Magyar Bancorp Inc
For the period ended Mar 31, 2024. Filed May 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 13, 2024
MGYR$21.90-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-14.
0001174947-24-000217
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001174947-24-000737
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 48 previous paragraphs and 74 current paragraphs.
15 unchanged; 29 reworded; 24 added; 4 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 1 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
The Company adopted ASU 2016-13 on October 1, 2023 using the modified retrospective approach for all financial assets measured at amortized cost, including loans, held-to-maturity debt securities, not measured at amortized cost and unfunded commitments. The Company recorded a cumulative effect increase to retained earnings of $492 thousand ($354 thousand net of taxes), which was comprised of a $1.0 million ($725 thousand net of tax) increase related to loans and $540 thousand ($379 thousand 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 are presented under Accounting Standards Codification 326, while prior period amounts continue to be reported in accordance with previously applicable accounting standards.
Current report
Given the significance of commercial real estate (“CRE”) loans to our total loan portfolio, the following table further disaggregates these loans by occupied status and by collateral type as of March 31, 2024:
Current report
The Company obtains an appraisal of the real estate collateral securing a CRE loan prior to originating the loan. The appraised value is used to calculate the ratio of the outstanding loan balance to the value of the real estate collateral, or loan-to-value ratio ("LTV"). The original appraisal is used to monitor the LTVs within the CRE portfolio unless an updated appraisal is received, which may happen for a variety of reasons, including but not limited to payment delinquency, additional loan requests using the same collateral, and loan modifications. The following table presents the ranges in the LTVs of our CRE loans at March 31, 2024:
Current report
Our asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions. As of each of March 31, 2024 and September 30, 2023, we had $2.2 million of non-performing commercial real estate loans. Such amounts totaled 0.5% and 0.6% of total commercial real estate loans as of those dates, respectively.
Current report
Average Balance Sheets for the Three and Six Months Ended March 31, 2024 and 2023
Current report
** **MAGYAR BANCORP, INC. AND SUBSIDIARY
Current report
Comparative Average Balance Sheets
Current report
(Dollars In Thousands)
Current report
(1) The average balance of loans receivable, net includes non-accrual loans.
Current report
(1) The average balance of loans receivable, net includes non-accrual loans.
Current report
Net Interest and Dividend Income. Net interest and dividend income decreased $23 thousand, or 0.3%, and was $6.9 million for each of the three months ended March 31, 2024 and 2023. The decrease was attributable to a 44-basis point decrease in the Company’s net interest margin to 3.17% for the three months ended March 31, 2024 from 3.61% for the three months ended March 31, 2023, partially offset by a $107.5 million increase in the average balance of interest-earning assets between the periods.
Current report
***Interest and Dividend Income.***Interest and dividend income increased $2.7 million, or 29.9%, to $11.9 million for the three months ended March 31, 2024 compared with $9.2 million for the three months ended March 31, 2023. The increase was attributable to a 67-basis point increase in the yield on interest-earning assets to 5.45% for the three months ended March 31, 2024 from 4.78% for the three months ended March 31, 2023, which was attributable to higher market interest rates between periods. Also contributing to the higher interest and dividend income were higher average balances of loans and interest-earning deposits, which increased $60.5 million and $50.1 million, respectively.
Current report
Provision for Credit Losses. The Company recorded a provision for credit losses of $14 thousand for the three months ended March 31, 2024 compared to $195 thousand for the three months ended March 31, 2024. The lower provision for credit losses resulted from lower net charge-offs as well as a decrease in construction loan balances, which require higher provisions for credit loss, as well as changes in factors driven by low unemployment rates. The Company recorded $65 thousand in net loan recoveries during the three months ended March 31, 2024 compared with $102 thousand in net loan charge-offs during the three months ended March 31, 2023.
Current report
***Other Income.***Other income decreased $9 thousand, or 1.4%, to $622 thousand during the three months ended March 31, 2024 compared to $631 thousand for the three months ended March 31, 2023. The decrease was due to lower loan prepayment fees, partially offset by higher gains from the sale of Small Business Administration 7(a) loans, which increased $12 thousand to $213 thousand for the three months ended March 31, 2024 from $201 thousand for the three months ended March 31, 2023.
Current report
***Other Expenses.***Other expenses increased $312 thousand, or 6.5%, to $5.1 million during the three months ended March 31, 2024 compared with $4.8 million for the three months ended March 31, 2023. The increase was primarily attributable to higher compensation and benefit expense, which increased $234 thousand, or 8.4%, to $3.0 million, due to fewer open positions between periods and the additions of a commercial lender and a commercial credit analyst. Other expenses increased $106 thousand, or 23.2%, from higher recruitment costs, loan origination and servicing costs, OREO expenses and operating expenses.
Current report
***Net Income.***Net income decreased $57 thousand, or 1.6%, to $3.5 million during the six-month period ended March 31, 2024 compared with $3.6 million for the six-month period ended March 31, 2023. The decrease was due to higher other expenses which increased $751 thousand, or 8.0%, to $10.01 million from $9.3 million, partially offset by higher net interest and dividend income.
Current report
The average balance of loans receivable, net of allowance for credit losses, increased $60.3 million to $714.9 million during the six months ended March 31, 2024 from $654.6 million during the six months ended March 31, 2023. The average interest earned on loans receivable, net of allowance for credit losses, increased $4.0 million, or 24.4%, to $20.6 million for the six months ended March 31, 2024 from $16.6 million for the same period prior year. The increase was due to higher market interest rates, which resulted in a 71-basis point increase in the yield on the average balance of loans receivable, net of allowance for credit losses to 5.79% for the six months ended March 31, 2024 from 5.08% for the six months ended March 31, 2023.
Current report
Interest earned on investment securities, including interest-earning deposits and excluding FHLBNY stock, increased $1.7 million, or 162.9%, to $2.7 million for the six months ended March 31, 2024 from $1.0 million for the six months ended March 31, 2023. The increase was attributable to a 154-basis point increase in the yield to 3.40% for the six months ended March 31, 2024 from 1.86% for the six months ended March 31, 2023, and the average balance of investment securities and interest-earning deposits increased by $49.1 million, or 43.4%, to $162.4 million for the six months ended March 31, 2024 from $113.3 million for the six months ended March 31, 2023.
Current report
Interest Expense. Interest expense increased $5.5 million, or 142.6%, to $9.3 million for the six months ended March 31, 2024 compared with $3.8 million for the six months ended March 31, 2023. The cost of interest-bearing liabilities increased 147 basis points to 2.98% for the six months ended March 31, 2024 compared with 1.51% for the six months ended March 31, 2023 resulting primarily from higher market interest rates between periods. In addition, the average balance of interest-bearing liabilities increased $117.3 million, or 23.0%, to $626.8 million from higher money market account and time deposit account balances.
Current report
Average interest paid on interest-bearing deposits increased 153 basis points increase to 2.97% for the six months ended March 31, 202 from 1.44% for the six months ended March 31, 2023 due to the higher market interest rate environment while the average balance increased $110.9 million, or 22.8%, to $597.5 million for the six months ended March 31, 2024 from $486.6 million for the six months ended March 31, 2023. As a result, interest paid on interest-bearing deposits increased $5.4 million to $8.9 million for the six months ended March 31, 2024 from $3.5 million for the six months ended March 31, 2023.
Current report
Interest expense on borrowings increased $102 thousand, or 28.7%, to $457 thousand for the six months ended March 31, 2024 from $355 thousand for the six months ended March 31, 2023. Higher market interest rates resulted in a 2-basis point increase in the cost of borrowings to 3.14% for the six months ended March 31, 2024 from 3.12% for the six months ended March 31, 2023. The average balance of borrowings increased $6.4 million to $29.2 million for the six months ended March 31, 2024 from $22.8 million for the six months ended March 31, 2023 to partially fund the growth in the Company’s loans receivable.
Current report
***Other Income.***Other income increased $2 thousand, or 0.2%, to $1.2 million during the six months ended March 31, 2024 compared to $1.2 million for the six months ended March 31, 2023. The increase was due to the $60 thousand gains on sales of premises and equipment, $32 thousand increase in loan prepayment fees, $5 thousand increased in other operating incomes and $1 thousand increase in bank owned life insurance incomes, partially offset by a $57 thousand decrease in interest rate swap fees and lower gains from the sale of Small Business Administration loans, which decreased $39 thousand to $342 thousand for the six months ended March 31, 2024 from $381 thousand for the six months ended March 31, 2023.
Current report
***Other Expenses.***Other expenses increased $751 thousand, or 8.0%, to $10.1 million during the six months ended March 31, 2024 from $9.4 million during the six months ended March 31, 2023. The increase was primarily attributable to higher compensation and benefit expense, which increased $459 thousand, or 8.5%, to $5.9 million, due to annual merit increases as well as fewer open positions between periods and the additions of a commercial lender and a commercial credit analyst. Other expenses increased $206 thousand, or 21.7%, from higher recruitment costs, loan origination and servicing costs, OREO expenses and operating expenses.
Current report
***Income Tax Expense.***The Company recorded tax expense of $1.2 million on pre-tax income of $4.8 million for the six months ended March 31, 2024, compared to $1.6 million on pre-tax income of $5.2 million for the six months ended March 31, 2023. The decrease in income tax expense was primarily driven by changes in deferred tax items during the period. The Company’s effective tax rate for the six months ended March 31, 2024 was 25.7% compared with 30.3% for the six months ended March 31, 2023.
Removed paragraphs (4)
Previous report
Average Balance Sheet for the Three Months Ended December 31, 2023 and 2022
Previous report
***Other Income.***Other income increased $12,000, or 2.0%, to $609,000 during the three months ended December 31, 2023 compared to $597,000 for the three months ended December 31, 2022. 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 SBA loans.
Previous report
***Other Expenses.***Other expenses increased $439,000, or 9.6%, to $5.0 million during the three months ended December 31, 2023.
Previous report
The increase in other expense was primarily attributable to higher compensation and benefit expense, which increased $226,000, or 8.6%, to $2.8 million, due to fewer open positions between periods and the addition of a commercial lender in September 2023. Also contributing to the increase were higher FDIC deposit insurance premiums 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 increased $100,000, or 20.3%, from higher loan origination and servicing costs, higher losses on fraudulent checks, and higher OREO expenses.
Reworded paragraphs (29)
Previous wording
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 three months ended December 31, 2023.
Current wording
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, other than a change to the methodology for calculating the allowance for credit losses during the six months ended March 31, 2024.
Previous wording
Total Assets. Total assets increased $9.4 million, or 1.0%, to $916.7 million at December 31, 2023 from $907.3 million at September 30, 2023. The increase was attributable to higher balances of loans receivable, net of allowance for credit loss, offset by lower interest-earning deposits with banks.
Current wording
Total Assets. Total assets increased $21.3 million, or 2.3%, to $928.6 million at March 31, 2024 from $907.3 million at September 30, 2023. The increase was attributable to higher balances of loans receivable, partially offset by lower interest-earning deposits with banks.
Previous wording
Interest Earning Deposits. Interest-earning deposits with banks decreased $21.4 million, or 30.8%, to $48.0 million at December 31, 2023 from $69.4 million at September 30, 2023 resulting primarily from deployment of these fund into loans receivable during the three months ended December 31, 2023.
Current wording
Interest Earning Deposits. Interest-earning deposits with banks decreased $22.5 million, or 31.1%, to $50.0 million at March 31, 2024 from $72.5 million at September 30, 2023 resulting primarily from deployment of these fund into loans receivable during the six months ended March 31, 2024.
Previous wording
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.
Current wording
Loans Receivable. Total loans receivable increased $44.3 million, or 6.4%, to $741.7 million at March 31, 2024 from $698.2 million at September 30, 2023. The increase in total loans receivable during the six months ended March 31, 2024 occurred in commercial real estate loans, which increased $40.0 million, or 10.3%, to $429.1 million, construction and land loans, which increased $7.3 million, or 33.6%, to $29.2 million and one-to four-family residential real estate loans (including home equity loans and lines of credit), which increased $216 thousand, or 0.1%, to $254.9 million and other loans, which increased $157 thousand, or 6.7%, to $25.0 million. Partially offsetting these increases were commercial business loans, which decreased $3.2 million, or 10.7%, to $27.0 million during the six months period.
Previous wording
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.
Current wording
As of March 31, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 256%. 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.
Previous wording
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.
Current wording
Total non-performing loans decreased $497 thousand, or 9.8%, to $4.6 million at March 31, 2024 from $5.1 million at September 30, 2023. The decline was attributable to the foreclosure of a single-family residential property previously securing a $777 thousand construction loan and payments totaling $4 thousand, partially offset by a $284 thousand increase in non-performing loans secured by single family residential properties. The ratio of non-performing loans to total loans decreased to 0.62% at March 31, 2024 from 0.73% at September 30, 2023.
Previous wording
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 December 31, 2023 from $8.3 million at September 30, 2023 while its reserve for off-balance sheet commitments increased to $637,000 at December 31, 2023 from $0 at September 30, 2023.
Current wording
The allowance for credit losses increased $69 thousand to $8.4 million during the six months ended March 31, 2024. Upon adoption of ASU 2016-13 on October 1, 2024, the Company’s allowance for credit losses decreased $492 thousand. Growth in loans receivable and loan commitments during the six months ended March 31, 2024 resulted in additional provisions for credit loss totaling $495 thousand and there were $66 thousand in loan recoveries. The Company’s allowance for on-balance sheet credit losses decreased to $7.7 million at March 31, 2024 from $8.3 million at September 30, 2023 while its reserve for off-balance sheet commitments increased to $705 thousand at March 31, 2024 from $0 at September 30, 2023.
Previous wording
The allowance for credit losses as a percentage of non-performing loans increased to 171.5% at December 31, 2023 from 163.9% at September 30, 2023. Our allowance for credit losses as a percentage of total loans was 1.14% at December 31, 2023 compared with 1.19% at September 30, 2023. Future increases in the allowance for 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.
Current wording
The allowance for on-balance sheet loan losses as a percentage of non-performing loans increased to 167.7% at March 31, 2024 from 163.9% at September 30, 2023. The Company’s allowance for on-balance sheet loan losses as a percentage of total loans was 1.04% at March 31, 2024 compared with 1.19% at September 30, 2023. Future increases in the allowance for 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.
Previous wording
Investment Securities. 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 available-for-sale investment securities. Offsetting these increases were repayments from mortgage-backed securities totaling $1.4 million and the maturity of a $2.5 million U.S. Government-sponsored enterprise debt security. There were no sales of investment securities during the period.
Current wording
Investment Securities. At March 31, 2024, investment securities totaled $95.4 million, reflecting a decrease of $609 thousand, or 0.6%, from $96.0 at September 30, 2023. The decrease resulted from matured bonds totaling $4.5 million and payments from mortgage-backed securities totaling $2.6 million during the six months ended March 31, 2024. Offsetting these decreases were purchases totaling $6.0 million and a $500 thousand increase in the market value of the Company’s available-for-sale investment securities.
Previous wording
Investment securities at December 31, 2023 consisted of $66.9 million in 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 credit losses for the Company’s investment securities for the three months ended December 31, 2023.
Current wording
Investment securities at March 31, 2024 consisted of $67.7 million in mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $21.0 million in U.S. government-sponsored enterprise debt securities, $3.0 million in corporate notes, $3.5 million in municipal bonds, and $199 thousand in “private-label” mortgage-backed securities. There was no allowance for credit losses for the Company’s investment securities for the six months ended March 31, 2024.
Previous wording
Deposits. Total deposits increased $8.1 million, or 1.1%, to $763.5 million at December 31, 2023 from $755.4 million at September 30, 2023.
Current wording
Deposits. Total deposits increased $19.4 million, or 2.6%, to $774.9 million at March 31, 2024 from $755.4 million at September 30, 2023.
Previous wording
The inflow in deposits occurred in money market accounts, which increased $22.0 million, or 7.7%, to $306.9 million, in certificates of deposit (including individual retirement accounts), which increased $7.8 million, or 7.4%, to $112.5 million and in interest-bearing checking accounts (NOW), which increased $4.6 million, or 4.0%, to $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 $2.2 million, or 3.5%, to $60.0 million. Included in the certificates of deposit were $13.8 million in brokered certificates of deposit.
Current wording
The inflow in deposits occurred in certificates of deposit (including individual retirement accounts), which increased $30.3 million, or 28.9%, to $135.0 million and in money market accounts, which increased $15.4 million, or 5.4%, to $300.3 million. Partially offsetting these increases were decreases in non-interest bearing checking accounts, which decreased $19.9 million, or 10.6%, to $168.6 million, in savings accounts, which decreased $4.6 million, or 7.4%, to $57.5 million and in interest-bearing checking accounts (NOW), which decreased $1.7 million, or 1.5%, to $113.5 million.
Previous wording
***Borrowed Funds.***Borrowings decreased $719,000, or 2.4%, to $28.8 million at December 31, 2023 from $29.5 million at September 30, 2023. The Company repaid a matured long term advance totaling $2.4 million and borrowed a zero- cost, three-year advance totaling $1.7 million the Federal Home Loan Bank of New York during the three months ended December 31, 2023.
Current wording
***Borrowed Funds.***Borrowings decreased $719 thousand, or 2.4%, to $28.8 million at March 31, 2024 from $29.5 million at September 30, 2023. The Company repaid a matured long term advance totaling $2.4 million and utilized a new $1.7 million long term advance from the Federal Home Loan Bank of New York during the six months ended March 31, 2024.
Previous wording
Stockholders’ Equity. Stockholders’ equity increased $1.7 million, or 1.7%, to $106.5 million at December 31, 2023 from $104.8 million at September 30, 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 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 19,232 shares repurchased during the quarter totaling $192,000. As a result, the Company’s book value per share increased to $16.01 at December 31, 2023 from $15.70 at September 30, 2023.
Current wording
Stockholders’ Equity. Stockholders’ equity increased $2.8 million, or 2.7%, to $107.6 million at March 31, 2024 from $104.8 million at September 30, 2023. The increase was primarily due to net income of $3.5 million, followed by a $377 thousand reduction in other accumulated comprehensive loss, a $354 thousand increase for the Company’s adoption of ASU 2016-13, a $323 thousand increase from stock-based compensation and an $84 thousand increase for ESOP shares allocated for the six months ended March 31, 2024. Partially offsetting these increases were $1.0 million in dividends ($0.16 per share) paid and 71,745 shares repurchased during the period totaling $800 thousand. As a result, the Company’s book value per share increased to $16.30 at March 31, 2024 from $15.70 at September 30, 2023.
Previous wording
The following table presents certain information regarding the Company’s financial condition and net interest income for the three months ended December 31, 2023 and 2022. The 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.
Current wording
The following tables present certain information regarding the Company’s financial condition and net interest income for the three and six months ended March 31, 2024 and 2023. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the period indicated. Interest income includes fees that we consider adjustments to yields.
Previous wording
(1) Calculated using the Company's 21% federal tax rate.
Current wording
(2) Interest income and yield are calculated using the Company's 21% federal tax rate.
Previous wording
Net Income. Net income decreased $158,000, or 8.7%, to $1,652,000 for the three-month period ended December 31, 2023 compared with net income of $1,810,000 for the three-month period ended December 31, 2022. The decrease was due to higher provisions for credit loss and other expenses, partially offset by higher net interest income.
Current wording
Net Income. Net income increased $101 thousand, or 5.6%, to $1.9 million for the three-month period ended March 31, 2024 compared with net income of $1.8 million for the three month period ended March 31, 2023. The increase was due to lower provisions for credit loss and lower income tax expense, partially offset by higher other expenses.
Previous wording
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.
Current wording
The average balance of loans receivable, net of allowance for credit loss, increased $60.5 million to $726.8 million during the three months ended March 31, 2024 from $666.3 million during the three months ended March 31, 2023 while the yield on loans receivable increased 63 basis points to 5.88% for the three months ended March 31, 2024 from 5.25% for the three months ended March 31, 2023 due to higher market interest rates. The higher average balance and yield accounted for a $1.9 million, or 22.3%, increase in loan interest income between periods.
Previous wording
Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, increased $902,000, or 174.1%, to $1.4 million for the quarter ended December 31, 2023 from $518,000 for the prior year quarter. A 160 basis point increase in the yield on such assets to 3.39% for the three months ended December 31, 2023 from 1.79% for the three months ended December 31, 2022, and the average balance of investment securities and interest-earning deposits increased by $51.5 million, or 44.6%, to $167.0 million for the quarter ended December 31, 2023.
Current wording
Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, increased $798 thousand, or 151.7%, to $1.3 million for the three months ended March 31, 2024 from $526 thousand for the three months ended March 31, 2023. The yield on such assets increased 148 basis points to 3.41% for the three months ended March 31, 2024 from 1.93% for the three months ended March 31, 2023, and the average balance of investment securities and interest-earning deposits increased by $46.7 million, or 42.0%, to $157.7 million for the three months ended March 31, 2024 from $111.1 million for the three months ended March 31, 2023.
Previous wording
Interest Expense. Interest expense increased $2.7 million, or 167.9%, to $4.3 million for the three months ended December 31, 2023 from $1.6 million for the three months ended December 31, 2022. The cost of interest-bearing liabilities increased 153 basis points to 2.80% for the three months ended December 31, 2023 compared with 1.27% for the three months ended December 31, 2022 resulting primarily from higher market interest rates. In addition, the average balance of interest-bearing liabilities increased $109.0 million, or 21.7%, to $611.2 million.
Current wording
Interest Expense. Interest expense increased $2.8 million, or 124.3%, to $5.0 million for the three months ended March 31, 2024 from $2.2 million for the three months ended March 31, 2023. The cost of interest-bearing liabilities increased 140 basis points to 3.15% for the three months ended March 31, 2024 compared with 1.75% for the three months ended March 31, 2023 resulting primarily from higher market interest rates. In addition, the average balance of interest-bearing liabilities increased $125.7 million, or 24.3%, to $642.5 million from $516.8 million for the three months ended March 31, 2023.
Previous wording
The average balance of interest-bearing deposits increased $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 2.78% from 1.21%. As a result, interest paid on interest-bearing deposits increased $2.6 million to $4.1 million for the three months ended December 31, 2023 compared with $$1.5 million for the three months ended December 31, 2022 due to higher market interest rate environment.
Current wording
The average balance of interest-bearing deposits increased $123.5 million, or 25.2%, to $613.7 million for the three months ended March 31, 2024 from $490.2 million for the three months ended March 31, 2023, while the average cost of such deposits increased 150 basis points to 3.16% from 1.66%. As a result, interest paid on interest-bearing deposits increased $2.8 million to $4.8 million for the three months ended March 31, 2024 compared with $2.0 million for the three months ended March 31, 2023, with the increase in the cost of deposits due to higher market interest rate environment.
Previous wording
Interest paid on borrowings increased $100,000, or 73.5%, to $236,000 for the three months ended December 31, 2023 from $136,000 for the prior year period. The increase was the result of a 33 basis point increase in the cost of borrowings to 3.16% for the three months ended December 31, 2023 from 2.83% for the three months ended December 31, 2022. Average balance of borrowings increased $10.5 million to $29.6 million for the three months ended December 31, 2023 compared to $19.1 million for the three months ended December 31, 2022.
Current wording
Interest paid on borrowings increased $3 thousand, or 1.4%, to $222 thousand for the three months ended March 31, 2024 from $219 thousand for the prior year period, while a 22-basis point decrease in the cost of borrowings to 3.12% for the three months ended March 31, 2024 from 3.34% for the three months ended March 31, 2023. Average balance of borrowings increased $2.2 million to $28.8 million for the three months ended March 31, 2024 compared to $26.6 million for the three months ended March 31, 2023.
Previous wording
Income Tax Expense. The Company recorded tax expense of $700,000 on pre-tax income of $2.4 million for the three months ended December 31, 2023, compared to $780,000 on pre-tax income of $2.6 million for the three months ended December 31, 2022. The Company’s effective tax rate for the three months ended December 31, 2023 was 29.8% compared with 30.1% for the three months ended December 31, 2022.
Current wording
***Income Tax Expense.***The Company recorded tax expense of $526 thousand on pre-tax income of $2.4 million for the three months ended March 31, 2024, compared to $790 thousand on pre-tax income of $2.6 million for the three months ended March 31, 2023. The decrease in income tax expense was primarily driven by changes in deferred tax items during the period. The Company’s effective tax rate for the three months ended March 31, 2024 was 21.7% compared with 30.5% for the three months ended March 31, 2023.
Previous wording
Net Interest and Dividend Income. Net interest and dividend income increased $353,000, or 5.1%, to $7.2 million for the three months ended December 31, 2023 from $6.9 million for the three months ended December 31, 2022. The increase was attributable to a $112.3 million increase in the average balance of interest-earning assets between periods, partially offset by a 31 basis point decrease in the Company’s net interest margin to 3.29% for the three months ended December 31, 2023 from 3.60% for the three months ended December 31, 2022.
Current wording
Net Interest and Dividend Income. Net interest and dividend income increased $330 thousand, or 2.4%, to $14.2 million for the six months ended March 31, 2024 from $13.8 million for the six months ended March 31, 2023. The increase was attributable to a $109.9 million, or 14.3%, increase in the average balance of interest-earning assets between the periods, partially offset by a 38-basis point decrease in the Company’s net interest margin to 3.23% for the six months ended March 31, 2024 from 3.61% for the six months ended March 31, 2023.
Previous wording
***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.
Current wording
Interest and Dividend Income. Interest and dividend income increased $5.8 million, or 32.8%, to $23.5 million for the six months ended March 31, 2024 from $17.7 million for the six months ended March 31, 2023. The increase was attributable to a 74-basis point increase in the yield on interest-earning assets to 5.35% for the six months ended March 31, 2024 from 4.61% for the prior period, as well as a $60.3 million, or 9.2%, increase in the average balance of net loans receivable to $714.9 million from $654.6 million between the two periods and a $53.0 million increase in the average balance of interest-earning deposits. The increase in yield on the Company’s assets was attributable to higher market interest rates between periods.
Previous wording
Provision for Credit Losses. The Company recorded a provision of $481,000 for the three months ended December 31, 2023 compared to $317,000 for the three months ended December 31, 2022. The higher provisions resulted from growth in the Company’s loan portfolio during the three months ended December 31, 2023, specifically in commercial real estate and construction loans. The Company recorded $461 in net recoveries during the three months ended December 31, 2023 compared with $0 in net recoveries during the three months ended December 31, 2022.
Current wording
Provision for Credit Losses. The Company recorded a provision for credit losses of $495 thousand for the six months ended March 31, 2024 compared to $513 thousand for the six months ended March 31, 2023. Provisions for credit losses resulted from growth in the Company’s loan portfolio, particularly construction and commercial real estate loans, during the six months ended March 31, 2024. The Company recorded $66 thousand in net loan recoveries during the six months ended March 31, 2024 compared with $102 thousand in net loan charge-offs during the six months ended March 31, 2023.
Previous wording
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 December 31, 2023, we had an aggregate borrowing capacity of $122.9 million. There has been no material adverse change during the three months ended December 31, 2023 in the ability of the Company and its subsidiaries to fund their operations.
Current wording
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 March 31, 2024, we had an aggregate borrowing capacity of $117.8 million. There has been no material adverse change during the six months ended March 31, 2024 in the ability of the Company and its subsidiaries to fund their operations.
Previous wording
At December 31, 2023, the Company had commitments outstanding under letters of credit totaling $1.1 million, commitments to originate loans totaling $20.6 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit totaling $95.3 million. There has been no material change during the three months ended December 31, 2023 in any of the Company’s other contractual obligations or commitments to make future payments.
Current wording
At March 31, 2024, the Company had commitments outstanding under letters of credit totaling $860 thousand, commitments to originate loans totaling $35.0 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit totaling $93.4 million. There has been no material change during the three months ended March 31, 2024 in any of the Company’s other contractual obligations or commitments to make future payments.
Previous wording
At December 31, 2023, the Bank’s Tier 1 capital as a percentage of the Bank’s total assets was 10.81%, and total qualifying capital as a percentage of risk-weighted assets was 15.81%.
Current wording
At March 31, 2024, the Bank’s Tier 1 capital as a percentage of the Bank’s total assets was 10.88%, and total qualifying capital as a percentage of risk-weighted assets was 15.88%.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
(2) Interest income and yield are calculated using the Company's 21% federal tax rate.
Current report — wording carried from elsewhere
(3) Includes passbook savings, money market passbook and club accounts.
Current report — wording carried from elsewhere
(4) Includes interest-bearing checking and money market accounts.
Current report — wording carried from elsewhere
(5) Includes certificates of deposits and individual retirement accounts.
Current report — wording carried from elsewhere
(6) Calculated as annualized net interest income divided by average total interest-earning assets.
Current report — wording carried from elsewhere
Comparison of Operating Results for the Six Months Ended March 31, 2024 and 2023