UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 26, 2021

MAGYAR BANCORP, INC.

(Exact Name of Registrant as Specified in Charter)

Registrant's telephone number, including area code: (732) 342-7600

Not Applicable

(Former name or former address, if changed since last report)

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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 Exchange Act. ☐

On July 26, 2021, Magyar Bancorp, Inc. (the "Company") issued a press release regarding its results of operations and financial condition at and for the three months and nine months ended June 30, 2021. The text of the press release is included as Exhibit 99.1 to this report. The information included in the press release text is considered to be "furnished" under the Securities Exchange Act of 1934. The Company will include financial statements and additional analyses at and for the three months and nine months ended June 30, 2021 , as part of its Form 10-Q for the period.

The following Exhibit is attached as part of this report:

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, hereunto duly authorized.

EXHIBIT INDEX

News

400 Somerset St., New Brunswick, NJ 08901

732.342.7600

MAGYAR BANCORP, INC. ANNOUNCES THIRD QUARTER FINANCIAL RESULTS

New Brunswick, New Jersey, July 26, 2021 – Magyar Bancorp (NASDAQ: MGYR) (“Company”), parent company of Magyar Bank, reported today the results of its operations for the three and nine months ended June 30, 2021.

The Company reported a 228% increase in its net income for the three months ended June 30, 2021, to $1,668,000 compared with net income of $509,000 for the three months ended June 30, 2020. Net income for the nine months ended June 30, 2021 was $4,510,000 compared with net income of $1,367,000 for the nine months ended June 30, 2020.

Basic and diluted earnings per share were $0.29 for the three months ended June 30, 2021 compared to $0.09 for the three months ended June 30, 2020. Basic and diluted earnings per share were $0.78 for the nine months ended June 30, 2021 compared to $0.24 for the nine months ended June 30, 2020.

“We are pleased that our earnings growth remained strong in the third quarter,” stated John Fitzgerald, President and Chief Executive Officer of Magyar Bancorp. “Our net interest margin increased 28 basis points during the quarter on a year over year basis despite historically low interest rates as a result of our prudent management of our balance sheet and continued benefits of participating in the Paycheck Protection Program (PPP).  In addition, our net interest and dividend income increased 16% over the same period last year thanks to smart loan growth.

As we head into the final quarter of our fiscal year, we’re excited about the opportunities the completion of the second step presents for Magyar Bank. The additional capital will fuel new opportunities for smart, prudent growth, and we expect to close our fiscal year with continued positive earnings momentum.”

Coronavirus/COVID-19 Update

The extraordinary impact of the Coronavirus/COVID-19 (“COVID-19”) pandemic has created an unprecedented environment for consumers and businesses alike. To protect its employees and customers from potential exposure to the virus, all Magyar Bank lobbies continue to observe best practice protocols to limit exposure and/or spread of the virus.

To assist its loan customers, the Bank has offered loan payment deferrals to borrowers unable to make their contractual payments due to COVID-19. Deferral requests are considered on a case-by-case basis and are initially approved for a three month period for principal and interest payments or for interest only payments depending on the borrower’s circumstances. An additional three month period is available for businesses that remain unable to operate and for consumers unable to make their mortgage or home equity payments due to COVID-19. Additional deferrals are available for businesses experiencing a prolonged impact from the COVID-19 pandemic, such as hotels and restaurants.

Through June 30, 2021, we had modified 284 loans aggregating $150.9 million for the deferral of principal and/or interest payments. Of these loans, at June 30, 2021, 235 loans aggregating $120.4 million had resumed making their contractual loan payments, 45 loans totaling $22.3 million repaid their deferred payments, two loans totaling $6.3 million were due to resume payments at June 30, 2021, and two loans totaling $1.9 million were past their deferral period and delinquent. Of the two delinquent deferred loans, one commercial business loan totaling $1.4 million remained delinquent more than 90 days and in the process of foreclosure and one commercial real estate loan totaling $536,000 was delinquent 90 days at June 30, 2021.

The Bank participated in the PPP, which was designed by the U.S. Treasury under the Coronavirus, Aid, Relief, and Economic Security (“CARES”) Act to provide liquidity using the U.S. Small Business Administration’s (“SBA”) platform to small businesses and self-employed individuals to maintain their staff and operations through the pandemic. This liquidity is in the form of a loan, 100% guaranteed by the SBA, that is forgivable provided the funds are used on qualifying payroll costs, and to a lesser extent, rent, utilities and interest on qualifying mortgage payments. The loans bear a fixed rate of 1.0% and loan payments are deferred for the first 10 months following the covered period, which is eight to twenty-four weeks following the date the loan is made. We originated 350 “First Draw” loans totaling $56.0 million for which we received $2.0 million in origination fees from the SBA. These fees are being amortized over the expected life of the loans, which is two years for loans originated prior to June 4, 2020 and five years for loans originated June 5, 2020 or later. Through June 30, 2021, 276 loans totaling $46.1 million had been forgiven by the SBA.

On December 27, 2020 the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues (“Economic Aid”) Act was signed into law, extending the SBA’s authority to guarantee “Second Draw” PPP loans, under generally the same terms and conditions available under the First Draw program, through March 31, 2021, subsequently extended by the Paycheck Protection Program Extension Act of 2021 to May 31, 2021. In order to qualify for a Second Draw PPP loan, an applicant must have experienced a revenue reduction of at least 25% in 2020 relative to 2019. As of June 30, 2021, the Company originated 212 PPP loans totaling $35.3 million under the Economic Aid Act to its eligible customers, for which it received $1.5 million in origination fees from the SBA. These fees are being amortized over the expected life of the loans, which is five years. The Economic Aid Act also expanded the eligible expenditures for which a business could use PPP proceeds for and provided for a simplified forgiveness application for PPP loans $150,000 or less. At June 30, 2021, our PPP loans totaled $44.7 million.

The Board of Governors of the Federal Reserve System created the Paycheck Protection Program Lending Facility (“PPPLF”) to facilitate lending by eligible financial institutions to small businesses under the PPP. Under the PPPLF, the Federal Reserve Bank of New York provided advances with a fixed interest rate of 0.35% to Magyar Bank on a non-recourse basis, taking PPP loans as collateral. In addition, the Federal Deposit Insurance Corporation allows Magyar Bank to neutralize the effect of PPP loans financed under the PPPLF on Tier 1 leverage capital ratios. The Bank funded its First Draw PPP loans with $36.9 million in PPPLF, $5.3 million of which was outstanding at June 30, 2021.

Results of Operations for the Three Months Ended June 30, 2021

Net income increased $1.2 million, or 227.7%, to $1.7 million during the three month period ended June 30, 2021 compared with the three month period ended June 30, 2020, due to higher net interest and dividend income, lower provisions for loan loss, higher other income, and lower other expenses.

The Company’s net interest and dividend income increased $888,000, or 15.9%, to $6.5 million for the quarter ended June 30, 2021 from $5.6 million for the quarter ended June 30, 2020. The increase was attributable to a $46.4 million increase in average total interest-earning assets as well as a 28 basis point increase in the Company’s net interest margin to 3.54% for the three months ended June 30, 2021 compared to 3.26% for the three months ended June 30, 2020.

The yield on the Company’s interest-earning assets decreased 8 basis points to 3.89% for the three months ended June 30, 2021 from 3.97% for the three months ended June 30, 2020 due to lower market interest rates. The yield on investment securities and interest-earning deposits decreased 44 basis points to 0.70% for the three months ended June 30, 2021 from 1.14% for the three months ended June 30, 2020. Offsetting this decrease was a nine basis point increase in the yield on loans receivable to 4.49% for the three months ended June 30, 2021 from 4.40% for the three months ended June 30, 2020.

The cost of the Company’s interest-bearing liabilities decreased 45 basis points to 0.52% for the three months ended June 30, 2021 from 0.97% for the three months ended June 30, 2020 due to lower market interest rates. The cost of interest-bearing deposits decreased 49 basis points to 0.43% for the three months ended June 30, 2021 from 0.92% for the three months ended June 30, 2020 while the cost of borrowings increased 3 basis points to 1.48% for the three months ended June 30, 2021 from 1.45% for the three months ended June 30, 2020. In addition, the average balance of non-interest bearing liabilities increased $28.1 million to $204.0 million for the three months ended June 30, 2021 from $175.9 million for the three months ended June 30, 2020.

Interest and dividend income increased $308,000, or 4.5%, to $7.1 million for the three months ended June 30, 2021 from $6.8 million for the three months ended June 30, 2020. The increase was attributable to higher average balances of interest-earning assets, which increased $46.4 million between periods. The increase in average balances of interest-earning assets occurred in loans receivable, which increased $22.7 million, or 3.8%, in investment securities, which increased $15.7 million, or 37.4%, and in interest-earning deposits, which increased $8.1 million, or 16.1%.

Interest expense decreased $580,000, or 47.5%, to $640,000 for the three months ended June 30, 2021 compared with the three months ended June 30, 2020. The average balance of interest-bearing liabilities decreased $5.7 million, or 1.1%, between the two periods, while the cost of such liabilities decreased 45 basis points to 0.52% for the quarter ended June 30, 2021 compared with the prior year period. Lower market interest rates accounted for the decrease in the cost of interest-bearing liabilities.

The Company’s provision for loan losses was $246,000 for the three months ended June 30, 2021 compared to $438,000 for the three months ended June 30, 2020. The decreased provisions for loss resulted from lower adjustments to the Company’s historical loan losses for the economic impact of the COVID-19 pandemic on the consumer and business loan portfolios. The Company did not record any net charge-offs during the three months ended June 30, 2021 compared with $37,000 in net recoveries during the three months ended June 30, 2020.

Non-interest income increased $347,000, or 92.8%, to $721,000 during the three months ended June 30, 2021 compared to $374,000 for the three months ended June 30, 2020. The Company recorded higher gains from the sales of SBA loans, which were $380,000 for the three months ended June 30, 2021 compared with $55,000 for the three months ended June 30, 2020.

Non-interest expenses decreased $194,000, or 4.1%, to $4.6 million during the three months ended June 30, 2021 from $4.8 million during the three months ended June 30, 2020. The decrease was primarily attributable to lower OREO expenses, which decreased $311,000, or 92.8%, to $24,000 due to lower valuation allowances and fewer properties held at June 30, 2021 than the prior year period. Partially offsetting the lower OREO expenses were higher compensation and benefit expenses, which increased $83,000, or 3.3%, due to higher incentive plan accruals, partially offset by lower compensation from lower full-time equivalent employees between periods. In addition, other expenses increased $81,000, or 24.5%, to $412,000 from higher marketing, business development and charitable contributions, all of which were lower due to the outbreak of the COVID-19 pandemic for the three months ended June 30, 2020.

The Company recorded tax expense of $676,000 on pre-tax income of $2.3 million for the three months ended June 30, 2021, compared to $214,000 on pre-tax income of $723,000 for the three months ended June 30, 2020. The Company’s effective tax rate for the three months ended June 30, 2021 was 28.8% compared with 29.6% for the three months ended June 30, 2020.

Results from Operations for the Nine Months Ended June 30, 2021

Net income increased $3.1 million, or 229.9%, to $4.5 million during the nine-month period ended June 30, 2021 compared with $1.4 million for the nine-month period ended June 30, 2020 due to higher net interest and dividend income and non-interest income, partially offset by higher provisions for loan loss and other expenses.

The Company’s net interest and dividend income increased $3.2 million, or 20.0%, to $18.9 million for the nine months ended June 30, 2021 from $15.7 million for the nine months ended June 30, 2020. The increase was attributable to a $90.3 million increase in total average interest-earning assets as well as an 18 basis point increase in the Company’s net interest margin to 3.52% for the nine months ended June 30, 2021 compared to 3.34% for the nine months ended June 30, 2020.

The yield on the Company’s interest-earning assets decreased 33 basis points to 3.95% for the nine months ended June 30, 2021 from 4.28% for the nine months ended June 30, 2020 due to lower market interest rates. The yield on investment securities and interest earning deposits decreased 83 basis points to 0.80% for the nine months ended June 30, 2021 from 1.63% for the nine months ended June 30, 2020 while the yield on loans receivable decreased 14 basis points to 4.50% for the nine months ended June 30, 2021 from 4.64% for the nine months ended June 30, 2020.

The cost of the Company’s interest-bearing liabilities decreased 62 basis points to 0.62% for the nine months ended June 30, 2021 from 1.24% for the nine months ended June 30, 2020 due to lower market interest rates. The cost of interest-bearing deposits decreased 64 basis points to 0.54% for the nine months ended June 30, 2021 from 1.18% for the nine months ended June 30, 2020 while the cost of borrowings decreased 62 basis points to 1.28% for the nine months ended June 30, 2021 from 1.90% for the nine months ended June 30, 2020. In addition, the average balance of non-interest bearing liabilities increased $44.8 million to $185.9 million for the nine months ended June 30, 2021 from $141.1 million for the nine months ended June 30, 2020.

Interest and dividend income increased $1.1 million, or 5.3%, to $21.2 million for the nine months ended June 30, 2021 from $20.1 million for the nine months ended June 30, 2020. The increase was attributable to higher average balances of interest-earning assets, which increased $90.4 million between periods. The increase in average balances of interest-earning assets occurred in loans receivable, which increased $60.6 million, or 11.1%, in interest-earning deposits, which increased $22.1 million, or 69.2%, and in investment securities, which increased $7.7 million, or 17.2%. Growth in loans receivable was partially attributable to the origination of $91.3 million in PPP loans from April 2020 through June 2021, of which $44.7 million were outstanding at June 30, 2021.

Interest expense decreased $2.1 million, or 47.2%, to $2.3 million for the nine months ended June 30, 2021 compared with the nine months ended June 30, 2020. The average balance of interest-bearing liabilities increased $31.1 million, or 6.5%, between the two periods, while the cost of such liabilities decreased 62 basis points to 0.62% for the nine months ended June 30, 2021 compared with the prior year period. Lower market interest rates accounted for the decrease in the cost of interest-bearing liabilities.

The Company’s provision for loan losses was $1.4 million for the nine months ended June 30, 2021 compared to $1.1 million for the nine months ended June 30, 2020. The increased provisions for loss resulted from higher adjustments to the Company’s historical loan losses due to the anticipated impact of the COVID-19 pandemic on the consumer and business loan portfolios. The Company recorded $47,000 in net recoveries during the nine months ended June 30, 2021 compared with $43,000 in net recoveries during the nine months ended June 30, 2020.

Non-interest income increased $1.7 million, or 150.6%, to $2.9 million during the nine months ended June 30, 2021 compared to $1.2 million for the nine months ended June 30, 2020. Fees for other customer services increased $777,000 due to fees earned from the Middlesex County Small Business Relief Grant program during the nine months ended June 30, 2021. The Company received a fee of three percent of the grants it assisted the County with processing. In addition, the Company recorded $208,000 in interest rate swap fees during the nine months ended June 30, 2021. The Company also recorded higher gains from the sales of loans, which were $749,000 for the nine months ended June 30, 2021 compared with $81,000 for the nine months ended June 30, 2020.

Non-interest expenses increased $131,000, or 0.9%, to $14.0 million during the nine months ended June 30, 2021 from $13.9 million during the nine months ended June 30, 2020. The increase was primarily attributable to professional fees, which increased $192,000, or 16.1%, due to higher legal and consulting fees related to the collection and foreclosure of non-performing loans.

The Company recorded tax expense of $1.9 million on pre-tax income of $6.4 million for the nine months ended June 30, 2021, compared to $572,000 on pre-tax income of $1.9 million for the nine months ended June 30, 2020. The Company’s effective tax rate for the nine months ended June 30, 2021 was 29.6% compared with 29.5% for the nine months ended June 30, 2020.

Balance Sheet Comparison

Total assets increased $88.3 million, or 11.7%, to $842.3 million at June 30, 2021 compared to $754.0 million at September 30, 2020. The increase was attributable to higher balances of cash and interest-earning deposits, investment securities, and loans receivable, net of allowance for loan loss.

Cash and interest-earning deposits with banks increased $67.5 million, or 109.3% to $129.2 million at June 30, 2021 from $61.7 million at September 30, 2020. Cash proceeds of $109.6 million from stock subscription deposits were held as of June 30, 2021 in connection with the Company’s second-step conversion and related stock offering.

At June 30, 2021, investment securities totaled $62.0 million, reflecting an increase of $17.0 million, or 37.8%, from September 30, 2020. The Company purchased 13 mortgage-backed securities totaling $27.7 million, five callable U.S. government-sponsored enterprise bonds totaling $10.0 million, and two municipal bonds totaling $1.0 million during the nine months ended June 30, 2021. Repayments of mortgage-backed securities and bond calls totaled $21.4 million. There were no sales of investment securities during the period. Investment securities at June 30, 2021 consisted of $45.2 million in mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $12.5 million in U.S. government-sponsored enterprise debt securities, $3.0 million in corporate notes, $1.0 million in municipal bonds and $247,000 in “private-label” mortgage-backed securities. There were no other-than-temporary-impairment charges for the Company’s investment securities for the nine months ended June 30, 2021.

Total loans receivable increased $3.9 million, or 0.6%, during the nine months ended June 30, 2021 to $615.1 million at June 30, 2021 and were comprised of $276.9 million (45.0%) in commercial real estate loans, $203.7 million (33.1%) in one- to four- family residential mortgage loans, $88.2 million (14.4%) in commercial business loans, $24.7 million (4.0%) in construction loans, $18.0 million (2.9%) in home equity lines of credit, and $3.6 million (0.6%) in other loans. Included with the commercial business loans were $44.7 million in PPP loans. The increase in total loans receivable during the nine months ended June 30, 2021 occurred in commercial real estate loans, which increased $28.8 million, or 11.6%. Partially offsetting this increase were decreases in commercial business loans, which decreased $12.8 million (PPP loans decreased $11.2 million), one- to four- family residential real estate loans (including home equity lines of credit), which decreased $8.0 million, construction loans, which decreased $3.6 million, and other loans, which decreased $557,000.

Total non-performing loans decreased $301,000, or 3.1%, to $9.4 million at June 30, 2021 from $9.7 million at September 30, 2020. The decrease was attributable to repayments of non-performing loans totaling $1.6 million, the transfer of two foreclosed loans totaling $572,000 to OREO, and the restructure of one loan totaling $218,000 during the nine months ended June 30, 2021. Offsetting these decreases was the addition of four loans totaling $2.1 million. The ratio of non-performing loans to total loans decreased to 1.53% at June 30, 2021 from 1.59% at September 30, 2020.

Included in the non-performing loan totals were seven commercial real estate loans totaling $2.5 million, two construction loans totaling $4.6 million, two commercial business loans totaling $1.4 million and two residential mortgage loans totaling $910,000.

The allowance for loan loss increased $1.4 million during the nine months ended June 30, 2021 to $7.8 million, which was attributable to the provision for loan loss.

The allowance for loan losses as a percentage of non-performing loans increased to 82.7% at June 30, 2021 from 65.8% at September 30, 2020. Our allowance for loan losses as a percentage of total loans was 1.27% at June 30, 2021 compared with 1.05% at September 30, 2020. Future increases in the allowance for loan losses may be necessary based on the growth of the loan portfolio, the change in composition of the loan portfolio, possible future increases in non-performing loans and charge-offs, and the possible deterioration of the current economic environment due to the COVID-19 pandemic.

Other real estate owned decreased $1.3 million, or 49.7%, to $1.3 million during the nine months ended June 30, 2021. The Company sold two properties totaling $1.7 million for a $79,000 gain, established valuation allowances totaling $215,000, and added two properties totaling $547,000 from the foreclosure of collateral securing non-performing loans. The Company is determining the proper course of action for its remaining other real estate owned, which may include holding the properties until the real estate market further improves, leasing properties to offset carrying costs and selling the properties.

Total deposits increased $117.6 million, or 19.0%, to $736.0 million during the nine months ended June 30, 2021 from $618.3 million at September 30, 2020. Savings accounts increased $116.0 million, or 154.9%, to $191.0 million, non-interest bearing checking accounts increased $10.4 million, or 6.3%, to $173.9 million, and interest-bearing checking accounts (NOW) increased $4.9 million, or 7.5%, to $70.4 million. These increases were partially offset by certificates of deposit (including individual retirement accounts), which decreased $13.5 million, or 10.7%, to $112.8 million and money market accounts, which decreased $159,000 to $187.9 million. In connection with the Company’s second-step conversion and related stock offering, cash proceeds of $109.6 million from stock subscription deposits were received during the third quarter of 2021 and are included as savings deposits as of June 30, 2021.

The Company held $2.0 million and $9.4 million in brokered certificates of deposit at June 30, 2021 and September 30, 2020, respectively. Matured brokered certificate of deposit totaling $7.4 million were repaid from interest-earning deposits with banks during the nine months ended June 30, 2021.

Borrowings decreased $36.1 million, or 53.6%, to $31.3 million at June 30, 2021 from $67.4 million at September 30, 2020. The Company repaid $31.6 million in PPPLF advances from the Federal Reserve Bank during the nine month period as the PPP loans securing the advances were forgiven by the SBA. Borrowings from the Federal Home Loan Bank of New York decreased $4.5 million to $26.0 million, as maturing term advances were repaid from interest-earning deposits with banks during the nine months ended June 30, 2021.

The Company did not repurchase shares of its common stock during the nine months ended June 30, 2021. Through June 30, 2021, the Company had repurchased 91,000 shares at an average price of $8.41 pursuant to the second stock repurchase plan, which has reduced outstanding shares to 5,810,746.

The Company’s book value per share increased to $10.54 at June 30, 2021 from $9.78 at September 30, 2020. The increase was due to the Company’s results from operations.

About Magyar Bancorp

Magyar Bancorp is the parent company of Magyar Bank, a community bank headquartered in New Brunswick, New Jersey. Magyar Bank has been serving families and businesses in Central New Jersey since 1922 with a complete line of financial products and services. Magyar operates seven branch locations in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison (2). Please visit us online at www.magbank.com.

Forward Looking Statements

This press release contains statements about future events that constitute forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward- looking terminology, such as “may,” “will,” “believe,” “expect,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks previously disclosed in the Company’s filings with the SEC, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services, and with respect to the loans extended by the Bank and real estate owned, the following: risks related to the economic environment in the market areas in which the Bank operates, particularly with respect to the real estate market in New Jersey; the risk that the value of the real estate securing these loans may decline in value; and the risk that significant expense may be incurred by the Company in connection with the resolution of non-performing loans. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Contact: John Reissner, 732.214.2083

MAGYAR BANCORP, INC. AND SUBSIDIARY

Selected Financial Data

(Dollars in Thousands, Except Per Share Data)