest  rates  paid  by the Bank on interest-bearing liabilities, such as
deposits  and  other  borrowings, and the interest rates received by the Bank on
its  interest-earning  assets,  such  as  loans  extended  to  its  clients  and
securities  held  in its investment portfolio, comprise the major portion of the
Bank's  earnings.  These  rates  are  highly  sensitive to many factors that are
beyond the control of the Company and the Bank, such as inflation, recession and
unemployment,  and  the  impact  which  future  changes  in domestic and foreign
economic  conditions might have on the Company and the Bank cannot be predicted.
The  business of the Company and The Bank is also influenced by the monetary and
fiscal  policies  of  the  federal  government  and  the  policies of regulatory
agencies, particularly the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). The Federal Reserve Board implements national monetary
policies  (with  objectives  such  as curbing inflation and combating recession)
through  its  open-market  operations in U.S. Government securities by adjusting
the  required  level  of  reserves  for  depository  institutions subject to its
reserve requirements, and by varying the target federal funds and discount rates
applicable to borrowings by depository institutions.  The actions of the Federal
Reserve  Board  in  these areas influence the growth of bank loans, investments,
and  deposits  and  also affect interest rates earned on interest-earning assets
and  paid on interest-bearing liabilities.  The nature and impact on the Company
and  the  Bank  of  any future changes in monetary and fiscal policies cannot be
predicted.
From  time  to time, legislation, as well as regulations, are enacted which have
the  effect  of  increasing  the  cost  of doing business, limiting or expanding
permissible  activities,  or affecting the competitive balance between banks and
other  financial  services  providers.  Proposals  to  change  the  laws  and
regulations  governing  the  operations  and  taxation  of  banks,  bank holding
companies, and other financial institutions and financial services providers are
frequently  made  in  the  U.S.  Congress, in the state legislatures, and before
various  regulatory  agencies.  This legislation may change banking statutes and
the operating environment of the Company and its subsidiaries in substantial and
unpredictable  ways. If enacted, such legislation could increase or decrease the
cost  of  doing  business,  limit or expand permissible activities or affect the
Competitive  balance among banks, savings associations, credit unions, and other
financial institutions. The Company cannot predict whether any of this potential
legislation  will  be  enacted,  and  if  enacted,  the  effect  that it, or any
implementing  regulations,  would  have on the financial condition or results of
operations  of  the  Company or any of its subsidiaries. See "Item 1. Business -
Supervision  and  Regulation."
     SUPERVISION  AND  REGULATION
     ----------------------------
GENERAL
     Bank  holding  companies  and  banks  are  extensively regulated under both
federal and state law.  This regulation is intended primarily for the protection
of  depositors  and  the  deposit  insurance  fund  and  not  for the benefit of
stockholders  of  the  Company.  Set forth below is a summary description of the
material  laws and regulations which relate to the operations of the Company and
the  Bank.  The  description  is  qualified  in its entirety by reference to the
applicable  laws  and  regulations.
     MARATHON  BANCORP
     Marathon  Bancorp,  as  a  registered  bank  holding company, is subject to
regulation  under the Bank Holding Company Act of 1956, as amended (the "BHCA").
The  Company is required to file with the Federal Reserve Board periodic reports
and  such  additional  information  as  the  Federal  Reserve  Board may require
pursuant to the BHCA.  The Federal Reserve Board may conduct examinations of the
Company  and  its  subsidiaries.
The  Federal Reserve Board may require that the Company terminate an activity or
terminate  control  of or liquidate or divest certain subsidiaries or affiliates
when  the  Federal  Reserve  Board  believes  the activity or the control of the
subsidiary  or affiliate constitutes a significant risk to the financial safety,
soundness  or stability of any of its banking subsidiaries.  The Federal Reserve
Board  also  has  the  authority  to regulate provisions of certain bank holding
company  debt,  including  the authority to impose interest ceilings and reserve
requirements  on  such debt.  Under certain circumstances, the Company must file
written  notice  and  obtain  approval  from  the Federal Reserve Board prior to
purchasing  or  redeeming  its  equity  securities.
Further,  the  Company  is  required  by  the  Federal Reserve Board to maintain
certain  levels  of  capital. Management believes, as of December 31, 2001, that
the  Bank  meets  all capital adequacy requirements to which it is subject.  See
part  II,  Item  7,  Note K for the Banks capital ratio requirements and current
ratios.
The  Company  is  required  to  obtain the prior approval of the Federal Reserve
Board for the acquisition of 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.  Prior  approval of the Federal Reserve Board is also required
for the merger or consolidation of the Company and another bank holding company.
The  Company is prohibited by the BHCA, except in certain statutorily prescribed
instances,  from  acquiring direct or indirect ownership or control of more than
5%  of  the  outstanding voting shares of any company that is not a bank or bank
holding  company  and  from  engaging directly or indirectly in activities other
than  those of banking, managing or controlling banks, or furnishing services to
its  subsidiaries.  However,  the  Company, subject to the prior approval of the
Federal Reserve Board, may engage in any, or acquire shares of companies engaged
in,  activities  that  are  deemed by the Federal Reserve Board to be so closely
related  to  banking or managing or controlling banks as to be a proper incident
thereto.
Under  Federal  Reserve Board regulations, a bank holding company is required to
serve  as  a source of financial and managerial strength to its subsidiary banks
and may not conduct its operations in an unsafe or unsound manner.  In addition,
it  is  the  Federal  Reserve  Board's policy that a bank holding company should
stand  ready to use available resources to provide adequate capital funds to its
subsidiary  banks  during  periods  of  financial stress or adversity and should
maintain  the  financial  flexibility  and  capital-raising  capacity  to obtain
additional  resources  for  assisting  its  subsidiary  banks.  A  bank  holding
company's  failure  to  meet its obligations to serve as a source of strength to
its  subsidiary  banks will generally be considered by the Federal Reserve Board
to  be  an  unsafe  and  unsound  banking practice or a violation of the Federal
Reserve  Board's  regulations  or  both.
The Company is also a bank holding company within the meaning of Section 3700 of
the  California  Financial  Code.  As such, the Company and its subsidiaries are
subject  to  examination  by,  and  may  be  required  to file reports with, the
California  Department  of  Financial  Institutions.
The  Company's  securities  are  registered  with  the  Securities  and Exchange
Commission  under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").  As  such, the Company is subject to the information, proxy solicitation,
insider  trading,  and  other requirements and restrictions of the Exchange Act.
The  Bank, as a national banking association, is subject to primary supervision,
examination,  and  regulation  by  the Office of the Comptroller of the Currency
(the  "Comptroller").  To  a  lesser  extent,  the  Bank  is  also  subject  to
regulations  of  the  Federal  Deposit  Insurance  Corporation  ("FDIC")  as
administrator  of the Bank Insurance Fund ("BIF") and the Federal Reserve Board.
If,  as a result of an examination of the Bank, the Comptroller should determine
that  the  financial  condition,  capital  resources,  asset  quality,  earnings
prospects,  management,  liquidity or other aspects of the Bank's operations are
unsatisfactory  or  that the Bank or its management is violating or has violated
any  law or regulation, various remedies are available to the Comptroller.  Such
remedies  include  the power to enjoin "unsafe or unsound practices," to require
affirmative  action  to  correct  any conditions resulting from any violation or
practice,  to  issue an administrative order that can be judicially enforced, to
direct  an  increase  in  capital, to restrict the growth of the Bank, to assess
civil  monetary  penalties,  and to remove officers and directors.  The FDIC has
similar  enforcement  authority,  in  addition to its authority to terminate the
Bank's  deposit insurance in the absence of action by the Comptroller and upon a
finding  that  the  Bank  is  in  an unsafe or unsound condition, is engaging in
unsafe  or  unsound  activities, or that its conduct poses a risk to the deposit
insurance  fund  or  may  prejudice  the  interest  of  its  depositors.
Various  requirements  and  restrictions under the laws of the United States and
the  State  of  California  affect  the  operations  of  the  Bank.  Federal and
California  statutes  and  regulations  relate  to  many  aspects  of the Bank's
operations,  including reserves against deposits, ownership of deposit accounts,
interest  rates  payable  on  deposits,  loans,  investments,  mergers  and
acquisitions,  borrowings,  dividends,  locations  of  branch  offices,  capital
requirements  and  disclosure  obligations  to  depositors  and  borrowers.

     FINANCIAL  SERVICES  MODERNIZATION  LEGISLATION
     -----------------------------------------------
     GENERAL.  On  November  12,  1999,  President  Clinton  signed into law the
Gramm-Leach-Bliley  Act  of  1999  (the "Financial Services Modernization Act").
The  Financial Services Modernization Act repeals the two affiliation provisions
of  the  Glass-Steagall  Act:  Section  20,  which restricted the affiliation of
Federal  Reserve  Member  Banks  with  firms  "engaged principally" in specified
securities  activities;  and  Section  32, which restricts officer, director, or
employee  interlocks  between a member bank and any company or person "primarily
engaged"  in  specified  securities  activities.  In  addition,  the  Financial
Services  Modernization  Act also contains provisions that expressly preempt any
state  law  restricting  the  establishment of financial affiliations, primarily
related  to  insurance.  The  general  effect  of  the  law  is  to  establish a
comprehensive framework to permit affiliations among commercial banks, insurance
companies,  securities  firms, and other financial service providers by revising
and expanding the BHCA framework to permit a holding company system to engage in
a  full  range of financial activities through a new entity known as a Financial
Holding  Company
     The  law  also:
-     Broadens  the  activities that may be conducted by national banks, banking
subsidiaries  of  bank  holding  companies,  and  their  financial subsidiaries;
-     Provides  an  enhanced  framework  for  protecting the privacy of consumer
information;
-     Adopts  a  number of provisions related to the capitalization, membership,
corporate  governance, and other measures designed to modernize the Federal Home
Loan  Bank  system;
-     Modifies  the  laws  governing  the  implementation  of  the  Community
Reinvestment  Act;  and
-     Addresses  a  variety  of other legal and regulatory issues affecting both
day-to-day  operations  and  long-term  activities  of  financial  institutions.

     The  Company  and  the  Bank  do  not  believe  that the Financial Services
Modernization  Act  will  have  a  material  adverse effect on operations in the
near-term.  However,  to the extent that it permits banks, securities firms, and
insurance companies to affiliate, the financial services industry may experience
further  consolidation.  The Financial Services Modernization Act is intended to
grant  to  community  banks  certain  powers  as  a  matter of right that larger
institutions  have  accumulated  on an ad hoc basis.  Nevertheless, this act may
have the result of increasing the amount of competition that the Company and the
Bank  face  from  larger  institutions  and  other  types  of companies offering
financial  products,  many  of  which  may  have  substantially  more  financial
resources  than  the  Company  and  the  Bank.
     EXPANDED  BANK  ACTIVITIES  The  Financial  Services Modernization Act also
permits national banks to engage in expanded activities through the formation of
financial  subsidiaries.  A  national  bank may have a subsidiary engaged in any
activity  authorized  for  national  banks  directly  or any financial activity,
except for insurance underwriting, insurance investments, real estate investment
or  development,  or  merchant  banking,  which  may only be conducted through a
subsidiary  of  a  financial  holding company.  Financial activities include all
activities  permitted under new sections of the BHCA or permitted by regulation.
     A  national  bank  seeking  to have a financial subsidiary, and each of its
depository  institution  affiliates,  must be "well-capitalized," "well-managed"
and  in compliance with the Community Reinvestment Act.  The total assets of all
financial  subsidiaries  may  not  exceed  the  lesser  of 45% of a bank's total
assets, or $50 billion.  A national bank must exclude from its assets and equity
all  equity investments, including retained earnings, in a financial subsidiary.
The  assets  of  the  subsidiary may not be consolidated with the Bank's assets.
The  Bank  must also have policies and procedures to assess financial subsidiary
risk  and  protect  the  Bank  from  such  risks  and  potential  liabilities.

     PRIVACY.  Under  the  Financial Services Modernization Act, federal banking
regulators  are required to adopt rules that will limit the ability of banks and
other  financial institutions to disclose non-public information about consumers
to  nonaffiliated  third  parties.  These limitations will require disclosure of
privacy  policies  to consumers and, in some circumstances, will allow consumers
to  prevent  disclosure of certain personal information to a nonaffiliated third
party.  Federal banking regulators issued final rules on May 10, 2000.  Pursuant
to  these  rules,  financial  institutions  must  provide:
-     initial  notices to customers about their privacy policies, describing the
conditions  under  which  they  may  disclose  nonpublic personal information to
nonaffiliated  third  parties  and  affiliates;
-     annual  notices  of  their  privacy  policies  to  current  customers; and
-     a  reasonable  method  for  customers  to  "opt  out"  of  disclosures  to
nonaffiliated  third  parties.

     The  rules  were  effective  November  13, 2000, but compliance is optional
until  July  1,  2001.  These  privacy  provisions  will  affect  how  consumer
information  is transmitted through diversified financial companies and conveyed
to outside vendors. The Company implemented the privacy provisions in early 2001
and there has not been an impact to the financial condition or operating results
of  the  Company.
     SAFEGUARDING  CONFIDENTIAL  CUSTOMER  INFORMATION.  In  January  2000,  the
banking  agencies  adopted  guidelines  requiring  financial  institutions  to
establish  an  information  security  program  to:
-     identify  and  assess  the  risks  that may threaten customer information;
-     develop  a  written  plan containing policies and procedures to manage and
control  these  risks;
-     implement  and  test  the  plan;  and
-     adjust  the  plan  on  a  continuing  basis  to  account  for  changes  in
technology,  the  sensitivity  of customer information, and internal or external
threats  to  information  security.

     Each  institution  may implement a security program appropriate to its size
and  complexity  and  the  nature  and  scope  of  its  operations.
The  guidelines  outline  specific  security  measures  that institutions should
consider in implementing a security program.  A financial institution must adopt
those  security  measures  determined to be appropriate.  The guidelines require
the  board  of  directors  to  oversee  an  institution's  efforts  to  develop,
implement,  and  maintain  an effective information security program and approve
written  information  security  policies  and  programs.  The  guidelines  were
effective  July  1,  2001.  The  Company  implemented  an  effective information
security  program  in  the  second  quarter  of  2001.
     DIVIDENDS  AND  OTHER  TRANSFERS  OF  FUNDS
     -------------------------------------------
     Dividends  from the Bank are a source of income to the Company  The Company
is  a  legal  entity separate and distinct from the Bank. The Bank is subject to
various statutory and regulatory restrictions on its ability to pay dividends to
the  Company.  Under  such  restrictions,  the  Bank could pay a dividend to the
Company at December 31, 2001 OF $20,072.  In addition, the California Department
of  Financial  Institutions  and the Federal Reserve Board have the authority to
prohibit  the  Bank  from  paying dividends, depending upon the Bank's financial
condition,  if  such  payment  is  deemed  to  constitute  an  unsafe or unsound
practice.
The  FDIC  and  the  Comptroller  also  have authority to prohibit the Bank from
engaging in activities that, in the FDIC's and Comptroller's opinion, constitute
unsafe  or  unsound  practices  in  conducting  its  business.  It  is possible,
depending  upon  the  financial  condition  of  the  Bank  in question and other
factors,  that  the  FDIC  and  the Comptroller could assert that the payment of
dividends  or  other payments might, under some circumstances, be such an unsafe
or  unsound  practice.  Further,  the  FDIC  and the Comptroller and the Federal
Reserve  Board  have  established  guidelines with respect to the maintenance of
appropriate  levels  of  capital  by banks or bank holding companies under their
jurisdiction.  Compliance  with  the  standards set forth in such guidelines and
the  restrictions  that are or may be imposed under the prompt corrective action
provisions  of federal law could limit the amount of dividends which the Bank or
the  Company  may  pay.  An  insured  depository  institution is prohibited from
paying  management  fees  to  any  controlling  persons or, with certain limited
exceptions,  making  capital  distributions  if  after  such  transaction  the
institution  would  be  undercapitalized.  See  "-  Prompt Corrective Regulatory
Action  and  Other  Enforcement Mechanisms" for a discussion of these additional
restrictions  on  capital  distributions.
The  Bank  is  subject  to  certain  restrictions  imposed by federal law on any
extensions  of  credit to, or the issuance of a guarantee or letter of credit on
behalf  of, the Company or other affiliates, the purchase of, or investments in,
stock  or  other securities thereof, the taking of such securities as collateral
for  loans,  and the purchase of assets of the Company or other affiliates. Such
restrictions  prevent  the Company and such other affiliates from borrowing from
the  Bank  unless  the loans are secured by marketable obligations of designated
amounts.  Further,  such  secured loans and investments by the Bank to or in the
Company  or  to or in any other affiliate are limited, individually, to 10.0% of
the  Bank's  capital  and  surplus (as defined by federal regulations), and such
secured  loans  and  investments  are limited, in the aggregate, to 20.0% of the
Bank's  capital  and surplus (as defined by federal regulations). California law
also  imposes  certain  restrictions  with respect to transactions involving the
Company  and  other  controlling persons of the Bank. Additional restrictions on
transactions  with  affiliates  may  be  imposed  on  the  Bank under the prompt
corrective action provisions of federal law. See "Item 1. Business - Supervision
and  Regulation  -  Prompt  Corrective Action and Other Enforcement Mechanisms."
     CAPITAL  STANDARDS
     ------------------
     The  federal  banking  agencies  have  adopted  risk-based  minimum capital
guidelines  intended to provide a measure of capital that reflects the degree of
risk  associated  with a banking organization's operations for both transactions
reported  on  the balance sheet as assets and transactions which are recorded as
off  balance  sheet  items.  Under  these  guidelines, nominal dollar amounts of
assets  and  credit equivalent amounts of off balance sheet items are multiplied
by  one  of  several risk adjustment percentages, which range from 0% for assets
with  low  credit  risk  federal  banking  agencies,  to  100%  for  assets with
relatively  high  credit  risk.
The  guidelines  require  a  minimum  ratio  of  qualifying  total  capital  to
risk-adjusted  assets  of  8%  and  a  minimum  ratio  of  Tier  1  capital  to
risk-adjusted  assets  of 4%.  In addition to the risk-based guidelines, federal
banking regulators require banking organizations to maintain a minimum amount of
Tier  1  capital  to  total  assets,  referred  to as the leverage ratio.  For a
banking  organization  rated  in  the  highest  of  the  five categories used by
regulators  to  rate banking organizations, the minimum leverage ratio of Tier 1
capital  to  total  assets  must be 3%.  In addition to these uniform risk-based
capital  guidelines  and  leverage  ratios  that  apply across the industry, the
regulators  have  the  discretion to set individual minimum capital requirements
for  specific  institutions  at rates significantly above the minimum guidelines
and  ratios.
     See  Part  II, Item 7, Note K for the Bank's capital ratio requirements and
current  ratios  as  of  December  31,  2001.

     The federal banking regulators may set capital requirements higher than the
minimums  described  above for holding companies whose circumstances warrant it.
For  example,  a  financial institution experiencing or anticipating significant
growth  may  be  expected  to maintain capital positions substantially above the
minimum  supervisory  levels  without significant reliance on intangible assets.
The  Federal  Reserve Board has also indicated that it will consider a "tangible
Tier 1 capital leverage ratio" (deducting all intangibles) and other indications
of  capital  strength when evaluating proposals for expansion or new activities.
     PROPOSED  CAPITAL  REQUIREMENTS  FOR  COMMUNITY  INSTITUTIONS
     -------------------------------------------------------------
     In  November 2000 the federal bank and thrift regulatory agencies requested
public  comment  on  an advance notice of proposed rulemaking that considers the
establishment  of  a  simplified  regulatory  capital  framework for non-complex
institutions.
In the proposal, the agencies suggested criteria that could be used to determine
eligibility  for  a simplified capital framework, such as the nature of a bank's
activities,  its  asset  size  and  its risk profile. In the advance notice, the
agencies  seek  comment  on possible minimum regulatory capital requirements for
non-complex  institutions,  including  a  simplified  risk-based ratio, a simple
leverage  ratio, or a leverage ratio modified to incorporate certain off-balance
sheet  exposures.
The  advance  notice solicits public comment on the agencies' preliminary views.
Comments  are  due  on the proposal on February 1, 2001.   Given the preliminary
nature  of the proposal, it is not possible to predict its impact on the Bank at
this  time.
     PROMPT  CORRECTIVE  ACTION  AND  OTHER  ENFORCEMENT  MECHANISMS
     ---------------------------------------------------------------
     Federal  banking agencies possess broad powers to take corrective and other
supervisory  action  to resolve the problems of insured depository institutions,
including  but  not  limited  to  those institutions that fall below one or more
prescribed  minimum capital ratios.  Each federal banking agency has promulgated
regulations  defining  the  following  five  categories  in  which  an  insured
depository  institution  will  be  placed,  based  on  its  capital ratios: well
capitalized,  adequately  capitalized,  undercapitalized,  significantly
undercapitalized,  and  critically  undercapitalized.  At December 31, 2001, the
Bank  and  the  Company exceeded the required ratios for classification as "well
capitalized."
An  institution  that,  based  upon  its  capital  levels, is classified as well
capitalized,  adequately  capitalized,  or  undercapitalized  may  be treated as
though  it  were  in  the next lower capital category if the appropriate federal
banking  agency,  after  notice  and opportunity for hearing, determines that an
unsafe  or  unsound  condition  or  an  unsafe or unsound practice warrants such
treatment.  At  each  successive  lower  capital category, an insured depository
institution  is  subject  to  more  restrictions.  The federal banking agencies,
however,  may  not  treat  a  significantly  undercapitalized  institution  as
critically  undercapitalized  unless  its  capital  ratio actually warrants such
treatment.
In  addition  to  measures  taken under the prompt corrective action provisions,
commercial banking organizations may be subject to potential enforcement actions
by  the  federal  regulators for unsafe or unsound practices in conducting their
businesses  or  for  violations  of  any law, rule, regulation, or any condition
imposed  in  writing  by  the  agency  or any written agreement with the agency.
     SAFETY  AND  SOUNDNESS  STANDARDS
     ---------------------------------
     The federal banking agencies have adopted guidelines designed to assist the
federal  banking  agencies  in  identifying  and addressing potential safety and
soundness  concerns  before  capital  becomes impaired. The guidelines set forth
operational  and  managerial  standards  relating  to:  (i)  internal  controls,
information  systems  and internal audit systems, (ii) loan documentation, (iii)
credit  underwriting,  (iv)  asset  growth, (v) earnings, and (vi) compensation,
fees  and  benefits. In addition, the federal banking agencies have also adopted
safety  and  soundness  guidelines  with  respect  to asset quality and earnings
standards.  These  guidelines  provide  six  standards  for  establishing  and
maintaining  a  system  to identify problem assets and prevent those assets from
deteriorating.  Under these standards, an insured depository institution should:
(i)  conduct  periodic  asset  quality  reviews to identify problem assets, (ii)
estimate  the  inherent losses in problem assets and establish reserves that are
sufficient  to  absorb  estimated  losses, (iii) compare problem asset totals to
capital,  (iv) take appropriate corrective action to resolve problem assets, (v)
consider the size and potential risks of material asset concentrations, and (vi)
provide  periodic asset quality reports with adequate information for management
and  the  board  of  directors  to  assess  the  level  of asset risk. These new
guidelines  also  set forth standards for evaluating and monitoring earnings and
for  ensuring  that  earnings  are  sufficient  for  the maintenance of adequate
capital  and  reserves.
     PREMIUMS  FOR  DEPOSIT  INSURANCE
     ---------------------------------
     Through the Bank Insurance Fund (BIF), the FDIC insures the deposits of the
Company's  depository  institution subsidiaries up to prescribed limits for each
depositor. The amount of FDIC assessments paid by each BIF member institution is
based  on  its relative risk of default as measured by regulatory capital ratios
and  other  factors.  Specifically,  the  assessment  rate  is  based  on  the
institution's capitalization risk category and supervisory subgroup category. An
institution's  capitalization risk category is based on the FDIC's determination
of  whether  the institution is well capitalized, adequately capitalized or less
than  adequately  capitalized. An institution's supervisory subgroup category is
based on the FDIC's assessment of the financial condition of the institution and
the  probability  that  FDIC  intervention  or  other  corrective action will be
required.
FDIC-insured  depository  institutions  pay an assessment rate equal to the rate
assessed on deposits insured by the Savings Association Insurance Fund ("SAIF").
The  assessment rate currently ranges from zero to 27 cents per $100 of domestic
deposits.  The  FDIC  may increase or decrease the assessment rate schedule on a
semi-annual  basis.  An  increase  in  the assessment rate could have a material
adverse  effect  on  the  Company's  earnings,  depending  on  the amount of the
increase. The FDIC is authorized to terminate a depository institution's deposit
insurance  upon a finding by the FDIC that the institution's financial condition
is  unsafe  or  unsound or that the institution has engaged in unsafe or unsound
practices  or  has  violated any applicable rule, regulation, order or condition
enacted  or  imposed  by the institution's regulatory agency. The termination of
deposit  insurance of the Company's subsidiary depository institution could have
a material adverse effect on the Company's earnings, depending on the collective
size  of  the  particular  institution  involved.
All  FDIC-insured  depository  institutions  must  pay  an  annual assessment to
provide  funds  for  the  payment  of  interest on bonds issued by the Financing
Corporation,  a federal corporation chartered under the authority of the Federal
Housing  Finance  Board.  The  bonds,  commonly  referred to as FICO bonds, were
issued  to  capitalize  the  Federal Savings and Loan Insurance Corporation. The
FDIC  established  the  FICO assessment rates effective for the third quarter of
2000  at approximately $.021 per $100 annually for assessable deposits. The FICO
assessments are adjusted quarterly to reflect changes in the assessment bases of
the  FDIC's  insurance  funds  and  do  not  vary  depending  on  a  depository
institution's  capitalization  or  supervisory  evaluations.
     INTERSTATE  BANKING  AND  BRANCHING
     -----------------------------------
     The BHCA permits bank holding companies from any state to acquire banks and
bank  holding  companies  located  in  any  other  state,  subject  to  certain
conditions,  including  certain  nationwide-  and  state-imposed  concentration
limits.  The  Bank  has the ability, subject to certain restrictions, to acquire
by  acquisition or merger branches outside its home state.  The establishment of
new  interstate  branches  is  also  possible  in  those  states  with laws that
expressly  permit  it.  Interstate  branches  are subject to certain laws of the
states  in  which  they  are located.  Competition may increase further as banks
branch  across  state  lines  and  enter  new  markets.
     COMMUNITY  REINVESTMENT  ACT  AND  FAIR  LENDING  DEVELOPMENTS
     --------------------------------------------------------------
     The  Bank  is  subject  to  certain fair lending requirements and reporting
obligations  involving  home  mortgage  lending  operations  and  Community
Reinvestment  Act  activities.  The  CRA  generally requires the federal banking
agencies to evaluate the record of a financial institution in meeting the credit
needs  of  its  local  communities,  including  low-  and  moderate-income
neighborhoods.  A  bank  may  be subject to substantial penalties and corrective
measures  for  a  violation  of  certain fair lending laws.  The federal banking
agencies  may  take  compliance  with such laws and CRA obligations into account
when regulating and supervising other activities.  In December 2000, the federal
banking agencies established annual reporting and public disclosure requirements
for  certain written agreements that are entered into between insured depository
institutions  or  their  affiliates and nongovernmental entities or persons that
are  made  pursuant  to,  or  in  connection  with,  the fulfillment of the CRA.
A  bank's  compliance  with  its  CRA  obligations  is based a performance-based
evaluation  system  which  bases CRA ratings on an institution's lending service
and  investment performance. When a bank holding company applies for approval to
acquire  a  bank  or  other bank holding company, the Federal Reserve Board will
review  the  assessment  of  each  subsidiary bank of the applicant bank holding
company,  and  such records may be the basis for denying the application.  Based
on  an  examination  conducted June 22, 1998, the Bank was rated satisfactory in
complying  with  its  CRA  obligations.

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

In  June  2001, the FASB issued SFAS No. 142, "Accounting for Goodwill and Other
Intangible  Assets,"  effective  starting  with  fiscal  years  beginning  after
December  15,  2001.  This  Statement  establishes  new accounting standards for
goodwill  and  continues  to require the recognition of goodwill as an asset but
does  not  permit  amortization  of  goodwill  as previously required by the APB
Opinion No. 17.  The Statement also establishes a new method of testing goodwill
for  impairment.  It requires goodwill to be separately tested for impairment at
a  reporting unit level.  The amount of goodwill determined to be impaired would
be expensed to current operations.  Management believes that the adoption of the
statement  will  not  have a material effect on the Bank's financial statements.


EMPLOYEES
---------

     At  December  31,  2001,  the  Company  employed  36  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>
<CAPTION>

CHANGES  IN  NET  INTEREST  INCOME


Year ended December 31, 2001
( in thousands)
<S>                                   <C>        <C>        <C>       <C>                 <C>     <C>
                                         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. . . . . . . . . . . . . . . .  $ 58,524   $   5,152      8.8%  $    580         $(468)   $  112
Other earning assets:
   Interest bearing deposits with
      financial institutions . . . .        25           1      4.0%       (2)             0       (2)
   Investment Securities . . . . . .    24,969       1,476      5.9%       169           (55)      114
   Fed funds sold & Securities
      purchased under resale
      agreements . . . . . . . . . .     6,871         248      3.6%        70          (177)    (107)
                                      ---------  ---------  --------  --------         ------  -------
Total  interest earning assets . . .  $ 90,389   $   6,877      7.6%  $    817          $(700)  $  117
Non earning assets:
                                         4,570
   Cash & due from banks
   Other assets. . . . . . . . . . .     5,397
   Allowance for loan loss . . . . .    (1,080)
                                      ---------
                                      $ 99,276

Interest-bearing liabilities:
   Deposits:

   Demand. . . . . . . . . . . . . .  $  3,644   $      35      1.0%  $      2           $   0   $    2
   Money  market and savings . . . .    31,377         914      2.9%       124            (310)    (186)
   Time certificate of deposit . . .    22,650       1,107      4.9%       304            (183)     121
   Federal funds purchased . . . . .        10           2     20.0%       (2)               1       (1)
Other interest bearing liabilities:
   Mortgage indebtedness . . . . . .         -           -        -          -               -        -
                                      ---------  ---------  --------  ----------         ------  -------
Total interest-bearing liabilities .  $ 57,681   $   2,058      3.6%  $    428           $(492)  $  (64)
Noninterest-bearing liabilities
   And shareholders equity
Noninterest-bearing demand . . . . .    29,624
Other liabilities. . . . . . . . . .       824
Shareholders' equity . . . . . . . .    11,147
                                      ---------
                                      $ 99,276

Net interest income. . . . . . . . .  $  4,819

Net interest spread. . . . . . . . .       4.0%

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

</TABLE>
<TABLE>
<CAPTION>

CHANGES  IN  NET  INTEREST  INCOME


Year ended December 31, 2000
( in thousands)
<S>                                   <C>        <C>        <C>       <C>                 <C>    <C>
                                         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. . . . . . . . . . . . . . . .  $ 52,483   $   5,040      9.6%  $    547           $ 611  $1,158
Other earning assets:
   Interest bearing deposits with
      financial institutions . . . .        52           3      5.8%         0               3       3
   Investment Securities . . . . . .    22,208       1,362      6.1%       165              93     258
   Fed funds sold & Securities
      purchased under resale
      agreements . . . . . . . . . .     5,746         355      6.2%         9              66      75
                                      ---------  ---------  --------  --------           -----  ------
Total  interest earning assets . . .  $ 80,489   $   6,760      8.4%  $    721           $ 773  $1,494
Non earning assets:
                                         4,582
   Cash & due from banks
   Other assets. . . . . . . . . . .     4,751
   Allowance for loan loss . . . . .      (986)
                                      ---------
                                      $ 88,836

Interest-bearing liabilities:
   Deposits:

   Demand. . . . . . . . . . . . . .  $  3,433   $      33      1.0%  $     (1)          $   1  $    0
   Money  market and savings . . . .    28,201       1,100      3.9%        85             163     248
   Time certificate of deposit . . .    17,317         986      5.7%       241             155     396
   Federal funds purchased . . . . .        54           3      5.6%         2               0       2
Other interest bearing liabilities:
   Mortgage indebtedness . . . . . .         -           -        -          -               -       -
                                      ---------  ---------  --------  --------            -----  ------
Total interest-bearing liabilities .  $ 49,005   $   2,122      4.3%  $    327            $ 319  $  646
Noninterest-bearing liabilities
   And shareholders equity
Noninterest-bearing demand . . . . .    29,543
Other liabilities. . . . . . . . . .       646
Shareholders' equity . . . . . . . .     9,642
                                      ---------
                                      $ 88,836

Net interest income. . . . . . . . .  $  4,638

Net interest spread. . . . . . . . .       4.1%

Net yield on earning assets. . . . .       5.8%

</TABLE>






<PAGE>
<TABLE>
<CAPTION>

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:

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

                                               Total                          Estimated
                                             Amortized   Gross Unrealized     Market
      YEAR END 2001 . . . . . . . . . . . .  Cost        Gains      Losses    Value
( in thousands)
Securities available for sale:
     U.S. Government and Agency Securities.  $    8,985  $    134  $  ( 13)  $ 9,106
     Corporate Bonds and Commercial Paper .       4,296       140        -     4,436
     Municipal Securities - Taxable . . . .         501         -    (   1)      500
     Mortgage-Backed Securities . . . . . .       2,333         6     ( 13)    2,326
                                             ----------  ---------  --------  -------
          Total . . . . . . . . . . . . . .  $   16,115  $    280  $  ( 27)  $16,368

Securities held to maturity:
     U.S. Treasury Securities . . . . . . .  $      500  $     12  $     -   $   512
     U.S. Government and Agency Securities.       1,483        87        -     1,570
     Municipal Securities - Taxable . . . .       5,383        96      (26)    5,453
     Mortgage-Backed Securities . . . . . .       5,552       118      (16)    5,654
                                             ----------  ---------  --------  -------
          Total . . . . . . . . . . . . . .  $   12,918  $    301  $   (42)  $13,189


YEAR END 2000
Securities available for sale:
     U.S. Government and Agency Securities.  $    5,077  $     31  $   (30)  $ 5,078
     Corporate Bonds and Commercial Paper .       4,261        15      (21)    4,255
                                             ----------  --------  --------  -------
          Total . . . . . . . . . . . . . .  $    9,338  $     46  $   (51)  $ 9,333

Securities held to maturity:
     U.S. Treasury Securities . . . . . . .  $      501  $      4  $     -   $   505
     U.S. Government and Agency Securities.       6,597        64      (21)    6,640
     Municipal Securities . . . . . . . . .       4,679         7      (40)    4,646
     Mortgage-Backed Securities . . . . . .       3,430        51      (11)    3,470
                                             ----------  --------  --------  -------
          Total . . . . . . . . . . . . . .  $   15,207  $    122  $   (72)  $15,261
</TABLE>



INVESTMENT  SECURITIES  -  CONTINUED
------------------------------------

     The  following  table  shows  the  maturities  of  investment securities at
December  31,  2001  and  the  weighted  average  yields  of  those  securities.
<TABLE>
<CAPTION>


                                         <c>          <c>          <c>        <c>       <c>       <c>

                                                          OVER 1       OVER 5
                                                            YEAR        YEARS
                                             1  YEAR     THROUGH      THROUGH       OVER             AVERAGE
(in  thousands)                             OR  LESS     5 YEARS     10 YEARS    10 YEARS     TOTAL    YIELD
                                            --------     -------     --------    --------  --------- -------
Securities  available  for  sale:
     U.S.  Government  Agency
        Securities                            $    -     $  8,695    $     -     $   411     $  9,106  4.81%
     Corporate  Bonds  and
        Commercial Paper                           -        4,436          -           -        4,436  6.27%
     Municipal Securities - Taxable                -          500          -           -          500  5.44%
     Mortgage-Backed Securities                    -          891         464        971        2,326  5.64%
                                              ---------  ---------     -------       ---     --------  -----
             Total                            $    -      $14,522    $    464    $ 1,382      $16,368  5.34%

Securities  held  to  maturity:
     U.S. Treasury Securities                 $   500     $     -    $     -     $    -       $   500  5.92%
     U.S.  Government  Agency
        Securities                                500         983          -          -         1,483  7.02%
     Mortgage-Backed Securities                     -       2,626       2,110        816        5,552  6.12%
     Municipal Securities                         550       3,652       1,181          -        5,383  5.61%
                                              ---------   --------     ------    --------       -----  -----
        Total                                  $1,550    $  7,261      $3,291    $   816      $12,918  6.00%
</TABLE>


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


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

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

                                                          % OF               % OF
 (in Thousands) . . . . . . . . . . . . . . .     2001   TOTAL        2000  TOTAL
                                               --------  --------  -------  ------

Commercial Loans. . . . . . . . . . . . . . .  $27,723        45%  $22,842     43%
Real Estate Loans:
     Construction . . . . . . . . . . . . . .   14,577        24%    7,619     14%
     Real Estate Mortgage . . . . . . . . . .   18,479        30%   21,990     42%
                                               --------            -------
          Total real estate loans . . . . . .   33,056              29,609
Installment loans . . . . . . . . . . . . . .      359         1%      418      1%
                                               --------  --------  -------  ------
                                                61,138       100%   52,869    100%
Deferred net loan origination fees and costs.     (150)                  3
Allowance for Loan Losses . . . . . . . . . .   (1,082)             (1,066)
                                               --------            --------
          Net Loans . . . . . . . . . . . . .  $59,906             $51,806
</TABLE>


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

<TABLE>
<CAPTION>


<S>                                                                                        <C>
COMMERCIAL AND CONSTRUCTION LOANS                                                           DECEMBER 31,
 ( in thousands). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2001
                                                                                              -------

COMMERCIAL LOANS
Aggregate maturities of loan balances due:
     In one year or less:
          Interest rates are floating or adjustable . . . . . . . . . . . . . . . . . . . . .  $12,351
          Interest rates are fixed or predetermined . . . . . . . . . . . . . . . . . . . . .      780
     After one year but within five years:
          Interest rates are floating or adjustable . . . . . . . . . . . . . . . . . . . . .    9,634
          Interest rates are fixed or predetermined . . . . . . . . . . . . . . . . . . . . .    1,321
     After five years:
          Interest rates are floating or adjustable . . . . . . . . . . . . . . . . . . . . .    3,637
          Interest rates are fixed or predetermined . . . . . . . . . . . . . . . . . . . . .        -
                                                                                                -------
               Total commercial loans . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $27,723

REAL ESTATE CONSTRUCTION LOANS
Aggregate maturities of loan balances due
     In one year or less:
           Interest rates are floating or adjustable. . . . . . . . . . . . . . . . . . . . .   $13,406
           Interest rates are fixed or predetermined. . . . . . . . . . . . . . . . . . . . .         -
     After one year but within five years:
           Interest rates are floating or adjustable. . . . . . . . . . . . . . . . . . . . .     1,171
                                                                                                -------
               Total commercial and construction loans. . . . . . . . . . . . . . . . . . . .   $14,577
</TABLE>


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

     Nonaccrual  loans  are those for which the Bank has discontinued accrual of
interest  because  there  exists  reasonable  doubt  as  to  the full and timely
collection  of  either  principal  or  interest  or  such  loans  have  become
contractually past due ninety days with respect to principal or interest.  Under
certain  circumstances, interest accruals are continued on loans past due ninety
days  which,  in  management's  judgment,  are considered to be well secured and
fully  collectible  as to both principal and interest.  When a loan is placed in
nonaccrual  status,  all interest previously accrued but uncollected is reversed
against  current period income.  Income on such loans is then recognized only to
the extent that cash is received and where the future collection of principal is
probable.  Accrual  of  interest is resumed only when principal and interest are
brought  fully  current  and  when,  in  management's  judgment,  such loans are
estimated  to  be  collectible  as  to  both  principal  and  interest.

     Restructured commercial loans are those for which the Bank has, for reasons
related  to  borrowers' financial difficulties, granted concessions to borrowers
(including  reductions  of  either  interest  or  principal)  that  it would not
otherwise  consider,  whether  or  not  such  loans are secured or guaranteed by
others.  Loan  restructurings  involving  only  a  modification  of  terms  are
accounted  for  prospectively  from  the time of restructuring.  Accordingly, no
gain  or loss is recorded at the time of such restructurings unless the recorded
investment in such loans exceeds the total future cash receipts specified by the
new  loan  terms.

     At December 31, 2001 loans totaling $1,151,000 were on nonaccrual, compared
with none at year-end 2000. There was no reduction in interest income associated
with nonaccrual loans during 2001, and $3,000 during 2000.  At December 31, 2001
loans past due 90 days or more and still accruing interest were $70,000 compared
to  $1,000,000  at year-end 2000. The Bank had $105,000 in specific reserves for
impaired  loans  in  2001and  none  in 2000 and in addition, the Bank classified
$1,410,000  and  $2,173,000,  respectively,  of  its  loans  without  a specific
reserve. The average recorded investment of impaired loans during the year ended
December 31, 2001 and 2000 was approximately $1,068,000 and $1,000 respectively.
No  interest  income  was  recognized  on  impaired  loans during the year ended
December  31,  2001 and $150 of interest income was recognized on impaired loans
in  2000.  There  were no restructured loans at December 31, 2001 or 2000. There
were no loans at December 31, 2001 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  accept  as  previously  disclosed.  The Bank has not made loans to
borrowers  outside  the United States.  At December 31, 2001, the Company had no
loan  concentrations  in  any  one SIC code 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.  Although management believes the level
of  the  allowance as of December 31, 2001 is adequate to absorb losses inherent
in  the  loan  portfolio,  decline in the local economy and the possibility of a
recession,  may  result  in  losses  that cannot reasonably be predicted at this
date.  Such  losses  may also cause unanticipated erosion of the Bank's capital.




<PAGE>
<TABLE>
<CAPTION>

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

<S>                                                         <C>       <C>
 LOAN CHARGE-OFFS AND RECOVERIES
(in thousands) . . . . . . . . . . . . . . . . . . . . . .     2001      2000
                                                            --------  --------
Balance of allowance for loan losses at beginning of year.  $ 1,066   $   853
Loans charged off:
     Commercial. . . . . . . . . . . . . . . . . . . . . .     ( 62)    (  80)
     Real estate . . . . . . . . . . . . . . . . . . . . .        -         -
     Installment . . . . . . . . . . . . . . . . . . . . .    (   4)    (  28)
                                                            --------  --------
        Total loans charged off. . . . . . . . . . . . . .     ( 66)     (108)

Recoveries of loans previously charged off:
     Commercial. . . . . . . . . . . . . . . . . . . . . .       34       206
     Real estate . . . . . . . . . . . . . . . . . . . . .        -         -
     Installment . . . . . . . . . . . . . . . . . . . . .        3        15
                                                            --------  --------
        Total loan recoveries. . . . . . . . . . . . . . .       37       221
                                                            --------  --------
Net loans charged off. . . . . . . . . . . . . . . . . . .     ( 29)      113
Provision charged to operating expense . . . . . . . . . .       45       100
                                                            --------  --------
Balance of allowance for loan losses at end of year. . . .  $ 1,082   $ 1,066

                                                               2001      2000
                                                            --------  --------
Amount of loans outstanding at end of the year . . . . . .  $60,988   $52,872
Average amount of loans outstanding. . . . . . . . . . . .  $58,524   $52,483
Ratio of net charge-offs to average loans outstanding. . .     0.05%    -0.22%
Ratio of allowance for loan losses at the end of the
     year to average loans outstanding . . . . . . . . . .     1.85%     2.03%
Ratio of allowance for loan losses at the end of the
     year to loans outstanding at the end of the year. . .     1.77%     2.02%
</TABLE>

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

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

ALLOWANCE  FOR  LOAN  LOSSES                                       December  31,
                                      ---------------------------------------------------------------------------
                                                     2001                                  2000
                                                     ----                                  ----
                                                                       PERCENT OF LOANS          PERCENT OF LOANS
                                                     ALLOWANCE FOR     IN EACH CATEGORY          IN EACH CATEGORY
 ( in thousands). . . . . . . . . . .  LOAN LOSSES   TO TOTAL LOANS   ALLOWANCE FOR LOAN LOSSES   TO TOTAL LOANS
                                       ------------  ---------------  --------------------------  ---------------
Commercial loans. . . . . . . . . . .  $        427              45%  $                      378              43%
Real  estate loans:
     Construction . . . . . . . . . .           300              24%                         127              14%
     Mortgage . . . . . . . . . . . .           346              30%                         553              42%
Installment/Consumer loans. . . . . .             9               1%                           8               1%
                                       ------------  ---------------  --------------------------  ---------------
     Total allowance for loan losses.  $      1,082             100%  $                    1,066             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.

<PAGE>
     Although  management believes the level of the allowance for loan losses as
of  December  31,  2001,  is  adequate  to  absorb  losses  inherent in the loan
portfolio,  currently  unanticipated  conditions  and events, such as additional
declines  in the local economy and the possibility of a recession, may result in
losses  that  cannot  reasonably  be  predicted  at  this  date.

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

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

DEPOSITS
--------

     The  Bank's  deposit  products include noninterest-bearing demand deposits,
interest-bearing  demand  deposits,  money market and savings accounts, and time
certificates  of deposit.  The majority of the Bank's deposits are obtained from
its  primary  marketing  area.


<TABLE>
<CAPTION>


     The  distribution  of  average  deposits and the average rates paid thereon is summarized for the
periods  indicated  below:

<S>                            <C>             <C>             <C>         <C>
                                      2001                           2000
                               -----------------------       -------------------
DEPOSITS. . . . . . . . . . .  AVERAGE         AVERAGE          AVERAGE  AVERAGE
(in thousands). . . . . . . .  BALANCE           RATE           BALANCE     RATE
                               ------------  ---------       -----------   -----

Demand, non-interest-bearing.  $     29,624                     $ 29,543
Demand, interest bearing. . .         3,644       1.0%             3,433   1.0%
Money market and savings. . .        31,377       2.9%            28,201   3.9%
Time certificates of deposit.        22,650       4.9%            17,317   5.7%
                               ------------                    ---------
         Total Deposits . . .  $     87,295       2.4%          $ 78,494   2.7%
</TABLE>



<TABLE>
<CAPTION>

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

TIME  CERTIFICATES  OF  DEPOSIT
December  31,

<S>                                     <C>      <C>
(in thousands) . . . . . . . . . . . .     2001     2000
                                        -------  -------

Three months or less . . . . . . . . .  $ 7,063  $ 5,538
Over three months through six months .    5,043    4,746
Over six months through twelve months.    1,005    2,191
Over twelve months . . . . . . . . . .        -        -
                                        -------  -------
        Total. . . . . . . . . . . . .  $13,111  $12,475
</TABLE>

     The  Bank  had  no  brokered  deposits  at  December  31,  2001  and  2000.


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


     The following table sets forth the ratios of net loss to average assets and
to  average  shareholders' equity, and the ratio of average shareholders' equity
to  average  assets.

<S>                                               <C>    <C>
                                                  2001   2000
Return on average assets . . . . . . . . . . . .  1.05%  1.24%
Return on average shareholders' equity . . . . .  9.39%  11.5%
Average shareholders' equity to average assets .  11.2%  10.9%
Shareholders' equity to total assets at year end  11.5%  11.3%
</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 and has
a five-year renewal option that is currently being negotiated with the landlord.
The  Bank  also  leases  702  feet  of  office space at 21241 Ventura Boulevard,
Woodland  Hills,  California,  which  expires  on  February 28, 2003. The leases
provide  for  annual  rental  payments of approximately $411,000 during 2002 and
$16,000 in 2003  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
2001.


                                PART II
                                -------

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


     The  Bancorp's common shares are traded on the OTCBB under the symbol MARB.
The high and low market prices for each quarterly period ended December 31, 2000
and  1999  ranged  as  follows:
<TABLE>
<CAPTION>


<S>         <C>  <C>  <C>  <C>           <C>  <C>  <C>  <C>
By Quarter  1st  2nd  3rd  4th-2001      1st  2nd  3rd  4th-2000
----------  ---  ---  ---  --------      ---  ---  ---  --------
Price
   High    3.25  3.10  4.75  4.73       3.00  3.00  3.31  3.38
   Low     2.97  2.90  3.57  3.60       2.50  2.50  2.63  3.13
</TABLE>


Principal  market  makers  at  December  31,  2001:

     Hill  Thompson  Magid,  L.P.          Hoefer  &  Arnett,  Incorporated
     Investec  Ernst  &  Company           Knight  Securities,  Inc
     Sutro  &  Co.,  Incorporated.         Wedbush  Morgan Securities


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

At  December  31,  2001  there  were  approximately 271 holders of record of the
Company's  common  shares.
<PAGE>


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

FINANCIAL  HIGHLIGHTS  OVERVIEW
     The  Company  continued  to  perform  well  even  during a year of economic
recession.  Pre-tax  earnings  for  the  year grew to $1,066,000 a 7.5% over the
$992,000  earned  in  2000.  Net  income  after  taxes  was  $1,047,000 for 2001
compared  to  $1,104,000  for 2000.  The Company became taxable for state tax in
the  fourth  quarter  of  2001.  Basic and diluted per share earnings were $0.27
for  the year 2001 versus $0.29 for the year 2000.  Return on average assets for
the year-ended December 31 2001 was 1.05% and return on average equity was 9.39%
for  the  same  period.
     Assets totaled $102,339,000 at December 31, 2001 compared to $92,916,000 at
December  31,  2001,  an increase of 10.1%.  Loans increased from $52,872,000 at
December 31, 2000 to $60,988,000 at year-end 2001.  Book value per share rose to
$3.06  at December 31, 2001 and increase of 12.1% over the $2.73 at December 31,
2000.

RESULTS  OF  OPERATIONS

NET  INTEREST  INCOME
     Net  interest  income  increased  for  the  year-ended December 31, 2001 by
$235,000 or 5.2%.  This increase was noteworthy in that it occurred in a year of
falling  interest  rates.  The  Company managed its interest rate risk well in a
year that saw the Federal Reserve Bank reduce its fed funds target rate by 4.75%
and the prime lending rate decreased a like amount.  Net interest earned in 2001
was  5.3%  compared  to  5.8%  for  year-end  2000.
     Interest income increased $117,000 or 1.7% for the year-ended  December 31,
2001  compared to year-end 2000.  Interest and fees on loans and interest earned
on  the  investment  portfolio  increased while interest on fed funds decreased.
Interest  and fees on loans rose due to the increase in the volume of loans that
offset  interest declines do to the falling prime rate, which declined from 9.5%
to  4.75%  during  2001.  Loan  interest  income  generated from the increase in
volume  was  $580,000, while income declined $468,000 from the decline in rates.
Interest  income  from  the  investment portfolio also increased from volume and
from  the Company lengthening maturities during 2000 to take advantage of higher
yields.
     Interest  expense, which is generated almost entirely from interest paid on
deposits,  declined  by  $63,000  or  3.0%.  Interest expense declined while the
volume  of  interest-bearing  deposits  increased  by  29.6%.  Interest  costs
increased  by  $430,000  from  the change in volume of interest-bearing deposits
while  declining  interest  rates  reduced  costs  by  $493,000.  Other interest
expense  was  generated  by  short-term  Federal  Home  Loan  Bank  borrowings.

NONINTEREST  INCOME
     Noninterest income generated for the year-ended December 31, 2001 increased
a  substantial  $153,000 or 27.5%.  Service charges and fees on deposits was the
main  item  generating  the increase.  Analysis charges on our business accounts
increased due to the lower earnings credit applied to noninterest-bearing demand
deposits maintained that is used to offset service charges. The analysis charges
tend  to  increase  when  rates  fall  and  decrease  as rates rise.  Both other
noninterest  income  generated  from fees and the dividends on the cash value of
our  bank  owned  life  insurance  policies  increased  as  well.

NONINTEREST  EXPENSE
     Noninterest expense increased $313,000 for the year-ended December 31, 2001
compared  to the year-end 2000.  Human resource costs increased due to increased
employee  benefit costs and reduced FASB91 salary credits.  Salary expense alone
increased by only $22,000 in the year 2001.  Occupancy expenses increased due to
increased  maintenance  expense on our lease.  Professional services, stationery
and  supplies,  and  other  expense  increased  $32,000  in  total.
     Legal fees and costs increased by $203,000 due mainly to three loan related
lawsuits.  The  insurance  deductible  has  been met on these lawsuits and there
will  be  substantial defense cost coverage in 2002 that will decrease the legal
fees  on  these cases.  The Company does not anticipate any losses in regards to
these  cases  which  should  settle  in  the  first  half  of  2002.
     The  Company  renegotiated  its  data  processing  contract during 2001 and
decreased  its  costs  as  well as not having any of the costs for the year 2000
changeover  in  2001.  Furniture  and  Equipment,  customer  related expense and
insurance  costs  declined  from  those  reported  for  2000.

CREDIT  RISK  MANAGEMENT
     Credit  risk  is  an intrinsic part of commercial banking.  The Company has
credit  policies designed to manage and regulate credit risk and to minimize the
level  of  losses  incurred.  Our  policies  helped  to  protect  us  during the
recession  that  we  experienced  in  2001.
     Credit policies require the 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.
Credit  review  is  done  both  by  management and an outside third-party credit
review  firm.  Reviews  of  current  economic  conditions,  previous  loan  loss
experience,  composition  of  the  portfolio,  industry  trends  and  many other
relative  factors  are  used  in  determining  the  allowance for credit losses.
     Nonperforming  loans,  which  consist  of  loans past due over 90 days plus
loans  on  nonaccrual,  totaled $1,151,000, which represents 1.9% of total loans
outstanding  at December 31, 2001 versus $1,000,000 or 1.9% of outstanding loans
at  year-end  2000.  Loans  classified by the Bank as doubtful or substandard at
year-end  2001 equaled $1,410,000 versus $2,172,000 at year-end 2000 a reduction
of  35%.
     The  allowance  for  credit  losses,  that  buffers  the credit risk in the
lending  process,  is  decreased  by  the  amount  of  loans  charged off and is
increased  by  the  provision  for  credit  losses charged against income and by
recoveries.  There is no precise method of predicting which loans may ultimately
be  charged  off;  and  the  conclusion that a loan may become uncollectable, in
whole  or  in  part,  is  a matter of judgement.  Similarly, the adequacy of the
allowance and accompanying provision for credit losses can be determined only on
a  judgmental  basis  after  full  review,  including  consideration of economic
conditions  and  their  effects  on specific borrowers, the borrowers' financial
data,  and  evaluation  of  any  underlying  collateral  enhancing  the  credit.
     Taking  into  consideration  our  assessment  of  the  quality  of the loan
portfolio,  and  the  other  factors previously discussed along with the current
weak  economy  and increased loan volume prompted the company to slowly increase
the  reserve for credit losses.  A provision of $45,000 was made in 2001 and the
reserve  increased  from  net recoveries for the year.  There was a provision of
$100,000  in  2000. Loans totaling $66,000 were charged off during the year, and
$37,000  was  recovered  increasing the reserve for credit losses to $1,082,000.
The  reserve  at  December  31, 2001 was 1.8% of gross loans compared to 2.0% of
gross  loans  outstanding  at  December  31,  2000.

ASSETS  AND  LIABILITIES

     Marathon  Bancorp's  asset  growth  for  the  year  was  a  healthy  10.1%,
increasing  year-end  asset from $92,916,000 at year-end 2000 to $102,339,000 at
year-end  2001.  Average  assets  increased  to  $99,276,000  for  the year 2001
compared  to  $88,836,000  for  2000.
     The  Company  reduced  the  cash  and  cash  equivalents  and increased the
earnings  assets.  The  loan portfolio grew by $8,116,000 or 15.3% spread mostly
between  commercial  and  industrial  loans  and  real estate construction.  The
investment  portfolio  was  increased  from  $24.5  million  to $29.3 million to
increase  the  yield  on  earning  assets.  More  securities  were classified as
available  for  sale  to  support increased future loan growth and for liquidity
since  we  decreased  our  investment  in low yielding high liquidity fed funds.
     The  lease  for  our headquarters and main office expires in August of 2002
and  contains  an  option  to renew.  We will be exploring the different options
available  to  us  with  other  buildings in the area as well as negotiating the
terms of the option on our exiting space.  We also will continue to maintain our
loan production office in Woodland Hills and look to expand that facility into a
branch  in  the  future.
     Deposit growth was also good for the year 2001 increasing total deposits to
$89,648,000  at  year-end 2001. This was an increase of $9,763,000 or 12.2% over
year-end  2000.  The  deposit  sector  that  showed  the most increase was money
market  deposits,  which  rose $10,988,000 or 40.3% from December 31, 2000.  The
weakening  stock  market  and  lower  interest  rates on certificates of deposit
prompted  customers  to  park  more  money  in  liquid  money  market  funds.




<PAGE>
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 and
on  shareholders' equity.  Management uses three different measurement processes
to  quantify  and  measure  its  interest  rate risk: gap analysis, net interest
income  simulation  and  present value of equity analysis. 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.  Net interest income simulation measures the change in income from drops
or  increases  in  interest  rates  in the market place and the present value of
equity  is used to provide information on the price sensitivity of shareholders'
equity  to  changes  in  interest  rates.
     In  order to appropriately reflect the repricing structure of the Company's
balance sheet, management has made certain adjustments to the balances reflected
in  the following table to account for the behavioral characteristics of certain
core  deposits that do not have specified contractual maturities (i.e., checking
with  interest,  savings, money markets).  In addition, the investment portfolio
is  shown  as  repricing at specified call date, if applicable, and not maturity
date.  The cumulative one-year gap position shown in the following interest rate
sensitivity  table  reflects  asset  sensitivity  of $5 million or 5% of earning
assets at year-end.  This is a large decrease in asset sensitivity from the year
2000  and  helped the Company to better weather the rate declines that we had in
2001.  Asset  sensitivity  is  normally  advantageous  to  us  when  rates  are
increasing  as  that  increase  in interest rates would likely cause earnings to
increase  because  a larger portion of assets than liabilities would reprice.  A
decrease in rates would decrease earnings. We decreased the asset sensitivity to
better  match  the  portfolios  to  the  declining  rate  market  in  2001.
     Loans  and  deposits  that  can  immediately adjust either contractually or
because  they  are  tied to the prime rate or other indexes, which can change at
any  time,  are  included  in  the zero to three-month category.   The remaining
assets  and  liabilities  are  categorized  by either the next time the asset or
liability  may  be  repriced  or  the  maturity  date, whichever is sooner.  The
Company  does  not  use  off-balance  sheet  interest  rate instruments to hedge
interest  rate  risk,  but  does  employ interest rate floors on adjustable rate
loans.  The  floors  help  to  mitigate  the  loss  of  net interest income in a
declining  rate  environment.

CAPITAL
     The  federal  banking  agencies require a minimum ratio of qualifying total
capital  to  risk-adjusted  assets  of 8% and minimum ratio of Tier I capital to
risk-adjusted  assets  of 4%.  In addition to the risk based guidelines, federal
banking regulators require banking organizations to maintain a minimum amount of
Tier  I capital to total assets, referred to as the leverage ratio.  The Company
and  bank  meet  all  regulatory  guidelines  and  the  bank is considered "well
capitalized" under the regulations. The Company increased capital to $11,792,000
at  year-end  2001,  which  was  a 12.8% improvement over 2000.  The capital was
increased  from  the  retained  earnings  generated  and  an  improvement in the
unrealized  value of investment securities available for sale.  The bank's total
risk-based  capital to asset ratio at year-end was 15.2% and the Tier I leverage
ratio  was 10.7%.  A further analysis of the capital position is covered in Note
K.


<PAGE>



INTEREST  RATE  SENSITIVITY
<TABLE>
<CAPTION>


<S>                         <C>     <C>     <C>        <C>    <C>     <C>
                            >0-3    4-6     7-12        1-5    >5
(In thousands) . . . . . .  Months  Months  Months    Years   Years     Total
--------------------------  ------  ------  ------  -------  -------  -------
Assets
  Securities               $ 2,747  $1,307  $5,225  $17,348  $ 2,504  $29,130
  Fed funds sold             2,905       -       -        -        -    2,905
      Loans                 51,642   1,538   1,371    6,472      908   61,932
-------------------------- -------  ------  ------  -------  -------  -------
  TOTAL EARNING ASSETS     $57,294  $2,845  $6,596  $23,820  $ 3,412  $93,967

Sources                      1,123       -       -        -        -    1,123
  Checking with interest     3,504       -       -        -        -    3,504
  Money market              37,088       -       -        -        -   37,088
  Time CD's                 10,503   6,821   2,578      172        -   20,074
       Demand deposits                    -       -       -   27,859   27,859
       FHLB borrowing            -       -       -        -        -        -
                           -------  ------  ------  -------  -------  -------
  TOTAL SOURCES            $52,218  $6,821  $2,578  $   172  $27,859  $89,648

Cumulative Gap             $ 5,076  $1,100  $5,118  $28,766  $ 4,319

Gap as a percent of total
      earning assets           5.0     1.1     5.0     28.1      4.2

</TABLE>

                                       25


                                       51


LIQUIDITY  MANAGEMENT
     Liquidity  management is used to maintain cash flow sufficient to both meet
the  needs  of  depositors  and  borrowers  and  to fund ongoing operations.  We
continue  to  have  a  relatively  stable base of core deposits that provide the
Company with a low-cost source of stable funds.  Deposits are monitored closely,
especially  the  largest relationships, to correctly gauge balance fluctuations.
Loan  funding  needs  are  also  closely  watched  so  that sufficient funds are
available  for  borrowers.
     The statement of cash flows shows the Company generated cash from operating
activities of $1,152,000 and $8,001,000 was from financing activities.  The cash
generated  was  used mainly to fund the increased loan portfolio and an increase
in  the investment portfolio. Cash and cash equivalents decreased $3,744,000 for
the  year.  Liquidity  remains  adequate  for  the Company's needs and gives the
Company  the  ability to deal with any deposit fluctuations as well as providing
funds  for increasing the loan portfolio.  The Bank has pre-approval to purchase
fed  funds  with  two  correspondent banks and the ability to borrow at both the
Federal  Reserve  Bank  and  Federal  Home Loan Bank to supplement  liquidity if
needed.

<PAGE>
------


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


CONSOLIDATED  BALANCE  SHEET

<S>                                                               <C>
                                                                  December 31,
                                                                  -----------------
ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              2001
                                                                  -----------------

Cash and Due From Banks. . . . . . . . . . . . . . . . . . . . .  $      4,291,000
Federal Funds Sold . . . . . . . . . . . . . . . . . . . . . . .         2,905,000
                                                                  -----------------
        TOTAL CASH AND CASH EQUIVALENTS. . . . . . . . . . . . .         7,196,000

Investment Securities:
   Securities Available for Sale . . . . . . . . . . . . . . . .        16,368,000
   Securities Held to Maturity . . . . . . . . . . . . . . . . .        12,918,000
                                                                  -----------------
        TOTAL INVESTMENT SECURITIES. . . . . . . . . . . . . . .        29,286,000

Federal Home Loan and Federal Reserve Bank stock, at cost. . . .           426,000

Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        60,988,000
   Less Allowance for Credit Losses. . . . . . . . . . . . . . .   (     1,082,000)
                                                                  -----------------
        NET LOANS. . . . . . . . . . . . . . . . . . . . . . . .        59,906,000
Premises and Equipment . . . . . . . . . . . . . . . . . . . . .           231,000
Cash Surrender Value of Life Insurance . . . . . . . . . . . . .         3,855,000
Accrued Interest and Other Assets. . . . . . . . . . . . . . . .         1,439,000
                                                                  -----------------
        TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . .  $    102,339,000
                                                                  =================

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
   Noninterest-Bearing Demand. . . . . . . . . . . . . . . . . .  $     27,859,000
   Interest-Bearing Demand . . . . . . . . . . . . . . . . . . .         3,504,000
   Money Market and Savings. . . . . . . . . . . . . . . . . . .        38,211,000
   Time Deposits Under $100,000. . . . . . . . . . . . . . . . .         6,963,000
   Time Deposits $100,000 and Over . . . . . . . . . . . . . . .        13,111,000
                                                                  -----------------
        TOTAL DEPOSITS . . . . . . . . . . . . . . . . . . . . .        89,648,000

Accrued Interest and Other Liabilities . . . . . . . . . . . . .           899,000
Federal Home Loan Bank Advance . . . . . . . . . . . . . . . . .                 -
                                                                  -----------------
        TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . .        90,547,000

Commitments and Contingencies - Note D and H

Shareholders' Equity
   Preferred Shares - No Par Value, 1,000,000 Shares Authorized,
      No Shares Issued and Outstanding
   Common Shares - No Par Value, 9,000,000 Shares Authorized,
       3,852,819 Shares Issued and Outstanding . . . . . . . . .        13,713,000
   Accumulated Deficit . . . . . . . . . . . . . . . . . . . . .   (     2,168,000)
   Accumulated Other Comprehensive Income - Net Unrealized
      Gains on Available-for-Sale Securities . . . . . . . . . .           247,000
                                                                  -----------------
        TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . . . .        11,792,000
                                                                  -----------------
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . . . .  $    102,339,000
                                                                  =================
</TABLE>


See  accompanying  notes  to  consolidated  financial  statements.


See  accompanying  notes  to  consolidated  financial  statements.
<TABLE>
<CAPTION>
 CONSOLIDATED  STATEMENTS  OF  INCOME


<S>                                                       <C>                       <C>

                                                                    Year Ended December 31,
                                                          ----------------------------------------
                                                                              2001           2000
                                                          ------------------------  --------------
INTEREST INCOME
    Interest and Fees on Loans . . . . . . . . . . . . .  $              5,152,000  $   5,040,000
    Interest on Investment Securities. . . . . . . . . .                 1,476,000      1,362,000
    Other Interest Income. . . . . . . . . . . . . . . .                   249,000        358,000
                                                          ------------------------  --------------
        TOTAL INTEREST INCOME. . . . . . . . . . . . . .                 6,877,000      6,760,000

INTEREST EXPENSE
    Interest on Demand Deposits. . . . . . . . . . . . .                    35,000         33,000
    Interest on Money Market and Savings . . . . . . . .                   913,000      1,100,000
    Interest on Time Deposits. . . . . . . . . . . . . .                 1,108,000        986,000
    Other Interest Expense . . . . . . . . . . . . . . .                     2,000          3,000
                                                          ------------------------  --------------
        TOTAL INTEREST EXPENSE . . . . . . . . . . . . .                 2,058,000      2,122,000
                                                          ------------------------  --------------

NET INTEREST INCOME. . . . . . . . . . . . . . . . . . .                 4,819,000      4,638,000
Provision for Credit Losses. . . . . . . . . . . . . . .                    45,000        100,000
                                                          ------------------------  --------------
        NET INTEREST INCOME AFTER
           PROVISION FOR CREDIT LOSSES . . . . . . . . .                 4,774,000      4,538,000
                                                          ------------------------  --------------

NONINTEREST INCOME
    Service Charges and Fees on Deposits . . . . . . . .                   386,000        267,000
    Dividends on Cash Surrender Value of Life Insurance.                   214,000        198,000
    Other Noninterest Income . . . . . . . . . . . . . .                   108,000         92,000
                                                          ------------------------  --------------
        TOTAL NONINTEREST INCOME . . . . . . . . . . . .                   708,000        557,000
                                                          ------------------------  --------------

NONINTEREST EXPENSE
    Salaries and Employee Benefits . . . . . . . . . . .                 2,228,000      2,095,000
    Occupancy Expenses . . . . . . . . . . . . . . . . .                   575,000        559,000
    Furniture and Equipment. . . . . . . . . . . . . . .                    89,000        102,000
    Professional Services. . . . . . . . . . . . . . . .                   109,000         89,000
    Business Promotion . . . . . . . . . . . . . . . . .                    61,000         58,000
    Stationery and Supplies. . . . . . . . . . . . . . .                    51,000         45,000
    Data Processing Services . . . . . . . . . . . . . .                   272,000        294,000
    Customer Related Expenses. . . . . . . . . . . . . .                   286,000        320,000
    Insurance and Assessments. . . . . . . . . . . . . .                   151,000        154,000
    Legal Fees and Costs . . . . . . . . . . . . . . . .                   317,000        114,000
    Other Expenses . . . . . . . . . . . . . . . . . . .                   277,000        273,000
                                                          ------------------------  --------------
        TOTAL NONINTEREST EXPENSE. . . . . . . . . . . .                 4,416,000      4,103,000
                                                          ------------------------  --------------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . .                 1,066,000        992,000
Income Taxes Expense (Benefit) . . . . . . . . . . . . .                    19,000   (    112,000)
                                                          ------------------------  --------------
        NET INCOME . . . . . . . . . . . . . . . . . . .  $              1,047,000  $   1,104,000
                                                          ========================  ==============
Per Share Data:
        Net Income  - Basic. . . . . . . . . . . . . . .  $                   0.27  $        0.29
        Net Income  - Diluted. . . . . . . . . . . . . .  $                   0.27  $        0.29
</TABLE>



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

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
<S>                                                                     <C>                 <C>
                                                                                Year  Ended  December,  31
                                                                                     2001                2000
                                                                        ------------------  ------------------
OPERATING ACTIVITIES
   Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       1,047,000   $       1,104,000
   Adjustments to Reconcile Net Income to Net Cash Provided
      by Operating Activities:
         Depreciation and Amortization . . . . . . . . . . . . . . . .            116,000             122,000
         Provision for Credit Losses . . . . . . . . . . . . . . . . .             45,000             100,000
         Deferred Taxes. . . . . . . . . . . . . . . . . . . . . . . .   (         87,000)    (       136,000)
         Net Amortization of Premiums and Discounts
            on Investment Securities . . . . . . . . . . . . . . . . .   (         31,000)   (         28,000)
         Net Change in Deferred Loan Origination Fees. . . . . . . . .            153,000              59,000
         Net Increase in Cash Surrender Value of Life Insurance. . . .    (       188,000)    (       173,000)
         Net Change in Accrued Interest, Other Assets
             And Other Liabilities . . . . . . . . . . . . . . . . . .             97,000              79,000
                                                                        ------------------  ------------------
         NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . . . . .          1,152,000           1,127,000

INVESTING ACTIVITIES
   Net Change in Interest-Bearing Deposits with Financial Institutions                  -             100,000
   Purchases of  Available-for-Sale Securities . . . . . . . . . . . .      (  23,071,000)      (  12,004,000)
   Purchases of Held-to-Maturity Securities. . . . . . . . . . . . . .     (    6,226,000)     (    7,333,000)
   Proceeds from Maturities of Available-for-Sale Securities . . . . .         16,301,000          10,000,000
   Proceeds from Maturities of Held-to-Maturity Securities . . . . . .          8,532,000           4,487,000
   Proceeds from Sale of Available-for-Sale Securities . . . . . . . .                  -           2,000,000
   Purchase of Federal Home Loan & Federal Reserve Bank Stock. . . . .   (         51,000)   (         24,000)
   Proceeds from Redemption of Federal Home Loan Bank Stock. . . . . .                  -             131,000
   Net Change in Loans . . . . . . . . . . . . . . . . . . . . . . . .     (    8,298,000)     (    2,716,000)
   Purchase of Life Insurance. . . . . . . . . . . . . . . . . . . . .                  -      (    1,935,000)
   Purchases of Premises and Equipment . . . . . . . . . . . . . . . .   (         84,000)   (         60,000)
                                                                        ------------------  ------------------
        NET CASH USED BY INVESTING ACTIVITIES. . . . . . . . . . . . .      (  12,897,000)     (    7,354,000)

FINANCING ACTIVITIES
   Net Change in Demand Deposits, Money Market and Savings . . . . . .          8,867,000           4,200,000
   Net Change in Time Deposits . . . . . . . . . . . . . . . . . . . .            896,000           4,130,000
   Net Change in Federal Home Loan Bank Advance. . . . . . . . . . . .     (    1,800,000)   (         75,000)
   Proceeds from Exercise of Stock Options . . . . . . . . . . . . . .             38,000              21,000
                                                                        ------------------  ------------------
        NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . .          8,001,000           8,276,000
                                                                        ------------------  ------------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . .     (    3,744,000)          2,049,000
Cash and Cash Equivalents at Beginning of Year . . . . . . . . . . . .         10,940,000           8,891,000
                                                                        ------------------  ------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR . . . . . . . . . . . . . . .  $       7,196,000   $      10,940,000
                                                                        ==================  ==================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Interest Paid . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       2,067,000   $       1,985,000
   Income Taxes Paid . . . . . . . . . . . . . . . . . . . . . . . . .  $         107,000   $          21,000
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED  STATEMENT  OF  CHANGES  IN  SHAREHOLDERS'  EQUITY

<S>                         <C>             <C>             <C>             <C>               <C>             <C>
                                                                                             Accumulated
                                                                                                Other
                                    Common Shares           Comprehensive   Accumulated     Comprehensive
                            Shares          Amount          Income          Deficit           Income              Total
                            --------------  --------------  --------------  ----------------  --------------  -----------

BALANCE, JANUARY 1, 2000 .       3,830,019  $   13,654,000                  $(  4,319,000)  $  (    199,000)  $ 9,136,000

Exercise of Stock Options.           8,000          21,000                                                         21,000

COMPREHENSIVE INCOME:
  Net Income . . . . . . .                                  $    1,104,000       1,104,000                      1,104,000
  Net Gain in Unrealized
    on Available-for-Sale
    Securities . . . . . .                                         194,000                           194,000      194,000
                                                            --------------
TOTAL COMPREHENSIVE INCOME                                  $    1,298,000
                                                            ==============

BALANCE, DECEMBER 31, 2000       3,838,019      13,675,000                   (  3,215,000)   (        5,000)   10,455,000

Exercise of Stock Options.          14,800          38,000                                                         38,000

COMPREHENSIVE INCOME:
  Net Income . . . . . . .                                  $    1,047,000       1,047,000                      1,047,000
  Net Gain in Unrealized
    on Available-for-Sale
    Securities . . . . . .                                         252,000                          252,000       252,000
                                                            --------------
TOTAL COMPREHENSIVE INCOME                                  $    1,299,000
                                                            ==============
                            --------------  --------------                  --------------  ----------------  -----------
BALANCE, DECEMBER 31, 2001       3,852,819  $   13,713,000                   $(  2,168,000)   $     247,000   $11,792,000
                            ==============  ==============                  ==============  ================  ===========

</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 has been organized as a single reporting segment and operates a branch
office,  a loan production office and corporate headquarters located in the west
side  of  the  City  of Los Angeles.  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  Cash  Equivalents
----------------------------

For  purposes  of  reporting cash flows, cash and cash equivalents include cash,
due  from  banks  and federal funds sold.  Generally, federal funds are sold for
one  day  periods.

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

Banking  regulations  require  that  all  banks  maintain  a percentage of their
deposits  as  reserves in cash or on deposit with the Federal Reserve Bank.  The
Bank  complied  with  the  reserve  requirements  as  of  December  31,  2001.

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

<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

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

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

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

Loans
-----

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

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

Loans  on  which the accrual of interest has been discontinued are designated as
nonaccrual  loans.  The  accrual  of  interest  on  loans  is  discontinued when
principal or interest is past due 90 days or when, in the opinion of management,
there  is  reasonable  doubt  as  to  collectibility.  When  loans are placed on
nonaccrual status, all interest previously accrued but not collected is reversed
against  current  period  interest  income.  Income  on  nonaccrual  loans  is
subsequently  recognized only to the extent that cash is received and the loan's
principal  balance is deemed collectible.  Interest accruals are resumed on such
loans  only when they are brought current with respect to interest and principal
and  when,  in  the  judgment of management, the loans are estimated to be fully
collectible  as  to  all  principal  and  interest.

The  Bank considers a loan to be impaired when it is probable that the Bank will
be  unable  to collect all amounts due (principal and interest) according to the
contractual  terms of the loan agreement.  Measurement of impairment is based on
the expected future cash flows of an impaired loan which are to be discounted at
the  loan's  effective  interest rate, or measured by reference to an observable
market  value,  if  one  exists,  or  the  fair  value  of  the collateral for a
collateral-dependent  loan.  The  Bank  selects  the  measurement  method  on  a
loan-by-loan  basis except that collateral-dependent loans for which foreclosure
is  probable  are  measured  at  the  fair  value  of  the collateral.  The Bank
recognizes  interest  income  on impaired loans based on its existing methods of
recognizing  interest  income  on  nonaccrual  loans.

<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

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

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

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

Premises  and  equipment  are  carried at cost less accumulated depreciation and
amortization.  Depreciation  is computed using the straight-line method over the
estimated  useful  lives,  which range from three to ten years for furniture and
fixtures.  Leasehold  improvements  are amortized using the straight-line method
over the estimated useful lives of the improvements or the remaining lease term,
whichever  is  shorter.  Expenditures  for  betterment  or  major  repairs  are
capitalized  and  those  for  ordinary  repairs  and  maintenance are charged to
operations  as  incurred.

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

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

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

Statement  of  Financial  Accounting  Standards  ("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.

<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  A  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

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
-------------------------

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 ("APB") 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.

Comprehensive  Income
---------------------

The  Bank adopted SFAS No. 130, "Reporting Comprehensive Income", which requires
the disclosure of comprehensive income and its components. Changes in unrealized
gain  (loss)  on  available-for-sale  securities net of income taxes is the only
component of accumulated other comprehensive income for the Bank for the periods
ended  December  31,  2000  and  December  31,  2001.

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

In  June  2001, the FASB issued SFAS No. 142, "Accounting for Goodwill and Other
Intangible  Assets,"  effective  starting  with  fiscal  years  beginning  after
December  15,  2001.  This  Statement  establishes  new accounting standards for
goodwill  and  continues  to require the recognition of goodwill as an asset but
does  not  permit  amortization  of  goodwill  as previously required by the APB
Opinion No. 17.  The Statement also establishes a new method of testing goodwill
for  impairment.  It requires goodwill to be separately tested for impairment at
a  reporting unit level.  The amount of goodwill determined to be impaired would
be expensed to current operations.  Management believes that the adoption of the
statement  will  not  have a material effect on the Bank's financial statements.

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

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


<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  B  -  INVESTMENT  SECURITIES

<TABLE>
<CAPTION>

The  following is a summary of data for the major categories of securities as of December 31, 2001:

<S>                                          <C>          <C>          <C>              <C>
                                             Gross        Gross        Estimated
                                             Amortized    Unrealized   Unrealized       Fair
                                             Cost         Gains        Losses           Value
                                             -----------  -----------  ---------------  -----------
AVAILABLE-FOR-SALE SECURITIES:
   DECEMBER 31, 2001:
      U.S. Government and Agency Securities  $ 8,985,000  $   134,000  $ (     13,000)  $ 9,106,000
      Corporate Bonds and Commercial Paper.    4,296,000      140,000               -     4,436,000
      Municipal Securities - Taxable. . . .      501,000            -   (       1,000)      500,000
      Mortgage-Backed Securities. . . . . .    2,333,000        6,000    (     13,000)    2,326,000
                                             -----------  -----------  ---------------  -----------
                                             $16,115,000  $   280,000  $ (     27,000)  $16,368,000
                                             ===========  ===========  ===============  ===========

HELD-TO-MATURITY SECURITIES:
   DECEMBER 31, 2001:
      U. S. Treasury Securities . . . . . .  $   500,000  $    12,000  $            -   $   512,000
      U.S. Government and Agency Securities    1,483,000       87,000               -     1,570,000
      Municipal Securities - Taxable. . . .    5,383,000       96,000    (     26,000)    5,453,000
      Mortgage-Backed Securities. . . . . .    5,552,000      118,000    (     16,000)    5,654,000
                                             -----------  -----------  ---------------  -----------
                                             $12,918,000  $   301,000  $ (     42,000)  $13,189,000
                                             ===========  ===========  ===============  ===========

</TABLE>



Investment  securities  carried at approximately $6,025,000 at December 31, 2001
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  2001.
<TABLE>
<CAPTION>


The  scheduled  maturities of securities held to maturity and securities available for sale at December 31, 2001, were as
follows:

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

Due in One Year or Less . . . .  $                             -  $                           -  $   500,000  $   512,000
Due From One Year to Five Years                       13,782,000                     14,042,000    6,866,000    7,023,000
Mortgage-Backed Securities. . .                        2,333,000                      2,326,000    5,552,000    5,654,000
                                 -------------------------------  -----------------------------  -----------  -----------

                                 $                    16,115,000  $                  16,368,000  $12,918,000  $13,189,000
                                 ===============================  =============================  ===========  ===========
</TABLE>


NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  C  -  LOANS

The  Bank's  loan  portfolio consists primarily of loans to borrowers within the
Los  Angeles  Area  of  Southern  California.  Although  the Bank seeks to avoid
concentrations  of  loans  to  a single industry or based upon a single class of
collateral,  real  estate  and  real  estate associated businesses are among the
principal industries in the Bank's market area and, as a result, the Bank's loan
and  collateral  portfolios are to some degree concentrated in those industries.


<TABLE>
<CAPTION>


The  following  is  a  summary  of the components of loans at December 31, 2001:

<S>                         <C>
                                    2001
                            -------------

Commercial Loans . . . . .  $ 27,723,000
Real Estate - Construction    14,577,000
Real Estate - Other. . . .    18,479,000
Consumer . . . . . . . . .       359,000
                            -------------
                              61,138,000
Net Deferred Loan Costs. .   (   150,000)
                            -------------

                            $ 60,988,000
                            =============

</TABLE>


<TABLE>
<CAPTION>


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:

<S>                                            <C>         <C>
                                                     2001    2000
                                               ----------  ------

Recorded Investment in Impaired Loans . . . .  $1,151,000  $    -
                                               ==========  ======

Related Allowance for Credit Losses . . . . .  $  105,000  $    -
                                               ==========  ======

Average Recorded Investment in Impaired Loans  $1,068,000  $1,000
                                               ==========  ======

Interest Income Recognized from Cash Payments  $        -  $    -
                                               ==========  ======

</TABLE>




<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  C  -  LOANS  -  CONTINUED
<TABLE>
<CAPTION>


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

<S>                          <C>             <C>
                                      2001           2000
                             --------------  -------------

Balance, January 1. . . . .  $   1,066,000   $    853,000
Provision for Credit Losses         45,000        100,000
Loans Charged Off . . . . .   (     66,000)   (   108,000)
Recoveries. . . . . . . . .         37,000        221,000
                             --------------  -------------
Balance, December 31. . . .  $   1,082,000   $  1,066,000
                             ==============  =============
</TABLE>



NOTE  D  -  PREMISES  AND  EQUIPMENT
<TABLE>
<CAPTION>


The  following is a summary of the major components of premises and equipment at
December  31,  2001:

<S>                                             <C>
                                                        2001
                                                -------------

Furniture, Fixtures and Equipment. . . . . . .  $  1,579,000
Leasehold Improvements . . . . . . . . . . . .       480,000
                                                -------------
                                                   2,059,000
Less Accumulated Depreciation and Amortization   ( 1,828,000)
                                                -------------

                                                $    231,000
                                                =============

</TABLE>



The  Bank  has  an  operating  lease  commitment  covering  its banking premises
expiring  in  2002  that  contains a provision to extend the lease.  The minimum
rental  commitment  under  this  operating  lease  is  $349,000.

Rent expense was $541,000 and $542,000 for the years ended December 31, 2001 and
2000, respectively.  Sublease rental income was $101,000 and $95,000 in 2001 and
2000,  respectively.


NOTE  E  -  DEPOSITS
<TABLE>
<CAPTION>


At December 31, 2001, the scheduled maturities of certificates of deposit are as
follows:

<S>                 <C>
2002 . . . . . . .  $19,901,000
2003 through 2005.      173,000
                    -----------

20,074,000
==================

</TABLE>

<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  F  -  INCOME  TAXES
<TABLE>
<CAPTION>


The  income  tax  provision  (benefit) for the years ended December 31, 2001 and
2000  is  comprised  of  the  following:

<S>                                <C>            <C>
                                           2001           2000
                                   -------------  -------------
Current Taxes:
   Federal. . . . . . . . . . . .  $     17,000   $     18,000
   State. . . . . . . . . . . . .        89,000          6,000
                                   -------------  -------------
                                        106,000         24,000
Deferred. . . . . . . . . . . . .       269,000        321,000
Net Change in Valuation Allowance   (   356,000)   (   457,000)
                                   -------------  -------------

                                   $     19,000   $(   112,000)
                                   =============  =============

</TABLE>



At  December  31,  2001,  the  Company  had net operating loss carryforwards for
federal  income tax purposes of approximately $1,289,000, which expire beginning
in  the  year  2008.  Alternative  minimum  tax  credit  carryforwards  for  tax
purposes,  which  do  not  expire,  is  $173,000  as  of  December  31,  2001.
<TABLE>
<CAPTION>


At December 31, 2001, the components of the net deferred tax asset are comprised
of  the  following:

<S>                                                        <C>
                                                                     2001
                                                           ---------------
Deferred Tax Assets:
    Allowance for Credit Losses Due to Tax Limitations. .  $      431,000
    Net Operating Loss and Tax Credit Carryforwards . . .         594,000
    Premises and Equipment Due to Depreciation Difference         103,000
    Other Items . . . . . . . . . . . . . . . . . . . . .         258,000
                                                           ---------------
                                                                1,386,000

Valuation Allowance . . . . . . . . . . . . . . . . . . .     (   785,000)

Deferred Tax Liabilities:
    Other Items . . . . . . . . . . . . . . . . . . . . .   (       5,000)
                                                           ---------------
                                                            (       5,000)
                                                           ---------------

Net Deferred Assets . . . . . . . . . . . . . . . . . . .  $      596,000
                                                           ===============

</TABLE>








NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  G  -  INCOME  TAXES  -  CONTINUED
<TABLE>
<CAPTION>


The  principal  reasons  for the difference between the federal statutory income
tax rate of 34% in 2001 and 2000, and income tax expense (benefit) for the years
ended  December  31,  2001  and  2000  are  as  follows:

<S>                                              <C>             <C>
                                                          2001            2000
                                                 --------------  --------------

Tax Expense at Statutory Rate . . . . . . . . .  $     362,000   $     337,000
State Franchise Tax Net of Federal Tax Benefit.         64,000          60,000
Reduction of Valuation Allowance. . . . . . . .    (   356,000)    (   457,000)
Expired State Net Operating Losses. . . . . . .              -               -
Other, Net. . . . . . . . . . . . . . . . . . .   (     51,000)   (     52,000)
                                                 --------------  --------------

Tax Expense (Benefit) . . . . . . . . . . . . .  $      19,000   $ (   112,000)
                                                 ==============  ==============


</TABLE>



NOTE  G  -  EARNINGS  PER  SHARE  (EPS)
<TABLE>
<CAPTION>


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

<S>                             <C>         <C>         <C>         <C>
                                         2001                  2000
                                ----------------------  ---------------------
                                Income  . .  Shares      Income      Shares
                                ----------------------  ----------  ---------

Net Income as Reported . . . .  $1,047,000              $1,104,000
Weighted Average Shares
   Outstanding During the Year               3,849,287              3,836,588
                                ----------  ----------  ----------  ---------
      USED IN BASIC EPS. . . .   1,047,000   3,849,287   1,104,000  3,836,588
Dilutive Effect of Outstanding
   Stock Options . . . . . . .           -      31,695           -          -
                                ----------  ----------  ----------  ---------
      USED IN DILUTIVE EPS . .  $1,047,000   3,880,982  $1,104,000  3,836,588
                                ==========  ==========  ==========  =========

</TABLE>





<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  H  -  COMMITMENTS  AND  CONTINGENCIES

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

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


The  following  is  a  summary  of  contractual or notional amounts of financial
instruments  with  off  balance  sheet  risk  as  of  December  31,  2001.

<S>                           <C>
                                     2001
                              -----------

Commitments to Extend Credit  $34,983,000
Letters of Credit. . . . . .      990,000
                              -----------

                              $35,973,000
                              ===========

</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.

The  Bank  has  entered  into deferred compensation agreements with key officers
providing  for  future  benefits aggregating approximately $3,000,000 payable in
equal  monthly  installments  for  ten  years  from the retirement dates of each
participating  officer.  The  estimated  present  value of future benefits to be
paid  is being accrued over the period from the effective date of the agreements
until  the  expected  retirement  dates of the participants.  As of December 31,
2001,  approximately  $451,000  has  been  accrued  in  conjunction  with  these
agreements.  The expense incurred and accrued was $169,000 and $149,000, for the
years  ended  December  31,  2001  and  2000,,  respectively.  The  Bank  is the
beneficiary  of  life insurance policies that have been purchased as a method of
financing  the  benefits  under  the  agreements.

<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  I  -  STOCK  OPTION  PLAN
<TABLE>
<CAPTION>


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

<S>                                 <C>          <C>      <C>         <C>
                                          2001      2000
                                    -----------  -------
                                                Weighted             Weighted
                                                 Average              Average
                                                Exercise             Exercise
                                       Shares     Price     Shares     Price
                                    -----------  -------  ----------  ------

Outstanding at Beginning of Year .     469,553   $  3.54    476,896   $  3.63
Granted. . . . . . . . . . . . . .      37,000   $  3.13     18,958   $  3.02
Exercised. . . . . . . . . . . . .    ( 14,800)  $  2.61  (   8,000)  $  2.66
Forfeited. . . . . . . . . . . . .   (   4,000)  $  3.79   ( 18,301)  $  6.31
                                    -----------           ----------
Outstanding at End of Year . . . .     487,753   $  3.54    469,553   $  3.54
                                    ===========           ==========

Weighted-Average Fair Value of
   Options Granted During the Year               $  1.72              $  1.74

</TABLE>




The fair value of each option grant was estimated on the date of grant using the
Black-Scholes  option  pricing  model  with  the  following  weighted-average
assumptions  used:  no dividend yield; risk-free rates of 4% for 2001 and 6% for
2000,  volatility  of  37%  for  2001 and 34% for 2000 and expected lives of ten
years.
<TABLE>
<CAPTION>

The  following  table summarizes information about fixed options outstanding at December 31,
2001:

<S>             <C>                  <C>                  <C>         <C>          <C>
                Options Outstanding                                    Options Exercisable
                -------------------                                    -------------------
                                        Weighted-           Weighted               Weighted-
                                        Average             Average                Average
Exercise         Number                 Remaining           Exercise  Number       Exercise
Price. . . . .  Outstanding          Contractual Life       Price     Exercisable   Price
--------------  -------------------  -------------------  ----------  -----------  ---------
2.00 to $2.99               85,000           7.56 years     $  2.85       29,200     $ 2.85
3.00 to $3.99              375,253           6.77 years     $  3.66      194,565     $ 3.74
4.00 to $5.99               27,500           5.74 years     $  4.01       21,700     $ 4.01
                -------------------                                   -----------
                            487,753          6.85 years     $  3.54      245,465     $ 3.66
                ===================                                   ===========

</TABLE>





<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  I  -  STOCK  OPTION  PLAN  -  CONTINUED

The Company applies APB Opinion No. 25 and related interpretations in accounting
for  its  stock  options.  Accordingly, no compensation cost has been recognized
for its stock option plan.  Had compensation cost for the Company's stock option
plan been determined based on the fair value at the grant dates for awards under
the  plan  consistent  with the method of SFAS No. 123, the Company's net income
and  income  per  share for the year ended December 31, 2001 and 2000 would have
been  changed  to  the  pro  forma  amounts  indicated  below:

<TABLE>
<CAPTION>


<S>                                  <C>         <C>

                                           2001        2000
                                     ----------  ----------
Net Income  to Common Shareholders:
   As Reported. . . . . . . . . . .  $1,047,000  $1,104,000
   Pro Forma. . . . . . . . . . . .  $  886,000  $  951,000

Per Share Data:
   Net Income - Basic
      As Reported . . . . . . . . .  $     0.27  $     0.29
      Pro Forma . . . . . . . . . .  $     0.23  $     0.25

   Net Income - Diluted
      As Reported . . . . . . . . .  $     0.27  $     0.29
      Pro Forma . . . . . . . . . .  $     0.23  $     0.25

</TABLE>


NOTE  J  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

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

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


<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  J  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  -  CONTINUED

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

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

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

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

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

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

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


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

<S>                                <C>          <C>
                                          2001
                                   -----------
                                   Carrying Value   Fair Value
                                   --------------   -----------
Financial Assets:
   Cash and Due From Banks. . . .  $     4,291         $ 4,291
   Federal Funds Sold . . . . . .  $     2,905         $ 2,905
   Investment Securities. . . . .  $    29,286         $29,557
   Federal Home Loan and Federal
      Reserve Bank Stock. . . . .  $       426         $   426
   Loans, Net . . . . . . . . . .  $    59,906         $60,476
   Cash Value of Life Insurance .  $     3,855         $ 3,855

Financial Liabilities:
   Deposits . . . . . . . . . . .  $    89,648         $89,715
   Federal Home Loan Bank Advance  $         -         $     -

</TABLE>




<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  K  -  REGULATORY  MATTERS

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

Quantitative  measures  established  by  regulation  to  ensure capital adequacy
require  the  Company and Bank to maintain minimum amounts and ratios (set forth
in  the table below) of total and Tier 1 capital (as defined in the regulations)
to  risk-weighted  assets  (as  defined),  and of Tier 1 capital (as defined) to
average assets (as defined).  Management believes, as of December 31, 2001, that
the  Company  and  Bank meet all capital adequacy requirements to which they are
subject.
<TABLE>
<CAPTION>


As  of  December 31, 2001, 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):

<S>                      <C>           <C>            <C>         <C>          <C>        <C>
                                                             Amount of Capital Required
                                                      ----------------------------------------------
                                                      To Be Categorized as      To Be Categorized as
                                  Actual              Adequately Capitalized     Well-Capitalized
                         ---------------------------  -----------------------   --------------------
                         Amount         Percentage     Amount     Percentage     Amount   Percentage
                         -----------  ------------  ----------   -----------    -------   ----------
AS OF DECEMBER 31, 2001
   Total Risk-Based . .  $    12,558        15.2%     $  6,628         8.0%     $  8,285       10.0%
   Tier 1 Risk-Based. .  $    11,522        13.9%     $  3,314         4.0%     $  4,971        6.0%
   Tier 1 Leverage. . .  $    11,522        10.7%     $  4,292         4.0%     $  5,365        5.0%

</TABLE>



The  Company  is  subject  to  similar  requirements administered by its primary
regulator,  the  Federal  Reserve  Board.  For  capital  adequacy  purposes, the
Company  must  maintain total capital to risk-weighted assets, Tier 1 capital to
risk-weighted  assets  and  Tier  1  capital to average assets of 8.0%, 4.0% and
4.0%,  respectively.  Its  total capital to risk-weighted assets, Tier 1 capital
to  risk-weighted  assets and Tier 1 capital to average assets was 15.2%, 13.9%,
and  10.7%,  respectively,  at  December  31,  2001.

<PAGE>
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


NOTE  L  -  CONDENSED  FINANCIAL  INFORMATION  OF  PARENT  COMPANY  ONLY
<TABLE>
<CAPTION>


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:

<S>                                                           <C>               <C>
                                                              December 31,
                                                              ----------------
CONDENSED BALANCE SHEETS . . . . . . . . . . . . . . . . . .             2001
                                                              ----------------
ASSETS
Cash in Marathon National Bank . . . . . . . . . . . . . . .  $         5,000
Investment in Marathon National Bank . . . . . . . . . . . .       11,769,000
Other Assets . . . . . . . . . . . . . . . . . . . . . . . .           18,000
                                                              ----------------
        TOTAL ASSETS . . . . . . . . . . . . . . . . . . . .  $    11,792,000
                                                              ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued Expenses . . . . . . . . . . . . . . . . . . . . . .  $             -
Shareholders' Equity
   Common Shares . . . . . . . . . . . . . . . . . . . . . .       13,713,000
   Accumulated Deficit . . . . . . . . . . . . . . . . . . .     (  2,168,000)
   Accumulated Other Comprehensive Income. . . . . . . . . .          247,000
                                                              ----------------
        TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . . .       11,792,000
                                                              ----------------
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . . .  $    11,792,000
                                                              ================

    Year ended December 31,
------------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS . . . . . . . . . . . . .             2001              2000
                                                              ----------------  ----------------
Dividend from Marathon National Bank . . . . . . . . . . . .  $             -   $             -
Operating Expenses, net of Tax Benefit . . . . . . . . . . .   (       26,000)   (       18,000)
Equity in Undistributed Net Income of Marathon National Bank        1,073,000         1,122,000
                                                              ----------------  ----------------
        NET INCOME . . . . . . . . . . . . . . . . . . . . .  $     1,047,000   $     1,104,000
                                                              ================  ================

    Year Ended December 31,
------------------------------------------------------------
CONDENSED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . .             2001              2000
                                                              ----------------  ----------------
OPERATING ACTIVITIES
Net Income . . . . . . . . . . . . . . . . . . . . . . . . .  $     1,047,000   $     1,104,000
Adjustments to Reconcile Net Income to Net Cash Used by
   Operating Activities - Equity in Net Income
   of Marathon National Bank . . . . . . . . . . . . . . . .   (    1,073,000)   (    1,122,000)
Net Change in Other Assets and Other Liabilities . . . . . .   (       11,000)   (       16,000)
                                                              ----------------  ----------------
     NET CASH USED BY OPERATING ACTIVATES. . . . . . . . . .   (       37,000)   (       34,000)
INVESTING ACTIVITIES
Dividend from Marathon National Bank . . . . . . . . . . . .                -                 -
                                                              ----------------  ----------------
     NET CASH PROVIDED BY INVESTING ACTIVITIES . . . . . . .                -                 -
FINANCING ACTIVITIES
Proceeds from Exercise of Stock Options. . . . . . . . . . .           38,000            21,000
                                                              ----------------  ----------------
     NET CASH PROVIDEDBY FINANCING ACTIVITIES. . . . . . . .           38,000            21,000
                                                              ----------------  ----------------

INCREASE (DECREASE) INCASH AND CASH EQUIVALENTS. . . . . . .            1,000    (       13,000)
Cash and Cash Equivalents at Beginning of Year . . . . . . .            4,000            17,000
                                                              ----------------  ----------------
     CASH AND CASH EQUIVALENTS AT END OF YEAR. . . . . . . .  $         5,000   $         4,000
                                                              ================  ================

</TABLE>



INDEPENDENT  AUDITORS'  REPORT


The  Board  of  Directors  and  Shareholders
Marathon  Bancorp  and  Subsidiary

We  have audited the accompanying consolidated balance sheet of Marathon Bancorp
and  Subsidiary as of December 31, 2001, and the related consolidated statements
of  income,  changes  in  shareholder's  equity and cash flows for the two years
ended  December  31,  2001.  These  consolidated  financial  statements  are the
responsibility  of  the Marathon Bancorp's management.  Our responsibility is to
express  an  opinion  on  these  consolidated  financial statements based on our
audits.

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

In our opinion, such consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Marathon Bancorp and
Subsidiary  as  of  December 31, 2001, and the results of its operations and its
cash  flows  for each of the two years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.


Vavrinek, Trine, Day & Co. LLP
------------------------------
Vavrinek, Trine, Day & Co. LLP




Laguna  Hills,  California
January  8,  2002



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

     No  information  is  required  in  response  to  this  item.

                                     PART III
                                     ---------

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

     DIRECTORS:
<S>                             <C>                                                            <C>
                                DIRECTOR
NAME . . . . . . . . . . . . .  POSITION WITH COMPANY                                          SINCE
------------------------------  -------------------------------------------------------------  -----
Nikolas Patsaouras (1) (2) (3)  Chairman of the Board of the Company and Bank                   1982
Robert Abernethy (2) . . . . .  Director                                                        1983
Craig D. Collette(3) . . . . .  President and Chief Executive Officer of the Company and Bank   1997
Frank W. Jobe, M.D.. . . . . .  Director                                                        1985
C. Thomas Mallos (1) (2) (3) .  Director                                                        1982
Robert l. Oltman  (1) (2) (3).  Director                                                        1982
Ann Pappas (1) (2) (3) . . . .  Director                                                        1982

<FN>

(1)     Member  of  the  Audit  Committee
(2)     Member  of  the  Executive  and  Compensation  Committee.
(3)     Member  of  the  Loan  Committee.
</TABLE>


<TABLE>
<CAPTION>


     EXECUTIVE  OFFICERS  OF  THE  COMPANY  AND  THE  BANK  WERE:

<S>                <C>                                                                        <C>
NAME. . . . . . .  POSITION                                                                   AGE
-----------------  -------------------------------------------------------------------------  ---
Craig D. Collette  President and Chief Executive Officer of the Company and Bank               59
Timothy J. Herles  Executive Vice President and Senior Credit Officer of the Bank              60
Howard J. Stanke.  Executive Vice President, Chief Financial Officer of the Company and Bank   53
Adrienne Caldwell  Executive Vice President, Operations Administration of the Bank             59
</TABLE>

     CRAIG D. COLLETTE has been the President and Chief Executive Officer of the
Company  and  Bank  since  January  1997.  Mr. Collette has been a banker for 30
years  in  the  Southern  California  banking  community.

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

     HOWARD J. STANKE has been Executive Vice President /Chief Financial Officer
of the Company and Bank since June 9, 1997.  Mr. Stanke was previously Executive
Vice President/Chief Financial Officer of TransWorld Bancorp and TransWorld Bank
for  approximately  19  years.

     ADRIENNE  CALDWELL  has  been  Executive  Vice  President-Operations
Administration  of the Bank since March 1998 and has served in various positions
since  March  1986.

<PAGE>

ITEM  10.  EXECUTIVE  COMPENSATION
----------------------------------
<TABLE>
<CAPTION>



     The following table sets forth a comprehensive overview of the compensation
of the Bank's executive officers with salary and bonus exceeding $100,000 during
the  fiscal year ended December 31, 2000.  Comparative data is also provided for
the  previous  three  fiscal  years.

<S>                                <C>   <C>       <C>      <C>     <C>             <C>     <C>
                                                            Other
                                                            Annual   Restricted             All Other
           Name and                                         Compen-     Stock                  Compen
           Principal                     Salary    Bonus    Sation     Award(s)    Options/   sation
           Position                Year     ($)     ($)     ($)(1)       ($)         SARs      ($)
           --------                ----     ---     ---     ------     -------       ----    ---------


Craig D. Collette (3) . . . . . .  2001  $175,350  $10,000  $8,400           0       5,000  $  72,913(2)
President and . . . . . . . . . .  2000  $174,100  $ 8,312  $8,400           0           0  $  85,013(2)
Chief Executive Officer . . . . .  1999  $173,000  $ 5,600  $8,400           0      11,000  $  72,069(2)
Of the Company and the Bank

Timothy J. Herles . . . . . . . .  2001  $111,121  $ 8,000  $8,400           0           0  $  29,436(3)
Executive Vice President and. . .  2000  $106,593  $ 6,562  $8,400           0       5,512  $  28,914(3)
Chief Credit Officer of the Bank.  1999  $106,593  $ 4,100  $8,400           0       8,000  $   4,539

Howard J. Stanke (4). . . . . . .  2001  $ 99,036  $ 8,000  $7,800           0           0  $  27,043(3)
Executive Vice President and. . .  2000  $ 95,000  $ 6,562  $7,800           0           0  $  26,539(3)
Chief Financial Officer of the. .  1999  $ 95,000  $ 4,100  $7,200           0       8,000  $   3,168
Company and Bank

Tedd Voss . . . . . . . . . . . .  2001  $ 78,101  $67,669  $4,200           0           0  $     225
Sr. Vice President Real Estate. .  2000  $ 76,500  $ 6,075  $3,300           0           0  $     225
Construction Lending of the Bank.  1999  $ 58,666        0  $2,375           0       4,500  $     169

<FN>

(1)     These  amounts  represent  the  automobile  allowance
(2)     This  amount  includes  $66,870  for 1999, $79,219 for 2000 and $86,216 for 2001 of
        accrued  benefits  in  Mr.  Collette's  salary  continuation  plan.
(3)     This  amount  includes $23,371 for 2000 and $25,311 for 2001 of accrued benefits in
        Mr.  Herles's  Salary  Continuation  Plan.
(4)     This  amount  includes $23,371 for 2000 and $25,311 for 2001 of accrued benefits in
        Mr.  Stanke's  Salary  Continuation  Plan.
</TABLE>





                                       53

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

     Management  of  the Company knows of no person who owns, beneficially or of
record,  either  individually  or together with associates, 5 percent or more of
the outstanding shares of the Company's common stock, except as set forth in the
table  below.  The  following table sets forth, as of March 12, 2001, the number
and  percentage of shares of the Company's outstanding common stock beneficially
owned,  directly  or  indirectly,  by  each of the Company's directors and named
officers  and  by  the  directors  and named officers of the Company as a group.
Unless  otherwise  indicated,  the  persons  listed  below  have sole voting and
investment  powers.  Management is not aware of any arrangements which may, at a
subsequent  date,  result  in  a  change  of  control  of  the  Company.
<TABLE>
<CAPTION>


            Common  Stock  Beneficially  Owned  as  of
                                   March  12,  2001
                            Number of          Percent Of

<S>                                        <C>             <C>
Name of Beneficial Owner                    Shares          Class
                                           -------         ------

Directors and Named Executive Officers:
-----------------------------------------
Nikolas Patsaouras. . . . . . . . . . . .   78,260(1)         1.9
Robert J. Abernethy . . . . . . . . . . .  133,105(2)         3.2
Craig D. Collette . . . . . . . . . . . .   97,123(3)         2.4
Frank W. Jobe, M.D. . . . . . . . . . . .   94,184(4)         2.3
C. Thomas Mallos. . . . . . . . . . . . .   79,783(5)         1.9
Robert L. Oltman. . . . . . . . . . . . .  222,727(6)         5.4
Ann Pappas. . . . . . . . . . . . . . . .   93,333(7)         2.3
Timothy J. Herles . . . . . . . . . . . .   37,998(8)         0.9
Howard J. Stanke. . . . . . . . . . . . .   27,700(9)         0.7
Adrienne Caldwell . . . . . . . . . . . .   12,990(10)        0.3
                                           -------

Total for all directors, named
executive officers and all
executive officers (numbering 10) . . . .  877,203(11)       21.4

Principal Shareholders:
-----------------------------------------
Banc Funds IV L.P. and Banc Funds V L.P.
Oppenheimer-Spence Financial. . . . . . .  226,553(12)        5.9
Services Partnership L.P. . . . . . . . .  224,897(13)        5.5

<FN>


(1)     Mr.  Patsaouras  has shared voting and investment powers as to 37,874 of
these  shares.  The  amount includes 40,350 shares acquirable by the exercise of
stock  options.
(2)     The  amount  includes  25,806  shares  acquirable  by  exercise of stock
options.
(3)     Mr.  Collette  has  shared  voting  and  investment  powers as to 92,923
shares.  The  amount  includes  4,200  shares  acquirable  by  exercise of stock
options.
(4)     The  amount  includes  19,994  shares  acquirable  by  exercise of stock
options.
(5)     Mr. Mallos has shared voting and investment powers as of 47,551 of these
shares.  The  amount  includes  31,805  shares  acquirable  by exercise of stock
options.
(6)     Mr.  Oltman  has  shared  voting  and investment powers as to 179,424 of
these  shares. The amount includes 31,805 shares acquirable by exercise of stock
options.  His address is c/o Marathon Bancorp, 11150 West Olympic Boulevard, Los
Angeles,  California  90064.
(7)     Ms. Pappas has shared voting and investment powers as to 61,413 of these
shares.  The  amount  includes  31,805  shares  acquirable  by exercise of stock
options.
(8)     Mr.  Herles has shared voting and investment powers as to 1,184 of these
shares.  The  amount  includes  36,814  shares  acquirable  by exercise of stock
options.
(9)     Mr.  Stanke has shared voting and investment powers as to 26,100 shares.
The  amount  includes  1,600  shares  acquirable  by  exercise of stock options.
(10)     These  shares  are  acquirable  by  exercise  of  stock  options.
(11)     This  amount  includes  237,169  shares acquirable by exercise of stock
options  within  60  days  of  March  12,  2001.
(12)     The  Schedule  13G filing by the partnership indicates that it has sole
voting power of all of these shares.  The business address of the partnership is
208  S.  LaSalle  Street,  Chicago,  IL  60604.
(13)     The  Schedule  13D filing by the partnership indicates that it has sole
voting  power  and  sole dispositive power of all of these shares.  The business
address  of  the  partnership is 119 West 57th Street, New York, New York 10019.
</TABLE>






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

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


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

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

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


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

     N/A

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

     See  Exhibit  Index  at  Page  50  this  Form  10-KSB.



<PAGE>


                      SIGNATURES
                      ----------


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned, thereunto duly authorized, on the 25th day of
March  2002.

MARATHON  BANCORP  (Registrant)

                                                  Howard  J.  Stanke
                                                  ------------------
                                                  Howard  J.  Stanke
                                                  Chief  Financial  Officer
<TABLE>
<CAPTION>


     `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.

<S>                  <C>                         <C>
SIGNATURE . . . . .  TITLE                       DATE
-------------------  -----------------------    ------



Nikolas Patsaouras.  Chairman of the Board       March 25, 2002
-------------------
Nikolas Patsaouras


Craig D. Collette .  Director, President         March 25, 2002
-------------------
Craig D. Collette .  and CEO


C. Thomas Mallos. .  Director                    March 25, 2002
-------------------
C. Thomas Mallos


-------------------  Director                    March
Robert J. Abernethy

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


Robert L. Oltman. .  Director and Secretary      March 25, 2002
-------------------
Robert L. Oltman

Ann Pappas. . . . .  Director                    March 25, 2002
-------------------
Ann Pappas

</TABLE>





<PAGE>

                          EXHIBIT INDEX
                          -------------

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

10.             Salary  Continuation  Plan
                Filed as an exhibit  to  the  registrant's
                Form  10-KSB  for  the year  ended
                December 31, 1999.

21.             Subsidiaries  of  Company                        50

23.             Consent of Vavrinek, Trine, Day & Co LLP         51



<PAGE>





                                   EXHIBIT 21.


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



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







































                                   EXHIBIT 23.



INDEPENDENT  AUDITORS'  CONSENT


Board  of  Directors  and  Shareholders
Marathon  Bancorp
Los  Angeles,  California

We  consent  to  the incorporation by reference in the Registration Statement of
Marathon  Bancorp  on Form S-8 of our report dated January 8, 2002, on our audit
of  the  consolidated balance sheet of Marathon Bancorp as of December 31, 2001,
and  the  related  consolidated  statements  of income, changes in shareholders'
equity and cash flows for each of the two years in the period ended December 31,
2001,  which  report  is  incorporated by reference in the 2001 Annual Report on
Form  10-KSB.


Vavrinek,  Trine,  Day  &  Co.,  LLP
------------------------------------
Vavrinek,  Trine,  Day  &  Co.,  LLP

March  20,  2002
Laguna  Hills,  California