Magyar Bancorp Inc.
08/13/2026 | Press release | Distributed by Public on 08/13/2026 12:23
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
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.
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:
| June 30, 2026 | September 30, 2025 | |||||||||||||||
| Amount | Percent | Amount | Percent | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Owner-occupied | ||||||||||||||||
| Retail | $ | 40,578 | 6.9% | $ | 43,440 | 8.1% | ||||||||||
| Hotel/Motel | 74,457 | 12.6% | 75,380 | 14.1% | ||||||||||||
| Professional | 35,847 | 6.1% | 34,328 | 6.4% | ||||||||||||
| Office | 14,965 | 2.5% | 17,563 | 3.3% | ||||||||||||
| Restaurant | 29,167 | 4.9% | 23,409 | 4.4% | ||||||||||||
| Other | 54,558 | 9.3% | 39,722 | 7.4% | ||||||||||||
| Total owner-occupied | $ | 249,572 | 42.3% | $ | 233,842 | 43.9% | ||||||||||
| Non-owner occupied | ||||||||||||||||
| Retail | $ | 96,800 | 16.4% | $ | 85,574 | 16.0% | ||||||||||
| Multi-family | 97,658 | 16.6% | 95,794 | 18.0% | ||||||||||||
| Professional | 23,686 | 4.0% | 17,514 | 3.3% | ||||||||||||
| Office | 38,220 | 6.5% | 36,053 | 6.8% | ||||||||||||
| Restaurant | 8,559 | 1.5% | 7,943 | 1.5% | ||||||||||||
| Hotel/Motel | 2,493 | 0.4% | 2,526 | 0.5% | ||||||||||||
| Other | 72,821 | 12.3% | 53,967 | 10.1% | ||||||||||||
| Total non-owner occupied | $ | 340,237 | 57.7% | $ | 299,371 | 56.1% | ||||||||||
| Total commercial real estate loans | $ | 589,809 | 100.0% | $ | 533,213 | 100.0% | ||||||||||
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:
| June 30, 2026 | September 30, 2025 | |||||||||||||||
| Number of | Number of | |||||||||||||||
| LTV range | Loans | Amount | Loans | Amount | ||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| 0%-25.0% | 143 | $ | 67,038 | 129 | $ | 54,594 | ||||||||||
| 25.01%-50.0% | 133 | 181,240 | 129 | 163,280 | ||||||||||||
| 50.01%-60.0% | 91 | 122,956 | 79 | 114,311 | ||||||||||||
| 60.01%-70.0% | 109 | 159,405 | 109 | 147,882 | ||||||||||||
| 70.01%-75.0% | 31 | 45,796 | 24 | 33,244 | ||||||||||||
| 75.01%-80.0% | 4 | 12,473 | 8 | 17,856 | ||||||||||||
| > 80.0% | 1 | 900 | 2 | 2,046 | ||||||||||||
| Total | 512 | $ | 589,808 | 480 | $ | 533,213 | ||||||||||
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.
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.
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||
|
Average Balance |
Interest Income/ Expense |
Yield/Cost (Annualized) |
Average Balance |
Interest Income/ Expense |
Yield/Cost (Annualized) |
|||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Interest-earning deposits | $ | 54,664 | $ | 485 | 3.56% | $ | 59,653 | $ | 650 | 4.37% | ||||||||||||||
| Loans receivable, net (1) | 874,341 | 13,848 | 6.35% | 822,467 | 12,608 | 6.15% | ||||||||||||||||||
| Securities | ||||||||||||||||||||||||
| Taxable | 99,620 | 843 | 3.40% | 90,212 | 667 | 2.97% | ||||||||||||||||||
| Tax-exempt (2) | 3,370 | 18 | 2.17% | 3,370 | 18 | 2.17% | ||||||||||||||||||
| FHLBNY stock | 3,461 | 62 | 7.24% | 2,729 | 49 | 7.27% | ||||||||||||||||||
| Total interest-earning assets | 1,035,456 | 15,256 | 5.91% | 978,431 | 13,992 | 5.74% | ||||||||||||||||||
| Noninterest-earning assets | 49,519 | 51,850 | ||||||||||||||||||||||
| Total assets | $ | 1,084,975 | $ | 1,030,281 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Savings accounts (3) | $ | 56,475 | 97 | 0.69% | $ | 54,496 | 93 | 0.68% | ||||||||||||||||
| NOW accounts (4) | 451,955 | 3,100 | 2.75% | 507,337 | 3,787 | 2.99% | ||||||||||||||||||
| Time deposits (5) | 238,924 | 2,235 | 3.75% | 176,269 | 1,668 | 3.80% | ||||||||||||||||||
| Total interest-bearing deposits | 747,354 | 5,432 | 2.92% | 738,102 | 5,548 | 3.01% | ||||||||||||||||||
| Borrowings | 49,052 | 401 | 3.28% | 34,041 | 262 | 3.08% | ||||||||||||||||||
| Total interest-bearing liabilities | 796,406 | 5,833 | 2.94% | 772,143 | 5,810 | 3.02% | ||||||||||||||||||
| Noninterest-bearing liabilities | 167,757 | 146,342 | ||||||||||||||||||||||
| Total liabilities | 964,163 | 918,485 | ||||||||||||||||||||||
| Retained earnings | 120,812 | 111,796 | ||||||||||||||||||||||
| Total liabilities and retained earnings | $ | 1,084,975 | $ | 1,030,281 | ||||||||||||||||||||
| Tax-equivalent basis adjustment | (4 | ) | (4 | ) | ||||||||||||||||||||
| Net interest and dividend income | $ | 9,419 | $ | 8,178 | ||||||||||||||||||||
| Interest rate spread | 2.97% | 2.72% | ||||||||||||||||||||||
| Net interest-earning assets | $ | 239,050 | $ | 206,288 | ||||||||||||||||||||
| Net interest margin (6) | 3.65% | 3.35% | ||||||||||||||||||||||
| Average interest-earning assets to | ||||||||||||||||||||||||
| average interest-bearing liabilities | 130.02% | 126.72% | ||||||||||||||||||||||
(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.
| Nine Months Ended June 30, | ||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||
|
Average Balance |
Interest Income/ Expense |
Yield/Cost (Annualized) |
Average Balance |
Interest Income/ Expense |
Yield/Cost (Annualized) |
|||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||
| Interest-earning deposits | $ | 45,609 | $ | 1,267 | 3.71% | $ | 52,350 | $ | 1,691 | 4.32% | ||||||||||||||
| Loans receivable, net (1) | 866,369 | 40,968 | 6.32% | 803,846 | 36,603 | 6.09% | ||||||||||||||||||
| Securities | ||||||||||||||||||||||||
| Taxable | 93,179 | 2,295 | 3.29% | 91,191 | 1,920 | 2.82% | ||||||||||||||||||
| Tax-exempt (2) | 3,370 | 55 | 2.17% | 3,370 | 55 | 2.17% | ||||||||||||||||||
| FHLBNY stock | 3,414 | 189 | 7.42% | 2,544 | 160 | 8.40% | ||||||||||||||||||
| Total interest-earning assets | 1,011,941 | 44,774 | 5.92% | 953,301 | 40,429 | 5.67% | ||||||||||||||||||
| Noninterest-earning assets | 50,803 | 52,856 | ||||||||||||||||||||||
| Total assets | $ | 1,062,744 | $ | 1,006,157 | ||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||
| Savings accounts (3) | $ | 55,910 | $ | 294 | 0.70% | $ | 54,123 | $ | 279 | 0.69% | ||||||||||||||
| NOW accounts (4) | 447,102 | 9,193 | 2.75% | 494,218 | 11,095 | 3.00% | ||||||||||||||||||
| Time deposits (5) | 232,774 | 6,563 | 3.77% | 166,657 | 4,852 | 3.89% | ||||||||||||||||||
| Total interest-bearing deposits | 735,786 | 16,050 | 2.92% | 714,998 | 16,226 | 3.03% | ||||||||||||||||||
| Borrowings | 49,073 | 1,204 | 3.28% | 31,896 | 693 | 2.90% | ||||||||||||||||||
| Total interest-bearing liabilities | 784,859 | 17,254 | 2.94% | 746,894 | 16,919 | 3.03% | ||||||||||||||||||
| Noninterest-bearing liabilities | 150,310 | 142,302 | ||||||||||||||||||||||
| Total liabilities | 935,169 | 889,196 | ||||||||||||||||||||||
| Retained earnings | 127,575 | 116,961 | ||||||||||||||||||||||
| Total liabilities and retained earnings | $ | 1,062,744 | $ | 1,006,157 | ||||||||||||||||||||
| Tax-equivalent basis adjustment | (12 | ) | (12 | ) | ||||||||||||||||||||
| Net interest and dividend income | $ | 27,508 | $ | 23,498 | ||||||||||||||||||||
| Interest rate spread | 2.98% | 2.64% | ||||||||||||||||||||||
| Net interest-earning assets | $ | 227,082 | $ | 206,407 | ||||||||||||||||||||
| Net interest margin (6) | 3.63% | 3.30% | ||||||||||||||||||||||
| Average interest-earning assets to | ||||||||||||||||||||||||
| average interest-bearing liabilities | 128.93% | 127.64% | ||||||||||||||||||||||
(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 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.
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.
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.
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%.
Magyar Bancorp Inc. published this content on August 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 13, 2026 at 18:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]