Magyar Bancorp's Loan Portfolio Surges 9.9% Amidst Shifting Mix

TL;DR

**Magyar Bancorp is making a risky bet on commercial real estate, which could pay off big or lead to significant losses if the New Jersey market sours.**

AI Summary

Magyar Bancorp, Inc. (MGYR) reported consolidated assets of $997.7 million, total deposits of $814.3 million, and stockholders' equity of $118.8 million as of September 30, 2025. The company's primary business is attracting retail deposits and investing them in various loans, with revenues primarily from interest on loans and securities. The loan portfolio grew to $858.9 million in 2025 from $781.2 million in 2024, an increase of 9.9%. Commercial real estate loans constitute the largest segment at $533.2 million (62.1% of the total portfolio), up from $461.3 million (59.1%) in 2024. One-to-four-family residential loans decreased slightly to $242.5 million (28.2%) from $246.2 million (31.5%) in 2024. Construction and land loans increased to $29.3 million (3.4%) from $22.7 million (2.9%), while commercial business loans decreased to $20.0 million (2.3%) from $24.0 million (3.1%). The company faces intense competition in its New Jersey market from larger financial institutions and credit unions, holding a deposit market share of 1.39% in Middlesex County and 0.69% in Somerset County as of June 30, 2025.

Why It Matters

Magyar Bancorp's significant shift towards commercial real estate loans, now comprising 62.1% of its portfolio, indicates a strategic focus on higher-yield, albeit higher-risk, assets. This move could boost profitability for investors but also exposes the bank to greater sensitivity to New Jersey's commercial real estate market. For employees, this specialization might mean a need for enhanced expertise in commercial lending and risk management. Customers, particularly small to medium-sized businesses, may find more tailored lending options, while retail depositors remain crucial for funding. In a competitive landscape dominated by larger banks, MGYR's ability to effectively manage these larger, more complex loans will be critical for its sustained growth and market position.

Risk Assessment

Risk Level: medium — The company's loan portfolio shows a significant concentration in commercial real estate, accounting for 62.1% of total loans at September 30, 2025. This concentration, coupled with the inherent higher credit risk of commercial real estate loans compared to residential mortgages, increases the bank's exposure to adverse conditions in the New Jersey real estate market. The filing explicitly states, 'A decline in local economic conditions could adversely affect the values of such real estate,' directly impacting the bank's earnings and capital.

Analyst Insight

Investors should closely monitor the health of the New Jersey commercial real estate market and MGYR's non-performing loan ratios in future filings. Given the increased concentration in commercial real estate, a deeper dive into the specific types of properties and geographic diversification within that segment is warranted to assess potential vulnerabilities.

Key Numbers

• $997.7 million — Consolidated Assets (as of September 30, 2025)
• $814.3 million — Total Deposits (as of September 30, 2025)
• $118.8 million — Stockholders' Equity (as of September 30, 2025)
• $858.9 million — Total Loans Receivable (increased from $781.2 million in 2024, a 9.9% increase)
• $533.2 million — Commercial Real Estate Loans (62.1% of total loan portfolio, up from $461.3 million in 2024)
• 28.2% — One-to-Four-Family Residential Loans (percentage of total loan portfolio, decreased from 31.5% in 2024)
• 1.39% — Deposit Market Share in Middlesex County (as of June 30, 2025)
• 0.69% — Deposit Market Share in Somerset County (as of June 30, 2025)
• 6,477,991 — Outstanding Shares of Common Stock (as of December 15, 2025)
• $90.0 million — Aggregate Value of Voting Stock Held by Non-Affiliates (as of March 31, 2025)

Key Players & Entities

• Magyar Bancorp, Inc. (company) — Delaware-chartered corporation and parent company
• Magyar Bank (company) — New Jersey-chartered savings bank and subsidiary
• New Jersey Department of Banking and Insurance (regulator) — primary state regulator
• Federal Deposit Insurance Corporation (regulator) — primary federal regulator
• Freddie Mac (company) — guidelines for residential mortgage underwriting
• SBA (regulator) — Small Business Administration, providing loan guarantees
• New Brunswick, New Jersey (location) — headquarters and primary market area
• Middlesex County (location) — key deposit market area
• Somerset County (location) — key deposit market area
• The NASDAQ Stock Market LLC (regulator) — exchange where MGYR common stock is registered

FAQ

Risk Factors

• Intense Competition [medium — market]: Magyar Bancorp faces significant competition in its New Jersey market from larger financial institutions and credit unions. This intense competition impacts its ability to grow market share, as evidenced by its 1.39% deposit market share in Middlesex County and 0.69% in Somerset County as of June 30, 2025.
• Loan Portfolio Concentration [medium — financial]: The loan portfolio is heavily concentrated in Commercial Real Estate (CRE) loans, which constitute 62.1% ($533.2 million) of the total loan portfolio as of September 30, 2025. While this segment grew by 14.0% year-over-year, a significant concentration in CRE exposes the company to risks associated with the commercial real estate market.
• Interest Rate Sensitivity [medium — financial]: The company's profitability is sensitive to changes in interest rates. While not explicitly detailed in the provided text, the nature of a savings bank's business, attracting deposits and investing in loans, makes it vulnerable to fluctuations in the net interest margin.
• Cybersecurity Threats [medium — operational]: As a financial institution, Magyar Bancorp is exposed to cybersecurity risks. The company acknowledges these risks, as indicated by the inclusion of 'Cybersecurity' as a distinct item (ITEM 1C), suggesting a need for robust security measures to protect customer data and maintain operational integrity.
• Banking Regulation Compliance [medium — regulatory]: Magyar Bancorp operates under U.S. banking and financial regulations. Compliance with these regulations is crucial and can involve significant costs and operational adjustments. Future changes in regulatory requirements could impact the company's business model and profitability.

Industry Context

Magyar Bancorp operates within the highly competitive New Jersey banking market, facing pressure from larger financial institutions and credit unions. The company's strategy relies on attracting retail deposits and deploying them into a loan portfolio dominated by commercial real estate. Industry trends indicate a continued focus on digital banking services and evolving regulatory landscapes that impact community banks.

Regulatory Implications

As a New Jersey-chartered savings bank, Magyar Bancorp is subject to stringent U.S. banking and financial regulations. Compliance with these rules is paramount and can influence operational strategies, capital requirements, and risk management practices. Changes in regulatory frameworks, particularly concerning lending or capital adequacy, could pose challenges.

What Investors Should Do

1. Monitor CRE loan performance and market trends.
2. Assess competitive positioning and market share growth.
3. Analyze interest rate sensitivity and net interest margin trends.
4. Evaluate cybersecurity and operational risk management.

Key Dates

• 1922-XX-XX: Founding of Magyar Bank — Establishes the long operating history of the core banking entity.
• 2025-09-30: Reporting Period End — Key financial figures such as total assets ($997.7 million), total deposits ($814.3 million), and stockholders' equity ($118.8 million) are reported as of this date.
• 2025-06-30: Deposit Market Share Data — Deposit market share figures for Middlesex County (1.39%) and Somerset County (0.69%) were reported as of this date, indicating competitive positioning.
• 2025-12-15: Outstanding Shares Reported — The number of outstanding shares of common stock (6,477,991) was reported as of this date.
• 2025-03-31: Non-Affiliate Stock Value Reported — The aggregate value of voting stock held by non-affiliates ($90.0 million) was reported as of this date.

Glossary

Forward-looking statements

Statements about future events or conditions that are not based on historical facts. They are often identified by words like 'believe,' 'expect,' 'anticipate,' and 'estimate.' (Magyar Bancorp uses these statements to discuss future plans and objectives, but warns that actual results may differ materially.)

Loan-to-value ratio (LTV)

A lending risk assessment ratio that compares the loan amount to the appraised value of the property. A higher LTV indicates higher risk for the lender. (Used in underwriting residential mortgage loans, with private mortgage insurance required for LTVs over 80%.)

Net interest margin

The difference between the interest income generated by a bank and the interest paid out to its lenders (depositors), expressed as a percentage of its interest-earning assets. (A key profitability metric for banks like Magyar Bancorp, sensitive to interest rate changes.)

Commercial Real Estate (CRE) loans

Loans made to businesses for the purchase, development, or refinancing of commercial properties. (This is the largest segment of Magyar Bancorp's loan portfolio, representing 62.1% of total loans as of September 30, 2025.)

One-to-four-family residential loans

Mortgage loans secured by properties with one to four dwelling units, typically including single-family homes. (This is the second-largest loan category for Magyar Bancorp, making up 28.2% of its portfolio as of September 30, 2025.)

Year-Over-Year Comparison

The loan portfolio has seen a notable increase of 9.9% to $858.9 million, driven primarily by a 14.0% rise in Commercial Real Estate loans, which now represent a larger portion (62.1%) of the total. Conversely, One-to-Four-Family Residential loans have slightly decreased as a percentage of the portfolio, falling from 31.5% to 28.2%. While specific revenue and net income figures for the prior year are not detailed here, the growth in assets and loans suggests a potentially expanding business, though competitive pressures remain a constant factor.

Key Financial Figures

• $0.01 — ch Registered Common Stock, par value $0.01 per share MGYR The NASDAQ Stock Market
• $997.7 m — ancorp, Inc. had consolidated assets of $997.7 million, total deposits of $814.3 million
• $814.3 million — ts of $997.7 million, total deposits of $814.3 million and stockholders' equity of $118.8 mill
• $118.8 million — 4.3 million and stockholders' equity of $118.8 million. Magyar Bancorp, Inc. has not engaged i
• $242.5 m — ld in portfolio. At September 30, 2025, $242.5 million, or 28.2% of our total loan portf
• $145.0 million — e loan. At September 30, 2025, we had $145.0 million of fixed-rate residential mortgage loan
• $9.8 million — ixed-rate residential mortgage loan was $9.8 million. The loan was performing in accordance
• $97.4 m — rate residential mortgage loans totaled $97.4 million, or 40.2% of our total residentia
• $2.6 million — -rate residential mortgage loan was for $2.6 million. The loan was performing in accordance
• $533.2 m — ary market area. At September 30, 2025, $533.2 million, or 62.1%, of our total loan port
• $29.3 m — our construction and land loans totaled $29.3 million, or 3.4% of total loans. Constr
• $31.8 m — September 30, 2025, these loans totaled $31.8 million, or 3.7% of our total loan portfo
• $1.6 m — , stock-secured and other loans totaled $1.6 million, or 0.2% of our total net loan po
• $20.0 m — , our commercial business loans totaled $20.0 million, or 2.3% of total loans. The ma
• $150,000 — principal balance (85% for loans under $150,000). These loans are made for the purposes

Filing Documents

• ea0267256-10k_magyar.htm (10-K) — 2456KB
• ea026725601ex10-15_magyar.htm (EX-10.15) — 34KB
• ea026725601ex23_magyar.htm (EX-23) — 4KB
• ea026725601ex31-1_magyar.htm (EX-31.1) — 17KB
• ea026725601ex31-2_magyar.htm (EX-31.2) — 17KB
• ea026725601ex32_magyar.htm (EX-32) — 9KB
• image_001.jpg (GRAPHIC) — 10KB
• image_002.jpg (GRAPHIC) — 12KB
• ex23_001.jpg (GRAPHIC) — 16KB
• ex23_002.jpg (GRAPHIC) — 8KB
• 0002077096-25-000193.txt ( ) — 13753KB
• mgyr-20250930.xsd (EX-101.SCH) — 97KB
• mgyr-20250930_cal.xml (EX-101.CAL) — 92KB
• mgyr-20250930_def.xml (EX-101.DEF) — 448KB
• mgyr-20250930_lab.xml (EX-101.LAB) — 907KB
• mgyr-20250930_pre.xml (EX-101.PRE) — 485KB
• ea0267256-10k_magyar_htm.xml (XML) — 2917KB

Business

Business 3 ITEM 1A. Risk Factors 18 ITEM 1B. Unresolved Staff Comments 18 ITEM 1C. Cybersecurity 18 ITEM 2.

Properties

Properties 19 ITEM 3. Legal Proceedings 19 ITEM 4. Mine Safety Disclosures 19 PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 ITEM 6. [Reserved] 21 ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 21 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 30 ITEM 8. Financial 31 ITEM 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 72 ITEM 9A.

Controls and Procedures

Controls and Procedures 72 ITEM 9B. Other Information 72 ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 72 PART III ITEM 10. Directors, Executive Officers, and Corporate Governance 73 ITEM 11.

Executive Compensation

Executive Compensation 73 ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 73 ITEM 13. Certain Relationships and Related Transactions, and Director Independence 73 ITEM 14. Principal Accountant Fees and Services 73 PART IV ITEM 15. Exhibits and Financial Statement Schedules 74 ITEM 16. Form 10-K Summary 74

SIGNATURES

SIGNATURES 75 2 PART I

Business

ITEM 1. Business Forward Looking Statements We have included or incorporated by reference in this Annual Report on Form 10-K, and from time to time our management may make, statements that may constitute "forward-looking statements" within the meaning of the safe harbour provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent only our beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These statements include statements other than historical information or statements of current condition and may relate to our future plans and objectives and results, as well as statements about the objective and effectiveness of our risk management and liquidity policies, statements about trends in or growth opportunities for our business, statements about our future status, and activities or reporting under U.S. banking and financial regulation. Forward-looking "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," "will continue," "will likely result," and similar expressions. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking statements include, among others, those discussed below and under "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K. General Magyar Bancorp, Inc. (the "Company") is a Delaware-chartered corporation which owns 100% of the outstanding shares of common stock of Magyar Bank (the "Bank"

Business

Business Other Total (In thousands) One year or less $ 553 $ 34,603 $ 27,544 $ 3,602 $ 10,935 $ 6 $ 77,243 After one year through five years 2,361 48,787 101 510 3,035 33 54,827 After five years through fifteen years 39,427 131,365 134 4,034 4,072 20 179,052 After fifteen years 200,113 318,458 1,508 23,632 2,006 2,060 547,777 Total $ 242,454 $ 533,213 $ 29,287 $ 31,778 $ 20,048 $ 2,119 $ 858,899 4 The following table sets forth the scheduled repayments of fixed-rate and adjustable-rate loans at September 30, 2025 that are contractually due after September 30, 2026. Due After September 30, 2026 Fixed Adjustable Total (In thousands) One-to-four-family residential $ 144,470 $ 97,431 $ 241,901 Commercial real estate 63,312 435,298 498,610 Construction and land 101 1,642 1,743 Home equity loans and lines of credit 4,872 23,303 28,175 Commercial business 3,949 5,165 9,114 Other 37 2,076 2,113 Total $ 216,741 $ 564,915 $ 781,656 One-to Four-Family Residential Loans. We originate residential mortgage loans, most of which are secured by properties located in our primary market area and most of which we hold in portfolio. At September 30, 2025, $242.5 million, or 28.2% of our total loan portfolio, consisted of residential mortgage loans. Generally, residential mortgage loans are originated in amounts up to 80% of the lesser of the appraised value or purchase price of the property, with private mortgage insurance required on loans with a loan-to-value ratio more than 80%. Generally, all residential mortgage loans are underwritten according to Federal Home Loan Mortgage Corporation ("Freddie Mac") guidelines, policies and procedures. Historically, we have not originated a significant number of loans for the purpose of reselling them in the secondary market. We also originate home equity loans secured by residences located in our market area. The underwriting standards we use for

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