UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 000-51726
Magyar Bancorp, Inc.
(Exact Name of Registrant as Specified in Its Charter)
(732) 342-7600
(Registrant Telephone Number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act:
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
The number of shares outstanding of the issuer's common stock at August 1, 2026 was 6,455,383
MAGYAR BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
MAGYAR BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Data)
The accompanying notes are an integral part of these consolidated financial statements.
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Consolidated Statements of Income
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Consolidated Statements of Comprehensive Income
(In Thousands)
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Consolidated Statements of Changes in Stockholders' Equity
For the Three and Nine Months Ended June 30, 2026 and 2025
(In Thousands, Except for Share and Per-Share Amounts)
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Consolidated Statements of Cash Flows
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Notes to Consolidated Financial Statements
(Unaudited)
NOTE A – BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Magyar Bancorp, Inc. (the “Company”), its wholly owned subsidiary, Magyar Bank (the “Bank”), and the Bank’s wholly owned subsidiaries Magyar Service Corporation, Hungaria Urban Renewal, LLC, and Magyar Investment Company. All material intercompany transactions and balances have been eliminated. The Company prepares its consolidated financial statements on the accrual basis and in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The unaudited information furnished herein reflects all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.
Operating results for the nine months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending September 30, 2026 or for any other period. The September 30, 2025 information has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of available-for-sale investment securities, the valuation of other real estate owned (“OREO”), and the assessment of realizability of deferred income tax assets.
The Company has evaluated events and transactions occurring after the balance sheet date of June 30, 2026 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.
NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS
In connection with the preparation of quarterly and annual reports in accordance with the Securities and Exchange Commission’s (“SEC”) Securities Exchange Act of 1934, SEC Staff Accounting Bulletin Topic 11.M requires the disclosure of the impact that recently issued accounting standards will have on financial statements when they are adopted in the future.
On December 14, 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The ASU focuses on income tax disclosures around effective tax rates and cash income taxes paid. ASU 2023-09 largely follows the proposed ASU issued earlier in 2023 with modifications and clarifications discussed below. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 (October 1, 2025 for the Company) and effective for all other business entities one year later. Entities should adopt this guidance on a prospective basis, though retrospective application is permitted. ASU 2023-09 will affect the Company’s annual reporting for its fiscal year ending September 30, 2026.
ASU 2023-09 requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. The guidance requires the rate reconciliation to include specific categories and provides further guidance on disaggregation of those categories based on a quantitative threshold equal to 5% or more of the amount determined by multiplying pretax income (loss) from continuing operations by the applicable statutory rate. For entities reconciling to the U.S. statutory rate of 21%, this would generally require disclosing any reconciling items that impact the rate by 1.05% or more.
NOTE C - CONTINGENCIES
The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of this litigation, if any, would not have a material adverse effect on the Company’s consolidated financial position or results of operations as presented in this report.
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NOTE D - EARNINGS PER SHARE
The following table presents a calculation of basic and diluted earnings per share for the three and nine months ended June 30, 2026 and 2025. Basic and diluted earnings per share were calculated by dividing net income by the weighted average number of shares outstanding for the periods.
Options to purchase 282,200 shares of common stock at a weighted average strike price of $12.58 and 58,160 shares of restricted shares at a weighted average price of $12.62 were outstanding at June 30, 2026 and included in the calculation of diluted earnings per share. Options to purchase 281,200 shares of common stock at a weighted average strike price of $12.58 and 87,240 shares of restricted shares at a weighted average price of $12.62 were outstanding at June 30, 2025 and included in the calculation of diluted earnings per share.
Options and restricted shares were not anti-dilutive at June 30, 2026 and 2025.
NOTE E – OTHER COMPREHENSIVE INCOME
Comprehensive income includes net income as well as certain other items which result in a change to equity during the period. The Company recorded no reclassification adjustments during the three and nine months ended June 30, 2026 and 2025. The components of other comprehensive income and the related income tax effects are as follows:
(1) Related income tax expense or benefit calculated using an income tax rate approximating 25% for available-for-sale investments
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NOTE F – FAIR VALUE DISCLOSURES
The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The securities available-for-sale and the Company’s derivative assets and liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record other assets or liabilities at fair value on a non-recurring basis, such as held-to-maturity securities, mortgage servicing rights, loans receivable and OREO. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.
In accordance with Accounting Standards Codification (“ASC”) 820, the Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1 - Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2 - Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3 - Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.
The Company based its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following is a description of valuation methodologies used for assets measured at fair value on a recurring basis.
Securities Available-for-Sale
The securities available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The securities available-for-sale portfolio consists of U.S. government-sponsored mortgage-backed securities. The fair values of these securities are obtained from an independent nationally recognized pricing service. An independent pricing service provides the Company with prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.
Derivatives
The Bank executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. The fair values of such derivatives are based on valuation models from a third party using current market terms (including interest rates and fees), the remaining terms of the agreements and the credit worthiness of the counter party as of the measurement date (Level 2).
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The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a recurring basis.
The following is a description of valuation methodologies used for assets measured at fair value on a non-recurring basis.
Individually Evaluated Loans
The Company has six individually evaluated loans at June 30, 2026. Based on current information, management determined that the Company may not be able to collect all amounts due according to the loan contract. The allowance for these individually evaluated loans is included in the allowance for credit losses in the Consolidated Balance Sheets. At June 30, 2026, the allowance for the individually evaluated loans was $232 thousand. There was no allowance for the individually evaluated loans at September 30, 2025.
Other Real Estate Owned
Other real estate owned is measured and reported at fair value less selling costs based on the fair value of the underlying collateral.
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The following tables provide the level of valuation assumptions used to determine the carrying value of assets measured at fair value on a non-recurring basis at June 30, 2026 and September 30, 2025.
The following tables present additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)
The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments carried at cost or amortized cost as of June 30, 2026 and September 30, 2025. For short-term financial assets such as cash and cash equivalents and accrued interest receivable, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as interest-bearing demand, NOW, and money market savings deposits, the carrying amount is a reasonable estimate of fair value due to these products being payable on demand and having no stated maturity. The Company’s bank-owned life insurance is not a marketable asset and may generally only be redeemed with the insurance company and, therefore, is not included in the table below.
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NOTE G – LEASES
On October 7, 2025, the Bank entered into a lease agreement to rent a retail office space at 976 Inman Avenue, Edison, New Jersey to increase its presence in Middlesex County. The initial term of the lease is for five years, ending on May 31, 2031 and includes the option for one additional term of five years. In accordance with ASC 842, “Leases”, a lease liability and right-of-use asset in the amount of $175 thousand was recognized within accounts payable and other liabilities and other assets, respectively, on our Consolidated Balance Sheets during the nine months ended June 30, 2026. The discount rate used to determine the lease liability was 3.93% and derived from the Federal Home Loan Bank of New York advance rate for the same term.
The following table presents the balance sheet information related to our leases:
Total rental expense, included in occupancy expense, was approximately $452 thousand and $605 thousand for the nine months ended June 30, 2026 and 2025, respectively.
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NOTE H - INVESTMENT SECURITIES
The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at June 30, 2026:
The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, 2025:
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The Company monitors the credit quality of held-to-maturity debt securities, primarily through their credit ratings by nationally recognized statistical ratings organizations, on a quarterly basis. At June 30, 2026 and September 30, 2025, there were no non-performing held-to-maturity debt securities and no allowance for credit losses was deemed required. The majority of the investment securities are explicitly or implicitly guaranteed by the United States government, and any estimate of expected credit losses would be insignificant to the Company. The following tables summarize the amortized cost of held-to-maturity debt securities at June 30, 2026 and September 30, 2025, aggregated by credit quality indicator:
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The contractual maturities of debt securities, municipal bonds and certain information regarding mortgage-backed securities available-for-sale at June 30, 2026 are summarized in the following table:
The contractual maturities of debt securities, municipal bonds and certain information regarding mortgage-backed securities held-to-maturity at June 30, 2026 are summarized in the following table:
As of June 30, 2026 and September 30, 2025, investment securities having a carrying amount of approximately $9.9 million and $10.9 million, respectively, were pledged to secure public deposits.
NOTE I – UNREALIZED LOSSES ON INVESTMENT SECURITIES AVAILABLE-FOR-SALE
The Company recognizes an allowance for credit losses (“ACL”) on debt securities in earnings through a provision for credit losses while non credit-related impairment on debt securities not expected to be sold is recognized in other comprehensive income.
The Company reviews its investment portfolio on a quarterly basis for indications of credit losses. This review includes analyzing the extent to which the fair value has been lower than the amortized cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. The Company evaluates its intent and ability to hold debt securities based upon its investment strategy for the particular type of security and its cash flow needs, liquidity position, capital adequacy and interest rate risk position. In addition, the risk of future credit losses may be influenced by prolonged recession in the U.S. economy, changes in real estate values and interest deferrals.
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Investment securities with fair values greater than their amortized cost contain unrealized gains. Investment securities with fair values less than their amortized cost contain unrealized losses. Details of available-for-sale securities with unrealized losses at June 30, 2026 and September 30, 2025 are summarized in the following tables:
The investment securities listed above currently have fair values less than amortized cost and, therefore, contain unrealized losses. The Company evaluated these securities and determined that the decline in value was primarily related to fluctuations in the interest rate environment and were not related to any company or industry specific event.
The Company anticipates full recovery of amortized costs with respect to these securities. The Company does not intend to sell these securities and has determined that it is not more likely than not that the Company would be required to sell these securities prior to maturity or market price recovery. For individual debt securities classified as available-for-sale, we determine whether a decline in fair value below the amortized cost has resulted from a credit loss or other factors. If the decline in fair value is due to credit, we will record the portion of the impairment loss relating to credit through an ACL. Impairment that has not been recorded through an ACL is recorded through other comprehensive income, net of applicable taxes.
NOTE J – LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR CREDIT LOSSES
Loans receivable, net was comprised of the following:
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The segments of the Company’s loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The residential mortgage loan segment is further disaggregated into two types: first lien, amortizing term loans, and the combination of second lien amortizing term loans and home equity lines of credit. The commercial loan segment is further disaggregated into three types: loans secured by multifamily structures, loans secured by owner-occupied commercial structures, and loans secured by non-owner-occupied nonresidential properties. The construction and land loan segment consists primarily of developers or investors for the purpose of acquiring, developing and constructing residential or commercial structures and to a lesser extent one-to-four family residential construction loans made to individuals for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built. Construction loans to developers and investors have a higher risk profile because the ultimate buyer, once development is completed, is generally not known at the time of the loan. The commercial business loan segment consists of loans made for the purpose of financing the activities of commercial customers and consists of revolving lines of credit and loans partially guaranteed by the U.S. Small Business Administration. The consumer loan segment consists primarily of stock-secured installment loans but also includes unsecured personal loans and overdraft lines of credit connected with customer deposit accounts.
Management uses a ten-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first nine categories are considered not criticized and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard with the added characteristic that collection or liquidation in full, based on current conditions and facts, is highly improbable. All loans greater than three months past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.
To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as severe delinquency, bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Company’s Asset Review Committee performs monthly reviews of all commercial relationships internally rated 6 (“Watch”) or worse. Confirmation of appropriate risk grading is performed by an external loan review company that semi-annually reviews and assesses loans within the portfolio. Generally, the external consultant reviews commercial relationships greater than $500 thousand and/or criticized relationships greater than $250 thousand. Detailed reviews, including plans for resolution, are performed on adversely classified loans on a monthly basis.
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The following tables present the classes of the loan portfolio by origination year summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful for loans subject to the Company’s internal risk rating system and by performing status for all other loans as of June 30, 2026 and September 30, 2025:
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Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The Bank was not accruing interest on any loans delinquent 90 days or greater as of June 30, 2026 and September 30, 2025. The following tables present the classes of the loan portfolio summarized by the aging categories of loans for the periods presented:
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There were two residential loans totaling $294 thousand that were in the process of foreclosure at June 30, 2026.
Management individually evaluates a loan when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract.
The following tables provide detail on the Company’s loans individually evaluated by collateral type in the Company’s allowance for credit losses with the associated allowance amount, if applicable, as of June 30, 2026 and September 30, 2025:
Allowance for Credit Losses
An ACL is maintained to absorb losses from the loan portfolio. Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process to make appropriate and timely adjustments to the ACL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ACL. As loans individually evaluated for impairment are promptly written down to their fair value, typically there is no portion of the ACL for individually evaluated loans.
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The following tables set forth the allocation of the Bank’s ACL by loan category at the dates indicated. The portion of the ACL allocated to each loan category does not represent the total available for future losses which may occur within the loan category as the total allowance for credit losses is a valuation allocation applicable to the entire loan portfolio. The Company generally charges off the collateral or discounted cash flow deficiency on all loans at 90 days past due and all loans rated substandard or worse that are 90 days past due.
The Company’s ACL increased $340 thousand to $8.9 million, or 1.00% of total loans receivable, during the nine months ended June 30, 2026. Growth in loans receivable during the nine months ended June 30, 2026 resulted in additional provisions for credit losses totaling $630 thousand and the Company recorded $290 thousand in net loan charge-offs. The Company’s allowance for on-balance sheet credit losses increased to $8.5 million at June 30, 2026 from $8.4 million at September 30, 2025 while its reserve for off-balance sheet commitments increased to $402 thousand at June 30, 2026 from $198 thousand at September 30, 2025.
During the nine months ended June 30, 2026, there were no loans modified to borrowers experiencing financial difficulty.
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NOTE K - DEPOSITS
A summary of deposits by type of account are summarized as follows:
Included in the Company’s deposits at June 30, 2026 were $61.0 million in brokered certificates of deposit and $22.7 million in certificates of deposit obtained through a national deposit listing service. Included in the Company’s deposits at September 30, 2025 were $57.3 million in brokered certificates of deposit and $20.4 million in certificates of deposit obtained through a national deposit listing service.
At June 30, 2026 and September 30, 2025, time deposits of $250 thousand or more totaled approximately $117.8 million and $94.8 million, respectively.
NOTE L - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company may use derivative financial instruments, such as interest rate swaps and interest rate floors and caps, as part of its interest rate risk management. Interest rate caps and floors are agreements whereby one party agrees to pay or receive a floating rate of interest on a notional principal amount for a predetermined period of time if certain market interest rate thresholds are met. The Company considers the credit risk inherent in these contracts to be negligible. As of June 30, 2026, the Company did not hold any interest rate floors or collars.
The Company is a party to interest rate derivatives that are not designated as hedging instruments. Under a program, the Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third-party financial institution, such that the Company minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties and was not significant to the total fair value. The Company was not required to pledge any collateral for its interest rate swaps with financial institutions at June 30, 2026 and September 30, 2025.
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The following table presents summary information regarding these derivatives as of June 30, 2026 and September 30, 2025.
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit and are summarized in the table below. Those instruments involve, to varying degrees, elements of credit and interest rate risk more than the amounts recognized in the Consolidated Balance Sheets.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
When used in this filing and in future filings by the Company with the SEC, in the Company’s press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases, “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected,” “believes”, or similar expressions are intended to identify “forward looking statements.” Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks previously disclosed by the Company in Item 1A of its Annual Report on Form 10-K as may be supplemented by Quarterly Reports on Form 10-Q filed with the SEC, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, international conflict, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services, levels of uninsured deposits, the imposition of tariffs or other domestic or international governmental policies and retaliatory responses, and with respect to the loans extended by the Company and real estate owned, the following: risks related to the economic environment in the market areas in which the Bank operates, particularly with respect to the real estate market in New Jersey; the risk that the value of the real estate securing these loans may decline in value; and the risk that significant expense may be incurred by the Company in connection with the resolution of these loans.
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The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and advises readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investing activities, and competitive and regulatory factors, could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.
Comparison of Financial Condition at June 30, 2026 and September 30, 2025
Total Assets.Total assets increased by $50.8 million, or 5.1%, to $1.048 billion at June 30, 2026 from $997.7 million at September 30, 2025. The increase was attributable to higher loans receivable, investment securities and cash and cash equivalents.
Total cash and cash equivalents. Total cash and cash equivalents increased by $4.4 million, or 61.9% to $11.5 million at June 30, 2026 from $7.1 million at September 30, 2025 resulting from deposit inflows that exceeded the growth in loans receivable during the nine months ended June 30, 2026. The Company’s cash and deposit balances at June 30, 2026 reflect seasonal deposit outflows from municipal accounts that historically return the following calendar quarter.
Investment securities. At June 30, 2026, investment securities totaled $104.3 million, reflecting an increase of $15.9 million, or 17.9%, from September 30, 2025. The increase resulted from purchases of mortgage-backed securities totaling $21.9 million, partially offset by repayments of mortgage-backed securities totaling $6.0 million during the nine months ended June 30, 2026. There were no credit losses recorded for the Company’s investment securities during the nine months ended June 30, 2026 and June 30, 2025.
Loans Receivable.Total loans receivable increased by $31.1 million, or 3.6%, to $890.0 million at June 30, 2026 from $858.9 million at September 30, 2025. The increase in total loans receivable during the nine months ended June 30, 2026 occurred in commercial real estate loans, which increased $56.6 million. Partially offsetting this increase were construction and land loans, which decreased $15.7 million, one-to four-family residential real estate loans (including home equity lines of credit), which decreased $8.4 million, commercial business loans, which decreased $1.2 million and other loans, which decreased $195 thousand.
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 June 30, 2026 and September 30, 2025:
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The Company obtains an appraisal of the real estate collateral securing a CRE loan prior to originating the loan. 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"). 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. The following table presents the ranges in the LTVs of our CRE loans at June 30, 2026 and September 30, 2025:
As of June 30, 2026 and September 30, 2025, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital were estimated at approximately 271% and 267%, respectively. 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. As of June 30, 2026 and September 30, 2025, we had no non-performing commercial real estate loans.
Total non-performing loans decreased by $92 thousand to $359 thousand at June 30, 2026 from $451 thousand at September 30, 2025. The ratio of non-performing loans to total loans decreased to 0.04% at June 30, 2026 from 0.05% at September 30, 2025. Total non-performing assets decreased by $2.3 million to $359 thousand at June 30, 2026 from $2.6 million at September 30, 2025. The ratio of non-performing assets to total assets decreased to 0.03% at June 30, 2026 from 0.26% at September 30, 2025.
Allowance for Credit Losses. Allowance for credit losses increased $340 thousand to $8.9 million during the nine months ended June 30, 2026. Growth in loans receivable during the nine months ended June 30, 2026 resulted in additional provisions for credit losses totaling $630 thousand and the Company recorded $290 thousand in net loan charge-offs. The Company’s allowance for on-balance sheet credit losses increased to $8.5 million at June 30, 2026 from $8.4 million at September 30, 2025 while its reserve for off-balance sheet commitments increased to $402 thousand at June 30, 2026 from $198 thousand at September 30, 2025.
Deposits.Total deposits increased by $39.6 million, or 4.9%, to $853.9 million at June 30, 2026. The inflow in deposits occurred in certificates of deposit (including brokered deposit and individual retirement accounts), which increased by $26.3 million, or 12.5%, to $236.2 million, non-interest-bearing checking accounts, which increased by $24.3 million, or 20.7%, to $141.5 million, and savings accounts, which increased by $1.7 million, or 3.1%, to $56.1 million. Partially offsetting these increases was a $9.7 million, or 5.9%, decrease in interest-bearing checking accounts to $154.1 million and a $3.0 million, or 1.1%, decrease in money market accounts to $265.9 million.
During the nine months ended June 30, 2026, the Company implemented a digital marketing campaign focused on the Bank's primary market area, targeting prospective customers with a competitive rate on short term certificates of deposit. The campaign produced positive results and was a contributor to the increase in deposits.
Stockholders’ Equity. Stockholders’ equity increased by $7.8 million, or 6.5%, to $126.6 million at June 30, 2026 from $118.8 million at September 30, 2025. The increase was attributable to the Company’s results from operations, partially offset by $0.28 per share in dividends paid per share and 25,825 shares repurchased during the nine months ended June 30, 2026 at an average price per share of $17.55. The Company’s book value per share increased to $19.61 at June 30, 2026 from $18.34 at September 30, 2025.
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Average Balance Sheets for the Three and Nine Months Ended June 30, 2026 and 2025
The following tables present certain information regarding the Company’s financial condition and net interest income for the three and nine months ended June 30, 2026 and 2025. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized 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.
(1) The average balance of loans receivable, net includes non-accrual loans.
(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.
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(6) Calculated as net interest income divided by average total interest-earning assets.
Comparison of Operating Results for the Three Months Ended June 30, 2026 and 2025
Net Income. Net income increased by $623 thousand, or 25.2%, to $3.1 million for the three months ended June 30, 2026 compared with net income of $2.5 million for the three months ended June 30, 2025. The increase was due to higher net interest income and other income, partially offset by higher provisions for credit loss, other expenses and income tax expense.
Net Interest and Dividend Income. Net interest and dividend income increased by $1.2 million, or 15.2%, to $9.4 million for the quarter ended June 30, 2026 from the quarter ended June 30, 2025. The increase was attributable to a 30-basis point increase in the Company’s net interest margin to 3.65% for the three months ended June 30, 2026 from 3.35% for the three months ended June 30, 2025, as well as a $57.0 million increase in the average balance of interest-earning assets between the periods.
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Interest and Dividend Income.Interest and dividend income increased by $1.3 million, or 9.0%, to $15.3 million for the three months ended June 30, 2026 compared with $14.0 million for the three months ended June 30, 2025. The increase was attributable to a 17-basis point increase in the yield on interest-earning assets to 5.91% for the three months ended June 30, 2026 from 5.74% for the three months ended June 30, 2025, as well as a $51.8 million, or 6.3%, increase in the average balance of net loans receivable between the periods.
The average balance of loans receivable, net of allowance for credit losses, increased by $51.8 million, or 6.3%, to $874.3 million during the three months ended June 30, 2026 from $822.5 million for the three months ended June 30, 2025, while the yield on loans receivable increased by 20 basis points to 6.35% for the three months ended June 30, 2026 from 6.15% for the three months ended June 30, 2025. Contributing to the increase in yield on loans receivable are commercial term loan rates adjusting on their five-year anniversary to market rates that are significantly higher than they were five years ago.
Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, decreased by $12 thousand, or 0.9%, to $1.3 million for the three months ended June 30, 2026. The average balance of investment securities and interest-earning deposits increased by $4.4 million, or 2.9%, to $157.6 million for the three months ended June 30, 2026 from $153.2 million for the three months ended June 30, 2025, while the average yield on such assets decreased by seven basis points to 3.43% for the three months ended June 30, 2026 from 3.50% for the three months ended June 30, 2025.
Interest Expense.Interest expense increased by $23 thousand, or 0.4%, to $5.8 million for the three months ended June 30, 2026 from $5.8 million for the three months ended June 30, 2025. The average balance of interest-bearing liabilities increased by $24.3 million, or 3.1%, to $796.4 million for the three months ended June 30, 2026 from $772.1 million for the three months ended June 30, 2025, while the average cost on such interest-bearing liabilities decreased by eight basis points to 2.94% for the three months ended June 30, 2026 compared with 3.02% for the three months ended June 30, 2025.
The average balance of interest-bearing deposits increased $9.3 million, or 1.3%, to $747.4 million for the three months ended June 30, 2026 from $738.1 million for the three months ended June 30, 2025. The average cost of such deposits decreased nine basis points to 2.92% from 3.01%, and the interest paid on interest-bearing deposits decreased $116 thousand to $5.4 million for the three months ended June 30, 2026 compared with $5.5 million for the three months ended June 30, 2025.
Interest expense on borrowings increased by $139 thousand, or 53.1%, to $401 thousand for the three months ended June 30, 2026 from $262 thousand for the three months ended June 30, 2025. The average balance of borrowings increased by $15.0 million, or 44.1%, to $49.0 million for the three months ended June 30, 2026 compared with $34.0 million for the three months ended June 30, 2025 while the average cost of borrowings increased by 20 basis points to 3.28% from 3.08%, respectively.
Provision for Credit Losses.The net provision for credit losses totaled $351 thousand for the three months ended June 30, 2026 compared with a net provision for credit losses totaling $101 thousand for the three months ended June 30, 2025. The increase resulted from growth in commercial real estate loans, partially offset by lower one-to-four family mortgage loans, lower construction loan commitments and improving economic data used to determine the Bank’s expected credit losses. The Company recorded $295 thousand in net loan charge-offs during the three months ended June 30, 2026 compared with $3 thousand in net loan recoveries during the three months ended June 30, 2025. During the three months ended June 30, 2026 the Company recorded a $300 thousand charge-off related to one construction loan relationship.
Other Income. Other income increased by $180 thousand, or 28.3%, to $816 thousand during the three months ended June 30, 2026 compared with $636 thousand for the three months ended June 30, 2025. The increase was primarily due to higher gains on the sale of SBA loans, partially offset by lower service charge and interest rate swap fee income.
Other Expenses. Other expenses increased by $292 thousand, or 5.6%, to $5.5 million during the three months ended June 30, 2026 compared with $5.2 million for the three months ended June 30, 2025. The increase was primarily attributable to higher compensation and benefit expense, which increased $255 thousand, or 8.2%, to $3.4 million, due to higher medical benefits and incentive accruals as well as annual merit increases.
Other significant increases within other expenses affected occupancy expenses and data processing expenses. Occupancy expenses increased by $37 thousand, or 4.6%, to $837 thousand for the three months ended June 30, 2026 from higher one-time rental payments and termination costs related to the relocation of the Bank’s Edison branch. Data processing expenses increased by $37 thousand, or 30.8%, to $157 thousand for the three months ended June 30, 2026 from higher flex credits applied against service bureau billings for the prior year period. Offsetting these increases was a $60 thousand, or 30.9%, decrease in professional fees from lower legal fees and the recovery of $14 thousand in legal fees from the payoff of a loan previously in foreclosure.
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Income Tax Expense.The Company recorded income tax expense of $1.3 million on pre-tax income of $4.4 million for the three months ended June 30, 2026, compared with $1.0 million on pre-tax income of $3.5 million for the three months ended June 30, 2025. The increase in income tax expense was driven by higher pre-tax income during the three months ended June 30, 2026. The Company’s effective tax rate for the three months ended June 30, 2026 was 28.9% compared with 29.0% for the three months ended June 30, 2025.
Comparison of Operating Results for the Nine Months Ended June 30, 2026 and 2025
Net Income. Net income increased by $2.1 million, or 28.0%, to $9.3 million during the nine months period ended June 30, 2026 compared with $7.2 million for the nine months period ended June 30, 2025. The increase was due to higher net interest income, partially offset by higher provisions for credit loss, lower other income, higher other expenses and higher income tax expense.
Net Interest and Dividend Income. Net interest and dividend income increased by $4.0 million, or 17.1%, to $27.5 million for the nine months ended June 30, 2026 from $23.5 million for the nine months ended June 30, 2025. The increase was attributable to a 33-basis point increase in the Company’s net interest margin to 3.63% for the nine months ended June 30, 2026 from 3.30% for the nine months ended June 30, 2025 as well as a $58.6 million, or 6.2%, increase in the average balance of interest-earning assets between the periods.
Interest and Dividend Income.Interest and dividend income increased by $4.4 million, or 10.8%, to $44.8 million for the nine months ended June 30, 2026 from $40.4 million for the nine months ended June 30, 2025. The increase was attributable to a 25-basis point increase in the yield on interest-earning assets to 5.92% for the nine months ended June 30, 2026 from 5.67% for the nine months ended June 30, 2025, as well as a $62.5 million, or 7.8%, increase in the average balance of net loans receivable.
The average balance of loans receivable, net of allowance for credit losses, increased by $62.5 million, or 7.8%, to $866.4 million during the nine months ended June 30, 2026 from $803.8 million during the nine months ended June 30, 2025, while the yield on loans receivable increased 23 basis points to 6.32% for the nine months ended June 30, 2026 from 6.09% for the nine months ended June 30, 2025. The higher average balance and yield accounted for a $4.4 million, or 11.9%, increase in loan interest income between periods.
Interest earned on investment securities, including interest-earning deposits and excluding FHLBNY stock, decreased by $49 thousand, or 1.3%, to $3.6 million for the nine months ended June 30, 2026 from $3.7 million for the nine months ended June 30, 2025. The average balance of investment securities and interest-earning deposits decreased by $4.8 million, or 3.2%, to $142.1 million for the nine months ended June 30, 2026 from $146.9 million for the nine months ended June 30, 2025. Partially offsetting this decrease was a six basis point increase in the yield of such assets to 3.40% for the nine months ended June 30, 2026 from 3.34% for the nine months ended June 30, 2025.
Interest Expense.Interest expense increased by $335 thousand, or 2.0%, to $17.3 million for the nine months ended June 30, 2026 compared with $16.9 million for the nine months ended June 30, 2025. This increase was attributable to a higher average balance of interest-bearing liabilities, which increased by $38.0 million, or 5.1%, to $784.9 million, but was partially offset by a nine-basis point decrease in the cost of such liabilities to 2.94% for the nine months ended June 30, 2026 compared with 3.03% for the nine months ended June 30, 2025.
The average balance of interest-bearing deposits increased by $20.8 million, or 2.9%, to $735.8 million for the nine months ended June 30, 2026 from $715.0 million for the nine months ended June 30, 2025, while the average cost of such deposits decreased 11 basis points to 2.92% from 3.03%. As a result, interest paid on interest-bearing deposits decreased by $176 thousand, or 1.1%, to $16.0 million for the nine months ended June 30, 2026 from $16.2 million for the nine months ended June 30, 2025.
Interest expense on borrowings increased by $511 thousand, or 73.7%, to $1.2 million for the nine months ended June 30, 2026 from $693 thousand for the nine months ended June 30, 2025. The cost of borrowings increased 38 basis points to 3.28% for the nine months ended June 30, 2026 compared with 2.90% for the nine months ended June 30, 2025, while the average balance of borrowings increased by $17.2 million, or 53.9%, to $49.1 million for the nine months ended June 30, 2026 from $31.9 million for the nine months ended June 30, 2025.
Provision for Credit Losses.The provision for credit losses totaled $630 thousand for the nine months ended June 30, 2026 compared with $172 thousand for the nine months ended June 30, 2025. The higher provision for credit losses resulted from growth in commercial real estate loans, partially offset by lower one-to-four family mortgage loans, lower construction loan commitments and improving economic data used to determine the Bank’s expected credit losses. The Company recorded $290 thousand in net loan charge-offs during the nine months ended June 30, 2026 compared with $111 thousand in net loan recoveries during the nine months ended June 30, 2025.
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Other Income. Other income decreased by $411 thousand, or 14.4%, to $2.4 million during the nine months ended June 30, 2026 compared with $2.9 million for the nine months ended June 30, 2025. The decrease was primarily due to lower gains from the sale of OREO, as there were no gains during the nine months ended June 30, 2026 compared with $229 thousand for the prior year period.
The Company also experienced a $166 thousand, or 14.5%, reduction in its service charge income. This decrease resulted primarily from lower loan late charge income, which decreased by $88 thousand, lower loan servicing fee income, which decreased by $50 thousand, and lower commercial loan prepayment charges, which decreased by $11 thousand. These types of income vary from period to period depending on the ongoing performance of loans
Other Expenses. Other expenses increased by $383 thousand, or 2.4%, to $16.4 million during the nine months ended June 30, 2026 from $16.0 million during the nine months ended June 30, 2025. The increase was primarily attributable to higher compensation and benefit expense, which increased by $480 thousand, or 5.1%, to $9.9 million, due to higher medical benefits and incentive accruals as well as annual merit increases. Also contributing to the increase were higher data processing expenses, which increased by $143 thousand, or 42.9%, to $476 thousand, from higher flex credits applied against service bureau billings for the prior year period.
Partially offsetting the increases were lower occupancy, professional fees and other expenses. Occupancy expenses decreased by $141 thousand, or 5.3%, to $2.5 million for the nine months ended June 30, 2026 due to lease termination expenses related to the closure of the Bank’s Bridgewater office in the prior year period. Professional fees decreased by $111 thousand, or 18.8%, from lower legal fees and the recovery of $14 thousand in legal fees from the payoff of a loan previously in foreclosure. Other expenses decreased by $52 thousand, or 2.9%, from various expenses related to the closure and relocation of the Bank’s Bridgewater office to Martinsville in the prior year period.
Income Tax Expense.The Company recorded tax expense of $3.6 million on pre-tax income of $12.9 million for the nine months ended June 30, 2026, compared to $2.9 million on pre-tax income of $10.1 million for the nine months ended June 30, 2025. The increase in income tax expense was driven by higher pre-tax income during the nine months ended June 30, 2026. The Company’s effective tax rate for the nine months ended June 30, 2026 was 28.2% compared with 28.5% for the nine months ended June 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
The Company’s liquidity is a measure of its ability to fund loans, pay withdrawals of deposits, and other cash outflows in an efficient, cost-effective manner. The Company’s short-term sources of liquidity include maturity, repayment and sales of assets, excess cash and cash equivalents, new deposits, other borrowings, and new advances from the FHLBNY. Based on eligible loan collateral pledged to the FHLBNY at June 30, 2026, we had an aggregate net borrowing capacity of $158.0 million. We also had the ability to borrow $109.4 million from the FRBNY at June 30, 2026 compared with $109.6 million at September 30, 2025. The Company did not have any borrowings outstanding with the FRBNY at June 30, 2026 and September 30, 2025. There has been no material adverse change during the nine months ended June 30, 2026 in the ability of the Company and its subsidiaries to fund their operations.
At June 30, 2026, the Company had commitments outstanding under letters of credit totaling $920 thousand, commitments to originate loans totaling $34.1 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit totaling $89.5 million. There has been no material change during the nine months ended June 30, 2026 in any of the Company’s other contractual obligations or commitments to make future payments.
Capital Requirements
At June 30, 2026, the Bank’s Tier 1 capital as a percentage of the Bank’s total assets was 11.29%, and total qualifying capital as a percentage of risk-weighted assets was 15.97%.
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Item 3- Quantitative and Qualitative Disclosures about Market Risk
Not applicable to smaller reporting companies.
Item 4 – Controls and Procedures
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.
There has been no change in the Company's internal control over financial reporting during the nine months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
None.
There were no material changes to the risk factors relevant to the Company’s operations as described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025 filed with the U.S. Securities and Exchange Commission on December 19, 2025.
The following table reports information regarding repurchases of our common stock during the current quarter ended June 30, 2026.
None
Not applicable.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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