UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30,~~December 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_______________~~_____________ to ~~_______________~~_____________

Commission File Number 000-51726

Magyar Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		20-4154978
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

400 Somerset Street, New Brunswick, New Jersey		08901
(Address of Principal Executive Office)		(Zip Code)

(732) 342-7600

(Issuer’s Telephone Number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.01 per share	MGYR	The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

The number of shares outstanding of the issuer's common stock at ~~August~~February 1, ~~2023~~2024 was ~~6,662,098.~~

6,653,933.

MAGYAR BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

PART I. FINANCIAL INFORMATION

		Page Number

Item 1.	Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3230
Item 4.	Controls and Procedures	3230

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3331
Item 1A.	Risk Factors	3331
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3331
Item 3.	Defaults Upon Senior Securities	3331
Item 4.	Mine Safety Disclosures	3431
Item 5.	Other Information	3431
Item 6.	Exhibits	3432

Signature Pages		3533

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Data)

June 30, September 30,
2023 2022
(Unaudited)
Assets
Cash $ 3,064 $ 2,869
Interest earning deposits with banks 19,340 28,067
Total cash and cash equivalents 22,404 30,936

Investment securities available-for-sale, at fair value 8,734 9,229
Investment securities held-to-maturity, at amortized cost (fair value of $73,337 and $79,914 at June 30, 2023 and September 30, 2022, respectively) 83,720 91,646
Federal Home Loan Bank of New York stock, at cost 3,051 1,447
Loans receivable, net of allowance for loan losses of $8,378 and $8,433 at June 30, 2023 and September 30, 2022, respectively 693,308 619,843
Bank owned life insurance 17,938 17,660
Accrued interest receivable 4,143 3,478
Premises and equipment, net 13,483 13,880
Other real estate owned ("OREO") 291 281
Other assets 10,377 10,143

Total assets $ 857,449 $ 798,543

Liabilities and Stockholders' Equity
Liabilities
Deposits $ 693,472 $ 667,733
Escrowed funds 3,907 3,407
Borrowings 45,534 15,625
Accrued interest payable 213 85
Accounts payable and other liabilities 11,566 13,191

Total liabilities 754,692 700,041

Stockholders' equity
Preferred stock: $.01 Par Value, 500,000 shares authorized; at June 30, 2023 and September 30, 2022, none issued — —
Common stock: $.01 Par Value, 14,000,000 shares authorized; 7,097,825 shares issued; 6,668,572 and 6,745,128 shares outstanding at June 30, 2023 and September 30, 2022, respectively, at cost 71 71
Additional paid-in capital 63,023 63,734
Treasury stock: 429,253 and 465,693 shares at June 30, 2023 and September 30, 2022, respectively, at cost (5,478 ) (5,793 )
Unearned Employee Stock Ownership Plan shares (3,113 ) (3,169 )
Retained earnings 50,182 45,773
Accumulated other comprehensive loss (1,928 ) (2,114 )

Total stockholders' equity 102,757 98,502

Total liabilities and stockholders' equity $ 857,449 $ 798,543

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~MAGYAR BANCORP, INC. AND SUBSIDIARY~~

~~Consolidated Statements of Income~~

~~(In Thousands, Except Share and Per Share Data)~~

Three Months Ended Nine Months Ended
June 30, June 30,
2023 2022 2023 2022
(Unaudited)
Interest and dividend income
Loans, including fees $ 9,033 $ 7,018 $ 25,610 $ 20,281
Investment securities and interest earning deposits
Taxable 692 428 1,707 1,023
Tax-exempt 14 11 43 27
Federal Home Loan Bank of New York stock 38 19 92 58
Total interest and dividend income 9,777 7,476 27,452 21,389

Interest expense
Deposits 2,648 420 6,132 1,286
Borrowings 239 92 594 323
Total interest expense 2,887 512 6,726 1,609
Net interest and dividend income 6,890 6,964 20,726 19,780
Provision (credit) for loan losses (81 ) 205 432 376
Net interest and dividend income after provision (credit) for loan losses 6,971 6,759 20,294 19,404

Other income
Service charges 392 284 957 860
Income on bank owned life insurance 92 94 278 275
Interest rate swap fees — 76 57 76
Other operating income 34 21 75 67
Gains on sales of SBA loans 103 134 485 553
Gains on sale of OREO — 67 — 67
Total other income 621 676 1,852 1,898

Other expenses
Compensation and employee benefits 2,966 2,701 8,773 8,096
Occupancy expenses 803 750 2,355 2,255
Professional fees 188 198 572 856
Data processing expenses 148 136 443 409
Marketing and business development 101 143 344 353
OREO expenses 3 6 28 54
FDIC deposit insurance premiums 96 55 243 161
Loan servicing expenses 67 2 138 86
Other expenses 514 441 1,368 1,293
Total other expenses 4,886 4,432 14,264 13,563
Income before income tax expense 2,706 3,003 7,882 7,739
Income tax expense 788 886 2,358 2,250
Net income $ 1,918 $ 2,117 $ 5,524 $ 5,489

Earnings per share - basic $ 0.30 $ 0.31 $ 0.86 $ 0.81
Earnings per share - diluted $ 0.30 $ 0.31 $ 0.86 $ 0.81
Weighted average shares outstanding - basic 6,412,536 6,799,800 6,426,978 6,797,691
Weighted average shares outstanding - diluted 6,412,536 6,799,800 6,426,978 6,797,691

	December 31,			September 30,
	2023			2023
	(Unaudited)
Assets
Cash	$	3,128		$	3,179
Interest earning deposits with banks		47,989			69,353
Total cash and cash equivalents		51,117			72,532

Investment securities - available for sale, at fair value		12,273			10,125
Investment securities - at amortized cost (fair value of $75,508 and $73,728 at December 31, 2023 and September 30, 2023, respectively)		84,333			85,835
Federal Home Loan Bank of New York stock, at cost		2,254			2,286
Loans receivable		728,560			697,400
Allowance for credit losses		(7,683	)		(8,330	)
Bank owned life insurance		18,126			18,030
Accrued interest receivable		4,585			4,337
Premises and equipment, net		12,534			13,339
Other real estate owned ("OREO")		328			328
Other assets		10,312			11,410

Total assets	$	916,739		$	907,292

Liabilities and Stockholders' Equity
Liabilities
Deposits	$	763,548		$	755,453
Escrowed funds		3,723			3,494
Borrowings		28,796			29,515
Accrued interest payable		656			443
Accounts payable and other liabilities		13,477			13,597

Total liabilities		810,200			802,502

Stockholders' equity
Preferred stock: $.01 Par Value, 500,000 shares authorized; at December 31, 2023 and September 30, 2023, none issued		—			—
Common stock: $.01 Par Value, 14,000,000 shares authorized; 7,097,825 shares issued; 6,654,952 and 6,674,184 shares outstanding
at December 31, 2023 and September 30, 2023, respectively, at cost		71			71
Additional paid-in capital		62,962			62,801
Treasury stock: 442,873 and 423,641 shares at December 31, 2023 and September 30, 2023, respectively, at cost		(5,554	)		(5,362	)
Unearned Employee Stock Ownership Plan shares		(3,047	)		(3,097	)
Retained earnings		53,456			52,166
Accumulated other comprehensive loss		(1,349	)		(1,789	)

Total stockholders' equity		106,539			104,790

Total liabilities and stockholders' equity	$	916,739		$	907,292

The accompanying notes are an integral part of these consolidated financial statements.

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Income

(In Thousands, Except Share and Per Share Data)

	Three Months Ended
	December 31,
	2023		2022
	(Unaudited)
Interest and dividend income
Loans, including fees	$	10,082	$	7,959
Investment securities
Taxable		1,406		504
Tax-exempt		14		14
Federal Home Loan Bank of New York stock		55		24
Total interest and dividend income		11,557		8,501

Interest expense
Deposits		4,077		1,474
Borrowings		236		136
Total interest expense		4,313		1,610

Net interest and dividend income		7,244		6,891

Provision for credit losses- loans		384		317
Provision for credit losses- commitments		97		—

Net interest and dividend income after provision for credit losses		6,763		6,574

Other income
Service charges		303		245
Income on bank owned life insurance		95		95
Interest rate swap fees		—		57
Gains on sales of premises and equipment		60		—
Other operating income		22		20
Gains on sales of loans		129		180
Total other income		609		597

Other expenses
Compensation and employee benefits		2,847		2,621
Occupancy expenses		790		761
Professional fees		226		179
Data processing expenses		140		146
Director fees and benefits		224		201
Marketing and business development		97		126
FDIC deposit insurance premiums		103		54
Other expenses		593		493
Total other expenses		5,020		4,581
Income before income tax expense		2,352		2,590
Income tax expense		700		780
Net income	$	1,652	$	1,810

Earnings per share - basic	$	0.26	$	0.28
Earnings per share - diluted	$	0.26	$	0.28
Weighted average shares outstanding - basic		6,387,010		6,456,525
Weighted average shares outstanding - diluted		6,387,010		6,459,446

The accompanying notes are an integral part of these consolidated financial statements.

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(In Thousands)

Three Months Ended Nine Months Ended
June 30, June 30,
2023 2022 2023 2022
(Unaudited)
Net income $ 1,918 $ 2,117 $ 5,524 $ 5,489
Other comprehensive income (loss)
Unrealized gain (loss) on securities available for sale (137 ) (490 ) 247 (1,285 )
Other comprehensive income (loss), before tax (137 ) (490 ) 247 (1,285 )
Deferred income tax effect 34 120 (61 ) 316
Total other comprehensive income (loss) $ (103 ) $ (370 ) $ 186 $ (969 )
Total comprehensive income $ 1,815 $ 1,747 $ 5,710 $ 4,520

	Three Months Ended
	December 31
	2023			2022
	(Unaudited)
Net income	$	1,652		$	1,810
Other comprehensive income
Unrealized gains on securities available for sale		584			206
Other comprehensive income, before tax		584			206
Deferred income tax effect		(144	)		(50	)
Total other comprehensive income	$	440		$	156
Total comprehensive income	$	2,092		$	1,966

The accompanying notes are an integral part of these consolidated financial statements.

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders' Equity

For the Three ~~and Nine~~ Months Ended ~~June 30,~~December 31, 2023 and 2022

(In Thousands, Except for Share and Per-Share Amounts)

Accumulated
Common Stock Additional Unearned Other
Shares Par Paid-In Treasury ESOP Retained Comprehensive
Outstanding Value Capital Stock Shares Earnings Loss Total
(Unaudited)
Balance, March 31, 2023 $ 6,689,790 $ 71 $ 64,096 $ (6,504 ) $ (3,129 ) $ 48,456 $ (1,825 ) $ 101,165
Net income — — — — — 1,918 — 1,918
Dividends paid on common stock ($0.03 per share) — — — — — (192 ) — (192 )
Other comprehensive loss — — — — — — (103 ) (103 )
ESOP shares allocated — — 8 — 16 — — 24
Retirement of 112,996 treasury shares — — (1,242 ) 1,242 — — — —
Purchase of treasury stock (21,218 ) — — (216 ) — — — (216 )
Stock-based compensation expense — — 161 — — — — 161
Balance, June 30, 2023 $ 6,668,572 $ 71 $ 63,023 $ (5,478 ) $ (3,113 ) $ 50,182 $ (1,928 ) $ 102,757

Balance, September 30, 2022 $ 6,745,128 $ 71 $ 63,734 $ (5,793 ) $ (3,169 ) $ 45,773 $ (2,114 ) $ 98,502
Net income — — — — — 5,524 — 5,524
Dividends paid on common stock ($0.17 per share) — — — — — (1,115 ) — (1,115 )
Other comprehensive loss — — — — — — 186 186
Treasury stock used for restricted stock plan 1,000 — (13 ) 13 — — — —
ESOP shares allocated — — 42 — 56 — — 98
Retirement of 112,996 treasury shares — — (1,242 ) 1,242 — — — —
Purchase of treasury stock (77,556 ) — — (940 ) — — — (940 )
Stock-based compensation expense — — 502 — — — — 502
Balance, June 30, 2023 $ 6,668,572 $ 71 $ 63,023 $ (5,478 ) $ (3,113 ) $ 50,182 $ (1,928 ) $ 102,757

Accumulated
Common Stock Additional Unearned Other
Shares Par Paid-In Treasury ESOP Retained Comprehensive
Outstanding Value Capital Stock Shares Earnings Loss Total
(Unaudited)
Balance, March 31, 2022 $ 7,097,825 $ 71 $ 63,697 $ (1,242 ) $ (3,216 ) $ 41,634 $ (1,546 ) $ 99,398
Net income — — — — — 2,117 — 2,117
Dividends paid on common stock ($0.03 per share) — — — — — (204 ) — (204 )
Other comprehensive loss — — — — — — (370 ) (370 )
ESOP shares allocated — — 15 — 24 — — 39
Balance, June 30, 2022 7,097,825 $ 71 $ 63,712 $ (1,242 ) $ (3,192 ) $ 43,547 $ (1,916 ) $ 100,980

Balance, September 30, 2021 7,097,825 $ 71 $ 63,713 $ (1,242 ) $ (3,235 ) $ 39,281 $ (947 ) $ 97,641
Net income — — — — — 5,489 — 5,489
Dividends paid on common stock ($0.18 per share) — — — — — (1,223 ) — (1,223 )
Other comprehensive loss — — — — — — (969 ) (969 )
Common stock acquired by ESOP — — — — (98 ) — — (98 )
ESOP shares allocated — — (1 ) — 141 — — 140
Balance, June 30, 2022 7,097,825 $ 71 $ 63,712 $ (1,242 ) $ (3,192 ) $ 43,547 $ (1,916 ) $ 100,980

																	Accumulated
	Common Stock					Additional					Unearned						Other
	Shares			Par		Paid-In		Treasury			ESOP			Retained			Comprehensive
	Outstanding			Value		Capital		Stock			Shares			Earnings			Loss			Total
	(Unaudited)
Balance, September 30, 2023		6,674,184		$	71	$	62,801	$	(5,362	)	$	(3,097	)	$	52,166		$	(1,789	)	$	104,790
Net income		—			—		—		—			—			1,652			—			1,652
Dividends paid on common stock ($0.11 per share)		—			—		—		—			—			(716	)		—			(716	)
Effect of adopting ASU 2016-13		—			—		—		—			—			354			—			354
Other comprehensive income		—			—		—		—			—			—			440			440
ESOP shares allocated		—			—		—		—			50			—			—			50
Purchase of treasury stock		(19,232	)		—		—		(192	)		—			—			—			(192	)
Stock-based compensation expense		—			—		161		—			—			—			—			161
Balance, December 31, 2023		6,654,952		$	71	$	62,962	$	(5,554	)	$	(3,047	)	$	53,456		$	(1,349	)	$	106,539

The accompanying notes are an integral part of these consolidated financial statements.

																	Accumulated
	Common Stock					Additional					Unearned						Other
	Shares			Par		Paid-In		Treasury			ESOP			Retained			Comprehensive
	Outstanding			Value		Capital		Stock			Shares			Earnings			Loss			Total
	(Unaudited)
Balance, September 30, 2022		6,745,128		$	71	$	63,734	$	(5,793	)	$	(3,169	)	$	45,773		$	(2,114	)	$	98,502
Net income		—			—		—		—			—			1,810			—			1,810
Dividends paid on common stock ($0.11 per share)		—			—		—		—			—			(744	)		—			(744	)
Other comprehensive income		—			—		—		—			—			—			156			156
ESOP shares allocated		—			—		17		—			24			—			—			41
Purchase of treasury stock		(2,194	)		—		—		(27	)		—			—			—			(27	)
Stock-based compensation expense		—			—		180		—			—			—			—			180
Balance, December 31, 2022		6,742,934		$	71	$	63,931	$	(5,820	)	$	(3,145	)	$	46,839		$	(1,958	)	$	99,918

The accompanying notes are an integral part of these consolidated financial statements.

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(In Thousands)

	Nine Months Ended						For the Three Months Ended
	June 30,						December 31,
	2023			2022			2023			2022
	(Unaudited)						(Unaudited)
Operating activities
Net income	$	5,524		$	5,489		$	1,652		$	1,810
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		628			627			217			208
Premium amortization on investment securities, net		112			148			20			43
Provision for loan losses		432			376
Provision for credit losses								481			317
Originations of SBA loans held for sale		(5,450	)		(4,903	)		(1,613	)		(1,825	)
Proceeds from the sales of SBA loans		5,935			5,456			1,741			2,005
Gains on sale of SBA loans		(485	)		(553	)
Gains on the sales of other real estate owned		—			(67	)
Gains on sale of loans								(129	)		(180	)
Gains on the sale of premises and equipment		(9	)		—			(60	)		—
ESOP compensation expense		98			140			50			41
Stock-based compensation expense		502			—			161			180
Deferred income tax (benefit) expense		(237	)		86
Deferred income tax expense (benefit)								221			(237	)
Increase in accrued interest receivable		(665	)		(17	)		(248	)		(348	)
Increase in surrender value of bank owned life insurance		(278	)		(275	)		(95	)		(95	)
Increase in other assets		(57	)		(1,015	)
Increase (decrease) in accrued interest payable		128			(29	)
(Decrease) increase in accounts payable and other liabilities		(1,625	)		1,119
Decrease in other assets								733			160
Increase in accrued interest payable								213			77
Decrease in accounts payable and other liabilities								(120	)		(821	)
Net cash provided by operating activities		4,553			6,582			3,224			1,335

Investing activities
Net increase in loans receivable		(60,547	)		(31,731	)		(31,934	)		(46,554	)
Purchases of loans receivable		(13,350	)		—
Purchases of investment securities held-to-maturity		—			(39,535	)		(2,000	)		—
Purchases of investment securities available-for-sale								(1,953	)		—
Principal repayments on investment securities held-to-maturity		7,858			5,886			3,487			992
Principal repayments on investment securities available-for-sale		698			1,523			384			209
Purchases of bank owned life insurance		—			(3,000	)
Purchases of premises and equipment		(241	)		(246	)
Proceeds from the sale of premises and equipment		19			—
Purchases of premises and equipment, net								(128	)		(10	)
Proceeds from the sale of land								776			—
Investment in other real estate owned		(11	)		(12	)		—			(11	)
Proceeds from other real estate owned		—			434
Purchase of Federal Home Loan Bank stock		(5,747	)		(56	)		(76	)		(2,582	)
Redemption of Federal Home Loan Bank stock		4,143			363			108			1,923
Net cash used in investing activities		(67,178	)		(66,374	)		(31,336	)		(46,033	)

Financing activities
Net increase in deposits		25,739			20,007			8,095			8,350
Purchase of common stock for ESOP		—			(98	)
Net increase in escrowed funds		500			298			229			(39	)
Proceeds from long-term advances		17,000			—			1,690			3,000
Repayments of long-term advances		(3,091	)		(8,072	)		(2,409	)		—
Proceeds from short-term advances		16,000			—
Net change in short-term advances								—			11,100
Cash dividends paid on common stock		(1,115	)		(1,223	)		(716	)		(744	)
Purchase of treasury stock		(940	)		—			(192	)		(27	)
Net cash provided by financing activities		54,093			10,912			6,697			21,640
Net decrease in cash and cash equivalents		(8,532	)		(48,880	)		(21,415	)		(23,058	)
Cash and cash equivalents, beginning of year		30,936			75,201
Cash and cash equivalents, beginning of period								72,532			30,936

Cash and cash equivalents, end of year	$	22,404		$	26,321
Cash and cash equivalents, end of period							$	51,117		$	7,878

Supplemental disclosures of cash flow information
Cash paid for
Interest	$	6,597		$	1,638		$	4,100		$	1,533
Income taxes	$	2,800		$	2,180		$	—		$	—
Non-cash operating activities
Adoption of ASU 2016-13							$	354		$	—

The accompanying notes are an integral part of these consolidated financial statements.

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A – BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Magyar Bancorp, Inc. (the “Company”), its wholly owned subsidiary, Magyar Bank (the “Bank”), and the Bank’s wholly owned subsidiaries Magyar Service Corporation, Hungaria Urban Renewal, LLC, and Magyar Investment Company. All material intercompany transactions and balances have been eliminated. The Company prepares its consolidated financial statements on the accrual basis and in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). The unaudited information furnished herein reflects all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

Operating results for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, ~~2023.~~2024. The September 30, ~~2022~~2023 information has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete consolidated financial statements.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of available-for-sale investment securities, the valuation of other real estate owned (“OREO”), and the assessment of realizability of deferred income tax assets.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of ~~June 30,~~December 31, 2023 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS

In connection with the preparation of quarterly and annual reports in accordance with the Securities and Exchange Commission’s (“SEC”) Securities Exchange Act of 1934, SEC Staff Accounting Bulletin Topic 11.M requires the disclosure of the impact that recently issued accounting standards will have on consolidated financial statements when they are adopted in the future.

In June 2016, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments~~. ASU 2016-13 (“CECL”) requires entities~~ (Topic 326), which changed the impairment model for most financial assets. This update was intended to ~~report “expected”~~improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other ~~commitments~~organizations. The underlying premise of the update is that financial assets measured at amortized cost should be presented at the net amount expected to ~~extend~~be collected, through an allowance for credit ~~rather than~~losses that is deducted from the amortized cost basis. The allowance for credit losses (“ACL”) should reflect management's current ~~“incurred loss” model. These~~estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. The CECL will also require enhanced disclosures to help investors and other financial statement users better understand significant management’s estimates and judgments used in estimating credit losses, as well as the expected increases or decreases of expected credit ~~quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements~~losses that ~~provide additional information about~~have taken place during the ~~amounts recorded in the financial statements.~~

~~In October 2019, the FASB voted~~period. With certain exceptions, transition to defer the effective date of ASU 2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2022 (October 1, 2023 for the Company), and interim periods within those fiscal years. The Company continues to evaluate the impact the new ~~standard~~requirements will ~~have on the accounting for credit losses. The Company may recognize~~be through a ~~one-time~~ cumulative-effect adjustment to ~~the allowance for loan losses~~opening retained earnings as of the beginning of the first reporting period in which the ~~new standard~~guidance is adopted. This update is effective ~~consistent with regulatory expectations set forth in interagency guidance issued at the end of 2016.~~

~~The Company will adopt CECL related~~for SEC filers that are eligible to ~~Financial Instruments -Credit Losses (Topic 326) on of October 1, 2023, using a modified retrospective approach. The Company’s implementationprocess includes scoping, segmentation~~be smaller reporting companies, non-SEC filers, and ~~the design of a methodology appropriate for each respective financial instrument.The process also includes the development of loss forecasting models as well as the incorporation of qualitativeadjustments. Evaluation of technical accounting topics, updates~~all other companies, to ~~our allowance policydocumentation, model validation, governance and reporting, processes and related internal controls, as well as overall operationalreadiness will be completed throughout September 30, 2023 in preparation for adoption.~~fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

~~Based~~The Company adopted ASU 2016-13 on ~~analyses performed during~~October 1, 2023 using the ~~quarter ending June 30,~~modified retrospective approach for all financial assets measured at amortized cost, including loans, held-to-maturity debt securities, available-for-sale debt securities and unfunded commitments. The Company recorded a cumulative effect increase to retained earnings of $492,000 ($346,000 net of taxes), which was comprised of a $1,032,000 ($725,000 net of tax) increase related to loans and $540,000 ($379,000 net of tax) decrease related to unfunded commitments. The Company determined that there was no impact to retained earnings related to held-to-maturity securities as a result of adopting this guidance. The results reported for periods beginning on or after October 1, 2023 ~~as well as an implementation analysis utilizing exposures and forecasts~~are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

The impact of ~~economic conditions as of June 30, 2023,~~ the ~~Company currently expects~~change from the ~~adoption of CECL will result in an adjustment~~incurred loss model to the current expected credit loss model is included in the following table:

	October 1, 2023
			Adoption
	Pre-adoption		Impact			As Reported
	(In thousands)
Assets
ACL on debt securities held-to-maturity	$	—	$	—		$	—
ACL on loans
One-to-four family residential		1,259		7			1,266
Commercial real estate		5,277		(589	)		4,688
Construction		472		(55	)		417
Home equity lines of credit		207		(87	)		120
Commercial business		939		(133	)		806
Other		176		(175	)		1

Liabilities
ACL on unfunded commitments		—		540			540
Total	$	8,330	$	(492	)	$	7,838

Allowance for Credit Losses on Loans

The Company maintains its allowance for credit losses ~~amount~~(“ACL”) at ~~October 1, 2023 in the range of $630,000~~a level that management believes to ~~$950,000, which includes unfunded commitments and held~~be appropriate to ~~maturity debt securities. The impact will be reflected~~absorb estimated credit losses as a cumulative effect adjustment, net of taxes. At June 30, 2023, the allowance for loan losses totaled $8.4 million. As the Company is currently finalizing the execution of its implementation controls and processes, the ultimate impact of the ~~adoption~~date of ~~CECL as~~the Consolidated Statement of ~~October 1, 2023 could differ from~~Financial Condition. The Company established its allowance in accordance with the guidance included in Accounting Standards Codification 326, Financial Instruments – Credit Losses (“ASC 326”). The ACL is a valuation reserve established and maintained by charges against income. Loans, or portions thereof, are charged-off against the ACL when they are deemed uncollectible. The ACL is an estimate of expected credit losses that considers our historical loss experience, the weighted average expected lives of loans, current ~~expectation as it is largely dependent on the~~ economic conditions and forecasts of future economic conditions. The determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans. The ACL is measured on a collective (pool) basis when similar characteristics exist. The Company’s loan portfolio is segmented by loan types that have similar risk characteristics and behave similarly during economic cycles.

Historical credit loss experience is the basis for the estimate of expected credit losses. We apply our historical loss rates to pools of loans with similar risk characteristics using the Weighted-Average Remaining Maturity (“WARM”) method. The remaining contractual life of the pools of loans with similar risk characteristics is adjusted by expected scheduled payments and prepayments. After consideration of the historical loss calculation, management applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information. Our reasonable and supportable forecast adjustment is based on a regional economic indicator obtained from the United States Government Publishing Office. The Company selected eight qualitative metrics which were correlated with the Bank and its peer group’s historical loss patterns. The eight qualitative metrics include: changes in lending policies and procedures, changes in national and local economic conditions as well as business conditions, changes in the nature, complexity, and volume of the portfolio, changes in the experience, ability, and depth of lenders and lending management, changes in the volume and severity of past due and classified loans, changes in the value of collateral securing loans, changes in or the existence of credit concentrations, and changes in the legal and/or regulatory landscape. The adjustments are weighted for relevance before applying to each pool of loans. Each quarter, management reviews the recommended adjustment factors and applies any additional adjustments based on current conditions.

The Company has elected to exclude $4.3 million of accrued interest receivable on loans as of December 31, 2023 from the measurement of its ACL. When a loan is placed on non-accrual status, any outstanding accrued interest is reversed against interest income. Accrued interest on loans is reported in the accrued interest receivable line on the consolidated statements of financial condition.

The ACL for individual loans begins with the use of normal credit review procedures to identify whether a loan no longer shares similar risk characteristics with other pooled loans and, therefore, should be individually assessed. We individually evaluate all commercial loans that meet the following criteria: (1) when it is determined that foreclosure is probable, (2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, or (3) when it is determined by management that a loan does not share similar risk characteristics with other loans. Credit loss estimates are calculated based on the following three acceptable methods for measuring the ACL: (1) the present value of expected future cash flows discounted at the ~~date~~loan’s original effective interest rate; (2) the loan’s observable market price; or (3) the fair value of ~~adoption, but~~ the ~~cumulative effect adjustment~~collateral when the loan is collateral dependent. Our individual loan evaluations consist primarily of the fair value of collateral method because most of our loans are collateral dependent. Collateral values are reduced to ~~retained earnings~~consider expected disposition costs when appropriate. A charge-off is recorded when the estimated fair value of the loan is less than the loan balance.

Allowance for Credit Losses on Unfunded Loan Commitments

The Company estimates expected credit losses over the contractual period in which the Bank is exposed to credit risk via a contractual obligation to extend credit unless that obligation is unconditionally cancellable by the Bank. The allowance for credit losses on unfunded loan commitments is included in accounts payable and other liabilities in the Company’s Statement of Financial Condition and is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur, the amount of funding that will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

Allowance for Credit Losses on Held-to-Maturity Securities

The Company accounts for its held-to-maturity securities in accordance with Accounting Standards Codification (ASC) 326-20, Financial Instruments – Credit Loss – Measured at Amortized Cost, which requires that the Company measure expected credit losses on held-to-maturity debt securities on a collective basis by major security type. The estimate of expected credit losses considers historical credit loss information that is adjusted for current economic conditions and reasonable and supportable forecasts.

The Company classifies its held-to-maturity debt securities into the following major security types: obligations of U.S. government agencies, obligations of U.S. government-sponsored enterprises, private label mortgage-backed securities, obligations of state and political subdivisions and corporate securities. Credit ratings of held-to-maturity debt securities, which are a significant input in calculating the expected credit loss, are reviewed on a quarterly basis. Based on the credit ratings of our held-to-maturity securities and our historical experience of no losses, the Company determined that an allowance for credit losses on its’ held-to-maturity portfolio is not required.

Accrued interest receivable on held-to-maturity debt securities totaled $215 thousand as of December 31, 2023 and is included within accrued interest receivable on the Company’s Consolidated Statement of Financial Condition. This amount is excluded from the estimate of expected credit losses. Generally, held-to-maturity debt securities are classified as nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When held-to-maturity debt securities are placed on nonaccrual status, unpaid interest credited to income is reversed against interest income.

Allowance for Credit Losses on Available-for-Sale Securities

The Company measures expected credit losses on available-for-sale debt securities when the Bank intends to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the amortized cost basis of the security is written down to fair value through income. For available-for-sale debt securities that do not meet the previously mentioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the ~~change~~credit loss, equal to the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

The ACL on available-for-sale debt securities is included within the recorded balance of securities available-for-sale on the Consolidated Statements of Financial Condition. Changes in the allowance for credit losses ~~upon CECL adoption will not have a material effect~~are recorded within provision for credit losses on the Consolidated Statements of Income. Losses are charged against the allowance when the Company believes the collectability of an available-for-sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available-for-sale debt securities totaled $26 thousand as of December 31, 2023 and is included within accrued interest receivable on the Company’s ~~capital and regulatory capital amounts and ratios.~~

~~In March 2022,~~Consolidated Statement of Financial Condition. This amount is excluded from the ~~FASB issued ASU 2022-02,~~ ~~Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures~~ estimate of expected credit losses. Generally, available-for-sale debt securities are classified as ~~an update~~nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual status, unpaid interest credited to ~~Financial Instruments—Credit Losses (Topic 326).~~ The amendments in this ASU eliminate the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. In addition, ASU 2022-02 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, ~~Financial Instruments—Credit Losses—Measured at Amortized Cost~~~~. The amendments in ASU 2022-02 will be effective for the Company with its adoption of ASU 2016-13.~~income is reversed against interest income.

NOTE C - CONTINGENCIES

The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of this litigation, if any, would not have a material adverse effect on the Company’s consolidated financial position or results of ~~operations.~~operations as presented in this report.

NOTE D - EARNINGS PER SHARE

The following table presents a calculation of basic and diluted earnings per share for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022. Basic and diluted earnings per share were calculated by dividing net income by the weighted-average number of shares outstanding for the periods.

	Three Months Ended				Nine Months Ended				For the Three Months
	June 30,				June 30,				Ended December 31,
	2023		2022		2023		2022		2023		2022
	(Dollars in thousands, except share and per share data)								(Dollars in thousands, except share and per share data)

Income applicable to common shares	$	1,918	$	2,117	$	5,524	$	5,489	$	1,652	$	1,810
Weighted average shares outstanding - basic		6,412,536		6,799,800		6,426,978		6,797,691
Weighted average shares outstanding - diluted		6,412,536		6,799,800		6,426,978		6,797,691
Weighted average common shares outstanding- basic										6,387,010		6,456,525
Potential diliutive common stock equivalents										—		2,921
Weighted average common shares outstanding- diluted										6,387,010		6,459,446
Earnings per share - basic	$	0.30	$	0.31	$	0.86	$	0.81	$	0.26	$	0.28
Earnings per share - diluted	$	0.30	$	0.31	$	0.86	$	0.81	$	0.26	$	0.28

Options to purchase 293,200 shares of common stock at a weighted average strike price of $12.58 and ~~155,400~~124,320 shares of restricted shares at a weighted average price of $12.63 were outstanding at ~~June 30,~~December 31, 2023 but were not included in the calculation of diluted EPS because they were anti-dilutive. ~~There were no outstanding stock awards or options~~Options to purchase 293,200 shares of common stock at ~~June 30,~~a weighted average strike price of $12.58 and 156,400 shares of restricted shares at a weighted average price of $12.63 were outstanding at December 31, 2022.

NOTE E – STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

On August 25, 2022, the Company adopted the 2022 Equity Compensation Plan which provided for grants of up to 547,400 shares to be allocated between incentive and non-qualified stock options and restricted stock awards to officers, employees and directors of the Company and Magyar Bank. At ~~June 30,~~December 31, 2023, 293,200 options and ~~155,400~~124,320 shares of restricted stock had been awarded from the plan.

The following is a summary of the status of the Company’s stock option activity and related information for ~~its option plan for~~ the ~~nine~~three months ended ~~June 30,~~December 31, 2023:

Shares Weighted
Average
Exercise Price Weighted
Average
Remaining
Contractual Life
in Years
Aggregate
Intrinsic
Value

Balance at September 30, 2022 293,200 $ 12.58 10.0 $ —
Granted — — — —
Exercised — — — —
Forfeited — — — —
Expired — — — —
Balance at June 30, 2023 293,200 $ 12.58 9.2 —

Exercisable at June 30, 2023 — $ — — —

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years		Aggregate Intrinsic Value

Balance at September 30, 2023		293,200	$	12.58		8.98	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Balance at December 31, 2023		293,200	$	12.58		8.73	$	—

Exercisable at December 31, 2023		58,640	$	12.58		8.73	$	—

The following is a summary of the status of the Company’s non-vested restricted shares for the ~~nine~~three months ended ~~June 30,~~December 31, 2023:

	Shares			Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Balance at September 30, 2022		156,400			12.63
Balance at September 30, 2023							124,320	$	12.63
Granted		—			—		—		—
Vested		(1,000	)		12.70		—		—
Forfeited		—			—		—		—
Balance at June 30, 2023		155,400		$	12.63
Balance at December 31, 2023							124,320	$	12.63

Stock option and stock award expenses included with compensation expense were $63,000 and $98,000 for the three months ended ~~June 30,~~December 31, 2023 and ~~$195,000~~$69,000 and ~~$307,000~~$111,000 for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. At December 31, 2023, ~~respectively. There were no stock option or stock award expenses~~total compensation cost not yet recognized for the ~~nine months ended June 30, 2022.~~Company’s unvested stock options and stock awards was $2.4 million. The Company had no other stock-based compensation plans as of ~~June 30,~~December 31, 2023 except as disclosed below.

On December 8, 2022, the Company announced the ~~completion of its third stock repurchase program, under which 354,891 shares had been repurchased at an average price of $12.90. The Company also announced the~~ authorization of ~~an additional~~fourth stock repurchase plan pursuant to which the Company intends to repurchase up to an additional 5% of its outstanding shares, or up to 337,146 shares, under which ~~75,362~~120,062 shares had been repurchased at an average price of ~~$12.11.~~$11.51 through December 31, 2023. Under this stock repurchase program, ~~261,784~~217,084 shares of the 337,146 shares authorized remained available for repurchase as of ~~June 30,~~December 31, 2023. The Company’s intended use of the repurchased shares is for general corporate purposes. The Company held treasury stock shares totaling ~~429,253~~442,873 at ~~June 30,~~December 31, 2023. The timing of the repurchases will depend on certain factors, including but not limited to, market conditions and prices, the Company’s liquidity requirements and alternative uses of capital.

The Company has an Employee Stock Ownership Plan ("ESOP") for the benefit of employees who meet certain eligibility requirements. The ESOP trust purchases shares of common stock in the open market using proceeds of a loan from the Company. The loan is secured by shares of the Company’s stock. The Bank makes cash contributions to the ESOP on an annual basis sufficient to enable the ESOP to make the required loan payments to the Company. As the debt is repaid, shares are released as collateral and allocated to qualified employees. Accordingly, the shares pledged as collateral are reported as unearned ESOP shares in the Consolidated Balance Sheets. The Company accounts for its ESOP in accordance with FASB ASC Topic 718, “Employer’s Accounting for Employee Stock Ownership Plans.” As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations.

In connection with the Company’s second-step stock offering during its fiscal year ending September 30, 2021, the ESOP trustees purchased 312,800 shares of the Company’s common stock for $3.4 million, reflecting an average cost per share of $10.77. The ESOP loan bears a ~~variable~~fixed interest rate ~~that adjusts annually to Prime Rate (7.50% on January 1, 2023)~~of 3.25% with principal and interest payable annually in equal installments over ~~thirty~~30 years.

At ~~June 30,~~December 31, 2023, ESOP shares allocated to participants totaled ~~22,487.~~170,335. Unallocated ESOP shares held in suspense totaled 290,313 ~~at June 30, 2023 and the~~with an aggregate fair value ~~was $3.0~~of $3.3 million. The Company's contribution expense for the ESOP was ~~$98,000~~$50,000 and ~~$140,000~~$41,000 for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 and 2022, respectively.

NOTE F – OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) includes net income as well as certain other items which result in a change to equity during the period. The Company recorded no reclassification adjustments during the three months ended December 31, 2023 and ~~nine month periods ending June 30, 2023.~~2022. The components of other comprehensive income (loss) and the related income tax effects are as follows:

	Three Months Ended June 30,																Three Months Ended December 31,
	2023								2022								2023							2022
				Tax		Net of						Tax		Net of					Tax			Net of				Tax			Net of
	Before Tax			(Benefit)		Tax			Before Tax			(Benefit)		Tax			Before Tax		(Benefit)			Tax		Before Tax		(Benefit)			Tax
	Amount			Expense		Amount			Amount			Expense		Amount			Amount		Expense			Amount		Amount		Expense			Amount
	(In thousands)																(In thousands)
Unrealized holding gain (loss) arising during period on:
Available-for-sale investments	$	(137	)	$	34	$	(103	)	$	(490	)	$	120	$	(370	)	$	584	$	(144	)	$	440	$	206	$	(50	)	$	156
Other comprehensive income (loss), net	$	(137	)	$	34	$	(103	)	$	(490	)	$	120	$	(370	)	$	584	$	(144	)	$	440	$	206	$	(50	)	$	156

Nine Months Ended June 30,
2023 2022
Tax Net of Tax Net of
Before Tax (Benefit) Tax Before Tax (Benefit) Tax
Amount Expense Amount Amount Expense Amount
(In thousands)
Unrealized holding gain (loss) arising during period on:
Available-for-sale investments $ 247 $ (61 ) $ 186 $ (1,285 ) $ 316 $ (969 )
Other comprehensive income (loss), net $ 247 $ (61 ) $ 186 $ (1,285 ) $ 316 $ (969 )

(a) All amounts are net of tax. Related income tax expense or benefit calculated using an income tax rate approximating 25% for available-for-sale investments.

NOTE G – FAIR VALUE DISCLOSURES

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The securities available-for-sale and the Company’s derivative assets and liabilities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity securities, mortgage servicing rights, loans receivable and OREO. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.

In accordance with ASC 820, the Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

	Level 1 -	Valuation is based upon quoted prices for identical instruments traded in active markets.

	Level 2 -	Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

	Level 3 -	Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.

The Company based its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following is a description of valuation methodologies used for assets measured at fair value on a recurring basis.

Securities available-for-sale

The securities available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The securities available-for-sale portfolio consists of U.S government-sponsored mortgage-backed securities. The fair values of these securities are obtained from an independent nationally recognized pricing service. An independent pricing service provides the Company with prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

Derivatives

Magyar Bank executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. The fair values of such derivatives are based on valuation models from a third party using current market terms (including interest rates and fees), the remaining terms of the agreements and the credit worthiness of the counter party as of the measurement date (Level 2).

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a recurring basis.

June 30, 2023 Total Level 1 Level 2 Level 3
Assets: (In thousands)
Securities available for sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential $ 100 $ — $ 100 $ —
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential 8,634 — 8,634 —
Total securities available for sale $ 8,734 $ — $ 8,734 $ —
Derivative assets 2,383 — 2,383 —
Total assets $ 11,117 $ — $ 11,117 $ —

Liabilities:
Derivative liabilities $ 2,383 $ — $ 2,383 $ —
Total Liabilities $ 2,383 $ — $ 2,383 $ —


September 30, 2022	Total		Level 1		Level 2		Level 3
December 31, 2023									Total		Level 1		Level 2		Level 3
Assets:									(In thousands)
Securities available for sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	107	$	—	$	107	$	—	$	95	$	—	$	95	$	—
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		9,122		—		9,122		—		12,178		—		12,178		—
Total securities available for sale	$	9,229	$	—	$	9,229	$	—	$	12,273	$	—	$	12,273	$	—
Derivative assets		2,487		—		2,487		—		1,961		—		1,961		—
Total assets	$	11,716	$	—	$	11,716	$	—	$	14,234	$	—	$	14,234	$	—

Liabilities:
Derivative liabilities	$	2,487	$	—	$	2,487	$	—	$	1,961	$	—	$	1,961	$	—
Total Liabilities	$	2,487	$	—	$	2,487	$	—	$	1,961	$	—	$	1,961	$	—

September 30, 2023
Assets:
Securities available for sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential									$	92	$	—	$	92	$	—
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential										10,033		—		10,033		—
Total securities available for sale									$	10,125	$	—	$	10,125	$	—
Derivative assets										2,579		—		2,579		—
Total assets									$	12,704	$	—	$	12,704	$	—

Liabilities:
Derivative liabilities									$	2,579	$	—	$	2,579	$	—
Total Liabilities									$	2,579	$	—	$	2,579	$	—

The following is a description of valuation methodologies used for assets measured at fair value on a non-recurring basis.

~~Impaired~~Collateral Dependent Loans

~~Loans which meet certain criteria~~Collateral dependent loans are ~~evaluated individually for impairment. A loan is impaired when, based on current information~~measured and ~~events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms~~reported at fair value through specific allocations of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the loan agreement. Three impairment measurement methods are used, depending upon the collateral securing the asset: 1) the present value of expected future cash flows discounted at the loan’s effective interest rate (the rate of return implicit in the loan); 2) the asset’s observable market price; or 3)allowance for credit losses based on the fair value of the collateral, less anticipated selling and disposition costs, if the asset is collateral dependent. The regulatory agencies require the last method for loans from which repayment is expected to be provided solely by the underlying collateral. The Company’s impaired loans are generally collateral dependent and, as such, are carried at the estimated fair value of the collateral less estimated selling costs. Fair value is estimated through current appraisals, and adjusted by management as necessary, to reflect current market conditions and, as such, are generally classified as Level 3.

Appraisals of collateral securing impaired loans are conducted by approved, qualified, and independent third-party appraisers. Such appraisals are ordered via the Company’s credit administration department, independent from the lender who originated the loan, once the loan is deemed impaired, as described in the previous paragraph. Impaired loans are generally re-evaluated with an updated appraisal within one year of the last appraisal. The Company discounts the appraised “as is” value of the collateral for estimated selling and disposition costs and compares the resulting fair value of collateral to the outstanding loan amount. If the outstanding loan amount is greater than the discounted fair value, the Company requires a reduction in the outstanding loan balance or additional collateral before considering an extension to the loan. If the borrower is unwilling or unable to reduce the loan balance or increase the collateral securing the loan, it is deemed impaired and the difference between the loan amount and the fair value of collateral, net of estimated selling and disposition costs, is charged off through a reduction of the allowance for loan loss.

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a non-recurring basis at ~~June 30,~~December 31, 2023 and September 30, ~~2022.~~2023.

June 30, 2023 Total Level 1 Level 2 Level 3
(In thousands)

Impaired loans $ 777 $ — $ — $ 777
Total $ 777 $ — $ — $ 777

September 30, 2022	Total		Level 1		Level 2		Level 3
	(In thousands)								Total		Level 1		Level 2		Level 3
At December 31, 2023									(In thousands)

Collateral dependent loans									$	777	$	—	$	—	$	777
Total									$	777	$	—	$	—	$	777


At September 30, 2023

Impaired loans	$	5,659	$	—	$	—	$	5,659	$	777	$	—	$	—	$	777
Total	$	5,659	$	—	$	—	$	5,659	$	777	$	—	$	—	$	777

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Company has utilized Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements
(Dollars in thousands)

Fair Value Valuation
June 30, 2023 Estimate Techniques Unobservable Input Range (Weighted Average)
Impaired loans $ 777 Appraisal of collateral ⁽¹⁾ Appraisal adjustments ⁽²⁾ -50% to -8.0% (-19.4%)

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands)

Fair Value Valuation
September 30, 2022 Estimate Techniques Unobservable Input Range (Weighted Average)
Impaired loans $ 5,659 Appraisal of collateral ⁽¹⁾ Appraisal adjustments ⁽²⁾ 0% to -31.7% (-9.9%)

	Fair Value		Valuation
December 31, 2023	Estimate		Techniques	Unobservable Input	Range (Weighted Average)

Collateral dependent loans	$	777	Appraisal of collateral ⁽¹⁾	Appraisal adjustments ⁽²⁾	-50% to -8.0% (-12.0%)


	Fair Value		Valuation
September 30, 2023	Estimate		Techniques	Unobservable Input	Range (Weighted Average)

Impaired loans	$	777	Appraisal of collateral (1)	Appraisal adjustments (2)	-50% to -8.0% (-19.4%)

⁽¹⁾

Fair value is generally determined through independent appraisals for the underlying collateral, which generally include various level 3 inputs which are not identifiable.

⁽²⁾

Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments carried at cost or amortized cost as of ~~June 30,~~December 31, 2023 and September 30, ~~2022.~~2023. For short-term financial assets such as cash and cash equivalents and accrued interest receivable, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as interest-bearing demand, NOW, and money market savings deposits, the carrying amount is a reasonable estimate of fair value due to these products being payable on demand and having no stated maturity.

Carrying Fair Fair Value Measurement Placement
Value Value (Level 1) (Level 2) (Level 3)
(In thousands)
June 30, 2023
Financial instruments - assets
Investment securities held to maturity $ 83,720 $ 73,337 $ — $ 73,337 $ —
Loans 693,308 666,752 — — 666,752

Financial instruments - liabilities
Certificates of deposit including retirement certificates 103,375 102,959 — 102,959 —
Borrowings 45,534 44,567 — 44,567 —

September 30, 2022
Financial instruments - assets
Investment securities held-to-maturity $ 91,646 $ 79,914 $ — $ 79,914 $ —
Loans 619,843 592,804 — — 592,804

Financial instruments - liabilities
Certificates of deposit 82,609 81,289 — 81,289 —
Borrowings 15,625 14,762 — 14,762 —

	Carrying		Fair		Fair Value Measurement Placement
	Value		Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2023
Financial instruments - assets
Investment securities held to maturity	$	84,333	$	75,508	$	—	$	75,508	$	—
Loans		728,560		703,158		—		—		703,158

Financial instruments - liabilities
Certificates of deposit including retirement certificates		112,463		110,530		—		110,530		—
Borrowings		28,796		27,930		—		27,930		—

September 30, 2023
Financial instruments - assets
Investment securities held-to-maturity	$	85,835	$	73,728	$	—	$	73,728	$	—
Loans		689,070		664,331		—		—		664,331

Financial instruments - liabilities
Certificates of deposit including retirement certificates		104,668		101,216		—		101,216		—
Borrowings		29,515		28,177		—		28,177		—

NOTE H - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at ~~June 30,~~December 31, 2023:

			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
June 30, 2023	Cost		Gains		Losses			Value
December 31, 2023										Cost		Gains		Losses			Value
	(In thousands)									(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	109	$	—	$	(9	)	$	100	$	103	$	—	$	(8	)	$	95
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		10,296		—		(1,662	)		8,634		13,551		39		(1,412	)		12,178
Total securities available-for-sale	$	10,405	$	—	$	(1,671	)	$	8,734	$	13,654	$	39	$	(1,420	)	$	12,273
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	5,197	$	—	$	(731	)	$	4,466	$	4,986	$	—	$	(677	)	$	4,309
Mortgage-backed securities - commercial		584		—		(2	)		582		2,484		—		(22	)		2,462
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed-securities - residential		46,422		—		(7,093	)		39,329		47,199		—		(6,229	)		40,970
Debt securities		24,835		—		(1,954	)		22,881		22,999		6		(1,378	)		21,627
Private label mortgage-backed securities - residential		211		—		(11	)		200		203		—		(10	)		193
Obligations of state and political subdivisions		3,471		3		(398	)		3,076		3,462		5		(324	)		3,143
Corporate securities		3,000		—		(197	)		2,803		3,000		—		(196	)		2,804
Total securities held-to-maturity	$	83,720	$	3	$	(10,386	)	$	73,337	$	84,333	$	11	$	(8,836	)	$	75,508
Total investment securities	$	94,125	$	3	$	(12,057	)	$	82,071	$	97,987	$	50	$	(10,256	)	$	87,781

The Company monitors the credit quality of held-to-maturity debt securities, primarily through their credit ratings by nationally recognized statistical ratings organizations, on a quarterly basis. At December 31, 2023, there were no non-performing held-to-maturity debt securities and no allowance for credit losses were required. The majority of the investment securities are explicitly or implicitly guaranteed by the United States government, and any estimate of expected credit losses would be insignificant to the Company. The following table summarizes the amortized cost of held-to-maturity debt securities at December 31, 2023, aggregated by credit quality indicator:

	Credit Rating
	AAA/AA/A		BBB/BB/B		Non-rated
December 31, 2023	(In thousands)
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	4,986	$	—	$	—
Mortgage-backed securities - commercial		2,484		—		—
Obligations of U.S. government-sponsored enterprises:
Mortgage backed securities - residential		47,199		—		—
Debt securities		22,999		—		—
Private label mortgage-backed securities - residential		—		—		203
Obligations of state and political subdivisions		3,462		—		—
Corporate securities		—		3,000		—
Totals	$	81,130	$	3,000	$	203

The contractual maturities of debt securities, municipal bonds and certain information regarding mortgage-backed securities ~~available-for-sale and held-to-maturity~~ at ~~June 30,~~December 31, 2023 are summarized in the following table:

June 30, 2023
Amortized Fair
Securities available-for-sale Cost Value
(In thousands)
Due within 1 year $ — $ —
Due after 1 but within 5 years — —
Due after 5 but within 10 years — —
Due after 10 years — —
Total debt securities — —

Mortgage-backed securities:
Residential 10,405 8,734
Commercial — —
Total $ 10,405 $ 8,734

	June 30, 2023				December 31, 2023
	Amortized		Fair		Amortized		Fair
Securities held-to-maturity	Cost		Value
					Cost		Value
	(In thousands)				(In thousands)
Due within 1 year	$	7,836	$	7,652	$	4,000	$	3,966
Due after 1 but within 5 years		18,527		16,926		20,526		19,315
Due after 5 but within 10 years		4,943		4,182		4,935		4,293
Due after 10 years		—		—		—		—
Total debt securities		31,306		28,760		29,461		27,574

Mortgage-backed securities:
Mortgage backed securities:
Residential		51,830		43,995		66,042		57,745
Commercial		584		582		2,484		2,462
Total	$	83,720	$	73,337	$	97,987	$	87,781

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, ~~2022:~~2023:

Gross Gross
Amortized Unrealized Unrealized Fair
September 30, 2022 Cost Gains Losses Value
(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage backed securities - residential $ 118 $ — $ (11 ) $ 107
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential 11,029 — (1,907 ) 9,122
Total securities available for sale $ 11,147 $ — $ (1,918 ) $ 9,229
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential $ 5,525 $ — $ (717 ) $ 4,808
Mortgage-backed securities - commercial 631 — — 631
Obligations of U.S. government-sponsored enterprises:
Mortgage backed securities - residential 48,961 12 (7,548 ) 41,425
Debt securities 24,821 — (2,395 ) 22,426
Private label mortgage-backed securities - residential 224 — (10 ) 214
Obligations of state and political subdivisions 3,484 — (638 ) 2,846
Corporate securities 8,000 — (436 ) 7,564
Total securities held to maturity $ 91,646 $ 12 $ (11,744 ) $ 79,914
Total investment securities $ 102,793 $ 12 $ (13,662 ) $ 89,143

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2023	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage backed securities - residential	$	106	$	—	$	(14	)	$	92
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		11,984		—		(1,951	)		10,033
Total securities available for sale	$	12,090	$	—	$	(1,965	)	$	10,125
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	5,070	$	—	$	(850	)	$	4,220
Mortgage-backed securities - commercial		2,509		—		(16	)		2,493
Obligations of U.S. government-sponsored enterprises:
Mortgage backed securities - residential		48,086		—		(8,480	)		39,606
Debt securities		23,497		—		(1,947	)		21,550
Private label mortgage-backed securities - residential		207		—		(12	)		195
Obligations of state and political subdivisions		3,466		—		(605	)		2,861
Corporate securities		3,000		—		(197	)		2,803
Total securities held to maturity	$	85,835	$	—	$	(12,107	)	$	73,728
Total investment securities	$	97,925	$	—	$	(14,072	)	$	83,853

As of ~~June 30,~~December 31, 2023 investment securities having an estimated fair value of approximately ~~$12.8~~$12.2 million were pledged to secure public deposits.

NOTE I – ~~IMPAIRMENT OF~~CREDIT LOSSES ON INVESTMENT SECURITIES AVAILABLE-FOR-SALE

The Company recognizes ~~credit-related other-than-temporary impairment~~an allowance for credit losses on debt securities in earnings through a provision for credit losses while noncredit-related ~~other-than-temporary~~ impairment on debt securities not expected to be sold are recognized in other comprehensive income.

The Company reviews its investment portfolio on a quarterly basis for indications of ~~impairment.~~credit losses. This review includes analyzing ~~the length of time and~~ the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. The Company evaluates its intent and ability to hold debt securities based upon its investment strategy for the particular type of security and its cash flow needs, liquidity position, capital adequacy and interest rate risk position. In addition, the risk of future ~~other-than-temporary impairment~~credit losses may be influenced by prolonged recession in the U.S. economy, changes in real estate values and interest deferrals.

Investment securities with fair values greater than their amortized cost contain unrealized gains. Investment securities with fair values less than their amortized cost contain unrealized losses. Details of available-for-sale securities with unrealized losses at ~~June 30,~~December 31, 2023 ~~and September 30, 2022~~ are as follows:

Less Than 12 Months 12 Months Or Greater Total
Number of Fair Unrealized Fair Unrealized Fair Unrealized
Securities Value Losses Value Losses Value Losses
June 30, 2023 (Dollars in thousands)
Obligations of U.S. government agencies:
Mortgage-backed securities - residential 6 $ — $ — $ 4,567 $ (740 ) $ 4,567 $ (740 )
Mortgage-backed securities - commercial 1 — — 582 (2 ) 582 (2 )
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential 50 442 (18 ) 47,521 (8,737 ) 47,963 (8,755 )
Debt securities 14 — — 22,881 (1,954 ) 22,881 (1,954 )
Private label mortgage-backed securities residential 1 — — 200 (11 ) 200 (11 )
Obligations of state and political subdivisions 6 522 (6 ) 2,245 (392 ) 2,767 (398 )
Corporate securities 1 — — 2,804 (197 ) 2,804 (197 )
Total 79 $ 964 $ (24 ) $ 80,800 $ (12,033 ) $ 81,764 $ (12,057 )

September 30, 2022
Obligations of U.S. government agencies:
Mortgage-backed securities - residential 6 $ 2,364 $ (140 ) $ 2,551 $ (588 ) $ 4,915 $ (728 )
Mortgage-backed securities - commercial 1 631 — — — 631 —
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential 49 21,180 (2,795 ) 29,088 (6,660 ) 50,268 (9,455 )
Debt securities 14 11,664 (660 ) 10,763 (1,735 ) 22,427 (2,395 )
Private label mortgage-backed securities residential 1 215 (10 ) — — 215 (10 )
Obligations of state and political subdivisions 7 1,268 (181 ) 1,577 (457 ) 2,845 (638 )
Corporate securities 2 2,646 (353 ) 4,917 (83 ) 7,563 (436 )
Total 80 $ 39,968 $ (4,139 ) $ 48,896 $ (9,523 ) $ 88,864 $ (13,662 )

			Less Than 12 Months					12 Months Or Greater					Total
	Number of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Securities		Value		Losses			Value		Losses			Value		Losses
December 31, 2023	(Dollars in thousands)
Obligations of U.S. government agencies:
Mortgage-backed securities - residential		1	$	—	$	—		$	95	$	(8	)	$	95	$	(8	)
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential		9		1,879		(9	)		7,929		(1,403	)		9,808		(1,412	)
Total		10	$	1,879	$	(9	)	$	8,024	$	(1,411	)	$	9,903	$	(1,420	)

Prior to the adoption of ASU 2016-13, details of our entire investment portfolio were required to be disclosed. Accordingly, details of our held-to-maturity and available-for-sale investment securities with unrealized losses at September 30, 2023 were as follows:

			Less Than 12 Months					12 Months Or Greater					Total
	Number of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Securities		Value		Losses			Value		Losses			Value		Losses
September 30, 2023	(Dollars in thousands)
Obligations of U.S. government agencies:
Mortgage-backed securities - residential		6	$	—	$	—		$	4,312	$	(864	)	$	4,312	$	(864	)
Mortgage-backed securities - commercial		2		1,926		(14	)		567		(2	)		2,493		(16	)
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential		50		4,938		(49	)		44,485		(10,382	)		49,423		(10,431	)
Debt securities		12		—		—			21,550		(1,947	)		21,550		(1,947	)
Private label mortgage-backed securities residential		1		—		—			195		(12	)		195		(12	)
Obligations of state and political subdivisions		7		789		(43	)		2,072		(562	)		2,861		(605	)
Corporate securities		1		—		—			2,803		(197	)		2,803		(197	)
Total		79	$	7,653	$	(106	)	$	75,984	$	(13,966	)	$	83,637	$	(14,072	)

The investment securities listed above currently have fair values less than amortized cost and therefore contain unrealized losses. The Company evaluated these securities and determined that the decline in value was primarily related to fluctuations in the interest rate environment and were not related to any company or industry specific event.

The Company anticipates full recovery of amortized costs with respect to these securities. The Company does not intend to sell these securities and has determined that it is not more likely than not that the Company would be required to sell these securities prior to maturity or market price recovery. Management has considered factors regarding ~~other than temporarily impaired securities~~credit losses and determined that there are no ~~securities with impairment that is other than temporary~~allowance for credit loss was required as of ~~June 30, 2023 and September 30, 2022.~~December 31, 2023.

NOTE J – LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR ~~LOAN~~CREDIT LOSSES

Loans receivable, net were comprised of the following:

	June 30,			September 30,			December 31,			September 30,
	2023			2022			2023			2023
	(In thousands)						(In thousands)

One-to-four family residential	$	236,633		$	214,377		$	234,156		$	237,683
Commercial real estate		402,349			342,791			407,346			389,134
Construction		19,249			15,230
Home equity lines of credit		18,737			18,704
Construction and land								34,641			21,853
Home equity loans and lines of credit								24,069			16,983
Commercial business		23,129			34,672			27,043			30,194
Other		2,433			3,130			2,239			2,359
Total loans receivable		702,530			628,904			729,494			698,206
Net deferred loan fees		(844	)		(628	)
Allowance for loan losses		(8,378	)		(8,433	)
Net deferred loan costs								(934	)		(806	)
Total loans receivable, net	$	693,308		$	619,843		$	728,560		$	697,400

The segments of the Company’s loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The residential mortgage loan segment is further disaggregated into two classes: first lien, amortizing term loans, and the combination of second lien amortizing term loans and home equity lines of credit. The commercial loan segment is further disaggregated into three classes: loans secured by multifamily structures, loans secured by owner-occupied commercial structures, and loans secured by non-owner occupied nonresidential properties. The construction loan segment consists primarily of developers or investors for the purpose of acquiring, developing and constructing residential or commercial structures and to a lesser extent one-to-four family residential construction loans made to individuals for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built. Construction loans to developers and investors have a higher risk profile because the ultimate buyer, once development is completed, is generally not known at the time of the loan. The commercial business loan segment consists of loans made for the purpose of financing the activities of commercial customers and consists ~~primarily~~ of revolving lines of ~~credit.~~credit and loans partially guaranteed by the U.S. Small Business Administration. The consumer loan segment consists primarily of stock-secured installment loans, but also includes unsecured personal loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all segments for possible impairment if the loan either is in nonaccrual status, or is risk rated Substandard and is 90 days or more past due. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Once the determination has been made that a loan is impaired, the recorded investment in the loan is compared to the fair value of the loan using one of three methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s current observable market price; or (c) the fair value of the collateral securing the loan, less anticipated selling and disposition costs. The method is selected on a loan-by loan basis, with management primarily utilizing the fair value of collateral method. If there is a shortfall between the fair value of the loan and the recorded investment in the loan, the Company charges the difference to the allowance for loan loss as a charge-off and carries the impaired loan on its books at fair value. It is the Company’s policy to evaluate impaired loans on an annual basis to ensure the recorded investment in a loan does not exceed its fair value.

The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary for the periods presented:

Impaired
Loans with
Impaired Loans with No Specific
Specific Allowance Allowance Total Impaired Loans
Unpaid
Recorded Related Recorded Recorded Principal
Investment Allowance Investment Investment Balance
June 30, 2023 (In thousands)

One-to-four family residential $ — $ — $ 1,788 $ 1,788 $ 1,788
Commercial real estate — — 1,138 1,138 1,138
Construction — — 777 777 842
Commercial business — — 148 148 148
Total impaired loans $ — $ — $ 3,851 $ 3,851 $ 3,916

September 30, 2022

One-to four-family residential $ — $ — $ 1,512 $ 1,512 $ 1,512
Commercial real estate — — 1,159 1,159 1,159
Construction 2,835 114 — 2,835 2,900
Commercial business — — 153 153 153
Total impaired loans $ 2,835 $ 114 $ 2,824 $ 5,659 $ 5,724

The Company’s impaired loans include delinquent non-accrual loans and performing Troubled Debt Restructurings (“TDRs”), as TDRs remain impaired loans until fully repaid. There was one TDR loan totaling $106,000 during the nine months ended June 30, 2023 and there were two TDR loans totaling $373,000 during the nine months ended June 30, 2022.

~~The following tables present the average recorded investment in impaired loans and the interest income recognized on impaired loans for the three and nine months ended June 30, 2023 and 2022.~~

Three Months Ended Nine Months Ended
June 30, 2023 June 30, 2023
(In thousands)

One-to-four family residential $ 1,777 $ 1,645
Commercial real estate 1,142 1,220
Construction 1,806 2,149
Commercial business 342 312
Average investment in impaired loans $ 5,067 $ 5,326

Interest income recognized on
an accrual basis on impaired loans
One-to-four family residential $ 22 $ 64
Commercial real estate 13 39
Commercial business 2 5
Total $ 37 $ 108

Three Months Ended Nine Months Ended
June 30, 2022 June 30, 2022
(In thousands)

One-to-four family residential $ 1,531 $ 1,760
Commercial real estate 1,174 1,516
Construction 4,580 4,580
Commercial business 829 1,055
Average investment in impaired loans $ 8,114 $ 8,911

Interest income recognized on
an accrual basis on impaired loans
One-to-four family residential $ 21 $ 63
Commercial real estate 23 71
Commercial business 2 5
Total $ 46 $ 139

Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. All loans greater than three months past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Company has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as severe delinquency, bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Company’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Company’s Asset Review Committee performs monthly reviews of all commercial relationships internally rated 6 (“Watch”) or worse. Confirmation of the appropriate risk grade is performed by an external loan review company that semi-annually reviews and assesses loans within the portfolio. Generally, the external consultant reviews commercial relationships greater than $500,000 and/or criticized relationships greater than $250,000. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a monthly basis.

The following table presents the classes of the loan portfolio by origination year summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful for loans subject to the Company’s internal risk rating system and by performing status for all other loans as of December 31, 2023.

													Revolving Loans
	December 31, 2023												Amortized		Converted
	Term Loans Amortized Cost Basis by Origination Fiscal Year												Cost Basis		to Term		Total
	2024		2023		2022		2021		2020		Prior
	(In thousands)
One-to-four family residential
Performing	$	7,180	$	43,224	$	33,060	$	27,899	$	31,288	$	91,353	$	—	$	—	$	234,004
Non-performing		—		—		—		—		—		152		—		—		152
Total	$	7,180	$	43,224	$	33,060	$	27,899	$	31,288	$	91,505	$	—	$	—	$	234,156
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Commercial real estate
Pass	$	18,235	$	82,558	$	68,224	$	66,529	$	30,007	$	131,540	$	6,373	$	1,540	$	405,006
Special Mention		—		—		—		—		—		116		—		—		116
Substandard		—		—		2,224		—		—		—		—		—		2,224
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	18,235	$	82,558	$	70,448	$	66,529	$	30,007	$	131,656	$	6,373	$	1,540	$	407,346
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Construction and land
Pass	$	10,368	$	12,297	$	2,351	$	—	$	1,761	$	4,665	$	725	$	—	$	32,167
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		2,474		—		—		2,474
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	10,368	$	12,297	$	2,351	$	—	$	1,761	$	7,139	$	725	$	—	$	34,641
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Home equity loans and lines of credit
Performing	$	724	$	1,678	$	1,657	$	342	$	277	$	1,438	$	17,953	$	—	$	24,069
Non-performing		—		—		—		—		—		—		—		—		—
Total	$	724	$	1,678	$	1,657	$	342	$	277	$	1,438	$	17,953	$	—	$	24,069
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Commercial business
Pass	$	1,030	$	542	$	2,685	$	2,047	$	946	$	3,390	$	16,403	$	—	$	27,043
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	1,030	$	542	$	2,685	$	2,047	$	946	$	3,390	$	16,403	$	—	$	27,043
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Other
Performing	$	—	$	—	$	65	$	1	$	13	$	1,793	$	367	$	—	$	2,239
Non-performing		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	65	$	1	$	13	$	1,793	$	367	$	—	$	2,239
Current period gross charge-offs		—		—		—		—		—		—		—		—		—

Information presented in the table above is not required for periods prior to the adoption of ASU 2016-13. The following table presents more comparable information of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the ~~Company’s~~Bank’s internal risk rating system ~~for the periods presented:~~as of September 30, 2023.

			Special
	Pass		Mention		Substandard		Doubtful		Total
	(In thousands)
September 30, 2023
One-to-four family residential	$	236,876	$	—	$	807	$	—	$	237,683
Commercial real estate		386,794		116		2,224		—		389,134
Construction		19,379		—		2,474		—		21,853
Home equity lines of credit		16,983		—		—		—		16,983
Commercial business		30,194		—		—		—		30,194
Other		2,359		—		—		—		2,359
Total	$	692,585	$	116	$	5,505	$	—	$	698,206

Special
Pass Mention Substandard Doubtful Total

(In thousands)
June 30, 2023
One-to-four family residential $ 235,248 $ 962 $ 423 $ — $ 236,633
Commercial real estate 401,962 — 387 — 402,349
Construction 16,752 — 2,497 — 19,249
Home equity lines of credit 18,737 — — — 18,737
Commercial business 23,129 — — — 23,129
Other 2,433 — — — 2,433
Total $ 698,261 $ 962 $ 3,307 $ — $ 702,530

September 30, 2022
One-to-four family residential $ 213,173 $ 980 $ 224 $ — $ 214,377
Commercial real estate 342,593 198 — — 342,791
Construction 10,652 — 4,578 — 15,230
Home equity lines of credit 18,704 — — — 18,704
Commercial business 34,672 — — — 34,672
Other 3,130 — — — 3,130
Total $ 622,924 $ 1,178 $ 4,802 $ — $ 628,904

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The Bank was not accruing interest on any loans delinquent greater than 90 days. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans for the periods presented:

			30-59		60-89												30-59		60-89
			Days		Days		90 Days +		Total		Non-		Total				Days		Days		90 Days +		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans		Current		Past Due		Past Due		Past Due		Loans
	(Dollars in thousands)														(In thousands)
June 30, 2023
December 31, 2023
One-to-four family residential	$	236,093	$	—	$	369	$	171	$	540	$	171	$	236,633	$	232,710	$	1,056	$	238	$	152	$	234,156
Commercial real estate		399,621		—		116		2,612		2,728		2,612		402,349		404,315		690		116		2,225		407,346
Construction		18,472		—		—		777		777		777		19,249		32,167		—		—		2,474		34,641
Home equity lines of credit		18,737		—		—		—		—		—		18,737		24,069		—		—		—		24,069
Commercial business		23,109		—		20		—		20		—		23,129		26,404		639		—		—		27,043
Other		2,433		—		—		—		—		—		2,433		2,239		—		—		—		2,239
Total	$	698,465	$	—	$	505	$	3,560	$	4,065	$	3,560	$	702,530	$	721,904	$	2,385	$	354	$	4,851	$	729,494

September 30, 2022
One-to four-family residential	$	213,903	$	300	$	174	$	—	$	474	$	—	$	214,377
Commercial real estate		342,404		—		387		—		387		—		342,791
Construction		12,395		—		—		2,835		2,835		2,835		15,230
Home equity lines of credit		18,704		—		—		—		—		—		18,704
Commercial business		34,672		—		—		—		—		—		34,672
Other		3,130		—		—		—		—		—		3,130
Total	$	625,208	$	300	$	561	$	2,835	$	3,696	$	2,835	$	628,904

			30-59		60-89
			Days		Days		90 Days +		Total
	Current		Past Due		Past Due		Past Due		Loans
	(In thousands)
September 30, 2023
One-to four-family residential	$	236,729	$	—	$	568	$	386	$	237,683
Commercial real estate		386,794		—		116		2,224		389,134
Construction		19,379		—		—		2,474		21,853
Home equity lines of credit		16,983		—		—		—		16,983
Commercial business		30,047		147		—		—		30,194
Other		2,359		—		—		—		2,359
Total	$	692,291	$	147	$	684	$	5,084	$	698,206

AnThe following tables present our non-accrual loans and the related allowance for credit loss by loan ~~losses (“ALL”) is maintained to absorb losses from the loan portfolio. The ALL is based on management’s continuing evaluation~~type as of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience,December 31, 2023 and the ~~amount~~non-accrual loans and specific reserves by loan type as of ~~non-performing loans.~~September 30, 2023.

	Non-		Allowance for
	Accrual		Credit Loss
	(In thousands)
December 31, 2023
One-to-four family residential	$	152	$	—
Commercial real estate		2,225		—
Construction and land		2,474		—
Home loans and lines of credit		—		—
Commercial business		—		—
Total	$	4,851	$	—

The Company’s methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative and economic factors.

	Non-		Specific
	Accrual		Reserve
	(In thousands)
September 30, 2023
One-to four-family residential	$	386	$	—
Commercial real estate		2,224		—
Construction and land		2,474		—
Home equity lines of credit		—		—
Commercial business		—		—
Other		—		—
Total	$	5,084	$	—

The following table identifies our non-performing, collateral dependent loans ~~are segmented into classes based on their inherent varying degrees~~by collateral type as of risk, as described above. Management tracks the historical net charge-off activity by segment and utilizes this figure, as a percentage of the segment, as the general reserve percentage for pooled, homogenous loans that have not been deemed impaired. Typically, an average of losses incurred over five historical years is used.December 31, 2023:

	December 31,
	2023
	(In thousands)
One- to four-family residential	$	152
Commercial real estate		2,225
Land		2,474
Total	$	4,851

~~Non-impaired credits are~~

The Company’s adoption of ASU 2016-13 eliminated the requirement to disclose impaired loans. The following table presents impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary as of September 30, 2023:

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
September 30, 2023	(In thousands)

One-to four-family residential	$	—	$	—	$	2,031	$	2,031	$	2,031
Commercial real estate		—		—		2,969		2,969		2,969
Construction		—		—		2,474		2,474		2,539
Commercial business		—		—		147		147		147
Total impaired loans	$	—	$	—	$	7,621	$	7,621	$	7,686

The following table presents the average recorded investment in impaired loans and the interest income recognized on impaired loans for the application of qualitative factors. Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimatedthree months ended December 31, 2022.

	Three Months Ended
	December 31, 2022
	(In thousands)

One-to-four family residential	$	1,447
Commercial real estate		1,269
Construction		2,835
Commercial business		203
Average investment in impaired loans	$	5,754

Interest income recognized on
an accrual basis on impaired loans
One-to-four family residential	$	20
Commercial real estate		13
Commercial business		2
Total	$	35

An allowance for credit losses ~~associated with~~(“ACL”) is maintained to absorb losses from the ~~existing~~ loan pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources include: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

portfolio. Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ~~ALL.~~ACL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ~~ALL.~~ACL. Since loans individually evaluated for impairment are promptly written down to their fair value, typically there is no portion of the ~~ALL~~ACL for loans individually evaluated for impairment.

ASU 2016-13 requires estimated credit losses on loans to be determined based on an expected life of loan model, as compared to an incurred loss model (in effect for periods prior to October 1, 2023). Accordingly, the allowance for losses disclosures subsequent to October 1, 2023 are not always comparable to prior dates. In addition, certain new disclosures required under ASU 2016-13 are not applicable to prior periods. As a result, the following tables present disclosures separately for each period, where appropriate. New disclosures required under ASU 2016-13 are only shown for the current period. Please refer to Note B “Summary of Significant Accounting Policies” for a summary of the impact of adopting the provisions of ASU 2016-13 on October 1, 2023.

The following tables set forth the allocation of the Bank’s allowance for credit losses by loan category at the dates indicated. The portion of the credit loss allowance allocated to each loan category does not represent the total available for future losses which may occur within the loan category since the total credit loss allowance is a valuation allocation applicable to the entire loan portfolio. The Company generally charges-off the collateral or discounted cash flow deficiency on all loans at 90 days past due and all loans rated substandard or worse that are 90 days past due.

The following table ~~summarizes the ALL~~presents, by loan category, the changes in the allowance for credit losses for the three months ended December 31, 2023 and the ~~related activity~~allowance for loan losses for the ~~nine~~three months ended ~~June 30, 2023 and 2022:~~December 31, 2022.

One-to-Four Home Equity
Family Commercial Lines of Commercial
Residential Real Estate Construction Credit Business Other Unallocated Total
(In thousands)
Balance- September 30, 2022 $ 1,223 $ 4,612 $ 461 $ 263 $ 1,484 $ 1 $ 389 $ 8,433
Charge-offs — — — — — — — —
Recoveries — — — — — — — —
Provision (credit) 12 518 65 (7 ) (109 ) — (162 ) 317
Balance- December 31, 2022 $ 1,235 $ 5,130 $ 526 $ 256 $ 1,375 $ 1 $ 227 $ 8,750
Charge-offs — — — — (102 ) — — (102 )
Recoveries — — — — — — — —
Provision (credit) 35 280 (58 ) (10 ) 62 — (113 ) 196
Balance- March 31, 2023 $ 1,270 $ 5,410 $ 468 $ 246 $ 1,335 $ 1 $ 114 $ 8,844
Charge-offs — — — — (386 ) — — (386 )
Recoveries 1 — — — — — — 1
Provision (credit) (102 ) (318 ) (21 ) (15 ) (41 ) — 416 (81 )
Balance- June 30, 2023 $ 1,169 $ 5,092 $ 447 $ 231 $ 908 $ 1 $ 530 $ 8,378

	One-to-Four									Home Equity														One-to-Four									Home Equity
	Family			Commercial						Lines of			Commercial											Family			Commercial						Lines of			Commercial
	Residential			Real Estate			Construction			Credit			Business			Other			Unallocated			Total		Residential			Real Estate			Construction			Credit			Business			Other			Unallocated			Total
	(In thousands)																							(In thousands)
Balance- September 30, 2021	$	1,136		$	3,744		$	594		$	232		$	2,046		$	15		$	308		$	8,075

Balance- September 30, 2023																								$	1,259		$	5,277		$	472		$	207		$	939		$	2		$	174		$	8,330
Effect of adopting ASU 2016-13																									7			(589	)		(55	)		(87	)		(133	)		(1	)		(174	)		(1,032	)
Charge-offs		—			—			—			—			—			—			—			—		—			—			—			—			—			—			—			—
Recoveries		—			53			—			—			—			—			—			53		—			—			—			—			—			—			—			—
Provision (credit)		(43	)		(90	)		130			—			83			(14	)		35			100		(75	)		161			301			(40	)		39			(1	)		—			385
Balance- December 31, 2021	$	1,093		$	3,706		$	724		$	232		$	2,129		$	1		$	343		$	8,228
Balance- December 31, 2023																								$	1,191		$	4,849		$	718		$	80		$	845		$	—		$	—		$	7,683

Balance- September 30, 2022																								$	1,223		$	4,612		$	461		$	263		$	1,484		$	1		$	389		$	8,433
Charge-offs		—			—			—			—			—			—			—			—		—			—			—			—			—			—			—			—
Recoveries		1			—			—			—			—			—			—			1		—			—			—			—			—			—			—			—
Provision (credit)		19			376			79			(12	)		(290	)		1			(102	)		71		12			518			65			(7	)		(109	)		—			(162	)		317
Balance- March 31, 2022	$	1,113		$	4,082		$	803		$	220		$	1,839		$	2		$	241		$	8,300
Charge-offs		—			—			—			—			—			—			—			—
Recoveries		—			—			—			—			—			—			—			—
Provision (credit)		35			334			(196	)		5			(62	)		(1	)		90			205
Balance- June 30, 2022	$	1,148		$	4,416		$	607		$	225		$	1,777		$	1		$	331		$	8,505
Balance- December 31, 2022																								$	1,235		$	5,130		$	526		$	256		$	1,375		$	1		$	227		$	8,750

During the three months ended December 31, 2023 and exclusive of the impact of the adoption of ASU 2016-13, the changes in the provision for credit losses for each portfolio of loans were primarily due to fluctuations in the outstanding balance of each segment of loans collectively evaluated for impairment. Specifically, we experienced significant growth in our commercial real estate and construction loan portfolios during the three months ended December 31, 2023 and a corresponding increase in the provision for credit losses for these portfolios. The overall increase in the allowance during the three months ended December 31, 2023 is attributed to the previously mentioned growth in our commercial real estate and construction portfolios, partially offset by improved economic metrics with continued low levels of net charge-offs and a decrease in non-performing assets.

The following ~~tables summarize the ALL~~table presents, by loan category, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of ~~June 30, 2023~~ and September 30, ~~2022:~~ 2023.

One-to-Four Home Equity
Family Commercial Lines of Commercial
Residential Real Estate Construction Credit Business Other Unallocated Total
(In thousands)
Allowance for Loan Losses:
Balance - June 30, 2023 $ 1,169 $ 5,092 $ 447 $ 231 $ 908 $ 1 $ 530 $ 8,378
Individually evaluated for impairment — — — — — — — —
Collectively evaluated for impairment 1,169 5,092 447 231 908 1 530 8,378

Loans receivable:
Balance - June 30, 2023 $ 236,633 $ 402,349 $ 19,249 $ 18,737 $ 23,129 $ 2,433 $ — $ 702,530

Individually evaluated for impairment 1,788 1,138 777 — 148 — — 3,851
Collectively evaluated for impairment 234,845 401,211 18,472 18,737 22,981 2,433 — 698,679

One-to-Four Home Equity
Family Commercial Lines of Commercial
Residential Real Estate Construction Credit Business Other Unallocated Total
(In thousands)
Allowance for Loan Losses:
Balance - September 30, 2022 $ 1,223 $ 4,612 $ 461 $ 263 $ 1,484 $ 1 $ 389 $ 8,433
Individually evaluated for impairment — — 114 — — — — 114
Collectively evaluated for impairment 1,223 4,612 347 263 1,484 1 389 8,319

Loans receivable:
Balance - September 30, 2022 $ 214,377 $ 342,791 $ 15,230 $ 18,704 $ 34,672 $ 3,130 $ — $ 628,904
Individually evaluated for impairment 1,512 1,159 2,835 — 153 — — 5,659
Collectively evaluated for impairment 212,865 341,632 12,395 18,704 34,519 3,130 — 623,245

	One-to-Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance - September 30, 2023	$	1,259	$	5,277	$	472	$	207	$	939	$	2	$	174	$	8,330
Individually evaluated
for impairment		—		—		—		—		—		—		—		—
Collectively evaluated
for impairment		1,259		5,277		472		207		939		2		174		8,330

Loans receivable:
Balance - September 30, 2023	$	237,683	$	389,134	$	21,853	$	16,983	$	30,194	$	2,359	$	—	$	698,206
Individually evaluated
for impairment		2,031		2,969		2,474		—		147		—		—		7,621
Collectively evaluated
for impairment		235,652		386,165		19,379		16,983		30,047		2,359		—		690,585

~~The allowance for~~During the three months ended December 31, 2023, there were no loans modified to borrowers experiencing financial difficulty. During the three months ended December 31, 2022, there was one loan ~~losses is based on estimates,~~modified that was identified as a troubled debt restructuring (“TDR”) and ~~actual losses will vary from current estimates. Management believes~~there were no TDRs that the segmentation of the loan portfolio into homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

~~A TDR is a loan~~ that has been modified whereby the Bank has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Bank to maximize the ultimate recovery of a loan. TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted generally include, but are not limited to, interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal.

~~A default on a TDR loan for purposes of this disclosure occurs when a borrower is 90 days past due or a foreclosure or repossession of the applicable collateral has occurred~~subsequently defaulted within twelve months of ~~the restructure. The Company did not have any TDR loans default during the three or nine months ended June 30, 2023.~~modification.

~~There was one TDR loan modification totaling $106,000 during the nine months ended June 30, 2023. Information on the TDR is summarized as follows:~~

~~Three Months Ended June 30, 2023~~

~~Number of~~

~~Investment Before~~

~~Investment After~~

~~Loans~~

~~TDR Modification~~

~~(Dollars in thousands)~~

~~One-to four-family residential~~

—

~~Total~~

—

Nine Months Ended June 30, 2023
Number of Investment Before Investment After
Loans TDR Modification TDR Modification
(Dollars in thousands)
One-to four-family residential 1 $ 97 $ 106

Total 1 $ 97 $ 106

There was one TDR loan totaling $124,000 for the three months ended June 30, 2022, and there were two TDR loans totaling $373,000 during the nine months ended June 30, 2022. Information on the TDR loans are summarized as follows:

	Three Months Ended June 30, 2022						Three Months Ended December 31, 2022
	Number of		Investment Before		Investment After		Number of		Investment Before		Investment After
	Loans		TDR Modification		TDR Modification		Loans		TDR Modification		TDR Modification
	(Dollars in thousands)						(Dollars in thousands)
One-to four-family residential		1		112		124		1	$	97	$	107

Total		1	$	112	$	124		1	$	97	$	107

Nine Months Ended June 30, 2022
Number of Investment Before Investment After
Loans TDR Modification TDR Modification
(Dollars in thousands)
One-to four-family residential 2 330 373

Total 2 $ 330 $ 373

There were no residential loans in the process of foreclosure at December 31, 2023.

NOTE K - DEPOSITS

A summary of deposits by type of account are summarized as follows:

	June 30,		September 30,		December 31,		September 30,
	2023		2022		2023		2023
	(In thousands)				(In thousands)

Demand accounts	$	182,924	$	182,417	$	164,453	$	188,550
Savings accounts		65,470		81,850		60,008		62,168
NOW accounts		93,833		98,643		119,738		115,182
Money market accounts		247,870		222,214		306,886		284,885
Certificates of deposit		91,528		69,929		100,547		92,725
Retirement certificates		11,847		12,680		11,916		11,943
Total deposits	$	693,472	$	667,733	$	763,548	$	755,453

Included in Company’s deposits at ~~June 30,~~December 31, 2023 were ~~$18.8~~$13.8 million in brokered certificates of deposits and $15.5 million in certificate of deposits obtained through a national deposit listing service. At September 30, ~~2022~~2023 the Company had ~~$6.0~~$13.8 million in brokered certificates of deposits and ~~$14.6~~$14.0 million in certificate of deposits obtained ~~from~~through a national deposit listing service.

The current FDIC insurance limit on bank deposit accounts is $250,000 per separately insured deposit account. The aggregate amount of deposit accounts with a denomination of $250,000 or more was approximately $388.5 million at June 30, 2023 compared with $399.9 million at September 30, 2022. The portion of these accounts included in the Company’s total deposits was an estimated $95.4 million that exceeded the Federal Deposit Insurance Corporation’s insurance coverage limit of $250,000 at June 30, 2023 compared to $129.4 million at September 30, 2022.

The aggregate amount of deposit accounts of State and local municipalities was $200.9 million at June 30, 2023 compared with $140.6 million at September 30, 2022. There were $194.4 million and $139.3 million State and local municipality deposits in excess of $250,000 at June 30,At December 31, 2023 and September 30, ~~2022,~~2023, the aggregate deposits in amounts greater than $250,000, which ~~are~~is the maximum amount for federal deposit insurance, were $456.7 million and $429.9 million, respectively. The estimated amount of deposits that were neither insured nor collateralized ~~by investment securities~~was $120.2 million and ~~municipal letters of credit with the Federal Home Loan Bank of New York (FHLBNY”).~~$109.3 million at December 31, 2023 and September 30, 2023, respectively.

NOTE L - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company may use derivative financial instruments, such as interest rate swaps and interest rate floors and caps, as part of its interest rate risk management. Interest rate caps and floors are agreements whereby one party agrees to pay or receive a floating rate of interest on a notional principal amount for a predetermined period of time if certain market interest rate thresholds are met. The Company considers the credit risk inherent in these contracts to be negligible. As of ~~June 30,~~December 31, 2023, the Company did not hold any interest rate floors or collars.

The Company is a party to interest rate derivatives that are not designated as hedging instruments. Under a program, the Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third-party financial institution, such that the Company minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. The Company was not required to pledge any collateral for its interest rate swaps with financial institutions at ~~June 30,~~December 31, 2023 and September 30, ~~2022.~~2023.

The following table presents summary information regarding these derivatives as of ~~June 30,~~December 31, 2023 and September 30, ~~2022.~~2023.

Notional
Amount Average
Maturiy
(Years) Weighted
Average
Fixed
Rate Weighted Average
Variable Rate Fair Value
(Dollars in thousands)
June 30, 2023
Classified in Other Assets:
Customer interest rate swaps $ 36,294 4.4 4.95 % 1 Mo. BSBY + 2.44 $ 2,383
Total $ 36,294 4.4 4.95 % $ 2,383

Classified in Other Liabilities:
3rd Party interest rate swaps $ 36,294 4.4 4.95 % 1 Mo. BSBY + 2.44 $ 2,383
Total $ 36,294 4.4 4.95 % $ 2,383

September 30, 2022
Classified in Other Assets:
Customer interest rate swaps $ 19,512 5.9 3.63 % 1 Mo. LIBOR + 2.50 $ 2,275
$ 6,940 4.6 6.13 % 1 Mo. BSBY + 3.00 $ 212
Total $ 26,452 5.2 4.88 % $ 2,487

Classified in Other Liabilities:
3rd Party interest rate swaps $ 19,512 5.9 3.63 % 1 Mo. LIBOR + 2.50 $ 2,275
$ 6,940 4.6 6.13 % 1 Mo. BSBY + 3.00 $ 212
Total $ 26,452 5.2 4.88 % $ 2,487

	Notional Amount		Average Maturiy (Years)		Weighted Average Fixed Rate		Weighted Average Variable Rate	Fair Value
	(Dollars in thousands)
December 31, 2023
Classified in Other Assets:
Customer interest rate swaps	$	35,743		3.9		4.96%	1 Mo. BSBY + 2.44	$	1,961
Total	$	35,743		3.9		4.96%		$	1,961

Classified in Other Liabilities:
3rd Party interest rate swaps	$	35,743		3.9		4.96%	1 Mo. BSBY + 2.44	$	1,961
Total	$	35,743		3.9		4.96%		$	1,961

September 30, 2023
Classified in Other Assets:
Customer interest rate swaps	$	36,020		4.2		4.96%	1 Mo. BSBY + 2.44	$	2,579
Total	$	36,020		4.2		4.96%		$	2,579

Classified in Other Liabilities:
3rd Party interest rate swaps	$	36,020		4.2		4.96%	1 Mo. BSBY + 2.44	$	2,579
Total	$	36,020		4.2		4.96%		$	2,579

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit and are summarized in the below table. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

	June 30,		September 30,		December 31,		September 30,
	2023		2022		2023		2023
	(In thousands)				(In thousands)

Financial instruments whose contract amounts represent credit risk (in thousands)
Financial instruments whose contract amounts represent credit risk
Letters of credit	$	663	$	740	$	1,098	$	1,073
Unused lines of credit		89,182		73,825		95,333		89,933
Fixed rate loan commitments		13,235		2,550		15,610		3,578
Variable rate loan commitments		300		49,913		4,969		26,472

Totals	$	103,380	$	127,028	$	117,010	$	121,056

Upon adoption of ASU 2016-13 on October 1, 2023, the Company recorded an allowance for credit losses for its unused lines of credit and unfunded commitments totaling $540,000. The Company’s reserves for off-balance sheet credit losses increased to $637,000 at December 31, 2023 from $0 at September 30, 2023.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

When used in this filing and in future filings by the Company with the Securities and Exchange Commission, 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, 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 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.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. Critical accounting policies may involve complex subjective decisions or assessments. Please refer to the Company’s Form 10-K for the Company’s critical accounting policies. There were no significant changes to the Company’s critical accounting policies during the ~~nine~~three months ended ~~June 30,~~December 31, 2023.

Comparison of Financial Condition at ~~June 30,~~December 31, 2023 and September 30, ~~2022~~2023

Total Assets.Total assets increased ~~$58.9~~$9.4 million, or ~~7.4%~~1.0%, to ~~$857.4~~$916.7 million at ~~June 30,~~December 31, 2023 from ~~$798.5~~$907.3 million at September 30, ~~2022.~~2023. The increase was attributable to higher balances of loans receivable, net of allowance for ~~loan~~credit loss, ~~partially~~ offset by lower interest-earning deposits with ~~banks and investment securities.~~banks.

~~Cash and Interest-Earning Deposits.~~Interest Earning Deposits ~~Cash and interest-earning~~. Interest-earning deposits with banks decreased ~~$8.5~~$21.4 million, or ~~27.6%~~30.8%, to ~~$22.4~~$48.0 million at ~~June 30,~~December 31, 2023 from ~~$30.9~~$69.4 million at September 30, ~~2022~~2023 resulting primarily from deployment of these ~~funds~~fund into loans receivable during the ~~nine~~three months ended ~~June~~December 31, 2023.

Loans Receivable. Total loans receivable increased $31.3 million, or 4.5%, to $729.5 million at December 31, 2023 from $698.2 million at September 30, 2023. The increase in total loans receivable during the quarter ended December 31, 2023 occurred in commercial real estate loans, which increased $18.2 million, or 4.7%, to $407.4 million, construction loans, which increased $12.8 million, or 58.5%, to $34.6 million and one-to four-family residential real estate loans (including home equity loans and lines of credit), which increased $3.5 million, or 1.4%, to $258.2 million. Partially offsetting these increases were commercial business loans, which decreased $3.1 million, or 10.4%, to $27.0 million and other loans, which decreased $120,000, or 5.1%, to $2.2 million during the quarter.

As of December 31, 2023, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 267%. 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.

Total non-performing loans decreased $233,000, or 4.6%, to $4.9 million at December 31, 2023 from $5.1 million at September 30, 2023. The decline was attributable to payments received on one residential mortgage loan that was no longer delinquent more than 90 days at December 31, 2023. The ratio of non-performing loans to total loans decreased to 0.66% at December 31, 2023 from 0.73% at September 30, 2023.

~~Investment Securities.~~ ~~Investment securities totaled $92.5~~The allowance for credit losses was unchanged at $8.3 million during the three months ended December 31, 2023. Upon adoption of ASU 2016-13 on October 1, 2023, the Company’s allowance for credit losses decreased $492,000. Growth in loans receivable and loan commitments during the quarter resulted in additional provisions for credit loss totaling $481,000. The Company’s allowance for on-balance sheet credit losses decreased to $7.7 million at ~~June 30,~~December 31, 2023 ~~reflecting a decrease of $8.4 million, or 8.3%,~~ from ~~$100.9~~$8.3 million at September 30, ~~2022.~~

~~The decrease resulted~~2023 while its reserve for off-balance sheet commitments increased to $637,000 at December 31, 2023 from the maturity of a $5.0 million corporate note and payments from mortgage-backed securities totaling $3.7 million during the nine months while the market value of the Company’s available-for-sale investment securities increased $247,000. The Company did not purchase or sell any investment securities during the nine months ended June 30, 2023. In addition, there were no other-than-temporary-impairment charges for the Company’s investment securities for the nine months ended June$0 at September 30, 2023.

~~Loans Receivable.~~ Total loans receivable increased $73.6 million, or 11.7%, to $702.5 million at June 30, 2023 from $628.9 million at September 30, 2022. The increase in total loans receivable during the nine months ended June 30, 2023 occurred in commercial real estate loans, which increased $59.6 million, or 17.4%, to $402.3 million, one-to four-family residential mortgage loans (including home equity lines of credit), which increased $22.3 million, or 9.6%, to $255.4 million, and in construction loans, which increased $4.0 million, or 26.4%, to $19.2 million. Partially offsetting these increases were commercial business loans, which decreased $11.5 million, or 33.3%, to $23.1 million and other loans, which decreased $697,000, or 22.3%, to $2.4 million during the nine months period.

During the three months ended June 30, 2023, the Company originated 57 loans receivable and lines of credit totaling $47.1 million at a weighted average interest rate of 7.35% The Company originated 181 loans receivable and lines of credit totaling $155.3 million at a weighted average interest rate of 7.14% during the nine months ended June 30, 2023.

Total non-performing loans increased $725,000, or 25.6%, to $3.6 million at June 30, 2023 from $2.8 million at September 30, 2022. The increase was attributable to two commercial real estate loans totaling $2.6 million and one residential mortgage loan totaling $171,000, partially offset by repayments totaling $2.1 million on a non-performing construction loan. The ratio of non-performing loans to total loans increased to 0.51% at June 30, 2023 from 0.45% at September 30, 2022.

The allowance for loan losses decreased $55,000 during the nine months ended June 30, 2023 to $8.4 million. The Company provisioned $432,000 for loan losses and recorded $487,000 in net loan charge-offs during the nine months ended June 30, 2023. Higher provisions for growth in the Company’s loan portfolio were largely offset by a lower risk profile in the loan composition (specifically lower commercial business loan and home equity line of credit ~~balances) and improving economic data used to determine the allowance for loan losses.~~

~~The allowance for loan~~ losses as a percentage of non-performing loans ~~decreased~~increased to ~~235.3%~~171.5% at ~~June 30,~~December 31, 2023 from ~~297.5%~~163.9% at September 30, ~~2022. The Company’s~~2023. Our allowance for ~~loan~~credit losses as a percentage of total loans was ~~1.19%~~1.14% at ~~June 30,~~December 31, 2023 compared with ~~1.34%~~1.19% at September 30, ~~2022.~~2023. Future increases in the allowance for ~~loan~~credit losses may be necessary based on possible future increases in non-performing loans and charge-offs, the possible deterioration of collateral values, and the possible deterioration of the current economic environment.

~~Bank-Owned Life Insurance.~~Investment Securities. ~~The Company’s carrying~~At December 31, 2023, investment securities totaled $96.6 million, reflecting an increase of $646,000, or 0.7%, from September 30, 2023. During the three months ended December 31, 2023, the Company purchased securities totaling $4.0 million and experienced a $584,000 increase in the market value of its ~~life insurance policies held for directors~~available-for-sale investment securities. Offsetting these increases were repayments from mortgage-backed securities totaling $1.4 million and ~~officers~~the maturity of ~~Magyar Bank increased $278,000, or 1.6%, to $17.9~~a $2.5 million ~~at June 30, 2023 from $17.7 million at September 30, 2022. The increase was attributable to an increase in the cash surrender value~~U.S. Government-sponsored enterprise debt security. There were no sales of ~~the policies~~investment securities during the ~~nine months ended June 30, 2023.~~period.

~~Other Real Estate Owned.~~ ~~Other real estate owned increased $10,000, or 3.6%, to $291,000~~Investment securities at ~~June 30,~~December 31, 2023 ~~from capital improvements to one property~~consisted of $66.9 million in ~~order to market it~~mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $23.0 million in U.S. government-sponsored enterprise debt securities, $3.0 million in corporate notes, $3.5 million in municipal bonds, and $203,000 in “private-label” mortgage-backed securities. There was no allowance for ~~sale.~~credit losses for the Company’s investment securities for the three months ended December 31, 2023.

Deposits. Total deposits increased ~~$25.7~~$8.1 million, or ~~3.9%~~1.1%, to ~~$693.5~~$763.5 million at ~~June 30,~~December 31, 2023 from ~~$667.7~~$755.4 million at September 30, ~~2022.~~2023.

The ~~increase~~inflow in deposits ~~during the nine months ended June 30, 2023~~ occurred in money market accounts, which increased ~~$25.6~~$22.0 million, or ~~11.6%~~7.7%, to ~~$247.9~~$306.9 million, in certificates of deposit (including individual retirement accounts), which increased ~~$20.8~~$7.8 million, or ~~25.1%~~7.4%, to ~~$103.4~~$112.5 million and in ~~non-interest bearing~~interest-bearing checking accounts (NOW), which increased ~~$507,000,~~$4.6 million, or ~~0.3%~~4.0%, to ~~$182.9~~$119.7 million. Partially offsetting these increases were decreases in non-interest bearing checking accounts, which decreased $24.1 million, or 12.8%, to $164.4 million and savings accounts, which decreased ~~$16.4~~$2.2 million, or ~~20.0%~~3.5%, to ~~$65.5 million and in interest-bearing checking accounts (NOW), which decreased $4.8 million, or 4.9%, to $93.8~~$60.0 million. Included in the ~~Company’s total deposits was an estimated $95.4~~certificates of deposit were $13.8 million ~~that exceeded the Federal Deposit Insurance Corporation’s insurance coverage limit~~in brokered certificates of ~~$250,000 at June 30, 2023 compared to $129.4 million at September 30, 2022.~~deposit.

Borrowed Funds. Borrowings ~~increased $29.9 million,~~decreased $719,000, or ~~191.4%~~2.4%, to ~~$45.5~~$28.8 million at ~~June 30,~~December 31, 2023 from ~~$15.6~~$29.5 million at September 30, ~~2022.~~2023. The Company ~~borrowed $17.0 million in~~repaid a matured long term ~~advances,~~advance totaling $2.4 million and borrowed ~~$16~~a zero- cost, three-year advance totaling $1.7 million ~~in overnight line~~the Federal Home Loan Bank of ~~credit advances and repaid $3.1 million in matured advances from the FHLBNY~~New York during the nine month period. Long term advances were used to fund growth in the Company’s loans receivable and overnight line of credit advances were used to replace seasonal deposit outflows that occurred in June and returned in July.three months ended December 31, 2023.

Stockholders’ Equity.Stockholders’ equity increased ~~$4.3~~$1.7 million, or ~~4.3%~~1.7%, to ~~$102.8~~$106.5 million at ~~June 30,~~December 31, 2023 from ~~$98.5~~$104.8 million at September 30, ~~2022.~~2023. The increase was primarily due to net income of $1.6 million, followed by $440,000 in other comprehensive income, a $354,000 increase for the ~~Company’s results from operations, partially offset by $1.1 million~~tax effected adoption of ASU 2016-13, a $161,000 increase for stock-based compensation and a $50,000 increase for ESOP shares allocated during the quarter. Partially offsetting these increases were $716,000 in dividends paid ($0.11 per share) and ~~77,556~~19,232 shares repurchased during the ~~nine months ended June 30, 2023 at~~quarter totaling $192,000. As a ~~weighted average share price of $12.12. The~~result, the Company’s book value per share increased to ~~$15.41~~$16.01 at ~~June 30,~~December 31, 2023 from ~~$14.60~~$15.70 at September ~~30, 2022, based on the 6,668,572 shares that were outstanding at June~~ 30, 2023.

Average Balance Sheet for the Three ~~and Nine~~ Months Ended ~~June 30,~~December 31, 2023 and 2022

The following ~~tables present~~table presents certain information regarding the Company’s financial condition and net interest income for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022. The ~~tables present~~table presents 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 period indicated. Interest income includes fees that we consider adjustments to yields.

Three Months Ended June 30,
2023 2022
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 $ 24,976 $ 294 4.73 % $ 34,574 $ 67 0.77 %
Loans receivable, net 674,985 9,033 5.37 % 615,634 7,018 4.57 %
Securities
Taxable 94,049 398 1.70 % 96,452 361 1.50 %
Tax-exempt ⁽¹⁾ 3,370 18 2.17 % 2,957 14 1.94 %
FHLBNY stock 2,204 38 6.84 % 1,466 19 5.17 %
Total interest-earning assets 799,584 9,781 4.91 % 751,083 7,479 3.99 %
Noninterest-earning assets 48,283 47,204
Total assets $ 847,867 $ 798,287

Interest-bearing liabilities:
Savings accounts ⁽²⁾ $ 68,648 86 0.50 % $ 86,729 36 0.17 %
NOW accounts ⁽³⁾ 339,784 2,023 2.39 % 291,308 172 0.24 %
Time deposits ⁽⁴⁾ 92,855 539 2.33 % 92,152 212 0.92 %
Total interest-bearing deposits 501,287 2,648 2.12 % 470,189 420 0.36 %
Borrowings 27,967 239 3.43 % 16,136 92 2.30 %
Total interest-bearing liabilities 529,254 2,887 2.19 % 486,325 512 0.42 %
Noninterest-bearing liabilities 219,291 214,084
Total liabilities 748,545 700,409
Retained earnings 99,322 97,878
Total liabilities and retained earnings $ 847,867 $ 798,287

Tax-equivalent basis adjustment (4 ) (3 )
Net interest and dividend income $ 6,890 $ 6,964
Interest rate spread 2.72 % 3.57 %
Net interest-earning assets $ 270,330 $ 264,758
Net interest margin ⁽⁵⁾ 3.46 % 3.72 %
Average interest-earning assets to average interest-bearing liabilities 151.08 % 154.44 %

	Three Months Ended December 31,
	2023							2022
	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	$	70,954	$	928			5.19%	$	14,984	$	109			2.88%
Loans receivable, net		703,238		10,082			5.69%		643,206		7,959			4.91%
Securities
Taxable		92,694		478			2.05%		97,121		395			1.61%
Tax-exempt ⁽¹⁾		3,370		18			2.15%		3,370		18			2.15%
FHLBNY stock		2,290		55			9.53%		1,613		24			6.00%
Total interest-earning assets		872,546		11,561			5.26%		760,294		8,505			4.44%
Noninterest-earning assets		49,628							48,415
Total assets	$	922,174						$	808,709

Interest-bearing liabilities:
Savings accounts ⁽²⁾	$	60,661		87			0.57%	$	78,263		82			0.41%
NOW accounts ⁽³⁾		413,731		3,156			3.03%		325,295		1,177			1.44%
Time deposits ⁽⁴⁾		107,207		834			3.09%		79,535		215			1.07%
Total interest-bearing deposits		581,599		4,077			2.78%		483,093		1,474			1.21%
Borrowings		29,604		236			3.16%		19,067		136			2.83%
Total interest-bearing liabilities		611,203		4,313			2.80%		502,160		1,610			1.27%
Noninterest-bearing liabilities		204,225							206,197
Total liabilities		815,428							708,357
Retained earnings		106,746							100,352
Total liabilities and retained earnings	$	922,174						$	808,709

Tax-equivalent basis adjustment				(4	)						(4	)
Net interest and dividend income			$	7,244						$	6,891
Interest rate spread							2.46%							3.17%
Net interest-earning assets	$	261,343						$	258,134
Net interest margin ⁽⁵⁾							3.29%							3.60%
Average interest-earning assets to average interest-bearing liabilities		142.76%							151.40%

⁽¹⁾ Calculated using the Company's 21% federal tax rate.

⁽²⁾ Includes passbook savings, money market passbook and club accounts.

⁽³⁾ Includes interest-bearing checking and money market accounts.

⁽⁴⁾ Includes certificates of deposits and individual retirement accounts.

⁽⁵⁾ Calculated as annualized net interest income divided by average total interest-earning assets.

Nine Months Ended June 30,
2023 2022
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 $ 17,175 $ 513 4.00 % $ 63,646 $ 137 0.29 %
Loans receivable, net 661,320 25,610 5.18 % 593,248 20,281 4.57 %
Securities
Taxable 95,780 1,194 1.67 % 85,682 886 1.38 %
Tax-exempt ⁽¹⁾ 3,370 55 2.17 % 2,567 34 1.77 %
FHLBNY stock 1,926 92 6.42 % 1,585 58 4.86 %
Total interest-earning assets 779,571 27,464 4.71 % 746,728 21,396 3.83 %
Noninterest-earning assets 48,319 45,729
Total assets $ 827,890 $ 792,457

Interest-bearing liabilities:
Savings accounts ⁽²⁾ $ 73,798 $ 258 0.47 % $ 86,244 $ 109 0.17 %
NOW accounts ⁽³⁾ 331,024 4,764 1.92 % 281,193 457 0.22 %
Time deposits ⁽⁴⁾ 86,682 1,110 1.71 % 100,048 720 0.96 %
Total interest-bearing deposits 491,504 6,132 1.67 % 467,485 1,286 0.37 %
Borrowings 24,515 594 3.24 % 19,436 323 2.22 %
Total interest-bearing liabilities 516,019 6,726 1.74 % 486,921 1,609 0.44 %
Noninterest-bearing liabilities 208,451 203,490
Total liabilities 724,470 690,411
Retained earnings 103,420 102,046
Total liabilities and retained earnings $ 827,890 $ 792,457

Tax-equivalent basis adjustment (12 ) (7 )
Net interest and dividend income $ 20,726 $ 19,780
Interest rate spread 2.97 % 3.39 %
Net interest-earning assets $ 263,552 $ 259,807
Net interest margin ⁽⁵⁾ 3.55 % 3.54 %
Average interest-earning assets toaverage interest-bearing liabilities 151.07 % 153.36 %

⁽¹⁾ ~~Calculated using the Company's 21% federal tax rate.~~

⁽²⁾ ~~Includes passbook savings, money market passbook and club accounts.~~

⁽³⁾ ~~Includes interest-bearing checking and money market accounts.~~

⁽⁴⁾ ~~Includes certificates of deposits and individual retirement accounts.~~

⁽⁵⁾ ~~Calculated as annualized net interest income divided by average total interest-earning assets.~~

Comparison of Operating Results for the Three Months Ended ~~June 30,~~December 31, 2023 and 2022

Net Income. Net income decreased ~~$199,000,~~$158,000, or ~~9.4%~~8.7%, to ~~$1.9 million~~$1,652,000 for the ~~three month~~three-month period ended ~~June 30,~~December 31, 2023 compared with net income of ~~$2.1 million~~$1,810,000 for the ~~three month~~three-month period ended ~~June 30,~~December 31, 2022. The decrease was due to ~~lower net interest~~higher provisions for credit loss and ~~dividend income, lower other income, and higher~~ other expenses, partially offset by ~~lower provisions for loan loss.~~

~~Net Interest and Dividend Income.~~ Net interest and dividend income decreased $74,000, or 1.1%, to $6.9 million for the three months ended June 30, 2023 from $7.0 million for the three months ended June 30, 2022. The decrease was attributable to a 26 basis point decrease in the Company’s net interest margin to 3.46% for the three months ended June 30, 2023 from 3.72% for the three months ended June 30, 2022, partially offset by a $59.4 million increase in the average balance of loans receivable, net, between the periods.

~~Interest and Dividend Income.~~ Interest and dividend income increased $2.3 million, or 30.8%, to $9.8 million for the three months ended June 30, 2023 compared with $7.5 million for the three months ended June 30, 2022. The increase was attributable to a 92 basis point increase in the yield on interest-earning assets to 4.91% for the three months ended June 30, 2023 from 3.99% for the three months ended June 30, 2022 as well as a $48.5 million, or 6.5%, increase in the average balance of interest-earning assets. Higher balances of higher-yielding loans receivable funded with lower yielding interest-earning deposits with the Federal Reserve Bank as well as higher market interest rates contributed to the increase in the Company’s interest and dividend income between periods. Partially offsetting the increases were no Paycheck Protection Program loan fees included in interest income on loans receivable for the three months ended June 30, 2023, compared with $98,000 for the three months ended June 30, 2022.

The interest earned on loans receivable, net of allowance for loan loss, increased $2.0 million, or 28.7%, to $9.0 million for the three months ended June 30, 2023 from $7.0 million for the same period prior year. The increase resulted from an 80 basis point increase in the yield on loans receivable, net to 5.37% for the three months ended June 30, 2023 from 4.57% for the three months ended June 30, 2022 as well as a $59.4 million, or 9.6%, increase in the average balance of loans receivable to $675.0 million during the three months ended June 30, 2023 from $615.6 million during the three months ended June 30, 2022.

Interest earned on investment securities, including interest-earning deposits and excluding FHLBNY stock, increased $267,000, or 60.8%, to $706,000 for the three months ended June 30, 2023 from $439,000 for the three months ended June 30, 2022. The increase was attributable to a 101 basis point increase in the average yield on such assets to 2.33% for the three months ended June 30, 2023 from 1.32% for the three months ended June 30, 2022, partially offset by an $11.6 million, or 8.6%, decrease in the average balance of investment securities and interest-earning deposits to $122.4 million for the three months ended June 30, 2023 from $134.0 million for the three months ended June 30, 2022.

~~Interest Expense.~~ Interest expense increased $2.4 million, or 463.9%, to $2.9 million for the three months ended June 30, 2023 from $512,000 for the three months ended June 30, 2022. The cost of interest-bearing liabilities increased 177 basis points to 2.19% for the three months ended June 30, 2023 compared with 0.42% for the three months ended June 30, 2022 resulting primarily from higher cost interest-bearing deposits. In addition, the average balance of interest-bearing liabilities increased $42.9 million, or 8.8%, to $529.3 million during the three months ended June 30, 2023 from $485.3 during the three months ended June 30, 2022.

The cost of interest-bearing deposits increased 176 basis points to 2.12% for the quarter ended June 30, 2023 from 0.36% for the quarter ended June 30, 2022 due to the higher market interest rate environment while the average balance increased $31.1 million, or 6.6%, to $501.3 million from $470.2 million. As a result, interest paid on interest-bearing deposits increased $2.2 million to $2.6 million for the three months ended June 30, 2023 compared with $420,000 for the three months ended June 30, 2022.

Interest expense on borrowings increased $147,000, or 159.8%, to $239,000 for the three months ended June 30, 2023 from $92,000 at June 30, 2022. Higher market interest rates resulted in a 113 basis point increase in the cost of borrowings to 3.43% for the three months ended June 30, 2023 from 2.30% for the three months ended June 30, 2022. The average balance of borrowings increased $11.8 million to $28.0 million for the quarter ended June 30, 2023 from $16.1 million for the quarter ended June 30, 2022 to fund the growth in the Company’s loans receivable.

~~Provision for Loan Losses.~~ We establish provisions for loan losses, which are charged to earnings, at a level necessary to absorb known and inherent losses that are both probable and reasonably estimable at the date of the consolidated financial statements. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events occur.

After an evaluation of these factors, the Company recorded an $81,000 credit for loan losses for the three months ended June 30, 2023 compared with a $205,000 provision for loan losses for the three months ended June 30, 2022. The lower provision for loan losses resulted from improving economic conditions. The Company recorded $386,000 in loan charge-offs and $1,000 in loan recoveries during the three months ended June 30, 2023 compared with no charge-offs or recoveries during the three months ended June 30, 2022. The Company is pursuing the guarantor of the one commercial business loan totaling $386,000 that was charged-off during the quarter.

Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Management reviews the level of the allowance on a quarterly basis, and establishes the provision for loan losses based on the factors set forth in the preceding paragraph. As management evaluates the allowance for loan losses, the increased risk associated with larger non-homogenous construction, commercial real estate and commercial business loans may result in larger additions to the allowance for loan losses in future periods.

~~Other Income.~~ Other income decreased $55,000, or 8.1%, to $621,000 during the three months ended June 30, 2023 compared with $676,000 for the three months ended June 30, 2022. The Company did not record any interest rate swap fees or gains on the sale of OREO during the three months ended June 30, 2023, compared with $76,000 and $67,000, respectively, for the three months ended June 30, 2022. In addition, there were lower gains from the sale of Small Business Administration 7(a) loans, which decreased $31,000 to $103,000 for the three months ended June 30, 2023 from $134,000 for the three months ended June 30, 2022. Offsetting the decline was higher service charge income, which increased $108,000 to $392,000 for the three months ended June 30, 2023 from higher loan prepayment penalties received with the repayment of commercial loans.

~~Other Expenses.~~ Other expenses increased $454,000, or 10.2%, to $4.9 million during the three months ended June 30, 2023 compared with $4.4 million for the three months ended June 30, 2022. The increase was primarily attributable to higher compensation and benefit expense, which increased $265,000, or 9.8%, to $3.0 million, due to stock award and stock option expenses related to the Company’s 2022 Equity Incentive Plan and increased director fees resulting from the addition of three new directors on September 22, 2022. Higher FDIC deposit insurance premiums, loan servicing expenses, occupancy expenses and other expenses were partially offset by lower marketing and business development expenses.

~~Income Tax Expense.~~ The Company recorded tax expense of $788,000 on pre-tax income of $2.7 million for the three months ended June 30, 2023, compared to $886,000 on pre-tax income of $3.0 million for the three months ended June 30, 2022. The Company’s effective tax rate for the three months ended June 30, 2023 was 29.1% compared with 29.5% for the three months ended June 30, 2022.

~~Comparison of Operating Results for the Nine Months Ended June 30, 2023 and 2022~~

~~Net Income.~~ ~~Net income increased $35,000 or 0.6%, to $5.5 million during the nine month period ended June 30, 2023 compared with $5.5 million for the nine month period ended June 30, 2022. The increase was due to~~ higher net interest ~~and dividend income, partially offset by higher provisions for loan loss, lower other income and higher other expenses.~~income.

Net Interest and Dividend Income. Net interest and dividend income increased ~~$946,000,~~$353,000, or ~~4.8%~~5.1%, to ~~$20.7~~$7.2 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 from ~~$19.8~~$6.9 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. The increase was attributable to a ~~$68.1~~$112.3 million increase in the average balance of ~~loans receivable, net, as well as~~interest-earning assets between periods, partially offset by a ~~one~~31 basis point ~~increase~~decrease in the Company’s net interest margin to ~~3.55%~~3.29% for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 from ~~3.54%~~3.60% for the ~~nine~~three months ended ~~June 30, 2022.~~

~~Interest and Dividend Income.~~ Interest and dividend income increased $6.1 million, or 28.3%, to $27.5 million for the nine months ended June 30, 2023 from $21.4 million for the nine months ended June 30, 2022. The increase was attributable to an 88 basis point increase in the yield on interest-earning assets, as well as a $32.8 million, or 4.4%, increase in the average balance of interest-earning assets. Higher balances of higher-yielding loans receivable funded by lower yielding interest-earning deposits with the Federal Reserve Bank as well as higher market interest rates contributed to the increase in the Company’s interest and dividend income between periods. Partially offsetting the increases were no Paycheck Protection Program loan fees included in interest income on loans receivable for the nine months ended June 30, 2023, compared with $828,000 for the nine months ended June 30, 2022.

Interest income earned on loans receivable, net of allowance for loan loss, increased $5.3 million, or 26.3%, to $25.6 million for the nine months ended June 30, 2023 from $20.3 million for the prior year period. The increase resulted from a 61 basis point increase in the yield on interest-earning assets to 5.18% for the nine months ended June 30, 2023 from 4.57% for the nine months ended June 30, 2022 as well as a $68.1 million, or 11.5%, increase in the average balance of loans receivable to $661.3 million during the nine months ended June 30, 2023 from $593.2 million during the nine months ended June 30,December 31, 2022.

Interest and Dividend Income. Interest and dividend income increased $3.1 million, or 35.9%, to $11.6 million for the three months ended December 31, 2023 compared with $8.5 million for the three months ended December 31, 2022. The increase was attributable to an 82 basis point increase in the yield on earning assets to 5.26% for the three months ended December 31, 2023 from 4.44% for the three months ended December 31, 2022 as well as a $112.3 million, or 14.8%, increase in the average balance of interest-earning assets. The increase in yield on the Company’s assets was attributable to higher market interest rates between periods.

The average balance of loans receivable, net of allowance for loan loss, increased $60.0 million to $703.2 million during the three months ended December 31, 2023 from $643.2 million during the three months ended December 31, 2022 while the yield on loans receivable increased 78 basis points to 5.69% for the three months ended December 31, 2023 from 4.91% for the three months ended December 31, 2022 due to higher market interest rates. The higher average balance and yield accounted for a $2.1 million, or 26.7%, increase in loan interest income between periods.

Interest earned on investment securities, including interest-earning deposits and excluding ~~FHLBNY~~FHLB stock, increased ~~$700,000,~~$902,000, or ~~66.7%~~174.1%, to ~~$1.8~~$1.4 million for the ~~nine months~~quarter ended ~~June 30,~~December 31, 2023 from ~~$1.1 million~~$518,000 for the ~~nine months ended June 30, 2022. The increase was attributable to a 110~~prior year quarter. A 160 basis point increase in the ~~average~~ yield on such assets to ~~2.03%~~3.39% for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 from ~~0.93%~~1.79% for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, ~~partially offset by a $35.6 million, or 23.4% decrease in~~and the average balance of investment securities and interest-earning deposits increased by $51.5 million, or 44.6%, to ~~$116.3~~$167.0 million for the ~~nine months~~quarter ended ~~June 30, 2023 from $151.9 million for the nine months ended June 30, 2022.~~December 31, 2023.

Interest Expense. Interest expense increased ~~$5.1~~$2.7 million, or ~~318.0%~~167.9%, to ~~$6.7~~$4.3 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 ~~compared with~~from $1.6 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. The cost of interest-bearing liabilities increased ~~130~~153 basis points to ~~1.74%~~2.80% for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 compared with ~~0.44%~~1.27% for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 resulting primarily from higher ~~cost interest-bearing deposits.~~market interest rates. In addition, the average balance of interest-bearing liabilities increased ~~$29.1~~$109.0 million, or ~~6.0%~~21.7%, to ~~$516.0 million during the nine months ended June 30, 2023 from $486.9 million during the nine months ended June 30, 2022.~~$611.2 million.

The average ~~cost~~balance of interest-bearing deposits increased ~~130~~$98.5 million, or 20.4%, to $581.6 million for the quarter ended December 31, 2023 from $483.0 million for the quarter ended December 31, 2022, while the average cost of such deposits increased 157 basis points to ~~1.67% for the nine months ended June 30, 2023~~2.78% from 0.37% for the nine months ended June 30, 2022 due to the higher market interest rate environment while the average balance increased $24.0 million, or 5.1%, to $491.5 million for the nine months ended June 30, 2023 from $467.5 million for the nine months ended June 30, 2022.1.21%. As a result, interest paid on interest-bearing deposits increased ~~$4.8~~$2.6 million to ~~$6.1~~$4.1 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 ~~from $1.3~~compared with $$1.5 million for the ~~nine~~three months ended ~~June 30, 2022.~~December 31, 2022 due to higher market interest rate environment.

Interest ~~expense~~paid on borrowings increased ~~$271,000,~~$100,000, or ~~83.9%~~73.5%, to ~~$594,000~~$236,000 for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 from ~~$323,000~~$136,000 for the prior year period. ~~Higher market interest rates resulted in~~The increase was the result of a ~~102~~33 basis point increase in the cost of borrowings to ~~3.24%~~3.16% for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 from ~~2.22%~~2.83% for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. ~~The average~~Average balance of borrowings increased ~~$5.1~~$10.5 million to ~~$24.5~~$29.6 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 ~~from $19.4~~compared to $19.1 million for the ~~nine~~three months ended ~~June 30, 2022 to fund the growth in the Company’s loans receivable.~~December 31, 2022.

Provision for ~~Loan~~Credit Losses. We establish provisions for loan losses, which are charged to earnings, at a level necessary to absorb known and inherent losses that are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events occur.

~~After an evaluation of these factors, the~~The Company recorded a provision of ~~$432,000~~$481,000 for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 compared to ~~$376,000~~$317,000 for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. The higher ~~provision for loan losses~~provisions resulted from growth in the Company’s loan portfolio during the ~~nine~~three months ended ~~June 30,~~December 31, 2023, ~~as well as increased charge-offs.~~specifically in commercial real estate and construction loans. The Company recorded ~~$487,000 in net loan charge-offs during the nine months ended June 30, 2023 compared with $54,000~~$461 in net recoveries during the ~~nine~~three months ended ~~June 30, 2022. The Company charged off two commercial business loans totaling $488,000~~December 31, 2023 compared with $0 in net recoveries during the ~~nine~~three months ended ~~June 30, 2023 and is pursuing the guarantors on the loans for collection.~~

Other Income. Other income ~~decreased $46,000,~~increased $12,000, or ~~2.4%~~2.0%, to ~~$1.9 million~~$609,000 during the ~~nine~~three months ended ~~June 30,~~December 31, 2023 compared to ~~$1.9 million~~$597,000 for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. ~~The Company did not record any~~Higher service charge income from loan prepayment penalties and a $60,000 gain on the sale of land during the quarter were partially offset by lower interest rate swap fees and gains on the sale of OREO during the nine months ended June 30, 2023, compared with $67,000 for the nine months ended June 30, 2022. In addition, there were lower gains from the sale of Small Business Administration 7(a) loans, which decreased $68,000 to $485,000 for the nine months ended June 30, 2023 from $553,000 for the nine months ended June 30, 2022. Offsetting the decline was higher service charge income, which increased $97,000 to $957,000 for the nine months ended June 30, 2023 from higher loan prepayment penalties received with the repayment of commercialSBA loans.

Other Expenses. Other expenses increased ~~$701,000,~~$439,000, or ~~5.2%~~9.6%, to ~~$14.3~~$5.0 million during the ~~nine~~three months ended ~~June 30, 2023 from $13.6 million during the nine months ended June 30, 2022.~~ December 31, 2023.

The increase in other expense was primarily attributable to higher compensation and benefit expense, which increased ~~$677,000,~~$226,000, or ~~8.4%~~8.6%, to ~~$8.8~~$2.8 million, due to ~~stock award~~fewer open positions between periods and ~~stock option expenses related to the Company’s 2022 Equity Incentive Plan and increased director fees resulting from~~ the addition of ~~three new directors on~~a commercial lender in September ~~22, 2022. Higher occupancy expenses,~~2023. Also contributing to the increase were higher FDIC deposit insurance premiums ~~loan servicing expenses~~ and other expenses. Deposit insurance premiums increased $49,000, or 90.7%, from deposit growth and higher insurance assessment rates implemented by the FDIC for all insured institutions effective January 1, 2023. Other expenses ~~were partially offset by lower professional fees.~~increased $100,000, or 20.3%, from higher loan origination and servicing costs, higher losses on fraudulent checks, and higher OREO expenses.

Income Tax Expense. The Company recorded tax expense of ~~$2.4 million~~$700,000 on pre-tax income of ~~$7.9~~$2.4 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2023, compared to ~~$2.3 million~~$780,000 on pre-tax income of ~~$7.7~~$2.6 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2022. The Company’s effective tax rate for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 was ~~29.9%~~29.8% compared with ~~29.1%~~30.1% for the ~~nine~~three months ended ~~June 30,~~December 31, 2022.

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,~~December 31, 2023, we had an aggregate borrowing capacity of ~~$112.2~~$122.9 million. There has been no material adverse change during the ~~nine~~three months ended ~~June 30,~~December 31, 2023 in the ability of the Company and its subsidiaries to fund their operations.

At ~~June 30,~~December 31, 2023, the Company had commitments outstanding under letters of credit totaling ~~$663,000,~~$1.1 million, commitments to originate loans totaling ~~$13.5~~$20.6 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit totaling ~~$89.2~~$95.3 million. There has been no material change during the ~~nine~~three months ended ~~June 30,~~December 31, 2023 in any of the Company’s other contractual obligations or commitments to make future payments.

Capital Requirements

At ~~June 30,~~December 31, 2023, the Bank’s Tier 1 capital as a percentage of the Bank’s total assets was ~~11.21%~~10.81%, and total qualifying capital as a percentage of risk-weighted assets was ~~15.92%~~15.81%.

Item 3- Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Item 4 – Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

There has been no change in the Company's internal control over financial reporting during the ~~nine~~three months ended ~~June 30,~~December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal proceedings

None.

Item 1A.

Risk Factors

~~Except for the additional risk factors below, there~~There were no material changes to the risk factors relevant to the Company’s operations as described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2022~~2023 filed on December ~~22, 2022.~~

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on May 1, 2023, First Republic Bank went into receivership and its deposits and substantially all of its assets were acquired by JPMorgan Chase Bank, National Association. Similarly, on March 10, 2023, Silicon Valley Bank went into receivership, and on March 12, Signature Bank went into receivership.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program. Additionally, there is no guarantee that the Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

~~Rising Interest Rates Have Decreased the Value of the Company’s Securities Portfolio, and the Company Would Realize Losses if it Was Required to Sell Such Securities to Meet Liquidity Needs~~

As a result of inflationary pressures and the resulting rapid increases in interest rates over the last year, the trading value of previously issued government and other fixed income securities has declined significantly. These securities make up a majority of the securities portfolio of most banks in the U.S., including the Company’s, resulting in unrealized losses embedded in the securities portfolios. While the Company does not currently intend to sell these securities, if the Company were required to sell such securities to meet liquidity needs, it may incur losses, which could impair the Company’s capital, financial condition, and results of operations and require the Company to raise additional capital on unfavorable terms, thereby negatively impacting its profitability. While the Company has taken actions to maximize its funding sources, there is no guarantee that such actions will be successful or sufficient in the event of sudden liquidity needs. Furthermore, while the Federal Reserve Board has announced a Bank Term Funding Program available to eligible depository institutions secured by U.S. treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral at par, to mitigate the risk of potential losses on the sale of such instruments, there is no guarantee that such programs will be effective in addressing liquidity needs as they arise.15, 2023.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

a.)

Not applicable.

b.)

Not applicable.

c.)

The Company repurchased ~~77,556~~19,232 shares of its common stock during the ~~nine~~three months ended ~~June 30,~~December 31, 2023. Through ~~June 30,~~December 31, 2023, the Company held ~~429,253~~442,873 shares in treasury that were repurchased at a weighted average price of ~~$11.96~~$11.51 pursuant to stock repurchase plans. On December 8, 2022, the Company announced a stock repurchase program of up to 5% of its outstanding shares of common stock, or 337,146 shares, ~~261,784~~217,084 shares of which remained subject to repurchase under the plan.

The following table reports information regarding repurchases of our common stock during the ~~nine~~three months ended ~~June 30,~~December 31, 2023.

Weighted Remaining Number
Total Number Average of Shares That
of Shares Price Paid May be Purchased
Period Purchased Per Share Under the Plan
October 1, 2022 through December 31, 2022 2,194 $ 12.54 337,146
January 1, 2023 through March 31, 2023 54,144 $ 12.64 283,002
April 1, 2023 through June 30, 2023 21,218 $ 10.15 261,784
Total for the nine months ended June 30, 2023 77,556 11.96

					Remaining Number
	Total Number		Average		of Shares That
	of Shares		Price Paid		May be Purchased
Period	Purchased		Per Share		Under the Plan
October 1, 2023 through October 31, 2023		7,541	$	9.52		228,775
November 1, 2023 through November 30, 2023		1,700		9.84		227,075
December 1, 2023 through December 31, 2023		9,991		10.33		217,084
Total		19,232		9.97

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

a.)

Not applicable.

b.)

None.

Item 6.

Exhibits

31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)

31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

Interactive data file containing the following financial statements formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at ~~June 30,~~December 31, 2023 and September 30, ~~2022;~~2023; (ii) the Consolidated Statements of Income for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022; (iii) the Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022; (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2023 and 2022; (v) the Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~June 30,~~December 31, 2023 and 2022; and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text.

104

Cover Page Interactive Data File (embedded within Inline XBRL document contained in Exhibit 101).

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MAGYAR BANCORP, INC.
	(Registrant)




Date: ~~August~~February 14, ~~2023~~2024	/s/ John S. Fitzgerald
	John S. Fitzgerald
	President and Chief Executive Officer



Date: ~~August~~February 14, ~~2023~~2024	/s/ Jon R. Ansari
	Jon R. Ansari
	Executive Vice President and Chief Financial Officer

	Nine Months Ended June 30,
	2023							2022
			Tax			Net of					Tax		Net of
	Before Tax		(Benefit)			Tax		Before Tax			(Benefit)		Tax
	Amount		Expense			Amount		Amount			Expense		Amount
	(In thousands)
Unrealized holding gain (loss) arising during period on:
Available-for-sale investments	$	247	$	(61	)	$	186	$	(1,285	)	$	316	$	(969	)
Other comprehensive income (loss), net	$	247	$	(61	)	$	186	$	(1,285	)	$	316	$	(969	)

	Three Months Ended		Nine Months Ended
	June 30, 2022		June 30, 2022
	(In thousands)

One-to-four family residential	$	1,531	$	1,760
Commercial real estate		1,174		1,516
Construction		4,580		4,580
Commercial business		829		1,055
Average investment in impaired loans	$	8,114	$	8,911

Interest income recognized on
an accrual basis on impaired loans
One-to-four family residential	$	21	$	63
Commercial real estate		23		71
Commercial business		2		5
Total	$	46	$	139

	Nine Months Ended June 30, 2023
	Number of		Investment Before		Investment After
	Loans		TDR Modification		TDR Modification
	(Dollars in thousands)
One-to four-family residential		1	$	97	$	106

Total		1	$	97	$	106

	Nine Months Ended June 30, 2022
	Number of		Investment Before		Investment After
	Loans		TDR Modification		TDR Modification
	(Dollars in thousands)
One-to four-family residential		2		330		373

Total		2	$	330	$	373


	Notional Amount		Average Maturiy (Years)		Weighted Average Fixed Rate			Weighted Average Variable Rate	Fair Value
	(Dollars in thousands)
June 30, 2023
Classified in Other Assets:
Customer interest rate swaps	$	36,294		4.4		4.95	%	1 Mo. BSBY + 2.44	$	2,383
Total	$	36,294		4.4		4.95	%		$	2,383

Classified in Other Liabilities:
3rd Party interest rate swaps	$	36,294		4.4		4.95	%	1 Mo. BSBY + 2.44	$	2,383
Total	$	36,294		4.4		4.95	%		$	2,383


September 30, 2022
Classified in Other Assets:
Customer interest rate swaps	$	19,512		5.9		3.63	%	1 Mo. LIBOR + 2.50	$	2,275
	$	6,940		4.6		6.13	%	1 Mo. BSBY + 3.00	$	212
Total	$	26,452		5.2		4.88	%		$	2,487

Classified in Other Liabilities:
3rd Party interest rate swaps	$	19,512		5.9		3.63	%	1 Mo. LIBOR + 2.50	$	2,275
	$	6,940		4.6		6.13	%	1 Mo. BSBY + 3.00	$	212
Total	$	26,452		5.2		4.88	%		$	2,487

			Weighted		Remaining Number
	Total Number		Average		of Shares That
	of Shares		Price Paid		May be Purchased
Period	Purchased		Per Share		Under the Plan
October 1, 2022 through December 31, 2022		2,194	$	12.54		337,146
January 1, 2023 through March 31, 2023		54,144	$	12.64		283,002
April 1, 2023 through June 30, 2023		21,218	$	10.15		261,784
Total for the nine months ended June 30, 2023		77,556		11.96