Magyar Bancorp(MGYR) - 2025 Q3 - Quarterly Results

Company Announcement & Highlights Financial Performance Overview Magyar Bancorp reported a significant increase in net income and basic and diluted earnings per share for both the three and nine months ended June 30, 2025, with the Board of Directors also declaring an increased quarterly cash dividend Net Income and EPS Overview | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | Change (%) | | :------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------ | :------------------------------ | :--------- | | Net Income | $2.5 million | $1.7 million | 46% | $7.2 million | $5.2 million | 38.5% | | Basic & Diluted EPS | $0.40 | $0.27 | 48.1% | $1.16 | $0.82 | 41.5% | - The Company's Board of Directors declared an increase in its quarterly cash dividend to $0.08 per share, payable on August 21, 2025[4] CEO Commentary President and CEO John Fitzgerald highlighted the success of the Community Banking strategy, attributing strong financial results to solid loan growth and prudent balance sheet management, while also noting the company's recognition for consistent earnings growth - The Community Banking strategy continues to produce strong financial results, driven by solid loan growth and prudent balance sheet management[5] - Net income increased 46% year over year, and net interest margin expanded on a linked quarter basis[5] - Magyar Bancorp's stock price increased over 17% during the quarter and was included in Keefe Bruyette & Woods' 2025 Honor Roll for consistent earnings growth over the past decade[5] Results of Operations - Three Months Ended June 30, 2025 Net Income and Key Drivers Net income for the three months ended June 30, 2025, increased by $779 thousand, or 46.1%, to $2.5 million, primarily driven by higher net interest income and other income, partially offset by increased provisions for credit loss, other expenses, and income tax expense Net Income (QoQ) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Income | $2.5 million | $1.7 million | $779K | 46.1% | - The increase in net income was primarily due to higher net interest income and other income, partially offset by higher provisions for credit loss, other expenses, and income tax expense[6] Net Interest and Dividend Income Net interest and dividend income rose by 20.5% to $8.2 million, driven by a 33-basis point increase in net interest margin to 3.35% and a $78.4 million increase in average interest-earning assets, with interest income increasing due to higher yields and loan balances, while interest expense rose despite a decrease in the cost of liabilities Net Interest and Dividend Income (QoQ) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Interest & Dividend Income | $8.2 million | $6.8 million | $1.4 million | 20.5% | | Net Interest Margin | 3.35% | 3.02% | +33 bps | | | Interest & Dividend Income | $14.0 million | $12.3 million | $1.7 million | 13.5% | | Interest Expense | $5.8 million | $5.5 million | $267K | 4.8% | - The increase in net interest income was attributable to a 33-basis point increase in net interest margin and a $78.4 million increase in the average balance of interest-earning assets[7] - Interest expense increased due to an $85.5 million (12.4%) increase in the average balance of interest-bearing liabilities, partially offset by a 22-basis point decrease in the cost of such liabilities to 3.02%[9] Provision for Credit Losses The Company recorded a net provision for credit losses of $101 thousand for the three months ended June 30, 2025, a shift from a net recovery in the prior year, primarily due to growth in commercial real estate, residential mortgage, and commercial business loans Provision for Credit Losses (QoQ) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Net Provision for Credit Losses | $101 thousand | ($54 thousand) | | Net Loan Recoveries | $3 thousand | $1 thousand | - Higher provision for credit losses resulted from growth in commercial real estate, residential mortgage, and commercial business loans, partially offset by lower construction loan balances[10] Other Income Other income increased significantly by 55.5% to $636 thousand, mainly driven by higher income from bank-owned life insurance due to policy restructuring and increased service fee income from commercial loan prepayment and late charges Other Income (QoQ) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Other Income | $636 thousand | $409 thousand | $227K | 55.5% | | BOLI Income | $172 thousand | $93 thousand | $79K | 84.9% | | Service Fees | $340 thousand | $282 thousand | $58K | 20.6% | - The increase in other income was primarily due to higher income on bank-owned life insurance (up 84.9%) resulting from policy restructuring and higher service fee income (up 20.6%) from commercial loan prepayment and late charges[11] Operating Expenses Other expenses increased by 3.6% to $5.2 million, primarily due to higher compensation and benefit expenses, which rose by 7.3% to $3.1 million, driven by increased medical benefits, incentive accruals, and annual merit increases Other Expenses (QoQ) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Other Expenses | $5.2 million | $5.0 million | $184K | 3.6% | | Compensation & Benefit Expense | $3.1 million | $2.9 million | $211K | 7.3% | - The increase in other expenses was primarily attributable to higher compensation and benefit expense due to increased medical benefits, incentive accruals, and annual merit increases[12] Income Tax Expense Income tax expense increased to $1.0 million on higher pre-tax income of $3.5 million, resulting in an effective tax rate of 28.9% for the quarter, up from 22.9% in the prior year, partly due to changes in deferred tax items Income Tax Expense (QoQ) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | | Income Tax Expense | $1.0 million | $501 thousand | | Pre-tax Income | $3.5 million | $2.2 million | | Effective Tax Rate | 28.9% | 22.9% | - The increase in income tax expense was driven by higher pre-tax income and changes in deferred tax items that lowered the Company's tax expense in the prior year[13] Results of Operations - Nine Months Ended June 30, 2025 Net Income and Key Drivers Net income for the nine months ended June 30, 2025, increased by $2.0 million, or 38.1%, to $7.2 million, primarily due to higher net interest income, lower provisions for credit loss, and increased other income, partially offset by higher other expenses and income tax expense Net Income (YoY 9M) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Income | $7.2 million | $5.2 million | $2.0 million | 38.1% | - The increase in net income was due to higher net interest income, lower provisions for credit loss, and higher other income, partially offset by higher other expenses and income tax expense[14] Net Interest and Dividend Income Net interest and dividend income increased by 12.2% to $23.5 million for the nine-month period, driven by a $67.0 million increase in average interest-earning assets and a 14-basis point expansion in net interest margin to 3.30%, with interest income growing due to higher asset yields and increased average net loans receivable, while interest expense rose despite a decrease in the average cost of interest-bearing liabilities Net Interest and Dividend Income (YoY 9M) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Net Interest & Dividend Income | $23.5 million | $21.0 million | $2.5 million | 12.2% | | Net Interest Margin | 3.30% | 3.16% | +14 bps | | | Interest & Dividend Income | $40.4 million | $35.8 million | $4.6 million | 12.9% | | Interest Expense | $16.9 million | $14.8 million | $2.1 million | 13.9% | - The increase in net interest income was attributable to a $67.0 million (7.6%) increase in the average balance of interest-earning assets and a 14-basis point increase in net interest margin[15] - Interest expense increased due to a $100.2 million (15.5%) increase in the average balance of interest-bearing liabilities, despite a four-basis point decrease in the average cost of such liabilities[17] Provision for Credit Losses The provision for credit losses decreased to $172 thousand for the nine months ended June 30, 2025, from $441 thousand in the prior year, primarily due to lower construction loan commitments, which offset growth in other loan categories Provision for Credit Losses (YoY 9M) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | | Provision for Credit Losses | $172 thousand | $441 thousand | | Net Loan Recoveries | $111 thousand | $67 thousand | - The lower provision for credit losses resulted from lower construction loan commitments, which more than offset growth in commercial real estate, residential mortgage, and commercial business loans[18] Other Income Other income significantly increased by 74.5% to $2.9 million for the nine-month period, primarily driven by higher gains from the sale of Small Business Administration 7(a) loans, as well as increased gains from OREO sales, commercial loan prepayment charges, late charges, and bank-owned life insurance income Other Income (YoY 9M) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Other Income | $2.9 million | $1.6 million | $1.3 million | 74.5% | | Gains from SBA 7(a) loan sales | $848 thousand | $342 thousand | $506K | 147.9% | - The increase in other income was primarily due to higher gains from the sale of Small Business Administration 7(a) loans, and also higher gains from OREO sales, commercial loan prepayment charges, late charges, and bank-owned life insurance policies[19] Operating Expenses Other expenses increased by 5.7% to $16.0 million for the nine months, mainly due to higher compensation and benefit expenses (up 7.6% to $9.4 million) from increased medical benefits, incentive accruals, and merit increases, with occupancy expense also rising due to lease termination expenses from an office closure Other Expenses (YoY 9M) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change ($) | Change (%) | | :------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Other Expenses | $16.0 million | $15.2 million | $863K | 5.7% | | Compensation & Benefit Expense | $9.4 million | $8.7 million | $663K | 7.6% | | Occupancy Expense | $2.6 million | $2.4 million | $222K | 9.2% | - The increase in other expenses was primarily attributable to higher compensation and benefit expense and increased occupancy expense due to lease termination expenses related to an office closure[20] Income Tax Expense Income tax expense for the nine months increased to $2.9 million on pre-tax income of $10.1 million, resulting in an effective tax rate of 28.6%, up from 24.8% in the prior year Income Tax Expense (YoY 9M) | Metric | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :----------------- | :--------------------------- | :--------------------------- | | Income Tax Expense | $2.9 million | $1.7 million | | Pre-tax Income | $10.1 million | $7.0 million | | Effective Tax Rate | 28.6% | 24.8% | Balance Sheet Analysis Assets Total assets increased by 3.7% to $987.5 million at June 30, 2025, primarily driven by higher loans receivable, partially offset by decreases in cash and investment securities, with cash balances decreasing due to deployment into loans and seasonal municipal deposit outflows Asset Changes (vs. Sep 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------ | :----------------- | :--------- | :--------- | | Total Assets | $987.5 million | $951.9 million | $35.6 million | 3.7% | | Cash & Interest-Earning Deposits | $7.1 million | $25.6 million | ($18.5 million) | -72.5% | | Investment Securities | $91.1 million | $95.4 million | ($4.3 million) | -4.5% | - The increase in total assets was attributable to higher loans receivable, partially offset by lower cash and investment securities[22] - Cash and interest-earning deposits decreased due to deployment into loans receivable and seasonal municipal deposit outflows[23] Loans and Asset Quality Total loans receivable increased by 8.2% to $845.4 million, primarily in commercial real estate, residential real estate, and construction loans, while non-performing loans increased significantly, raising the ratio of non-performing loans to total loans to 0.11%, and the allowance for credit losses also increased to $8.3 million Loan and Asset Quality Changes (vs. Sep 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :------------ | :----------------- | :--------- | :--------- | | Total Loans Receivable | $845.4 million | $781.2 million | $64.2 million | 8.2% | | Non-Performing Loans | $920 thousand | $232 thousand | $688K | 296.6% | | Non-Performing Loans to Total Loans | 0.11% | 0.03% | +0.08% | | | Allowance for Credit Losses | $8.3 million | $8.0 million | $283K | 3.5% | | Allowance for Credit Losses to Total Loans | 0.98% | 1.02% | -0.04% | | - Total loans receivable increased primarily in commercial real estate loans ($62.7 million), one-to four-family residential real estate loans ($3.7 million), and construction and land loans ($3.2 million)[25] - Non-performing loans increased by $688 thousand, leading to an increase in the ratio of non-performing loans to total loans from 0.03% to 0.11%[26] Liabilities and Equity Total deposits increased by 2.9% to $820.0 million, driven by growth in money market accounts, certificates of deposit, and savings accounts, partially offset by decreases in checking accounts, while book value per share increased to $18.03, reflecting operational results despite dividend payments and share repurchases Liabilities and Equity Changes (vs. Sep 30, 2024) | Metric | June 30, 2025 | September 30, 2024 | Change ($) | Change (%) | | :------------------------- | :------------ | :----------------- | :--------- | :--------- | | Total Deposits | $820.0 million | $796.7 million | $23.3 million | 2.9% | | Money Market Accounts | $330.9 million | $304.6 million | $26.3 million | 8.6% | | Certificates of Deposit | $180.5 million | $159.6 million | $20.9 million | 13.1% | | Non-Interest Bearing Checking | $116.3 million | $132.8 million | ($16.5 million) | -12.4% | | Book Value Per Share | $18.03 | $16.98 | $1.05 | 6.2% | - Total deposits increased, with significant inflows in money market accounts (up 8.6%) and certificates of deposit (up 13.1%), partially offset by decreases in non-interest bearing and interest-bearing checking accounts[28] - Book value per share increased due to the Company's results from operations, partially offset by $0.21 in dividends paid and 60,410 shares repurchased[29] Company Information About Magyar Bancorp Magyar Bancorp is the parent company of Magyar Bank, a community bank based in New Brunswick, New Jersey, serving Central New Jersey families and businesses since 1922, operating seven branch locations - Magyar Bancorp is the parent company of Magyar Bank, a community bank headquartered in New Brunswick, New Jersey[30] - Magyar Bank has been serving Central New Jersey since 1922 and operates seven branch locations[30] Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, highlighting that such statements are subject to numerous risks and uncertainties, including general economic conditions, interest rate changes, regulatory considerations, and market acceptance, with the Company cautioning readers not to place undue reliance on these statements and disclaiming any obligation to update them - The press release contains forward-looking statements subject to numerous risks and uncertainties, including general economic conditions, changes in interest rates, regulatory considerations, competition, and technological developments[31] - The Company cautions readers not to place undue reliance on forward-looking statements and disclaims any obligation to publicly release revisions to reflect future events or circumstances[31] Selected Financial Data Income Statement Data and Ratios This section provides a detailed breakdown of the Company's income statement data and key financial ratios for the three and nine months ended June 30, 2025, compared to the same periods in 2024, including net income, EPS, return on assets, return on equity, and net interest margin Income Statement Data and Ratios | Metric (in thousands, except per-share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Interest and dividend income | $13,988 | $12,327 | $40,417 | $35,805 | | Interest expense | $5,810 | $5,543 | $16,919 | $14,853 | | Net interest and dividend income | $8,178 | $6,784 | $23,498 | $20,952 | | Provision for credit losses | $101 | ($54) | $172 | $441 | | Other income | $636 | $409 | $2,860 | $1,639 | | Other expense | $5,239 | $5,055 | $16,047 | $15,184 | | Income before income tax expense | $3,474 | $2,192 | $10,139 | $6,966 | | Income tax expense | $1,004 | $501 | $2,904 | $1,726 | | Net income | $2,470 | $1,691 | $7,235 | $5,240 | | Net income per share-basic | $0.40 | $0.27 | $1.16 | $0.82 | | Net income per share-diluted | $0.40 | $0.27 | $1.16 | $0.82 | | Book value per share, at period end | $18.03 | $16.55 | $18.03 | $16.55 | | Return on average assets (annualized) | 0.96% | 0.71% | 0.96% | 0.75% | | Return on average equity (annualized) | 8.84% | 6.41% | 8.25% | 6.37% | | Net interest margin (annualized) | 3.35% | 3.02% | 3.30% | 3.16% | Balance Sheet and Asset Quality Data This section presents key balance sheet figures and asset quality metrics as of June 30, 2025, compared to September 30, 2024, including total assets, loans, deposits, borrowings, shareholders' equity, non-performing loans, and related ratios Balance Sheet and Asset Quality Data | Metric (in thousands) | June 30, 2025 | September 30, 2024 | | :-------------------------------------------------- | :------------ | :----------------- | | Assets | $987,488 | $951,918 | | Total loans receivable | $843,991 | $780,162 | | Allowance for credit losses - loans | ($8,059) | ($7,548) | | Investment securities - available for sale | $21,604 | $15,616 | | Investment securities - held to maturity | $69,520 | $79,816 | | Deposits | $819,962 | $796,674 | | Borrowings | $36,054 | $28,568 | | Shareholders' Equity | $116,323 | $110,548 | | Non-performing loans | $920 | $232 | | Other real estate owned | $2,167 | $3,725 | | Total non-performing assets | $3,087 | $3,957 | | Allowance for credit losses to total loans receivable | 0.95% | 0.97% | | Non-performing loans to total loans receivable | 0.11% | 0.03% | | Non-performing assets to total assets | 0.31% | 0.42% | | Non-performing assets to total equity | 2.65% | 3.58% |