The following excerpt is from the company's SEC filing.
New Brunswick, New Jersey, July 26, 2022
–
Magyar Bancorp (NASDAQ: MGYR) (“Company”), parent company of Magyar Bank, reported today the results of its operations for
the three and nine months ended June 30, 2022.
The Company reported a 27% increase in its net income
for the three months ended June 30, 2022, to $2,117,000 compared with net income of $1,668,000 for the three months ended June 30, 2021.
Net income for the nine months ended June 30, 2022 was $5,489,000 compared with net income of $4,510,000 for the nine months ended June
30, 2021.
Basic and diluted earnings per share were $0.31 fo
r
the three months ended June 30, 2022 compared to $0.24 for the three months ended June 30, 2021. Basic and diluted earnings per share
were $0.81 for the nine months ended June 30, 2022 compared to $0.64 for the nine months ended June 30, 2021.
The Company also announced that its Board of
Directors declared a quarterly cash dividend of $0.03 per share, which will be paid on August 18, 2022 to stockholders of record
as of August 4, 2022.
“We are pleased to report another strong quarter,”
stated John Fitzgerald, President and Chief Executive Officer of Magyar Bancorp. “Our net interest margin increased 18 basis points
during the quarter on a year over year basis as a result of prudent management of our balance sheet. In addition, our return on average
assets has grown to 1.06% for the quarter ending June 30, 2022, a direct reflection of the sustained earnings growth the Bank has produced
during the fiscal year. As we head into the final quarter of our fiscal year, we expect the positive earnings momentum to continue.”
Results of Operations for the Three Months Ended
June 30, 2022
Net income increased $449,000, or 26.9%, to $2.1 million
during the three month period ended June 30, 2022 compared with the three month period ended June 30, 2021, due to higher net interest
and dividend income as well as lower non-interest expenses, partially offset by lower non-interest income.
The Company’s net interest and dividend income
increased $506,000, or 7.8%, to $7.0 million for the quarter ended June 30, 2022 from $6.5 million for the quarter ended June 30, 2021.
The increase was attributable to a $28.4 million increase in average net interest-earning assets as well as an 18 basis point increase
in the Company’s net interest margin to 3.72% for the three months ended June 30, 2022 compared to 3.54% for the three months ended
June 30, 2021.
Interest and dividend income increased $378,000, or
5.3%, to $7.5 million for the three months ended June 30, 2022 from $7.1 million for the three months ended June 30, 2021. The increase
was attributable to higher average balances of interest-earning assets, which increased $18.4 million, as well as a 10 basis point increase
in the yield on interest-earning assets. Higher market interest rates resulted in higher yields on both interest-earning deposits and
investment securities. While the average balances of loans receivable were relatively flat between periods, the yield on loans receivable
increased by eight basis points to 4.57% for the three months ended June 30, 2022 from 4.49% for the three months ended June 30, 2021.
The higher loan yield for the current period resulted from the reinvestment of repaid Paycheck Protection Program (“PPP”)
loans (earning 1.0%) into higher-yielding commercial real estate loans as well as the receipt of $211,000 in interest income recorded
with the payoff of a non-performing loan.
Interest expense decreased $128,000, or 20.0%, to
$512,000 for the three months ended June 30, 2022 compared with the three months ended June 30, 2021. The cost of interest-bearing liabilities
decreased 10 basis points to 0.42% for the three months ended June 30, 2022 compared with 0.52% for the three months ended June 30, 2021
resulting from lower interest-bearing liability costs between periods. In addition, the average balance of noninterest-bearing liabilities
increased $10.1 million, or 4.9%, to $214.1 million.
The Company’s provision for loan losses was
$205,000 for the three months ended June 30, 2022 compared to $246,000 for the three months ended June 30, 2021. The decreased provisions
for loan losses resulted from lower specific reserves for non-performing loans, partially offset by higher balances of (non-PPP) loans
receivable outstanding between periods. There were no charge-offs or recoveries during the three months ended June 30, 2022 and 2021.
Non-interest income decreased $45,000, or 6.2%, to
$676,000 during the three months ended June 30, 2022 compared to $721,000 for the three months ended June 30, 2021. The Company recorded
lower gains from the sales of SBA loans, which were $134,000 for the three months ended June 30, 2022 compared with $380,000 for the three
months ended June 30, 2021. Partially offsetting the decline were higher interest rate swap fees, which increased $76,000, higher service
charges, which increased $55,000, and a $67,000 gain recorded on the sale of an OREO property.
Non-interest expenses decreased $157,000, or 3.4%,
to $4.4 million during the three months ended June 30, 2022 from $4.6 million during the three months ended June 30, 2021. The decrease
was primarily attributable to professional fees, which decreased $181,000, or 47.8%, due to lower legal and consulting fees related to
the collection and foreclosure of non-performing loans. Loan servicing expenses and FDIC deposit insurance premiums decreased $94,000
and $59,000, respectively, from lower levels of non-performing loans and the Company’s higher capital levels. Partially offsetting
these decreases were higher compensation and marketing and business development expenses. Compensation and benefit expense increased $80,000,
or 3.1%, due to annual merit increases, fewer open positions within the Bank, and expenses for the employee stock ownership plan resulting
from the Company’s stock offering in July 2021. Marketing and business development expenses increased $77,000, or 116.7%, as the
Bank is celebrating its 100 year anniversary with increased events and advertising, while business development opportunities increased
as the COVID pandemic restrictions were lifted.
The Company recorded tax expense of $886,000 on pre-tax
income of $3.0 million for the three months ended June 30, 2022, compared to $676,000 on pre-tax income of $2.3 million for the three
months ended June 30, 2021. The Company’s effective tax rate for the three months ended June 30, 2022 was 29.5% compared with 28.8%
for the three months ended June 30, 2021.
Results of Operations for the Nine Months Ended
June 30, 2022
Net income increased $979,000, or 21.7%, to $5.5 million
during the nine month period ended June 30, 2022 compared with the nine-month period ended June 30, 2021, due to higher net interest and
dividend income, lower provisions for loan losses and lower non-interest expenses, partially offset by lower non-interest income.
The Company’s net interest and dividend income
increased $898,000, or 4.8%, to $19.8 million for the nine months ended June 30, 2022 from $18.9 million for the nine months ended June
30, 2021. The increase was attributable to a $50.2 million increase in average net interest-earning assets as well as a two basis point
increase in the Company’s net interest margin to 3.54% for the nine months ended June 30, 2022 compared to 3.52% for the nine months
ended June 30, 2021.
Interest and dividend income increased $167,000, or
0.8%, to $21.4 million for the nine months ended June 30, 2022 from $21.2 million for the nine months ended June 30, 2021. The increase
was attributable to higher average balances of interest-earning assets, which increased $29.0 million, partially offset by a 12 basis
point decrease in the yield on interest-earning assets to 3.83% for the nine months ended June 30, 2022. Higher average balances of investment
securities and higher yields on interest-earning deposits contributed to the increase in interest in dividend income between periods.
Meanwhile, a $15.9 million decrease in the average balances of loans receivable was partially offset by a seven basis point increase in
the yield on loans receivable to 4.57% for the nine months ended June 30, 2022 from 4.50% for the nine months ended June 30, 2021. The
higher loan yield for the current period resulted from the reinvestment of repaid Paycheck Protection Program (“PPP”) loans
(earning 1.0%) into higher-yielding commercial real estate loans as well as $356,000 in interest income received in connection with non-performing
loans.
Interest expense decreased $731,000, or 31.2%, to
$1.6 million for the nine months ended June 30, 2022 compared with the nine months ended June 30, 2021. The cost of interest-bearing liabilities
decreased 18 basis points to 0.44% for the nine months ended June 30, 2022 compared with 0.62% for the nine months ended June 30, 2021
resulting from lower interest-bearing liability costs between periods. In addition, the average balance of noninterest-bearing liabilities
increased $17.6 million, or 9.4%, to $203.5 million.
The Company’s provision for loan losses was
$376,000 for the nine months ended June 30, 2022 compared to $1.4 million for the nine months ended June 30, 2021. The lower provisions
for loan losses resulted from lower adjustments to the Company’s historical loan losses related to the COVID-19 pandemic’s
anticipated impact on the Company’s consumer and business loan portfolios. In addition, the Company recorded $54,000 in net recoveries
during the nine months ended June 30, 2022 compared with $47,000 in net recoveries during the nine months ended June 30, 2021.
Non-interest income decreased $986,000, or 34.2%,
to $1.9 million during the nine months ended June 30, 2022 compared to $2.9 million for the nine months ended June 30, 2021. Fees for
other customer services were $0 for the nine months ended June 30, 2022 compared with $777,000 for the nine months ended June 30, 2021.
The fees during the 2021 fiscal period were earned from the Small Business Relief Grant program offered in response to the COVID pandemic
for which the Company received a fee of 3.0% of the grants it assisted with processing. In addition, interest rate swap fees and gains
on the sales of assets decreased $132,000 and $129,000, respectively. Lower swap fees were the result of significantly higher market interest
rates while the lower gains resulted from lower SBA loan sale gains, which declined by $196,000, partially offset by higher OREO gains
totaling $67,000.
Non-interest expenses decreased $442,000, or 3.2%,
to $13.6 million during the nine months ended June 30, 2022 from $14.0 million during the nine months ended June 30, 2021. The decrease
was primarily attributable to professional fees, which decreased $526,000, or 38.1%, due to lower legal and consulting fees related to
the collection and foreclosure of non-performing loans. Loan servicing expenses and FDIC deposit insurance premiums decreased $208,000
and $209,000, respectively, from lower levels of non-performing loans and the Company’s higher capital levels. Partially offsetting
these decreases were higher compensation and marketing and business development expenses. Compensation and benefit expense increased $305,000,
or 3.9%, due to annual merit increases, fewer open positions within the Bank, and expenses for the employee stock ownership plan resulting
from the Company’s stock offering in July 2021. Marketing and business development expenses increased $182,000, or 106.4%, as the
Bank is celebrating its 100 year anniversary with increased events and advertising, while business development opportunities increased
as the COVID pandemic restrictions were lifted.
The Company recorded tax expense of $2.2 million on
pre-tax income of $7.7 million for the nine months ended June 30, 2022, compared to $1.9 million on pre-tax income of $6.4 million for
the nine months ended June 30, 2021. The Company’s effective tax rate for the nine months ended June 30, 2022 was 29.1% compared
with 29.6% for the nine months ended June 30, 2021.
Balance Sheet Comparison
Total assets increased $16.7 million, or 2.2%, to
$790.7 million at June 30, 2022 compared to $774.0 million at September 30, 2021. The increase was attributable to higher balances of
loans receivable, net of allowance for loan losses, and investment securities, partially offset by lower balances of interest-earning
deposits with banks.
Cash and interest-earning deposits with banks decreased
$48.9 million, or 65.0% to $26.3 million at June 30, 2022 from $75.2 million at September 30, 2021. Interest bearing deposits with banks
were used to fund loan originations and investment security purchases during the nine months ended June 30, 2022.
At June 30, 2022, investment securities totaled $101.3
million, reflecting an increase of $30.7 million, or 43.5%, from September 30, 2021. The Company purchased nine mortgage-backed securities
totaling $20.7 million, seven callable U.S. government-sponsored enterprise bonds totaling $12.3 million, three municipal bonds totaling
$1.5 million, and one corporate note totaling $5.0 million during the nine months ended June 30, 2022. Repayments of mortgage-backed securities
and bond calls totaled $7.4 million. There were no sales of investment securities during the period.
Investment securities at June 30, 2022 consisted of
$64.7 million in mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $24.8 million
in U.S. government-sponsored enterprise debt securities, $8.0 million in corporate notes, $3.5 million in municipal bonds and $229,000
in “private-label” mortgage-backed securities. Available-for-sale investment securities had a cost of $11.5 million and a
market value of $10.1 million reflecting an unrealized loss of $1.5 million at June 30, 2022. The unrealized loss on securities available-for-sale
reflects higher market interest rates, which adversely affects the market price of the securities. There were no other-than-temporary-impairment
charges for the Company’s investment securities for the nine months ended June 30, 2022.
Total loans receivable increased $31.2 million, or
5.2%, during the nine months ended June 30, 2022 to $625.8 million at June 30, 2022 and were comprised of $335.4 million (53.6%) in commercial
real estate loans, $208.0 million (33.2%) in one- to four- family residential mortgage loans, $40.6 million (6.5%) in commercial business
loans, $23.1 million (3.7%) in construction loans, $15.6 million (2.5%) in home equity lines of credit, and $3.1 million (0.5%) in other
loans. Included with the commercial business loans were $370,000 in PPP loans. The increase in total loans receivable during the nine
months ended June 30, 2022 occurred in commercial real estate loans, which increased $54.5 million, or 19.4%, in one- to four- family
residential mortgage loans, which increased $5.0 million, or 2.5%, and in construction loans, which increased $2.8 million, or 13.8%.
Partially offsetting these increases were decreases in commercial business loans, which decreased $28.1 million (PPP loans decreased $24.8
million), home equity lines of credit, which decreased $2.4 million, construction loans, which decreased $3.6 million, and other loans,
which decreased $653,000.
Total non-performing loans decreased $3.6
million, or 43.9%, to $4.6 million at June 30, 2022 from $8.2 million at September 30, 2021. The decrease was attributable to four
loans totaling $1.5 million paid current by the borrowers and the full repayment of three loans totaling $2.1 million during the
nine months ended June 30, 2022. The ratio of non-performing loans to total loans decreased to 0.73% at June 30, 2022 from 1.37% at
September 30, 2021.
The allowance for loan losses increased $430,000 during
the nine months ended June 30, 2022 to $8.5 million. The allowance for loan losses as a percentage of non-performing loans increased to
185.7% at June 30, 2022 from 99.0% at September 30, 2021. Our allowance for loan losses as a percentage of total loans was 1.36% at June
30, 2022 and September 30, 2021. Future increases in the allowance for loan losses may be necessary based on the growth of the loan portfolio,
the change in composition of the loan portfolio, possible future increases in non-performing loans and charge-offs, and the possible deterioration
of the current economic environment.
OREO decreased $355,000, or 55.8%, to $281,000 during
the nine months ended June 30, 2022. The Company sold one property totaling $368,000 for a $67,000 gain. The remaining OREO property was
under contract of sale at June 30, 2022.
Total deposits increased $20.0 million, or 3.1%, to
$659.8 million during the nine months ended June 30, 2022 from $639.8 million at September 30, 2021. Interest-bearing checking accounts
(NOW) increased $26.9 million, or 37.7%, to $98.2 million, money market accounts, increased $18.9 million, or 10.0%, to $206.8 million
and savings accounts increased $5.4 million, or 6.6%, to $87.1 million. These increases were partially offset by certificates of deposit
(including individual retirement accounts), which decreased $29.0 million, or 24.8%, to $87.9 million and non-interest bearing checking
accounts, which decreased $2.2 million, or 1.1%, to $179.8 million.
Borrowings decreased $8.1 million, or 34.6%, to $15.3
million at June 30, 2022 from $23.4 million at September 30, 2021. The Company repaid matured term borrowings from the Federal Home Loan
Bank of New York from interest-earning deposits with banks during the nine months ended June 30, 2022.
The Company’s book value per share increased
to $14.23 at June 30, 2022 from $13.76 at September 30, 2021. The increase was due to the Company’s net income during the nine months
ended June 30, 2022, partially offset by dividends totaling $0.18 per share paid during the nine months ended June 30, 2022.
About Magyar Bancorp
Magyar Bancorp is the parent company of Magyar Bank,
a community bank headquartered in New Brunswick, New Jersey. Magyar Bank has been serving families and businesses in Central New Jersey
since 1922 with a complete line of financial products and services. Magyar operates seven branch locations in New Brunswick, North Brunswick,
South Brunswick, Branchburg, Bridgewater, and Edison (2). Please visit us online at www.magbank.com.
Forward Looking Statements
This press release contains statements about future
events that constitute forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods,
or by the use of forward- looking terminology, such as “may,” “will,” “believe,” “expect,”
or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks
and uncertainties, including, but not limited to, those risks previously disclosed in the Company’s filings with the SEC, general
economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment
of qualified personnel, and market acceptance of the Company’s pricing, products and services, and with respect to the loans extended
by the Bank 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 non-performing
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. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions
that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
Contact: John Reissner, 732.214.2083
MAGYAR BANCORP, INC. AND SUBSIDIARY
Selected Financial Data
(Dollars in Thousands, Except
Per Share Data)
Income Statement Data:
21,389
21,222
Net interest and dividend income
19,780
18,882
Provision for loan losses
Net interest and dividend income after
provision for loan losses
19,404
17,529
13,563
14,005
Income before income tax expense
Income tax expense
Per Share Data:
Net income per share-basic and diluted*
Book value per share, at period end
Selected Ratios (annualized):
Return on average assets
Return on average equity
Net interest margin
As a result of the second-step conversion, the number of shares for the three and nine months ended June 30, 2021 were adjusted to reflect
the 1.2213 exchange ratio.
(Dollars in Thousands)
Balance Sheet Data:
Assets
790,652
773,990
625,793
594,617
Allowance for loan losses
Investment securities - available for sale, at fair value
10,058
12,927
Investment securities - held to maturity, at cost
91,222
57,660
Deposits
659,821
639,814
15,284
23,356
Shareholders' Equity
100,980
97,641
Asset Quality Data:
Non-performing loans
Other real estate owned
Total non-performing assets
Allowance for loan losses to non-performing loans
185.70%
98.96%
Allowance for loan losses to total loans receivable
Non-performing loans to total loans receivable
Non-performing assets to total assets
Non-performing assets to total equity
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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