10q10k10q10k.net

What changed in Magyar Bancorp, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Magyar Bancorp, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+241 added−360 removedSource: 10-K (2024-12-19) vs 10-K (2023-12-15)

Top changes in Magyar Bancorp, Inc.'s 2024 10-K

241 paragraphs added · 360 removed · 171 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

97 edited+42 added−146 removed88 unchanged
Biggest changeThe allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories. % of Loans In Category to Amount Total Loans (Dollars in thousands) At September 30, 2023 One-to four-family residential $ 1,259 34.1% Commercial real estate 5,277 55.8% Construction 472 3.1% Home equity lines of credit 207 2.4% Commercial business 939 4.3% Other 2 0.3% Unallocated 174 0.0% Total allowance for loan losses $ 8,330 100.0% At September 30, 2022 One-to four-family residential $ 1,223 34.1% Commercial real estate 4,612 54.5% Construction 461 2.4% Home equity lines of credit 263 3.0% Commercial business 1,484 5.5% Other 1 0.5% Unallocated 389 0.0% Total allowance for loan losses $ 8,433 100.0% Investments Our Board of Directors has adopted our Investment Policy.
Biggest changeAt of For the Year Ended September 30, 2024 At of For the Year Ended September 30, 2023 % of Net Charge- % of Net Charge- Loans Net off to Average Loans Net off to Average to Total Charge-off Loans to Total Charge-off Loans Amount Loans (Recovery) Outstanding Amount Loans (Recovery) Outstanding (Dollars in thousands) One-to four-family residential $ 755 31.5% $ (1 ) —% $ 1,259 34.1% $ (3 ) -% Commercial real estate 5,334 59.1% — —% 5,277 55.8% — -% Construction and land 624 2.9% (65 ) -0.3% 472 3.1% — -% Home equity loans and lines of credit 30 3.2% — —% 207 2.4% (1 ) -% Commercial business 805 3.1% (2 ) -0.01% 939 4.3% 488 1.5% Other — 0.3% — —% 2 0.3% — -% Unallocated — —% — —% 174 —% — -% Total allowance for credit losses $ 7,548 100.0% $ (68 ) 0.0% $ 8,330 100.0% $ 484 0.1% Investments Our Board of Directors has adopted our Investment Policy.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
General Our principal business consists of attracting retail deposits from the general public in the areas surrounding our main office in New Brunswick, New Jersey and our branch offices located in Middlesex and Somerset Counties, New Jersey, and investing those deposits, together with funds generated from operations and wholesale funding, in commercial real estate loans, residential mortgage loans, commercial business loans, Small Business Administration (“SBA”) loans, home equity loans, home equity lines of credit, construction loans and investment securities.
Our principal business consists of attracting retail deposits from the general public in the areas surrounding our main office in New Brunswick, New Jersey and our branch offices located in Middlesex and Somerset Counties, New Jersey, and investing those deposits, together with funds generated from operations and wholesale funding, in commercial real estate loans, residential mortgage loans, commercial business loans, Small Business Administration (“SBA”) loans, home equity loans, home equity lines of credit, construction and land loans and investment securities.
The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. 21 An institution’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities.
The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. An institution’s failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities.
The Bank Secrecy Act and USA PATRIOT Act The Bank Secrecy Act (“BSA”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) require Magyar Bank to implement a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime.
The Bank Secrecy Act (“BSA”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) require Magyar Bank to implement a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime.
A savings bank may lend an additional 10% of the bank’s capital funds if secured by collateral meeting the requirements of the New Jersey Banking Act. Magyar Bank currently complies with applicable loans-to-one-borrower limitations. Dividends.
A savings bank may lend an additional 10% of the bank’s capital funds if secured 12 by collateral meeting the requirements of the New Jersey Banking Act. Magyar Bank currently complies with applicable loans-to-one-borrower limitations. Dividends.
Under the prompt corrective action provisions 23 of the Dodd-Frank Act, a bank holding company parent of an undercapitalized subsidiary bank would be directed to guarantee, within limitations, the capital restoration plan that is required of such an undercapitalized bank.
Under the prompt corrective action provisions of the Dodd-Frank Act, a bank holding company parent of an undercapitalized subsidiary bank would be directed to guarantee, within limitations, the capital restoration plan that is required of such an undercapitalized bank.
An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 19 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater.
An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater.
The Commissioner also has authority to appoint a conservator or receiver for a savings bank under certain circumstances such as insolvency or unsafe or unsound condition to transact business. Federal Banking Regulation 18 Capital Requirements.
The Commissioner also has authority to appoint a conservator or receiver for a savings bank under certain circumstances such as insolvency or unsafe or unsound condition to transact business. Federal Banking Regulation Capital Requirements.
Federal regulation also requires that any proposed loan to an insider or a related interest of that insider be approved in advance by a majority of the Board of Directors of the bank, with any interested directors not participating in the voting, if such loan, when aggregated with any existing loans to that insider and the insider’s related interests, would exceed the greater of $25,000 or 5% of the bank’s unimpaired capital and surplus.
Federal regulation also requires that any proposed loan to an insider or a related interest of that insider be approved in advance by a majority of the Board of Directors of the bank, with any interested directors not participating in the voting, if such loan, when aggregated with any existing loans to that insider and the insider’s related interests, would exceed the greater of $25 thousand or 5% of the bank’s unimpaired capital and surplus.
The DIF of the FDIC insures deposits at Federal Deposit Insurance Corporation insured financial institutions such as Magyar Bank generally up to a maximum of $250,000 per separately insured depositor. Under the FDIC’s risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other risk factors.
The DIF of the FDIC insures deposits at Federal Deposit Insurance Corporation insured financial institutions such as Magyar Bank generally up to a maximum of $250 thousand per separately insured depositor. Under the FDIC’s risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations, regulatory capital levels and certain other risk factors.
Investment transactions are reviewed and ratified by the Board of Directors at their regularly scheduled meetings. 12 Our investments portfolio may include U.S.
Investment transactions are reviewed and ratified by the Board of Directors at their regularly scheduled meetings. Our investments portfolio may include U.S.
All FDIC-insured institutions have a responsibility under the Community Reinvestment Act (“CRA”) and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighbourhoods. In connection with its examination of a state chartered savings bank, the FDIC is required to assess the institution’s record of compliance with the CRA.
All FDIC-insured institutions have a responsibility under the Community Reinvestment Act (“CRA”) and related regulations to help meet the credit needs of their communities, including low-and moderate-income neighborhoods. In connection with its examination of a state chartered savings bank, the FDIC is required to assess the institution’s record of compliance with the CRA.
Generally, an SBA 7(a) loan has a deficiency in its credit profile that would not allow the borrower to qualify for a traditional commercial loan, which is why the government provides the guarantee. The deficiency may be a higher loan to value ratio, lower debt service coverage ratio or weak personal financial guarantees.
Generally, an SBA 7(a) loan has a deficiency in its credit profile that would not allow the borrower to qualify for a traditional commercial loan, which is why the government provides the guarantee. The deficiency may be a higher loan to value ratio, lower debt service coverage ratio or weaker personal financial guarantees.
Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part of the application process. We have established policies, procedures and systems designed to comply with the BSA, USA PATRIOT Act, and regulations implemented thereunder.
Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part of the application process. We have established policies, procedures and systems designed to comply with the BSA, USA PATRIOT Act, and regulations implemented thereunder. Cyber Security .
In addition, Magyar Bank and Magyar Bancorp are subject to other federal and state laws designed to protect consumers and prohibit unfair, deceptive or abusive business practices, including the Home Ownership Protection Act, Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003 (the “FACT Act”), the Gramm-Leach Bliley Act, the Truth in Lending Act (“TILA”), the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
In addition, Magyar Bank and Magyar Bancorp are subject to other federal and state laws designed to protect consumers and prohibit unfair, deceptive or abusive business practices, including the Home Ownership Protection Act, Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act of 2003, the Gramm-Leach Bliley Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
With certain exceptions, loans to an executive officer, other than loans for the education of the officer’s children and certain loans secured by the officer’s residence, may not exceed the greater of $25,000 or 2.5% of the bank’s unimpaired capital and surplus, and in no event more than $100,000.
With certain exceptions, loans to an executive officer, other than loans for the education of the officer’s children and certain loans secured by the officer’s residence, may not exceed the greater of $25 thousand or 2.5% of the bank’s unimpaired capital and surplus, and in no event more than $100 thousand.
The following table summarizes the scheduled repayments of our loan portfolio at September 30, 2023. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.
The following table summarizes the scheduled repayments of our loan portfolio at September 30, 2024. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.
Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include, among others, those discussed below and under “Risk Factors” in Part 1, Item 1A of this Annual Report on Form 10-K. Magyar Bancorp, Inc. Magyar Bancorp, Inc.
Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include, among others, those discussed below and under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. General Magyar Bancorp, Inc.
Magyar Bank, as a member of the FHLBNY, is required to purchase and hold shares of capital stock in the FHLBNY in specified amounts. 20 As of September 30, 2023, Magyar Bank was in compliance with these requirements. Enforcement. The FDIC has extensive enforcement authority over insured savings banks, including Magyar Bank.
Magyar Bank, as a member of the FHLBNY, is required to purchase and hold shares of capital stock in the FHLBNY in specified amounts. As of September 30, 2024, Magyar Bank was in compliance with these requirements. Enforcement. The FDIC has extensive enforcement authority over insured savings banks, including Magyar Bank.
In addition, nearly all of our employees are stockholders of the Company through participation in our Employee Stock Ownership Plan, which aligns associate and stockholder interests by providing stock ownership on a tax-deferred basis at no investment cost to our associates. At September 30, 2023, 39% of our current staff had been with us for ten years or more.
In addition, nearly all of our employees are stockholders of the Company through participation in our Employee Stock Ownership Plan, which aligns associate and stockholder interests by providing stock ownership on a tax-deferred basis at no investment cost to our associates. At September 30, 2024, 35% of our current staff had been with us for ten years or more.
At September 30, 2023, Magyar Bank’s common equity Tier 1 capital to risk-based assets ratio was 14.97%, total capital to risk-based assets ratio was 16.22%, and Tier 1 capital to total assets leverage ratio was 11.11%.
At September 30, 2023, Magyar Bank’s common equity Tier 1 capital to risk-based assets ratio was 14.97%, total capital to risk-based assets ratio was 16.22%, and Tier 1 capital to total assets leverage ratio was 11.11%. Prompt Corrective Action.
Magyar Bancorp, Inc., as a bank holding company controlling Magyar Bank, is subject to the Bank Holding Company Act of 1956, as amended (“BHCA”), the rules and regulations of the FRB under the BHCA the provisions of the New Jersey Banking Act of 1948 (the “New Jersey Banking Act”), and to the regulations of the Commissioner under the New Jersey Banking Act applicable to bank holding companies.
Magyar Bancorp, Inc., as a bank holding company controlling Magyar Bank, is subject to the Bank Holding Company Act of 1956, as amended (“BHCA”), the rules and regulations of the Federal Reserve Bank (the “FRB”) under the BHCA the provisions of the New Jersey Banking Act of 1948 (the “New Jersey Banking Act”), and to the regulations of the Commissioner under the New Jersey Banking Act applicable to bank holding companies.
These loans are made for the purposes of providing working capital and financing the purchase of equipment, inventory or commercial real estate, and may be made inside or outside the State of New Jersey. At September 30, 2023, $9.3 million, or 89.2% of the Company’s SBA loan balances, were to businesses located in the State of New Jersey.
These loans are made for the purposes of providing working capital and financing the purchase of equipment, inventory or commercial real estate, and may be made inside or outside the State of New Jersey. At September 30, 2024, $14.9 million, or 95.2% of the Company’s SBA loan balances, were to businesses located in the State of New Jersey.
According to the Federal Deposit Insurance Corporation’s annual Summary of Deposit report, at June 30, 2023, our market share of deposits was 1.26% and 0.38% in Middlesex and Somerset Counties, respectively. Our market share of deposits was 1.11% and 0.42%, respectively, at June 30, 2022.
According to the Federal Deposit Insurance Corporation’s annual Summary of Deposit report, at June 30, 2024, our market share of deposits was 1.52% and 0.38% in Middlesex and Somerset Counties, respectively. Our market share of deposits was 1.26% and 0.38%, respectively, at June 30, 2023.
If the estimate of construction cost is inaccurate, we may be required to advance funds beyond the amount originally committed in order to protect the value of the property. Additionally, if our estimate of the value of the completed property is inaccurate, our construction loan may exceed the value of the collateral. Commercial Business Loans.
If the estimate of construction cost is inaccurate, we may be required to advance funds beyond the amount originally committed in order to protect the value of the property. Additionally, if our estimate of the value of the completed property is inaccurate, our construction and land loan may exceed the value of the collateral.
Undercapitalized institutions are subject to a variety of mandatory supervisory measures including the requirement to file a capital plan for the FDIC’s approval and dividend restrictions as well as other discretionary actions by the regulator.
Undercapitalized institutions are subject to a variety of mandatory supervisory measures including the requirement to file a capital plan for the FDIC’s approval and dividend restrictions as well as other discretionary actions by the regulator. Federal Home Loan Bank System.
The failure to comply with these laws could result in enforcement actions by the federal banking agencies, as well as other federal regulatory agencies and the Department of Justice. Mortgage Reform .
The failure to comply with these laws could result in enforcement actions by the federal banking agencies, as well as other federal regulatory agencies and the Department of Justice. Privacy Regulations .
The estimated amount of deposits that were neither insured nor collateralized was $109.3 million at September 30, 2023. We had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance.
The estimated amounts of deposits that were neither insured nor collateralized were $114.7 million and $109.3 million at September 30, 2024 and 2023, respectively. We had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance.
The following table sets forth the maturity of certificates of deposits with individual account balances exceeding $250,000 at September 30, 2023.
The following table sets forth the maturity of certificates of deposits with individual account balances exceeding $250 thousand at September 30, 2024.
On October 24, 2023, the FDIC, the FRB, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations.
In 2023, the FDIC, the FRB, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations.
At September 30, 2023, our commercial business loans totaled $30.2 million, or 4.3% of total loans. We make commercial business loans primarily in our market area to a variety of professionals, sole proprietorships and small and mid-sized businesses. Our commercial business loans include term loans and revolving lines of credit.
We make commercial business loans primarily in our market area to a variety of professionals, sole proprietorships and small and mid-sized businesses. Our commercial business loans include term loans 5 and revolving lines of credit. At September 30, 2024, our commercial business loans totaled $24.0 million, or 3.1% of total loans.
The Bank does not believe that it is taking or is subject to any action, condition or violation that could lead to termination of its deposit insurance. Transactions with Affiliates of Magyar Bank.
The Bank does not believe that it is taking or is subject to any action, condition or violation that could lead to termination of its deposit insurance. Brokered Deposits.
Our market area has a high concentration of financial institutions including large money center and regional banks, community banks and credit unions. Some of our competitors offer products and services that we currently do not offer, such as trust services and private banking.
Competition We face intense competition within our market area both in making loans and attracting deposits. Our market area has a high concentration of financial institutions including large money center and regional banks, community banks and credit unions. Some of our competitors offer products and services that we currently do not offer, such as trust services and private banking.
September 30, 2023 (In thousands) Maturity Period: Three months or less $ 1,576 Over three through six months 3,234 Over six through twelve months 2,702 Over twelve months 8,989 Total $ 16,501 At September 30, 2023 $43.8 million of our certificates of deposit had maturities of one year or less.
September 30, 2024 2023 (In thousands) Maturity Period: Three months or less $ 5,060 $ 1,576 Over three through six months 9,672 3,234 Over six through twelve months 7,838 2,702 Over twelve months 4,159 8,989 Total $ 26,729 $ 16,501 At September 30, 2024, $99.2 million of our certificates of deposit had maturities of one year or less.
We generally originate adjustable-rate commercial real estate loans with a maximum term of 25 years with adjustable-rate periods every five years. The maximum loan-to-value ratio for our commercial real estate loans is 75%, based on the appraised value of the property. We consider a number of factors when we originate commercial real estate loans.
The maximum loan-to-value ratio for our commercial real estate loans is 75%, based on the appraised value of the property. We consider a number of factors when we originate commercial real estate loans.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted asset above the amount necessary to meet its minimum risk-based capital requirements.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted asset above the amount necessary to meet its minimum risk-based capital requirements. 13 At September 30, 2024, Magyar Bank’s common equity Tier 1 capital to risk-based assets ratio was 14.75%, total capital to risk-based assets ratio was 15.85%, and Tier 1 capital to total assets leverage ratio was 11.11%.
The Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes.
Magyar Bank and Magyar Bancorp are subject to federal and state fair lending laws. The Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes.
At September 30, 2023, our largest commercial real estate loan was $13.5 million to finance the purchase and operation of a nursing and rehabilitation home in Edison, New Jersey. The original loan amount was 65% of the purchase price, which was lower than the appraised value. The loan was performing in accordance with its terms at September 30, 2023.
At September 30, 2024, our largest loan was $13.2 million commercial real estate loan to finance the purchase and operation of a nursing and rehabilitation home in Edison, New Jersey. The loan was performing in accordance with its terms at September 30, 2024.
The Investment Policy requires that securities transactions be conducted in a safe and sound manner, and purchase and sale decisions be based upon a thorough analysis of each security to determine its quality and inherent risks and fit within our overall asset/liability management objectives.
In addition, we may invest in equity securities subject to certain limitations and not in excess of Magyar Bank’s Tier 1 capital. 9 The Investment Policy requires that securities transactions be conducted in a safe and sound manner, and purchase and sale decisions be based upon a thorough analysis of each security to determine its quality and inherent risks and fit within our overall asset/liability management objectives.
Generally, residential mortgage loans are originated in amounts up to 80% of the lesser of the appraised value or purchase price of the property, with private mortgage insurance required on loans with a loan-to-value ratio in excess of 80%.
Generally, residential mortgage loans are originated in amounts up to 80% of the lesser of the appraised value or purchase price of the property, with private mortgage insurance required on loans with a loan-to-value ratio in excess of 80%. Generally, all residential mortgage loans are underwritten according to Federal Home Loan Mortgage Corporation (“Freddie Mac”) guidelines, policies and procedures.
At September 30, 2023, adjustable-rate residential mortgage loans totaled $100.6 million, or 42.3% of our total residential mortgage loan portfolio. The largest adjustable-rate residential mortgage loan was for $2.3 million. The loan was performing in accordance with its contractual repayment terms at September 30, 2023.
At September 30, 2024, adjustable-rate residential mortgage loans totaled $102.2 million, or 41.5% of our total residential mortgage loan portfolio. The largest adjustable-rate residential mortgage loan was for $2.2 million. The loan was performing in accordance with its contractual repayment terms at September 30, 2024. Commercial Real Estate Loans.
Magyar Bank and Magyar Bancorp, Inc. are required to file reports with, and otherwise comply with the rules and regulations of the FRB and the Commissioner.
Magyar Bank and Magyar Bancorp, Inc. are required to file reports with, and otherwise comply with the rules and regulations of the FRB and the Commissioner. Magyar Bancorp, Inc. is required to file certain reports with, and otherwise comply with, the rules and regulations of the Securities and Exchange Commission under the federal securities laws.
Magyar Bancorp, Inc. is subject to New Jersey corporate income taxes in the same manner as described above for Magyar Bank. SUPERVISION AND REGULATION General Magyar Bank is a New Jersey-chartered savings bank, and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) under the Deposit Insurance Fund (“DIF”).
SUPERVISION AND REGULATION General Magyar Bank is a New Jersey-chartered savings bank, and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) under the Deposit Insurance Fund (“DIF”).
Loans Delinquent For 60-89 Days 90 Days and Over Total Number Amount Number Amount Number Amount (Dollars in thousands) At September 30, 2023 One-to four-family residential 4 $ 568 2 $ 386 6 $ 954 Commercial real estate 1 116 1 2,224 2 2,340 Construction — — 2 2,474 2 2,474 Total 5 $ 684 5 $ 5,084 10 $ 5,768 At September 30, 2022 One-to four-family residential 1 $ 174 — $ — 1 $ 174 Commercial real estate 1 387 — — 1 387 Construction — — 1 2,835 1 2,835 Total 2 $ 561 1 $ 2,835 3 $ 3,396 Real Estate Owned .
Loans Delinquent For 60-89 Days 90 Days and Over Total Number Amount Number Amount Number Amount (Dollars in thousands) At September 30, 2024 One-to four-family residential 2 $ 627 2 $ 116 4 $ 743 Commercial real estate — — 1 116 1 116 Home equity loans and lines of credit 1 236 — — 1 236 Total 3 $ 863 3 $ 232 6 $ 1,095 At September 30, 2023 One-to four-family residential 4 $ 568 2 $ 386 6 $ 954 Commercial real estate 1 116 1 2,224 2 2,340 Construction and land — — 2 2,474 2 2,474 Total 5 $ 684 5 $ 5,084 10 $ 5,768 7 Real Estate Owned .
We originate residential mortgage loans, most of which are secured by properties located in our primary market area and most of which we hold in portfolio. At September 30, 2023, $237.7 million, or 34.1% of our total loan portfolio, consisted of residential mortgage loans (including home equity loans).
We originate residential mortgage loans, most of which are secured by properties located in our primary market area and most of which we hold in portfolio. At September 30, 2024, $246.2 million, or 31.5% of our total loan portfolio, consisted of residential mortgage loans.
The New Jersey Banking Act defines the terms “company” and “bank holding company” as such terms are defined under the BHCA. Each bank holding company controlling a New Jersey-chartered bank or savings bank must file certain reports with the Commissioner and is subject to examination by the Commissioner. 24 Acquisition of Magyar Bancorp, Inc.
Each bank holding company controlling a New Jersey-chartered bank or savings bank must file certain reports with the Commissioner and is subject to examination by the Commissioner. Acquisition of Magyar Bancorp, Inc.
Magyar Bancorp, Inc. is required to file certain reports with, and otherwise comply with, the rules and regulations of the Securities and Exchange Commission under the federal securities laws. 17 Any change in such laws and regulations, whether by the Commissioner, the FDIC, the Federal Reserve Board or through legislation, could have a material adverse impact on Magyar Bank and Magyar Bancorp, Inc. and their operations and stockholders.
Any change in such laws and regulations, whether by the Commissioner, the FDIC, the Federal Reserve Board or through legislation, could have a material adverse impact on Magyar Bank and Magyar Bancorp, Inc. and their operations and stockholders. Certain of the laws and regulations applicable to Magyar Bank and Magyar Bancorp, Inc. are summarized below.
Generally, loans to an insider’s related interests must be made on substantially the same terms as, and follow credit underwriting procedures that are not less stringent than, those that are prevailing at the time for comparable transactions with other persons. 22 An exception is made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees of the bank.
Generally, loans to an insider’s related interests must be made on substantially the same terms as, and follow credit underwriting procedures that are not less stringent than, those that are prevailing at the time for comparable transactions with other persons.
More Than One More Than Five One Year Year Through Years Through More Than September 30, 2023 or Less Five Years Ten Years Ten Years (Dollars in thousands) Obligations of U.S. government agencies: Mortgage backed securities - residential —% —% —% 2.53% Mortgage backed securities - commercial —% —% 5.58% 5.55% Obligations of U.S. government-sponsored enterprises: Mortgage-backed securities-residential 2.42% 4.07% 2.62% 1.71% Debt securities 1.06% 0.85% 1.00% —% Private label mortgage-backed securities-residential —% —% 5.05% —% Obligations of U.S. states and political subdivisions —% 3.40% 1.90% 1.91% Corporate securities —% 2.98% —% —% Sources of Funds General.
More Than One More Than Five One Year Year Through Years Through More Than September 30, 2024 or Less Five Years Ten Years Ten Years Yield Yield Yield Yield Obligations of U.S. government agencies: Mortgage backed securities - residential —% —% —% 3.40% Mortgage backed securities - commercial —% —% 5.82% 5.38% Obligations of U.S. government-sponsored enterprises: Mortgage-backed securities-residential —% 4.22% 1.89% 1.84% Debt securities 0.82% 1.99% 1.00% —% Private label mortgage-backed securities-residential —% —% 7.05% —% Obligations of U.S. states and political subdivisions —% 1.59% 1.78% —% Corporate securities —% 2.98% 9.00% —% Sources of Funds General.
The interest rates for adjustable commercial business loans are typically based on the prime rate as published in The Wall Street Journal . Included in commercial business loans are SBA 7(a) loans, on which the SBA provides guarantees of up to 75% of the principal balance (85% for loans under $150,000).
Included in commercial business loans are Small Business Administration (“SBA”) 7(a) loans, on which the SBA provides guarantees of up to 75% of the principal balance (85% for loans under $150,000).
The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, we believe that our deposits are relatively stable.
The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, we believe that our deposits are relatively stable. However, the ability to attract and maintain deposits, and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions.
We monitor activity on these accounts and, based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity. Borrowings.
We monitor activity on these accounts and, based on historical experience and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity. Subsidiary Activities The Company's only subsidiary is the Bank. The Bank holds three subsidiaries as described below.
Certain of the laws and regulations applicable to Magyar Bank and Magyar Bancorp, Inc. are summarized below. These summaries do not purport to be complete and are qualified in their entirety by reference to such laws and regulations. New Jersey Banking Regulation Activity Powers.
These summaries do not purport to be complete and are qualified in their entirety by reference to such laws and regulations. New Jersey Banking Regulation Activity Powers. Magyar Bank derives its lending, investment and other activity powers primarily from the applicable provisions of the New Jersey Banking Act and its related regulations. Loans-to-One-Borrower Limitations.
This law would be applicable potentially to Magyar Bancorp, Inc. if it ever acquired as a separate subsidiary a depository institution in addition to Magyar Bank. New Jersey Regulation. Under the New Jersey Banking Act, a company owning or controlling a savings bank is regulated as a bank holding company.
This law would be applicable potentially to Magyar Bancorp, Inc. if it ever acquired as a separate subsidiary a depository institution in addition to Magyar Bank.
Construction lending is generally considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions.
Risk of loss on a construction and land loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of construction compared to the estimated cost (including interest) of construction and other assumptions.
We received an “Outstanding” CRA rating in our most recently completed federal examination, which was conducted by the FDIC in 2022. Consumer Protection . Magyar Bank and Magyar Bancorp are subject to federal and state fair lending laws.
We received an “Outstanding” CRA rating in our most recently completed federal examination, which was conducted by the FDIC in 2022. The Bank Secrecy Act and USA PATRIOT Act .
September 30, 2023 2022 Weighted Weighted Average Average Deposit Type Balance Percent Rate Balance Percent Rate (Dollars in thousands) Demand accounts $ 188,550 24.96% 0.00% $ 182,417 27.32% 0.00% Savings accounts 62,168 8.23% 0.54% 81,850 12.26% 0.33% NOW accounts 115,182 15.25% 1.67% 98,643 14.77% 0.93% Money market accounts 284,885 37.71% 3.01% 222,214 33.28% 1.27% Certificates of deposit 92,725 12.27% 3.03% 69,929 10.47% 0.95% Retirement accounts 11,943 1.58% 2.19% 12,680 1.90% 0.81% Total deposits $ 755,453 100.00% 1.84% $ 667,733 100.00% 0.72% At September 30, 2023 and 2022, the aggregate deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance, were $429.9 million and $292.4 million, respectively.
The following table sets forth the distribution of total deposit accounts, by account type, at the dates indicated. 10 September 30, 2024 2023 Weighted Weighted Average Average Deposit Type Balance Percent Rate Balance Percent Rate (Dollars in thousands) Demand accounts $ 132,837 16.67% 0.00% $ 188,550 24.96% 0.00% Savings accounts 52,853 6.63% 0.63% 62,168 8.23% 0.54% NOW accounts 146,744 18.42% 2.88% 115,182 15.25% 1.67% Money market accounts 304,588 38.23% 2.45% 284,885 37.71% 3.01% Certificates of deposit 146,674 18.41% 4.03% 92,725 12.27% 3.03% Retirement accounts 12,978 1.63% 1.73% 11,943 1.58% 2.19% Total deposits $ 796,674 100.00% 2.28% $ 755,453 100.00% 1.84% At September 30, 2024 and 2023, the aggregate deposits in amounts greater than $250 thousand, which is the maximum amount for federal deposit insurance, were $380.0 million and $429.9 million, respectively.
In 1954, Magyar Bank converted to a New Jersey savings and loan association, before converting to a New Jersey savings bank charter in 1993. We conduct business from our main office located at 400 Somerset Street, New Brunswick, New Jersey, and our seven branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey.
Magyar Bank is a New Jersey-chartered savings bank headquartered in New Brunswick, New Jersey that was originally founded in 1922. We conduct business from our main office located at 400 Somerset Street, New Brunswick, New Jersey, and our eight branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, Edison and Martinsville, New Jersey.
Generally, secondary credit is extended on a very short-term basis to meet the liquidity needs of the institution. Loans must be secured by acceptable collateral and carry a rate of interest above the Federal Open Market Committee’s federal funds target rate.
Loans must be secured by acceptable collateral and carry a rate of interest above the Federal Open Market Committee’s federal funds target rate.
Market Area We are headquartered in New Brunswick, New Jersey, and our primary deposit market area is concentrated in the communities surrounding our headquarters branch and our branch offices located in Middlesex and Somerset Counties, New Jersey. Our primary lending market area is broader than our deposit market area and includes all of New Jersey.
We are subject to comprehensive regulation and examination by the New Jersey Department of Banking and Insurance (“NJDBI”) and the Federal Deposit Insurance Corporation (“FDIC”). 2 Market Area We are headquartered in New Brunswick, New Jersey, and our primary deposit market area is concentrated in the communities surrounding our headquarters branch and our branch offices located in Middlesex and Somerset Counties, New Jersey.
At September 30, 2023, Magyar Bank was in compliance with the FRB’s reserve requirements. Savings banks, such as Magyar Bank, are authorized to borrow from the Federal Reserve Bank “discount window.” Magyar Bank is deemed by the FRB to be generally sound and thus is eligible to obtain secondary credit from its FRB.
Federal Reserve System Savings banks, such as Magyar Bank, are authorized to borrow from the Federal Reserve Bank “discount window.” Magyar Bank is deemed by the FRB to be generally sound and thus is eligible to obtain secondary credit from its FRB. Generally, secondary credit is extended on a very short-term basis to meet the liquidity needs of the institution.
September 30, 2023 2022 Amount Percent Amount Percent (Dollars in thousands) One-to four-family residential $ 237,683 34.1% $ 214,377 34.1% Commercial real estate 389,134 55.8% 342,791 54.5% Construction 21,853 3.1% 15,230 2.4% Home equity lines of credit 16,983 2.4% 18,704 3.0% Commercial business 30,194 4.3% 34,672 5.5% Other 2,359 0.3% 3,130 0.5% Total loans receivable $ 698,206 100.0% $ 628,904 100.0% Net deferred loan costs (806 ) (628 ) Allowance for loan losses (8,330 ) (8,433 ) Total loans receivable, net $ 689,070 $ 619,843 Loan Portfolio Maturities and Yields.
September 30, 2024 2023 Amount Percent Amount Percent (Dollars in thousands) One-to four-family residential $ 246,201 31.5% $ 237,683 34.1% Commercial real estate 461,319 59.1% 389,134 55.8% Construction and land 22,722 2.9% 21,853 3.1% Home equity loans and lines of credit 24,728 3.2% 16,983 2.4% Commercial business 24,011 3.1% 30,194 4.3% Other 2,235 0.3% 2,359 0.3% Total loans receivable $ 781,216 100.0% $ 698,206 100.0% Net deferred loan costs (1,054 ) (806 ) Total loans receivable, net $ 780,162 $ 697,400 3 Loan Portfolio Maturities and Yields.
The following table sets forth the allowance for loan losses allocated by loan category and the percent of the allowance to the total allowance at the dates indicated.
The following table sets forth the ACL on loans allocated by loan category and the percent of the allowance to the total allowance at the dates indicated, as well as additional information with respect to net loan charge-offs by category.
Magyar Service Corporation, a New Jersey corporation, is a wholly owned subsidiary of Magyar Bank. Magyar Service Corporation offers Magyar Bank customers and others a complete range of non-deposit investment products and financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers.
Magyar Service Corporation offers Magyar Bank customers and others a complete range of non-deposit investment products and 11 financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers. Employees and Human Capital Resources At September 30, 2024 we employed 91 full-time employees and 10 part-time employees.
In addition, we sell the SBA-guaranteed portion of SBA loans into the secondary market, while retaining the servicing rights for such loans. Our revenues are derived principally from interest on loans and securities, our investment securities consist primarily of mortgage-backed securities and U.S. Government and government-sponsored enterprise obligations. We also generate revenues from fees and service charges.
Our revenues are derived principally from interest on loans and securities; our investment securities consist primarily of mortgage-backed securities and U.S. Government and government-sponsored enterprise obligations. We also generate revenues from fees and service charges. Our primary sources of funds are deposits, borrowings and principal and interest payments on loans and securities.
In 2006, Magyar Bank acquired a 100% interest in Hungaria Urban Renewal, LLC, which has no other business other than owning Magyar Bank’s main office site. As part of a tax abatement agreement with the City of New Brunswick, Magyar Bank’s main office will remain in Hungaria Urban Renewal, LLC’s name.
As part of a tax abatement agreement with the City of New Brunswick, Magyar Bank’s main office will remain in Hungaria Urban Renewal, LLC’s name. Magyar Service Corporation, a New Jersey corporation, is a wholly owned subsidiary of Magyar Bank.
The weighted average yield is determined using a yield calculated from the contractual interest rate adjusted for the amortization/accretion of premium/discount paid to purchase the security, if any, expected to be recognized during its average life. Yields on tax-exempt obligations have been computed on a tax-equivalent basis.
Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. The weighted average yield is determined using a yield calculated from the contractual interest rate adjusted for the amortization/accretion of premium/discount paid to purchase the security, if any, expected to be recognized during its average life.
We try to minimize these risks through our underwriting standards. The maximum amount of a commercial business loan is limited by our loans-to-one-borrower limit, which is 15% of Magyar Bank’s capital, or $15.8 million. At September 30, 2023, our largest commercial business loan was a $4.8 million, and collateralized with cash deposits held at the Bank.
We try to minimize these risks through our underwriting standards. Loans to One Borrower and Concentration of Loans. The maximum amount of loans to one borrower is limited by our Board-established loans-to-one-borrower limit, which is currently 15% of Magyar Bank’s capital, or $17.2 million.
We also originate construction and land acquisition loans for the development of one-to four-family homes, apartment buildings and commercial properties. Construction loans are generally offered to experienced local developers operating in our primary market area and to individuals for the construction of their personal residences. At September 30, 2023, our construction loans totaled $21.9 million, or 3.1% of total loans.
Construction and land loans are generally offered to experienced local developers operating in our primary market area and to individuals for the construction of their personal residences. At September 30, 2024, our construction and land loans totaled $22.7 million, or 2.9% of total loans. Construction and land loans generally have a maximum term of 24 months.
The income earned on Magyar Investment Company’s investment securities are subject to a lower state tax than that assessed on income earned on investment securities maintained at Magyar Bank. Hungaria Urban Renewal, LLC is a Delaware limited-liability corporation established in 2002 as a qualified intermediary operating for the purpose of acquiring and developing Magyar Bank’s main office.
Hungaria Urban Renewal, LLC is a Delaware limited-liability corporation established in 2002 as a qualified intermediary operating for the purpose of acquiring and developing Magyar Bank’s main office. In 2006, Magyar Bank acquired a 100% interest in Hungaria Urban Renewal, LLC, which has no other business other than owning Magyar Bank’s main office site.
We also originate loans secured by the common stock of publicly traded companies, provided their shares are listed on the New York Stock Exchange or the NASDAQ Stock Market, and provided the company is not a banking company.
We also originate loans secured by the common stock of publicly traded companies, provided their shares are listed on the New York Stock Exchange or the NASDAQ Stock Market. Stock-secured loans are interest-only and are offered for terms up to twelve months and for adjustable rates of interest indexed to the prime rate, as reported in The Wall Street Journal.
At September 30, 2023, $389.1 million, or 55.8%, of our total loan portfolio consisted of these types of loans. Commercial real estate loans are generally secured by five-or-more-unit apartment buildings, industrial properties and properties used for business purposes such as small office buildings, warehouses and retail facilities.
Commercial real estate loans are generally secured by five-or-more-unit apartment buildings, industrial properties and properties used for business purposes such as small office buildings, warehouses and retail facilities. We generally originate adjustable-rate commercial real estate loans with a maximum term of 25 years with 4 adjustable-rate periods every five years.
When a loan is more than 60 days past due, the credit file is reviewed and, if deemed necessary, information is updated or confirmed and collateral re-evaluated. We make every effort to contact the borrower and develop a plan of repayment to cure the delinquency. Loans are placed on non-accrual status when they are delinquent for more than three months.
We make every effort to contact the borrower and develop a plan of repayment to cure the delinquency. Loans are placed on non-accrual status when they are delinquent for more than 90 days. When loans are placed on non-accrual status, unpaid accrued interest is fully reversed, and further income is recognized only to the extent received.
The New Jersey Banking Act also provides that a savings bank that is in compliance with federal law is deemed to be in compliance with such provisions of the New Jersey Banking Act. Federal Reserve System FRB regulations require all depository institutions to maintain reserves at specified levels against their transaction accounts (primarily NOW and regular checking accounts).
The New Jersey Banking Act also provides that 16 a savings bank that is in compliance with federal law is deemed to be in compliance with such provisions of the New Jersey Banking Act.
At September 30, 2023, our largest fixed-rate residential mortgage loan was $10.0 million. The loan was performing in accordance with its contractual repayment terms at September 30, 2023. We also offer adjustable-rate residential mortgage loans with interest rates based on the weekly average yield on U.S.
At September 30, 2024, we had $144.0 million of fixed-rate residential mortgage loans, which represented 58.5% of our total residential mortgage loan portfolio. At September 30, 2024, our largest fixed-rate residential mortgage loan was $9.9 million. The loan was performing in accordance with its contractual repayment terms at September 30, 2024.
The economy of our primary market area is largely urban and suburban with a broad economic base that is typical for counties surrounding the New York metropolitan area. The median household income in Middlesex and Somerset Counties ranks among the highest in the nation. Competition We face intense competition within our market area both in making loans and attracting deposits.
Our primary lending market area is broader than our deposit market area and includes all of New Jersey. The economy of our primary market area is largely urban and suburban with a broad economic base that is typical for counties surrounding the New York metropolitan area.
At September 30, 2023, stock-secured and other loans totaled $2.4 million, or 0.3% of our total net loan portfolio. Generally, we limit the aggregate amount of loans secured by the common stock of any one corporation to 15% of Magyar Bank’s capital, or $15.8 million.
The loan amount is not to exceed 70% of the value of the stock securing the loan at any time. At September 30, 2024, stock-secured and other loans totaled $2.1 million, or 0.3% of our total net loan portfolio. Commercial Business Loans.
September 30, 2023 2022 (Dollars in thousands) Balance at beginning of year $ 8,433 $ 8,075 Net charge-offs (recoveries): One-to four-family residential (4 ) (1 ) Commercial real estate — (53 ) Commercial business 488 — Total net charge-offs (recoveries) 484 (54 ) Provision for loan losses 381 304 Balance at end of year $ 8,330 $ 8,433 Ratios: Net charge-offs (recoveries) to average loans outstanding 0.07% -0.01% Allowance for loan losses to total non-accrual assets 163.8% 297.5% Allowance for loan losses to total loans 1.19% 1.34% 11 The following table presents the net charge-offs as a percentage of the average loans outstanding for each loan category during the year ended September 30, 2023 for each loan category.
The following table sets forth activity in our allowance for credit losses on loans for the years indicated. 8 September 30, 2024 2023 (Dollars in thousands) Balance at beginning of year $ 8,330 $ 8,433 Effect of adopting ASU 2016-13 (1,032 ) — Net charge-offs (recoveries): One-to four-family residential (68 ) (4 ) Commercial business — 488 Total net charge-offs (recoveries) (68 ) 484 Provision for credit losses 182 381 Balance at end of year $ 7,548 $ 8,330 Ratios: Net charge-offs (recoveries) to average loans outstanding -0.01% 0.07% Allowance for credit loss to total loans receivable 0.97% 1.10% Allocation of ACL on Loans.
The analysis must consider the effect of an investment or sale on our risk-based capital and prospects for yield and appreciation. At September 30, 2023, our securities portfolio totaled $96.0 million, or 10.6% of our total assets. Securities are classified as held-to-maturity or available-for-sale when purchased.
The analysis must consider the effect of an investment or sale on our risk-based capital and prospects for yield and appreciation. Portfolio Maturities and Yields. The maturities and weighted average yields of the investment debt securities portfolio and the mortgage-backed securities portfolio at September 30, 2024 are summarized in the following table.

… 205 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeProperties The following table provides certain information with respect to our offices as of September 30, 2023: Leased or Original Year Year of Location Owned Leased or Acquired Lease Expiration Main Office: 400 Somerset Street Owned 2005 — New Brunswick, New Jersey, 08901 Full - Service Branches: 3050 State Route 27 Owned 1969 — Kendall Park, New Jersey, 08824 596 Milltown Road Leased 2002 2031 North Brunswick, New Jersey, 08902 1000 Route 202 South Leased 2006 2031 Branchburg, New Jersey, 08876 475 North Bridge Street Leased 2010 2025 Bridgewater, New Jersey, 08807 1167 Inman Avenue Leased 2011 2026 Edison, New Jersey, 08820 1199 Amboy Avenue Leased 2017 2027 Edison, New Jersey, 08837 The net book value of our premises, land and equipment was approximately $13.3 million and $13.9 million at September 30, 2023 and 2022, respectively.
Biggest changeProperties The following table provides certain information with respect to our offices as of September 30, 2024: Leased or Original Year Year of Location Owned Leased or Acquired Lease Expiration Main Office: 400 Somerset Street Owned 2005 — New Brunswick, New Jersey, 08901 Full - Service Branches: 3050 State Route 27 Owned 1969 — Kendall Park, New Jersey, 08824 596 Milltown Road Leased 2002 2031 North Brunswick, New Jersey, 08902 1000 Route 202 South Leased 2006 2031 Branchburg, New Jersey, 08876 475 North Bridge Street Leased 2010 2024 Bridgewater, New Jersey, 08807 1167 Inman Avenue Leased 2011 2026 Edison, New Jersey, 08820 1199 Amboy Avenue Leased 2017 2027 Edison, New Jersey, 08837 1990 Washington Valley Road Leased 2024 2029 Martinsville, New Jersey, 08836 The net book value of our premises, land and equipment was approximately $12.5 million and $13.3 million at September 30, 2024 and 2023, respectively.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeAlthough the ultimate outcome and amount of liability, if any, with respect to these legal actions cannot presently be ascertained with certainty, in the opinion of management, based upon information currently available to us, any resulting liability as of September 30, 2023 is believed to be immaterial to our consolidated financial position, results of operations and cash flows.
Biggest changeAlthough the ultimate outcome and amount of liability, if any, with respect to these legal actions cannot presently be ascertained with certainty, in the opinion of management, based upon information currently available to us, any resulting liability as of September 30, 2024 is believed to be immaterial to our consolidated financial position, results of operations and cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−1 removed2 unchanged
Biggest changeThe following table reports information regarding repurchases of our common stock during the quarter ended September 30, 2023. 33 Weighted Remaining Number Total Number Average of Shares That of Shares Price Paid May be Purchased Periods Purchased Per Share Under the Plan July 1, 2023 through July 31, 2023 7,160 $ 11.99 254,624 August 1, 2023 through August 31, 2023 11,121 $ 12.15 243,503 September 1, 2023 through September 30, 2023 7,187 $ 11.48 236,316
Biggest changeRemaining Number Total Number Average of Shares That of Shares Price Paid May be Purchased Periods Purchased Per Share Under the Plan July 1, 2024 through July 31, 2024 98,388 $ 12.67 52,300 August 1, 2024 through August 31, 2024 7,550 $ 12.36 44,750 September 1, 2024 through September 30, 2024 4,340 $ 12.37 40,410 20
For more information on regulatory restrictions regarding the payment of dividends, see “Item 1- Business- Supervision and Regulation- New Jersey Banking Regulation-Dividends.” Other than its employee stock ownership plan, Magyar Bancorp, Inc. does not have any equity compensation plans that were not approved by stockholders. The following table sets forth information with respect to the Magyar Bancorp’s equity compensation plans.
For more information on regulatory restrictions regarding the payment of dividends, see “Item 1- Business- Supervision and Regulation- New Jersey Banking Regulation-Dividends.” Other than its employee stock ownership plan, Magyar Bancorp, Inc. does not have any equity compensation plans that were not approved by stockholders. The following table sets forth information with respect to the Company’s equity compensation plans.
Certain shares of Magyar Bancorp, Inc. are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. The Company declared five dividends totaling $0.20 per share paid to common shareholders during the year ended September 30, 2023.
Certain shares of Magyar Bancorp, Inc. are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. The Company declared five dividends totaling $0.26 per share paid to common shareholders during the year ended September 30, 2024.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (a) Our shares of common stock are traded on the NASDAQ Stock Market LLC under the symbol “MGYR.” The approximate number of holders of record of Magyar Bancorp, Inc.’s common stock as of September 30, 2023 was 591.
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities (a) Our shares of common stock are traded on the NASDAQ Stock Market LLC under the symbol “MGYR.” The approximate number of holders of record of Magyar Bancorp, Inc.’s common stock as of September 30, 2024 was 575.
Number of securities to Number of be issued upon exercise Weighted securities remaining of outstanding options average exercise available for September 30, 2023 and rights price* issuance under plan Stock options 293,200 $ 12.58 97,800 Shares of restricted stock 124,320 — — Total 417,520 $ 12.58 97,800 * Reflects exercise price of stock options only. (b) Not applicable.
Number of securities to Number of be issued upon exercise Weighted securities remaining of outstanding options average exercise available for September 30, 2024 and rights price* issuance under plan Stock options 293,200 $ 12.58 92,719 Shares of restricted stock 93,240 — — Total 386,440 $ 12.58 92,719 * Reflects exercise price of stock options only. (b) Not applicable.
The timing of the repurchases will depend on certain factors, including but not limited to, market conditions and prices, the Company’s liquidity requirements and alternative uses of capital.
The timing of the repurchases will depend on certain factors including, but not limited to, market conditions and prices, the Company’s liquidity requirements and alternative uses of capital. The following table reports information regarding repurchases of our common stock during the three months ended September 30, 2024.
The Company announced its fourth authorization of an additional stock repurchase plan pursuant to which the Company intends to repurchase up to an additional 5% of its outstanding shares, or up to 337,146 shares, under which 100,830 shares had been repurchased at an average price of $11.80 at September 30, 2023.
(c) Share repurchases. On December 8, 2022, the Company announced an additional stock repurchase plan pursuant to which the Company intends to repurchase up to an additional 5% of its outstanding shares, or up to 337,146 shares.
Under this stock repurchase program, 236,316 shares of the 337,146 shares authorized remained available for repurchase as of September 30, 2023. The Company’s intended use of the repurchased shares is for general corporate purposes. The Company held treasury stock shares totaling 423,641 at September 30, 2023.
The Company had repurchased 296,736 shares at an average price of $11.92 per share through September 30, 2024, leaving 40,410 shares remaining available for repurchase. The Company’s intended use of the repurchased shares is for general corporate purposes.
Removed
(c) Share repurchases. On December 8, 2022, the Company announced the completion of its third stock repurchase program, under which 354,891 shares had been repurchased at an average price of $12.90.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+28 added−42 removed23 unchanged
Biggest changeInterest income on loans includes loan fees, but such amounts were not material for the years ended September 30, 2023 or 2022. 38 Year Ended September 30, 2023 2022 Average Balance Interest Income/ Expense Yield/Cost (Annualized) Average Balance Interest Income/ Expense Yield/Cost (Annualized) (Dollars In Thousands) Interest-earning assets: Interest-earning deposits $ 22,616 $ 1,040 4.60% $ 53,714 $ 264 0.49% Loans receivable, net (1) 668,870 35,229 5.27% 600,630 27,841 4.64% Securities Taxable 94,519 1,602 1.69% 89,001 1,279 1.44% Tax-exempt (2) 3,370 73 2.17% 2,769 52 1.89% FHLBNY stock 2,020 139 6.89% 1,547 78 5.02% Total interest-earning assets 791,395 38,083 4.81% 747,661 29,514 3.95% Noninterest-earning assets 48,514 45,960 Total assets $ 839,909 $ 793,621 Interest-bearing liabilities: Savings accounts (3) $ 71,148 $ 342 0.48% $ 85,834 $ 156 0.18% NOW accounts (4) 340,126 7,332 2.16% 288,222 1,007 0.35% Time deposits (5) 90,385 1,814 2.01% 96,442 907 0.94% Total interest-bearing deposits 501,659 9,488 1.89% 470,498 2,070 0.44% Borrowings 25,604 846 3.31% 18,399 414 2.25% Total interest-bearing liabilities 527,263 10,334 1.96% 488,897 2,484 0.51% Noninterest-bearing liabilities 207,255 200,702 Total liabilities 734,518 689,599 Retained earnings 105,391 104,022 Total liabilities and retained earnings $ 839,909 $ 793,621 Tax-equivalent basis adjustment (15 ) (11 ) Net interest and dividend income $ 27,734 $ 27,019 Interest rate spread 2.85% 3.44% Net interest-earning assets $ 264,132 $ 258,764 Net interest margin (6) 3.50% 3.61% Average interest-earning assets to average interest-bearing liabilities 150.09% 152.93% (1) The average balance of loans receivable, net includes non-accrual loans.
Biggest changeInterest income on loans includes loan fees, but such amounts were not material for the years ended September 30, 2024 or 2023. 24 Years Ended September 30, 2024 2023 Average Balance Interest Income/ Expense Yield/Cost Average Balance Interest Income/ Expense Yield/Cost (Dollars In Thousands) Interest-earning assets: Interest-earning deposits $ 58,557 $ 3,037 5.19% $ 22,616 $ 1,040 4.60% Loans receivable, net (1) 734,402 43,107 5.87% 668,870 35,229 5.27% Securities Taxable 92,147 2,149 2.33% 94,519 1,602 1.69% Tax-exempt (2) 3,370 73 2.17% 3,370 73 2.17% FHLBNY stock 2,306 220 9.52% 2,020 139 6.89% Total interest-earning assets 890,782 48,586 5.45% 791,395 38,083 4.81% Noninterest-earning assets 49,938 48,514 Total assets $ 940,720 $ 839,909 Interest-bearing liabilities: Savings accounts (3) $ 57,147 $ 352 0.62% $ 71,148 $ 342 0.48% NOW accounts (4) 441,853 14,700 3.33% 340,126 7,332 2.16% Time deposits (5) 130,061 4,673 3.59% 90,385 1,814 2.01% Total interest-bearing deposits 629,061 19,725 3.14% 501,659 9,488 1.89% Borrowings 28,871 872 3.02% 25,604 846 3.31% Total interest-bearing liabilities 657,932 20,597 3.13% 527,263 10,334 1.96% Noninterest-bearing liabilities 170,923 207,255 Total liabilities 828,855 734,518 Retained earnings 111,865 105,391 Total liabilities and retained earnings $ 940,720 $ 839,909 Tax-equivalent basis adjustment (15 ) (15 ) Net interest and dividend income $ 27,974 $ 27,734 Interest rate spread 2.32% 2.85% Net interest-earning assets $ 232,850 $ 264,132 Net interest margin (6) 3.14% 3.50% Average interest-earning assets to average interest-bearing liabilities 135.39% 150.09% (1) The average balance of loans receivable, net includes non-accrual loans.
Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. We consider a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors.
Management performs a quarterly evaluation of the adequacy of the allowance for credit losses. We consider a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors.
As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the 34 allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties.
As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties.
Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates.
Our assets, consisting primarily of mortgage loans, have longer maturities than our 27 liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates.
Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. 43 Liquidity management is both a daily and long-term function of business management.
Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. Liquidity management is both a daily and long-term function of business management.
By following these strategies, we believe that we are well-positioned to react to changes in market interest rates. Net Interest Income Analysis. The table below sets forth, as of September 30, 2023, the estimated changes in our Net Interest Income (“NII”) for each of the next two years that would result from the designated instantaneous changes in interest rates.
By following these strategies, we believe that we are well-positioned to react to changes in market interest rates. Net Interest Income Analysis. The table below sets forth, as of September 30, 2024, the estimated changes in our Net Interest Income (“NII”) for each of the next two years that would result from the designated instantaneous changes in interest rates.
Due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses, the methodology for determining the allowance for loan losses is considered a critical accounting policy by management.
Due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for credit losses, the methodology for determining the allowance for credit losses is considered a critical accounting policy by management.
Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit (including individual retirement accounts and brokered certificate deposit accounts) due on or before September 30, 2024.
Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit (including individual retirement accounts and brokered certificate deposit accounts) due on or before September 30, 2025.
For additional information, see Note P, “Commitments,” and Note Q “Financial Instruments with Off-Balance-Sheet Risk” to our consolidated financial statements. Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for premises and equipment.
For additional information, see Note O, “Commitments,” and Note P “Financial Instruments with Off-Balance-Sheet Risk” to our consolidated financial statements. 29 Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for premises and equipment.
We analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations in establishing the general portion of the reserve. This analysis establishes factors that are applied to the loan groups to determine the amount of the general component of the allowance for loan losses.
We analyze the historical loss experience of each category, delinquency trends, general economic conditions and geographic and industry concentrations in establishing the general portion of the reserve. This analysis establishes factors that are applied to the loan groups to determine the amount of the general component of the allowance for credit losses.
(2) Calculated using the Company's 21% federal tax rate. (3) Includes passbook savings, money market passbook and club accounts. (4) Includes interest-bearing checking and money market accounts. (5) Includes certificates of deposits and individual retirement accounts. (6) Calculated as annualized net interest income divided by average total interest-earning assets. 39 Rate/Volume Analysis.
(2) Interest income and yield are calculated using the Company's 21% federal tax rate. (3) Includes passbook savings, money market passbook and club accounts. (4) Includes interest-bearing checking and money market accounts. (5) Includes certificates of deposits and individual retirement accounts. (6) Calculated as annualized net interest income divided by average total interest-earning assets. 25 Rate/Volume Analysis.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Magyar Bancorp, Inc. (the “Company”) is a Delaware-chartered stock holding company whose most significant business activity is ownership of 100% of the common stock of Magyar Bank.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview The Company is a Delaware-chartered stock holding company whose most significant business activity is ownership of 100% of the common stock of Magyar Bank.
Higher market interest rates were primarily responsible for the increase in the cost of the Company’s interest-bearing liabilities for the year ended September 30, 2023.
Higher market interest rates were primarily responsible for the increase in the cost of the Company’s interest-bearing liabilities for the year ended September 30, 2024.
The liquidity ratio is calculated by determining the sum of the difference between liquid assets (cash and unpledged investment securities) and short-term liabilities (estimated 30-day deposit outflows), plus our borrowing capacity from the FHLBNY and dividing the sum by total assets. At September 30, 2023, our liquidity ratio was 9.7% of assets.
The liquidity ratio is calculated by determining the sum of the difference between liquid assets (cash and unpledged investment securities) and short-term liabilities (estimated 30-day deposit outflows), plus our borrowing capacity from the FHLBNY and dividing the sum by total assets. At September 30, 2024, our liquidity ratio was 7.6% of assets.
If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLBNY, which provide an additional source of funds. FHLBNY advances totaled $29.5 million and $15.6 million at September 30, 202 and 2022, respectively. FHLBNY advances have primarily been used to fund loan demand.
If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLBNY, which provide an additional source of funds. FHLBNY advances totaled $28.6 million and $29.5 million at September 30, 2024 and 2023, respectively. FHLBNY advances have primarily been used to fund loan demand.
As of September 30, 2023, Magyar Bank’s Tier 1 capital as a percentage of the Bank’s average assets was 11.11% and the total qualifying capital as a percentage of risk-weighted assets was 16.22%. Bank-owned life insurance is a tax-advantaged financing transaction that is used to offset employee benefit plan costs.
As of September 30, 2024, Magyar Bank’s Tier 1 capital as a percentage of the Bank’s average assets was 11.11% and the total qualifying capital as a percentage of risk-weighted assets was 15.85%. Bank-owned life insurance is a tax-advantaged financing transaction that is used to offset employee benefit plan costs.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At September 30, 2023, cash and cash equivalents totaled $72.5 million compared with $30.9 million at September 30, 2022.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At September 30, 2024, cash and cash equivalents totaled 28 $25.6 million compared with $72.5 million at September 30, 2023.
The Company’s effective tax rate for the year ended September 30, 2023 was 28.2% compared with 29.1% for the year ended September 30, 2022. Management of Market Risk General . The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk.
The Company’s effective income tax rate was 29.9% for the year ended September 30, 2024 and 28.2% for the year ended September 30, 2023. Management of Market Risk General . The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk.
In addition to borrowings, the Bank has the ability to raise deposits on the brokered market or through deposit listing services. At September 30, 2023, the Bank held $13.8 million in brokered deposits and $14.0 million from deposit listing services. Magyar Bank is subject to various regulatory capital requirements, (see “Supervision and Regulation-Federal Banking Regulation-Capital Requirements”).
In addition to borrowings, the Bank has the ability to raise deposits on the brokered market or through deposit listing services. At September 30, 2024, the Bank held $29.6 million in brokered deposits and $20.0 million from deposit listing services. Magyar Bank is subject to various regulatory capital requirements, (see “Supervision and Regulation-Federal Banking Regulation-Capital Requirements”).
(2) Includes passbook savings, money market passbook and club accounts. (3) Includes interest-bearing checking and money market accounts. (4) Includes certificates of deposits and individual retirement accounts. Interest and Dividend Income. Interest and dividend income increased $8.6 million, or 29.0%, to $38.1 million for the year ended September 30, 2023 from $29.5 million for the year ended September 30, 2022.
(2) Includes passbook savings, money market passbook and club accounts. (3) Includes interest-bearing checking and money market accounts. (4) Includes certificates of deposits and individual retirement accounts. Interest and Dividend Income. Interest and dividend income increased $10.5 million, or 27.6%, to $48.6 million for the year ended September 30, 2024 from $38.1 million for the year ended September 30, 2023.
We originated $188.5 million in loans and purchased $6.6 million of investment securities during the year ended September 30, 2023. Comparatively, we originated $159.2 million in loans and purchased $41.1 million of investment securities during the year ended September 30, 2022. Financing activities consist primarily of activity in deposit accounts and FHLBNY advances.
We originated $161.1 million in loans and purchased $12.5 million of investment securities during the year ended September 30, 2024. Comparatively, we originated $188.5 million in loans and purchased $6.6 million of investment securities during the year ended September 30, 2023. Financing activities consist primarily of activity in deposit accounts and FHLBNY advances.
Securities classified as available-for-sale, which provide additional sources of liquidity from sales, totaled $10.1 million at September 30, 2023 compared with $9.2 million at September 30, 2022. At September 30, 2023, we also had the ability to borrow $230.1 million from the FHLBNY compared with $138.9 million at September 30 2022.
Securities classified as available-for-sale, which provide additional sources of liquidity from sales, totaled $15.6 million at September 30, 2024 compared with $10.1 million at September 30, 2023. At September 30, 2024, we also had the ability to borrow $272.3 million from the FHLBNY compared with $230.1 million at September 30 2023.
However, the Bank’s Federal and State regulators generally require that the specific reserve against impaired collateral-dependent loans be charged-off, reducing the carrying balance of the loan and allowance for loan loss. The general component is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history.
However, the Bank’s Federal and State regulators generally require that the specific reserve against impaired collateral-dependent loans be charged-off, reducing the carrying balance of the loan and allowance for loan loss. The general component is determined by segregating the remaining loans into homogenous categories.
The average yield on such loans increased 63 basis points to 5.27% at September 30, 2023 from 4.64% for the year ended September 30, 2022 from higher market interest rates.
The average yield on such loans increased 60 basis points to 5.87% at September 30, 2024 from 5.27% for the year ended September 30, 2023 from higher market interest rates.
Interest earned on investment securities, including interest earned on deposits but excluding FHLBNY stock, increased $1.1 million, or 70.5%, to $2.7 million for the year ended September 30, 2023 from $1.6 million for fiscal 2022.
Interest earned on investment securities, including interest earned on deposits but excluding FHLBNY stock, increased $2.5 million, or 94.3%, to $5.2 million for the year ended September 30, 2024 from $2.7 million for the year ended 26 2023.
The average balance of interest-bearing liabilities increased $38.4 million, or 7.8%, to $527.3 million from $488.9 million between the two periods while the average cost on such interest-bearing liabilities increased 145 basis points to 1.96% for the year ended September 30, 2023 from 0.51% for the year ended September 30, 2022.
The average balance of interest-bearing liabilities increased $130.7 million, or 24.8%, to $657.9 million from $527.3 million between the two periods while the average cost on such interest-bearing liabilities increased 117 basis points to 3.13% for the year ended September 30, 2024 from 1.96% for the year ended September 30, 2023.
The table presents the average yield on interest-earning assets and the average cost of interest-bearing liabilities. We derived the yields and costs by dividing income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated.
We derived the yields and costs by dividing income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the periods indicated. Interest income includes fees that we consider adjustments to yields.
The allowance for loan loss decreased in amount and as a percentage of gross loans during the year from higher balances of lower risk loans and lower balances of higher risk loans in addition to lower adjustments to the historical loss for all loan categories for improving economic conditions. Investment Securities.
In addition to lower net charge-offs, the provision for credit losses on loans decreased in amount and as a percentage of gross loans during the year from higher balances of lower risk loans and lower balances of higher risk loans in addition to lower adjustments to the historical loss for all loan categories for improving economic conditions. Other Income.
We experienced a net increase in total deposits of $87.7 million, or 13.1%, to $755.5 million for the year ended September 30, 2023 compared with a net decrease in total deposits of $27.9 million, or 4.4%, to $667.7 million for the year ended September 30, 2022.
We experienced a net increase in total deposits of $41.2 million, or 5.46%, to $796.7 million for the year ended September 30, 2024 compared with a net increase in total deposits of $87.7 million, or 13.1%, to $755.5 million for the year ended September 30, 2023.
The average balance of interest-earnings assets between the two periods increased $43.7 million, or 5.8%, to $791.4 million from $747.7 million, while the yield on such assets increased 86 basis point to 4.81% for the year ended September 30, 2023 from 3.95% for the year ended September 30, 2022.
The average balance of interest-earnings assets between the two periods increased $99.4 million, or 12.6%, to $890.8 million from $791.4 million, while the yield on such assets increased 64 basis point to 5.45% for the year ended September 30, 2024 from 4.81% for the year ended September 30, 2023.
Interest income on loans increased $7.4 million, or 26.5%, to $35.2 million for the year ended September 30, 2023 from $27.8 million for the year ended September 30, 2022, while the average balance of loans increased $68.2 million, or 11.4%, to $668.9 million from $600.6 million.
Interest income on loans increased $7.9 million, or 22.4%, to $43.1 million for the year ended September 30, 2024 from $35.2 million for the year ended September 30, 2023, while the average balance of loans increased $65.5 million, or 9.8%, to $734.4 million from $668.9 million.
The allowance is established through the provision for loan losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical.
In determining the allowance for credit losses, management makes significant estimates and has identified this policy as one of our most critical.
Average expense on interest-bearing deposits increased $7.4 million, or 358.4%, to 9.5 million at September 30, 2023 compared with $2.1 million at September 30, 2022. Interest expense on advances increased $432,000, or 104.3%, to $846,000 for the year ended September 30, 2023 from $414,000 for the year ended September 30, 2022.
Average expense on interest-bearing deposits increased $10.2 million, or 107.9%, to 19.7 million at September 30, 2024 compared with $9.5 million at September 30, 2023. Interest expense on advances increased $26 thousand, or 3.1%, to $872 thousand for the year ended September 30, 2024 from $846 thousand for the year ended September 30, 2023.
The average cost of borrowings increased 106 basis points to 3.31% for the year ended September 30, 2023 from 2.25% for the year ended September 30, 2022 while the average balance of those borrowings increased $7.2 million to $25.6 million for the year ended September 30, 2023 from $18.4 million the prior year. Provision for Loan Losses.
The average cost of borrowings decreased 29 basis points to 3.02% for the year ended September 30, 2024 from 3.31% for the year ended September 30, 2023 while the average balance of those borrowings increased $3.3 million to $28.9 million for the year ended September 30, 2024 from $25.6 million the prior year. Provision for Credit Losses.
Offsetting these increases were decreases in commercial business loans, which decreased $4.5 million, or 12.9%, to $30.2 million and in other consumer loans, which decreased $771,000, or 24.6%, to $2.3 million.
Offsetting these increases were declines in commercial business loans, which decreased $6.2 million, or 20.5%, to $24.0 million and in other consumer loans, which decreased $124 thousand, or 5.3%, to $2.2 million.
The increase was attributable to a 115 basis point increase in the average yield on investment securities and interest earned 40 on deposits to 2.25% from 1.10%, partially offset by a $25.0 million, or 17.2%, decrease in the average balance of investment securities and interest earning deposits to $120.5 million from $145.5 million during the year ended September 30, 2022.
The increase was attributable to a 116 basis point increase in the average yield on investment securities and interest earned on deposits to 3.41% from 2.25%, and $33.6 million increase in the average balance of investment securities and interest earning deposits to $154.1 million from $120.5 million during the year ended September 30, 2023. Interest Expense.
The average balance of interest-bearing deposits increased $31.2 million, or 6.6%, to $501.7 million for the year ended September 30, 2023 from $470.5 million for the year ended September 30, 2022 while the average cost on such interest-bearing deposits increased 145 basis points to 1.89% from 0.44%.
The average balance of interest-bearing deposits increased $127.4 million, or 25.4%, to $629.1 million for the year ended September 30, 2024 from $501.7 million for the year ended September 30, 2023 while the average cost on such interest-bearing deposits increased 125 basis points to 3.14% from 1.89%.
The increase was attributable to purchases totaling $2.0 million, partially offset by principal repayments totaling $970,000, premium amortization of $51,000 and unrealized losses of $47,000. Securities held-to-maturity decreased $5.8 million, or 6.3%, to $85.8 million at September 30, 2023 from $91.6 million at September 30, 2022.
The increase was attributable to purchases totaling $6.0 million, unrealized gain of $834 thousand partially offset by principal repayments totaling $1.3 million. Securities held-to-maturity decreased $6.0 million, or 7.0%, to $79.8 million at September 30, 2024 from $85.8 million at September 30, 2023.
Interest Expense. Interest expense increased $7.9 million, or 316.0%, to $10.3 million for the year ended September 30, 2023 from $2.5 million for the year ended September 30, 2022.
Interest expense increased $10.3 million, or 99.3%, to $20.6 million for the year ended September 30, 2024 from $10.3 million for the year ended September 30, 2023.
Growth occurred in commercial real estate loans, which increased $46.3 million, or 13.5%, to $389.1 million, in one-to four-family residential mortgage loans (including home equity lines of credit), which increased $21.6 million, or 9.3%, to $254.7 million, and in construction loans, which increased $6.6 million, or 43.5%, to $21.9 million.
The growth occurred in commercial real estate loans, which increased $72.2 million, or 18.6%, to $461.3 million, in one-to four-family residential mortgage loans (including home equity lines of credit), which increased $16.3 million, or 6.4%, to $270.9 million, and in construction and land loans, which increased $869 thousand, or 4.0%, to $22.7 million.
If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and FHLBNY advances.
Certificates of deposit due within one year of September 30, 2024 totaled $99.2 million, or 12.45% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits and FHLBNY advances.
The Company’s book value per share increased to $15.70, based on total equity of $104.8 million and 6,674,184 shares outstanding at September 30, 2023 from $14.60, based on total equity of $98.5 million and 6,745,128 shares outstanding.at September 30, 2022. 37 Comparison of Operating Results for the Years Ended September 30, 2023 and 2022 Net Income.
The Company’s book value per share increased to $16.98 at September 30, 2024 from $15.70 at September 30, 2023. Comparison of Operating Results for the Years Ended September 30, 2024 and 2023 Net Income.
The increase was attributable to the Company’s net income from operations totaling $7.7 million, partially offset by $1.3 million in dividends paid to shareholders and $1.2 million in treasury share repurchases.
The increase was attributable to the Company’s net income from operations totaling $7.8 million, partially offset by $1.7 million in dividends paid and $2.4 million in share repurchases. In addition, other comprehensive income, stock-based compensation expense and the effect of adopting ASU 2016-13 increased the 23 Company’s equity by $2.1 million.
During the year ended September 30, 2023, the Company’s total assets grew $108.7 million, or 13.6%, to $907.3 million compared with $798.5 million at September 30, 2022. The increase was attributable to a $69.2 million increase in net loans receivable and a $41.3 million increase in interest-earning deposits with banks, offset by a $4.9 million decrease in investment securities.
During the year ended September 30, 2024, the Company’s total assets grew $44.6 million, or 4.9%, to $951.9 million compared with $907.3 million at September 30, 2023. The increase was attributable to an $82.8 million increase in net loans receivable, a $5.3 million increase in bank-owned life insurance, and a $3.4 million increase in other real estate owned.
The Company’s net income decreased $210,000, or 2.7%, to $7.7 million during the year ended September 30, 2023 compared with $7.9 million for the year ended September 30, 2022 due to higher non-interest expenses, partially offset by higher net interest and dividend income. Net Interest and Dividend Income.
The Company’s net income increased $74 thousand, or 1.0%, to $7.8 million during the year ended September 30, 2024 compared with $7.7 million for the year ended September 30, 2023 from higher net interest income, lower provision for credit losses and higher other income, partially offset by higher income tax and other expenses.
Throughout fiscal 2024, we expect to continue increasing our commercial real estate and commercial business loans while managing non-interest expenses in an effort to increase profitability of the Company. Critical Accounting Policies Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions.
Throughout fiscal 2025, we expect to continue increasing our commercial real estate and commercial business loans while managing non-interest expenses in an effort to increase profitability of the Company. Our business operations are subject to risks and uncertainties that could materially affect our operating results. The extent of such impact will depend on future developments, which are highly uncertain.
Under State of New Jersey legislation, municipal deposits exceeding 70% of the Bank’s capital must be collateralized. Magyar Bank was in compliance with the State’s requirements at September 30, 2023. The FDIC provides $250,000 of deposit insurance per depositor for each account ownership category.
Included in the Company’s deposits were $249.9 million in municipal deposits at September 30, 2024, which represented 29.1% of total deposits. Under current State of New Jersey legislation, municipal deposits exceeding 70% of the Bank’s capital must be collateralized. Magyar Bank was in compliance with the State’s requirements at September 30, 2024.
The increase in deposits during the year ended September 30, 2023 occurred in money market account balances, which increased $62.7 million, or 28.2%, to $284.9 million, in certificates of deposit (including individual retirement accounts) which increased $22.1 million, or 26.7%, to $104.7 million, in interest-bearing checking account balances, which increased $16.5 million, or 16.8% to $115.2 million, and in non-interest checking account balances, which increased $6.1 million, or 3.4%, to $188.5 million.
The growth in deposits occurred in certificates of deposit (including individual retirement accounts) which increased $55.0 million, or 52.5%, to $159.7 million, in interest-bearing checking account balances, which increased $31.6 million, or 27.4% to $146.7 million, and in money market account balances, which increased $19.7 million, or 6.9%, to $304.6 million.
Service charge income increased $404,000, or 34.0%, to $1.6 million compared with $1.2 million for the prior year from higher commercial loan prepayment fees received during the current year. The Company received $423,000 in prepayment penalties during the year ended September 30, 2023, compared with $130,000 during the year ended September 30, 2022. Other Expenses.
In addition, service charges decreased $457 thousand to $1.1 million during the year ended September 30, 2024 compared with $1.6 million for the year ended September 30, 2023 from lower commercial loan prepayment fees. Other Expenses.
The Company’s net interest margin decreased 11 basis points to 3.50% for the year ended September 30, 2023 from 3.61% for the year ended September 30, 2022. Average Balance Sheet. The following table presents certain information regarding our financial condition and net interest income for the years ended September 30, 2023 and 2022.
The following table presents certain information regarding our financial condition and net interest income for the years ended September 30, 2024 and 2023. The table presents the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
The cash surrender value of life insurance held for directors and officers of Magyar Bank increased $370,000, or 2.7%, to $18.0 million at September 30, 2023 from $17.7 million at September 30, 2022. The change was due to an increase in the cash surrender value of the policies.
The decrease was the attributable to principal repayments totaling $12.5 million and partially offset by purchases totaling $6.5 million. Bank-Owned Life Insurance. The cash surrender value of life insurance held for directors and executive officers of Magyar Bank increased $5.3 million, or 29.5%, to $23.3 million at September 30, 2024 from $18.0 million at September 30, 2023.
Other expenses increased $1.0 million, or 5.7%, to $19.3 million compared to $18.3 million for the year ended September 30, 2022 due primarily to higher compensation, benefit, FDIC insurance premium and occupancy expenses, partially offset by lower professional fees.
Other expenses increased $1.1 million, or 5.7%, to $20.4 million during the year ended September 30, 2024 compared to $19.3 million for the year ended September 30, 2023 due primarily to higher compensation benefit expenses, which increased $689 thousand, or 6.2%, to $11.8 million for the year ended September 30, 2024 from $11.1 million for the year ended September 30, 2023.
There were no out-of-period adjustments excluded from the table below September 30, 2023 vs. 2022 Increase (decrease) due to Volume Rate Net (In thousands) Interest-earning assets: Interest-earning deposits $ (235 ) $ 1,011 $ 776 Loans 3,366 4,022 7,388 Securities Taxable 85 238 323 Tax-exempt (1) 12 9 21 FHLBNY stock 27 34 61 Total interest-earning assets 3,256 5,313 8,569 Interest-bearing liabilities: Savings accounts (2) (31 ) 217 186 NOW accounts (3) 213 6,112 6,325 Time deposits (4) (60 ) 967 907 Total interest-bearing deposits 122 7,296 7,418 Borrowings 196 236 432 Total interest-bearing liabilities 318 7,532 7,850 Increase (decrease) in tax equivalent net interest income $ 2,938 $ (2,219 ) $ 719 Change in tax-equivalent basis adjustment (4 ) Increase in net interest income $ 715 (1) Calculated using the Company's 21% federal tax rate.
There were no out-of-period adjustments excluded from the table below September 30, 2024 vs. 2023 Increase (decrease) due to Volume Rate Net (In thousands) Interest-earning assets: Interest-earning deposits $ 1,848 $ 149 $ 1,997 Loans 3,644 4,234 7,878 Securities Taxable (41 ) 588 547 Tax-exempt (1) — — — FHLBNY stock 22 59 81 Total interest-earning assets 5,472 5,031 10,503 Interest-bearing liabilities: Savings accounts (2) (76 ) 86 10 NOW accounts (3) 2,620 4,748 7,368 Time deposits (4) 1,024 1,835 2,859 Total interest-bearing deposits 3,568 6,669 10,237 Borrowings 103 (77 ) 26 Total interest-bearing liabilities 3,672 6,591 10,263 Increase (decrease) in tax equivalent net interest income $ 1,801 $ (1,561 ) $ 240 Change in tax-equivalent basis adjustment — Increase in net interest income $ 240 (1) Calculated using the Company's 21% federal tax rate.
Investment securities decreased $4.9 million, or 4.9%, to $96.0 million at September 30, 2023 from $100.9 million at September 30, 2022.
Investment securities decreased $528 thousand, or 0.6%, to $95.4 million at September 30, 2024 from $96.0 million at September 30, 2023. Securities available-for-sale increased $5.5 million, or 54.2%, to $15.6 million at September 30, 2024 from $10.1 million at September 30, 2023.
There were $488,000 in loan charge-offs and $4,000 in loan recoveries for the year ended September 30, 2023 compared with no loan charge-offs and $54,000 in loan recoveries for the year ended September 30, 2022. Other Income.
During the year ended September 30, 2024, the Company recorded $69 thousand in net loan recoveries compared with $484 thousand in net charge-offs for the year ended September 30, 2023.
On that date, we had an aggregate of $29.5 million in advances outstanding and $80.0 million in municipal letters of credit outstanding with the FHLBNY. Our cash flows are derived from operating activities, investing activities and financing activities as reported in our consolidated Statements of Cash Flows included in our consolidated Financial Statements.
Our cash flows are derived from operating activities, investing activities and financing activities as reported in our consolidated Statements of Cash Flows included in our consolidated Financial Statements. At September 30, 2024, we had $28.6 million in loan origination commitments outstanding. In addition to commitments to originate loans, we had $88.3 million in unused lines of credit to borrowers.
Critical accounting policies may involve complex subjective decisions or assessments. We consider the following to be our critical accounting policies. Allowance for Loan Loss. The allowance for loan losses is the amount estimated by management as necessary to cover credit losses in the loan portfolio both probable and reasonably estimable at the balance sheet date.
The allowance for credit losses is the amount estimated by management as necessary to cover expected credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for credit losses which is charged against income.
In addition, the Company incurred higher director fees, which increased $149,000 during the year ended September 30, 2023 from the prior year due to the addition of three new directors. 41 Deposit insurance premiums increased $125,000, or 58.1%, to $340,000 for the year ended September 30, 2023 from $215,000 for the year ended September 30, 2022 from higher insurance assessment rates implemented by the FDIC for all insured institutions effective January 1, 2023.
In addition, deposit insurance premiums increased $81 thousand, or 23.8%, to $421 thousand from deposit growth and higher insurance assessment rates implemented by the FDIC for all insured institutions effective January 1, 2023. Income Tax Expense.
Total deposits increased $87.7 million, or 13.1%, to $755.5 million and stockholders’ equity increased $6.3 million, or 6.4%, to $104.8 million during the year ended September 30, 2023 The Company’s net income decreased $210,000, or 2.7%, to $7.7 million during the year ended September 30, 2023 compared with net income of $7.9 million for the year ended September 30, 2022.
Other income increased $931 thousand, or 34.7%, to $3.6 million during the year ended September 30, 2024 compared with $2.7 million the year ended September 30, 2023.
Interest and dividend income increased $8.6 million, or 29.0%, to $38.1 million at September 30, 2023 from $29.5 million at September 30, 2022, while interest expense increased $7.6 million, or 316.0%, to $10.3 million at September 30, 2023 from $2.5 million at September 30, 2022.
Borrowings decreased $947 thousand, or 3.2%, to $28.6 million at September 30, 2024 compared with $29.5 million at September 30, 2023. Stockholders’ Equity. Stockholders’ equity increased $5.7 million, or 5.5%, to $110.5 million at September 30, 2024 from $104.8 million at September 30, 2023.
Total loans receivable increased $69.3 million, or 11.0%, to $698.2 million at September 30, 2023 from $628.9 million at September 30, 2022.
Partially offsetting these increases were lower interest-earning deposits with banks, as we used cash and cash equivalents to fund loan growth. Loans Receivable. Total loans receivable increased $83.0 million, or 11.9%, to $781.2 million at September 30, 2024 from $698.2 million at September 30, 2023.
Modeling changes in net interest income require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. 42 Change in Estimated Increase Estimated Increase Interest rates Estimated (Decrease) in NII Year 1 Estimated (Decrease) in NII Year 2 (Basis Points) (1) NII Year 1 Amount Percentage NII Year 2 Amount Percentage (Dollars in thousands) +200 $ 31,325 $ 391 1.26% $ 35,685 $ 1,789 5.28% Unchanged 30,934 — — 33,896 — — -200 30,273 (661 ) -2.14% 31,547 (2,349 ) -6.93% (1) Assumes an instantaneous uniform change in interest rates at all maturities.
Modeling changes in net interest income require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
The Company’s net interest and dividend income is affected by regulatory, economic and competitive factors that influence interest rates, loan demand, deposit flows and levels of nonperforming assets. During the year ended September 30, 2023, net interest and dividend income increased $715,000, or 2.6%, to $27.7 million compared to $27.0 million for the year ended September 30, 2022.
Earnings per share increased to $1.23 for the year ended September 30, 2024 from $1.20 for the year ended September 30, 2023. Net Interest and Dividend Income. Net interest and dividend income increased $240 thousand, or 0.9%, to $28.0 million during the year ended September 30, 2024 compared to $27.7 million for the year ended September 30, 2023.
Other income decreased $33,000, or 1.2%, to $2.7 million during the year ended September 30, 2023 compared with the year ended September 30, 2022 from lower gains on the sale of SBA loans, partially offset by higher service charge income between periods. The Bank sells the guaranteed portion of the SBA 7(a) program loans it originates in the secondary market.
The Company’s net income increased $74 thousand, or 1.0%, to $7.8 million during the year ended September 30, 2024 compared with net income of $7.7 million for the year ended September 30, 2023 from higher net interest income, lower provision for credit losses and higher other income, partially offset by higher income tax and other expenses.
Removed
Actual loan losses may be significantly greater than the allowances we have established, which could have a material negative effect on our financial results. The Company will adopt Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments on October 1, 2023, using a modified retrospective approach.
Added
Offsetting these increases was a $46.9 million decrease in interest-earning deposits with banks. Total deposits increased $41.2 million, or 5.5%, to $796.7 million and stockholders’ equity increased $5.8 million, or 5.5%, to $110.5 million during the year ended September 30, 2024.
Removed
The Company’s implementation process includes scoping, segmentation and the design of a methodology appropriate for each respective financial instrument. The process also includes the development of loss forecasting models as well as the incorporation of qualitative adjustments.
Added
There continues to be various other risks and uncertainties that could impact the Company’s businesses and future results, such as changes to the U.S. economic condition, market interest rates, the Federal Reserve Board's monetary policy, other government policies, and actions of regulatory agencies. Comparison of Financial Condition at September 30, 2024 and 2023 Total Assets.
Removed
Evaluation of technical accounting topics, updates to our allowance policy documentation, model validation, governance and reporting, processes and related internal controls, as well as overall operational readiness has been completed throughout September 30, 2023 in preparation for adoption.
Added
Total assets increased $44.6 million, or 4.9%, to $951.9 million during the year ended September 30, 2024 compared with $907.3 million at September 30, 2023. The increase was attributable to higher loans receivable, bank-owned life insurance and other real estate owned.
Removed
Based on analyses performed during the quarter ending September 30, 2023, as well as an implementation analysis utilizing exposures and forecasts of economic conditions as of September 30, 2023, the Company recorded a reduction to its allowance for credit losses on October 1, 2023 in the amount of $492,000.
Added
Given the significance of commercial real estate (“CRE”) loans to our total loan portfolio, the following table further disaggregates these loans by occupied status and by collateral type as of September 30, 2024: 21 September 30 2024 Amount Percent (In thousands) Owner-occupied Retail $ 41,718 9.0% Hotel/Motel 42,438 9.2% Professional 35,341 7.7% Office 10,934 2.4% Restaurant 18,743 4.1% Other 28,243 6.1% Total owner-occupied $ 177,417 38.5% Non-owner occupied Retail $ 84,435 18.3% Multi-family 86,676 18.8% Professional 18,972 4.1% Office 39,064 8.5% Restaurant 8,060 1.7% Hotel/Motel 2,566 0.6% Other 44,129 9.6% Total non-owner occupied $ 283,902 61.5% Total commercial real estate loans $ 461,319 100.0% The Company obtains an appraisal of the real estate collateral securing a CRE loan prior to originating the loan.
Removed
The reduction was comprised of a reduction in the allowance for on-balance sheet exposures, which includes held to maturity debt securities, totaling $1.0 million and an increase in the allowance for off-balance sheet exposures, which includes unfunded commitments, totaling $540,000. The impact will be reflected as a cumulative effect adjustment, net of taxes.
Added
The appraised value is used to calculate the ratio of the outstanding loan balance to the value of the real estate collateral, or loan-to-value ratio ("LTV").
Removed
The change in the allowance for credit losses upon adoption will not have a material effect on the Company’s capital and regulatory capital amounts and ratios. Deferred Income Taxes. The Company records income taxes using the asset and liability method.
Added
The original appraisal is used to monitor the LTVs within the CRE portfolio unless an updated appraisal is received, which may happen for a variety of reasons including, but not limited to, payment delinquency, additional loan requests using the same collateral, and loan modifications.
Removed
Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled.
Added
The following table presents the ranges in the LTVs of our CRE loans at September 30, 2024: Number of LTV range Loans Amount (Dollars in thousands) 0%-25.0% 114 $ 45,522 25.01%-50.0% 120 111,699 50.01%-60.0% 71 123,684 60.01%-70.0% 94 118,379 70.01%-75.0% 32 47,611 75.01%-80.0% 7 13,188 > 80.0% 1 1,236 Totals 439 $ 461,319 As of September 30, 2024 and 2023, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital were estimated at approximately 270% and 262%, respectively.
Removed
Deferred tax assets are likely to be realized and therefore do not have a valuation allowance. Comparison of Financial Condition at September 30, 2023 and September 30, 2022 Total Assets. Total assets increased $108.7 million, or 13.6%, to $907.3 million during the year ended September 30, 2023 compared with $798.5 million at September 30, 2022.
Added
Management believes that Magyar Bank has implemented appropriate risk management practices, including risk assessments, board-approved underwriting policies and related procedures, which include monitoring loan portfolio performance and stressing of the commercial real estate portfolio under adverse economic conditions. Our asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions.

… 54 more changes not shown on this page.

Other MGYR 10-K year-over-year comparisons