Magyar Bancorp(MGYR) - 2025 Q3 - Quarterly Report

Filing Information This section details the registrant, Magyar Bancorp, Inc., and its Form 10-Q filing status for the quarter ended June 30, 2025 Registrant Details This section provides the basic identification details of the registrant, Magyar Bancorp, Inc., for its quarterly report on Form 10-Q for the period ended June 30, 2025 Registrant and Filing Information | Detail | Value | | :--- | :--- | | Registrant Name | Magyar Bancorp, Inc. | | Filing Type | Form 10-Q | | Quarterly Period Ended | June 30, 2025 | | Commission File Number | 000-51726 | | Trading Symbol | MGYR | | Exchange | The NASDAQ Stock Market, LLC | | Filer Status | Non-accelerated filer, Smaller reporting company | | Shares Outstanding (August 1, 2025) | 6,450,948 | PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, and cash flows, with explanatory notes Consolidated Balance Sheets Presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Highlights (In Thousands) | Item | June 30, 2025 | September 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Assets | | | | | | Total cash and cash equivalents | $7,051 | $25,596 | $(18,545) | -72.45% | | Investment securities - available for sale | $21,604 | $15,616 | $5,988 | 38.35% | | Investment securities - held to maturity | $69,520 | $79,816 | $(10,296) | -12.90% | | Loans receivable | $843,991 | $780,162 | $63,829 | 8.18% | | Allowance for credit losses-loans | $(8,059) | $(7,548) | $(511) | 6.77% | | Total assets | $987,488 | $951,918 | $35,570 | 3.74% | | Liabilities | | | | | | Deposits | $819,962 | $796,674 | $23,288 | 2.92% | | Borrowings | $36,054 | $28,568 | $7,486 | 26.20% | | Total liabilities | $871,165 | $841,370 | $29,795 | 3.54% | | Stockholders' Equity | | | | | | Retained earnings | $64,558 | $58,644 | $5,914 | 10.08% | | Total stockholders' equity | $116,323 | $110,548 | $5,775 | 5.22% | Consolidated Statements of Income Presents the company's financial performance, detailing revenues, expenses, and net income over specific reporting periods Consolidated Statements of Income Highlights (In Thousands, Except Per Share Data) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | $13,988 | $12,327 | $1,661 | 13.48% | $40,417 | $35,805 | $4,612 | 12.88% | | Total interest expense | $5,810 | $5,543 | $267 | 4.82% | $16,919 | $14,853 | $2,066 | 13.91% | | Net interest and dividend income | $8,178 | $6,784 | $1,394 | 20.55% | $23,498 | $20,952 | $2,546 | 12.15% | | Total provision for (recovery of) credit losses | $101 | $(54) | $155 | -287.04% | $172 | $441 | $(269) | -60.99% | | Total other income | $636 | $409 | $227 | 55.50% | $2,860 | $1,639 | $1,221 | 74.50% | | Total other expenses | $5,239 | $5,055 | $184 | 3.64% | $16,047 | $15,184 | $863 | 5.68% | | Income before income tax expense | $3,474 | $2,192 | $1,282 | 58.48% | $10,139 | $6,966 | $3,173 | 45.55% | | Income tax expense | $1,004 | $501 | $503 | 100.40% | $2,904 | $1,726 | $1,178 | 68.25% | | Net income | $2,470 | $1,691 | $779 | 46.07% | $7,235 | $5,240 | $1,995 | 38.07% | | Earnings per share - basic | $0.40 | $0.27 | $0.13 | 48.15% | $1.16 | $0.82 | $0.34 | 41.46% | | Earnings per share - diluted | $0.40 | $0.27 | $0.13 | 48.15% | $1.16 | $0.82 | $0.34 | 41.46% | Consolidated Statements of Comprehensive Income Presents the company's comprehensive income, including net income and other comprehensive income components, for specific reporting periods Consolidated Statements of Comprehensive Income Highlights (In Thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | $2,470 | $1,691 | $779 | 46.07% | $7,235 | $5,240 | $1,995 | 38.07% | | Unrealized (loss) gain on securities available for sale | $115 | $(14) | $129 | -921.43% | $141 | $487 | $(346) | -71.05% | | Deferred income tax effect | $(28) | $4 | $(32) | -800.00% | $(35) | $(120) | $85 | 70.83% | | Total other comprehensive income (loss) | $87 | $(10) | $97 | -970.00% | $106 | $367 | $(261) | -71.12% | | Total comprehensive income | $2,557 | $1,681 | $876 | 52.11% | $7,341 | $5,607 | $1,734 | 30.93% | Consolidated Statements of Changes in Stockholders' Equity Details changes in the company's equity accounts, including common stock, retained earnings, and accumulated other comprehensive loss Changes in Stockholders' Equity (In Thousands) | Item | Balance, Sep 30, 2024 | Balance, Jun 30, 2025 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Common Stock Par Value | $71 | $71 | $0 | 0.00% | | Additional Paid-In Capital | $63,085 | $63,607 | $522 | 0.83% | | Treasury Stock | $(7,364) | $(8,209) | $(845) | 11.47% | | Unearned ESOP Shares | $(2,972) | $(2,894) | $78 | -2.62% | | Retained Earnings | $58,644 | $64,558 | $5,914 | 10.08% | | Accumulated Other Comprehensive Loss | $(916) | $(810) | $106 | -11.57% | | Total Stockholders' Equity | $110,548 | $116,323 | $5,775 | 5.22% | - Net income contributed $7,235 thousand to retained earnings for the nine months ended June 30, 2025, while dividends paid on common stock totaled $1,322 thousand ($0.21 per share) and treasury stock purchases amounted to $869 thousand for 60,410 shares[106][18] Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities for specific reporting periods Consolidated Statements of Cash Flows Highlights (Nine Months Ended June 30, In Thousands) | Activity | 2025 | 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $7,543 | $5,463 | $2,080 | 38.07% | | Net cash used in investing activities | $(55,001) | $(60,918) | $5,917 | -9.71% | | Net cash provided by financing activities | $28,913 | $31,970 | $(3,057) | -9.56% | | Net decrease in cash and cash equivalents | $(18,545) | $(23,485) | $4,940 | -21.03% | | Cash and cash equivalents, end of period | $7,051 | $49,047 | $(41,996) | -85.62% | - The significant decrease in cash and cash equivalents was primarily due to net cash used in investing activities, driven by a net increase in loans receivable ($63.49 million) and purchases of investment securities, partially offset by proceeds from maturities and repayments of investment securities and redemption of BOLI[22] Notes to Consolidated Financial Statements Provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies and specific financial instruments Basis of Presentation Outlines the basis for preparing consolidated financial statements, including GAAP conformity and management's key estimates - The consolidated financial statements include Magyar Bancorp, Inc., its wholly-owned subsidiary Magyar Bank, and the Bank's wholly-owned subsidiaries. They are prepared on an accrual basis in conformity with US GAAP, reflecting management's estimates and assumptions, particularly for allowance for credit losses, available-for-sale securities valuation, OREO valuation, and deferred income tax assets[24][26] Recent Accounting Pronouncements Discusses the impact of recently issued accounting standards on the company's financial reporting - ASU 2023-07, 'Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,' effective for fiscal years beginning after December 15, 2023, requires detailed segment expense disclosures. The Company is analyzing its impact and plans to incorporate additional disclosures upon adoption[29] Contingencies Addresses potential future liabilities or gains arising from past events, such as litigation - Management believes that the resolution of routine litigation arising in the normal course of business would not have a material adverse effect on the Company's consolidated financial position or results of operations[30] Earnings Per Share Details the calculation of basic and diluted earnings per share for common stockholders Earnings Per Share (3 & 9 Months Ended June 30) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Income applicable to common shares (in thousands) | $2,470 | $1,691 | $7,235 | $5,240 | | Weighted average shares outstanding - basic | 6,217,639 | 6,336,702 | 6,224,253 | 6,358,581 | | Weighted average shares outstanding - diluted | 6,232,247 | 6,336,702 | 6,232,173 | 6,358,581 | | Earnings per share - basic | $0.40 | $0.27 | $1.16 | $0.82 | | Earnings per share - diluted | $0.40 | $0.27 | $1.16 | $0.82 | - Options to purchase 281,200 shares and 87,240 restricted shares were outstanding at June 30, 2025, and included in diluted EPS calculation. In contrast, 293,200 options and 124,320 restricted shares were anti-dilutive and excluded at June 30, 2024[32] Other Comprehensive Income (Loss) Reports items of comprehensive income or loss not recognized in net income, such as unrealized gains/losses on AFS securities Other Comprehensive Income (Loss) (In Thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Unrealized holding gain (loss) on AFS investments (before tax) | $115 | $(14) | $141 | $487 | | Deferred income tax effect | $(28) | $4 | $(35) | $(120) | | Total other comprehensive income (loss), net | $87 | $(10) | $106 | $367 | Fair Value Disclosures Provides information on fair value measurements of financial instruments, categorized by input observability levels - The Company categorizes fair value measurements into three levels based on input observability: Level 1 (quoted prices in active markets), Level 2 (quoted prices for similar instruments or observable inputs), and Level 3 (significant unobservable inputs). Securities available-for-sale and derivatives are measured at fair value on a recurring basis, primarily using Level 2 inputs. Other real estate owned (OREO) is measured at fair value on a non-recurring basis using Level 3 inputs, primarily appraisals adjusted for liquidation expenses[35][38][39][41][42][44][45][47][49][50] Assets and Liabilities Measured at Fair Value on a Recurring Basis (June 30, 2025, In Thousands) | Item | Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Assets: | | | | | | Securities available for sale | $21,604 | $0 | $21,604 | $0 | | Derivative assets | $977 | $0 | $977 | $0 | | Liabilities: | | | | | | Derivative liabilities | $977 | $0 | $977 | $0 | Other Real Estate Owned (OREO) Measured at Fair Value on a Non-Recurring Basis (In Thousands) | Item | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Other real estate owned (Level 3) | $2,167 | $1,501 | | Valuation Technique | Appraisal | Appraisal | | Unobservable Input | Liquidation expenses | Liquidation expenses | | Range (Weighted Average) | -1.5% to -1.5% (-1.5%) | -13.0% to -19.6% (-14.6%) | Investment Securities Details the composition and fair value of the company's investment securities portfolio, categorized as AFS or HTM Investment Securities Summary (June 30, 2025, In Thousands) | Security Type | Amortized Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | | :--- | :--- | :--- | :--- | :--- | | Available-for-sale: | | | | | | Mortgage backed securities - residential | $91 | $82 | $0 | $(9) | | Mortgage-backed securities-residential (GSE) | $16,003 | $14,876 | $62 | $(1,189) | | Corporate securities | $6,500 | $6,646 | $146 | $0 | | Held-to-maturity: | | | | | | Mortgage-backed securities - residential | $6,781 | $6,094 | $0 | $(687) | | Mortgage-backed securities - commercial | $4,024 | $4,036 | $19 | $(7) | | Mortgage backed securities - residential (GSE) | $41,601 | $36,383 | $1 | $(5,219) | | Debt securities | $10,500 | $9,940 | $0 | $(560) | | Private label mortgage-backed securities - residential | $179 | $176 | $0 | $(3) | | Obligations of state and political subdivisions | $3,435 | $3,068 | $1 | $(368) | | Corporate securities | $3,000 | $2,894 | $0 | $(106) | | Total Investment Securities | $92,114 | $84,195 | $229 | $(8,148) | - The Company monitors the credit quality of held-to-maturity debt securities quarterly, primarily through credit ratings. At June 30, 2025, and September 30, 2024, there were no non-performing held-to-maturity debt securities, and no allowance for credit losses was required, as the majority are explicitly or implicitly guaranteed by the U.S. government[54][55] Unrealized Losses on Investment Securities Available-for-Sale Analyzes unrealized losses on available-for-sale securities, assessing their credit-related or interest rate-driven nature Available-for-Sale Securities with Unrealized Losses (June 30, 2025, In Thousands) | Security Type | Number of Securities | Fair Value | Unrealized Losses | | :--- | :--- | :--- | :--- | | U.S. government agencies: Mortgage-backed securities - residential | 1 | $82 | $(9) | | U.S. government-sponsored enterprises: Mortgage-backed securities - residential | 9 | $8,875 | $(1,189) | | Total | 10 | $8,957 | $(1,198) | - Unrealized losses on available-for-sale securities are primarily due to fluctuations in interest rates, not credit-related events. The Company does not intend to sell these securities and expects full recovery of amortized costs, thus no credit loss allowance is deemed necessary for these unrealized losses[58][59][60] Loans Receivable, Net and Related Allowance for Credit Losses Presents the composition of the loan portfolio, net of deferred costs, and the allowance for credit losses Loans Receivable Composition (In Thousands) | Loan Type | June 30, 2025 | September 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | One-to-four family residential | $245,235 | $246,201 | $(966) | -0.39% | | Commercial real estate | $523,990 | $461,319 | $62,671 | 13.59% | | Construction and land | $25,930 | $22,722 | $3,208 | 14.12% | | Home equity loans and lines of credit | $29,415 | $24,728 | $4,687 | 18.95% | | Commercial business | $19,135 | $24,011 | $(4,876) | -20.31% | | Other | $1,705 | $2,235 | $(530) | -23.71% | | Total loans receivable | $845,410 | $781,216 | $64,194 | 8.22% | | Net deferred loan costs | $(1,419) | $(1,054) | $(365) | 34.63% | | Total loans receivable, net | $843,991 | $780,162 | $63,829 | 8.18% | - The Company uses a ten-point internal risk rating system, aggregating the first six categories as 'Pass.' Criticized categories include Special Mention, Substandard, and Doubtful. Loans over three months past due are classified as Substandard. An external loan review company semi-annually assesses the portfolio for appropriate risk grading[61][62][64][65][71] Non-Accrual Loans and Collateral Dependent Loans (In Thousands) | Loan Type | June 30, 2025 | September 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | One-to-four family residential | $632 | $116 | $516 | 444.83% | | Commercial real estate | $288 | $116 | $172 | 148.28% | | Total Non-Accrual Loans | $920 | $232 | $688 | 296.55% | - The Allowance for Credit Losses (ACL) increased by $283 thousand to $8.3 million (0.98% of total loans receivable) during the nine months ended June 30, 2025, driven by growth in commercial real estate and construction portfolios. The allowance for on-balance sheet credit losses increased to $8.1 million, while the reserve for off-balance sheet commitments decreased to $222 thousand[74] Deposits Details the composition of the company's deposit base by type, including demand, savings, and certificates of deposit Deposits by Type (In Thousands) | Deposit Type | June 30, 2025 | September 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Demand accounts | $116,343 | $132,837 | $(16,494) | -12.42% | | Savings accounts | $53,277 | $52,853 | $424 | 0.80% | | NOW accounts | $138,944 | $146,744 | $(7,800) | -5.31% | | Money market accounts | $330,875 | $304,588 | $26,287 | 8.63% | | Certificates of deposit | $166,556 | $146,674 | $19,882 | 13.56% | | Retirement certificates | $13,967 | $12,978 | $989 | 7.62% | | Total Deposits | $819,962 | $796,674 | $23,288 | 2.92% | - Brokered certificates of deposit increased to $41.3 million at June 30, 2025, from $29.6 million at September 30, 2024. Deposits exceeding the federal deposit insurance maximum of $250 thousand totaled $444.1 million at June 30, 2025, up from $380.0 million at September 30, 2024[78][79] Financial Instruments with Off-Balance Sheet Risk Discloses financial instruments with off-balance sheet risk, such as loan commitments and interest rate swaps - The Company uses interest rate swaps with commercial lending customers, which are simultaneously offset by third-party swaps to minimize net risk exposure. Changes in fair value for these non-hedging derivatives are recognized in earnings, with credit risk considered negligible. The notional amount of customer and third-party interest rate swaps was $41.6 million at June 30, 2025, up from $34.9 million at September 30, 2024[81][84][85] Off-Balance Sheet Commitments (In Thousands) | Commitment Type | June 30, 2025 | September 30, 2024 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Letters of credit | $785 | $620 | $165 | 26.61% | | Unused lines of credit | $85,484 | $88,272 | $(2,788) | -3.16% | | Fixed rate loan commitments | $3,432 | $1,804 | $1,628 | 90.24% | | Variable rate loan commitments | $34,177 | $26,843 | $7,334 | 27.32% | | Total | $123,878 | $117,539 | $6,339 | 5.39% | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operating results, highlighting key changes in assets, liabilities, equity, and income statement items Forward-Looking Statements Warns readers about inherent risks and uncertainties in forward-looking statements, disclaiming any obligation to update them - The report contains forward-looking statements identified by words like 'anticipate,' 'will allow,' 'expects to,' and 'believes.' These statements are subject to numerous risks and uncertainties, including general economic conditions, interest rate changes, regulatory factors, competition, and real estate market risks. Readers are cautioned not to place undue reliance on these statements, and the Company disclaims any obligation to update them[86][87][88] Comparison of Financial Condition at June 30, 2025 and September 30, 2024 Compares the company's financial position, including assets, liabilities, and equity, between two reporting periods Key Financial Condition Changes (June 30, 2025 vs. September 30, 2024, In Millions) | Item | Sep 30, 2024 | Jun 30, 2025 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $951.9 | $987.5 | $35.6 | 3.7% | | Interest Earning Deposits | $25.6 | $7.1 | $(18.5) | -72.5% | | Loans Receivable | $781.2 | $845.4 | $64.2 | 8.2% | | Investment Securities | $95.4 | $91.1 | $(4.3) | -4.5% | | Bank Owned Life Insurance (BOLI) | $23.3 | $20.6 | $(2.7) | -11.8% | | Total Deposits | $796.7 | $820.0 | $23.3 | 2.9% | | Borrowings | $28.6 | $36.1 | $7.5 | 26.2% | | Stockholders' Equity | $110.5 | $116.3 | $5.8 | 5.2% | | Book Value Per Share | $16.98 | $18.03 | $1.05 | 6.18% | - Loans receivable growth was primarily in commercial real estate ($62.7 million), one-to-four family residential ($3.7 million), and construction and land loans ($3.2 million). Non-performing loans increased by $688 thousand to $920 thousand, raising the ratio of non-performing loans to total loans from 0.03% to 0.11%[91][92][94][96][99] Commercial Real Estate (CRE) Loan Composition (June 30, 2025, In Thousands) | Category | Amount | Percent of Total CRE | | :--- | :--- | :--- | | Owner-occupied | $228,671 | 43.6% | | Non-owner occupied | $295,319 | 56.4% | | Total CRE Loans | $523,990 | 100.0% | - Non-owner occupied commercial real estate loans to total risk-based capital were approximately 266% at June 30, 2025, down from 270% at September 30, 2024. Management believes appropriate risk management practices are in place[101] - The Company restructured $7.9 million of its BOLI portfolio in August 2024, increasing the yield from 2.59% (3.71% tax-equivalent) to 3.36% (4.81% tax-equivalent) at June 30, 2025[102] - Deposits increased primarily in money market accounts ($26.3 million) and certificates of deposit ($20.9 million), while non-interest bearing checking accounts decreased by $16.5 million. Borrowings increased by $7.5 million, including $9.0 million from FHLBNY to fund loan growth[103][104][105] Average Balance Sheets for the Three and Nine Months Ended June 30, 2025 and 2024 Analyzes average balance sheet components and their impact on net interest income and margin over specified periods Net Interest Income and Margin (3 Months Ended June 30, In Thousands) | Metric | 2025 | 2024 | Change (Absolute) | Change (Basis Points) | | :--- | :--- | :--- | :--- | :--- | | Average Interest-Earning Assets | $978,431 | $900,036 | $78,395 | | | Yield on Interest-Earning Assets | 5.74% | 5.50% | | 24 bps | | Average Interest-Bearing Liabilities | $772,143 | $686,679 | $85,464 | | | Cost of Interest-Bearing Liabilities | 3.02% | 3.24% | | -22 bps | | Net Interest and Dividend Income | $8,178 | $6,784 | $1,394 | | | Interest Rate Spread | 2.72% | 2.26% | | 46 bps | | Net Interest Margin | 3.35% | 3.02% | | 33 bps | Net Interest Income and Margin (9 Months Ended June 30, In Thousands) | Metric | 2025 | 2024 | Change (Absolute) | Change (Basis Points) | | :--- | :--- | :--- | :--- | :--- | | Average Interest-Earning Assets | $953,301 | $886,309 | $66,992 | | | Yield on Interest-Earning Assets | 5.67% | 5.40% | | 27 bps | | Average Interest-Bearing Liabilities | $746,894 | $646,653 | $100,241 | | | Cost of Interest-Bearing Liabilities | 3.03% | 3.07% | | -4 bps | | Net Interest and Dividend Income | $23,498 | $20,952 | $2,546 | | | Interest Rate Spread | 2.64% | 2.33% | | 31 bps | | Net Interest Margin | 3.30% | 3.16% | | 14 bps | Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024 Compares the company's operating performance, including net income and key revenue/expense drivers, for the three-month periods - Net income increased by $779 thousand (46.1%) to $2.5 million, driven by a $1.4 million (20.5%) increase in net interest and dividend income and a $227 thousand (55.5%) increase in other income. This was partially offset by a $155 thousand increase in provision for credit losses and higher income tax expense[113][114][120][121][123] - Interest and dividend income rose by $1.7 million (13.5%) due to a 24-basis point increase in asset yield and a $77.6 million increase in average interest-earning assets. Loan interest income specifically increased by $1.6 million (15.0%) due to higher average balances and yields[115][116] - Interest expense increased by $267 thousand (4.8%), despite a 22-basis point decrease in the cost of interest-bearing liabilities, primarily due to an $85.5 million increase in average interest-bearing liabilities. Interest paid on deposits increased by $211 thousand, and interest on borrowings increased by $56 thousand[117][118] - Other income saw significant growth from bank-owned life insurance (up $79 thousand, 84.9%) due to policy restructuring, and service charges (up $58 thousand, 20.6%) from commercial loan prepayment and late charges. Other expenses increased by $184 thousand (3.6%), mainly due to a $211 thousand (7.3%) rise in compensation and employee benefits[119][121][122] - Income tax expense more than doubled to $1.0 million, reflecting higher pre-tax income and a higher effective tax rate of 28.9% (up from 22.9% in the prior year)[123] Comparison of Operating Results for the Nine Months Ended June 30, 2025 and 2024 Compares the company's operating performance, including net income and key revenue/expense drivers, for the nine-month periods - Net income increased by $2.0 million (38.1%) to $7.2 million, driven by a $2.5 million (12.2%) increase in net interest and dividend income and a $1.2 million (74.5%) increase in other income, alongside a $269 thousand decrease in provision for credit losses. These gains were partially offset by higher other expenses and income tax expense[124][125][132][133][134][135] - Interest and dividend income increased by $4.6 million (12.9%), primarily from a $5.0 million (15.9%) rise in loan interest income due to higher average loan balances and yields. However, interest earned on investment securities and interest-earning deposits decreased by $402 thousand (9.9%) due to lower average balances and yields[126][127] - Interest expense increased by $2.1 million (13.9%), mainly due to a $97.3 million increase in average interest-bearing deposits, despite a 4-basis point decrease in the average cost of deposits. Interest expense on borrowings also increased by $30 thousand[128][129] - Other income significantly increased due to higher gains from SBA 7(a) loan sales (up $506 thousand to $848 thousand), gains from OREO sales, commercial loan prepayment charges, and income from BOLI policies. Other expenses increased by $863 thousand (5.7%), primarily from higher compensation and benefits ($663 thousand) and occupancy expenses ($222 thousand) due to an office closure[130][131][133][134] - Income tax expense increased to $2.9 million on higher pre-tax income, with the effective tax rate rising to 28.6% from 24.8% in the prior year[135] Liquidity and Capital Resources Assesses the company's ability to meet financial obligations and maintain adequate capital levels - The Company's liquidity is supported by asset maturities, repayments, sales, excess cash, new deposits, and FHLBNY advances. At June 30, 2025, the Company had an aggregate net borrowing capacity of $133.2 million from FHLBNY. There has been no material adverse change in the Company's ability to fund operations[136][137] Off-Balance Sheet Commitments (June 30, 2025, In Thousands) | Commitment Type | Amount | | :--- | :--- | | Letters of credit | $785 | | Commitments to originate loans | $37,600 | | Commitments to fund undisbursed balances of closed loans and unused lines of credit | $85,500 | - At June 30, 2025, the Bank's Tier 1 capital to total assets was 10.97%, and total qualifying capital to risk-weighted assets was 15.71%, indicating strong capital adequacy[138] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures are not applicable for smaller reporting companies under SEC regulations - Quantitative and Qualitative Disclosures About Market Risk are not applicable to smaller reporting companies[139] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures, confirming their effectiveness and no material changes to internal controls - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[140] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[141] PART II. OTHER INFORMATION Item 1. Legal Proceedings Confirms no legal proceedings requiring disclosure for the Company - No legal proceedings to report[142] Item 1A. Risk Factors No material changes to previously disclosed risk factors from the Annual Report on Form 10-K - No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details stock repurchase programs, including a new authorization for 5% of shares and shares repurchased during the period - On May 22, 2025, the Company authorized its fifth stock repurchase program to repurchase up to an additional 5% (323,547 shares) of its outstanding common stock for general corporate purposes[145] - The Company repurchased 60,410 shares of common stock during the nine months ended June 30, 2025, holding 646,877 treasury shares at an average cost of $12.69 as of that date[147] - The fourth stock repurchase program, authorizing up to 337,146 shares, was completed on April 17, 2025, at an average price of $12.23[149] Common Stock Repurchases (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Remaining Shares Under Current Program | | :--- | :--- | :--- | :--- | | April 1, 2025 through April 30, 2025 | 2,924 | $13.97 | — | | May 1, 2025 through May 31, 2025 | 20,000 | $15.42 | 303,547 | | June 1, 2025 through June 30, 2025 | — | — | 303,547 | Item 3. Defaults Upon Senior Securities Confirms no defaults occurred on senior securities - No defaults upon senior securities[150] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable, and no Rule 10b5-1 trading arrangements were adopted or terminated - Mine Safety Disclosures are not applicable[150] - No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the nine months ended June 30, 2025[150] Item 5. Other Information Notes the completion of the fourth stock repurchase program and other non-applicable items - The Company completed its fourth stock repurchase program, totaling 337,146 shares at an average price of $12.23, on April 17, 2025[149] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL data files - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2) and interactive data files (XBRL) for the consolidated financial statements and notes (101, 104)[153] Signature Pages Contains signatures of the CEO and CFO, certifying the report filing on August 13, 2025 - The report was signed by John S. Fitzgerald, President and Chief Executive Officer, and Jon R. Ansari, Executive Vice President and Chief Financial Officer, on August 13, 2025[155]