Magyar Bancorp Inc
For the period ended Jun 30, 2024. Filed Aug 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.
Jun 30, 2024 · Filed Aug 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 2024-03-31; filed 2024-05-13.
0001174947-24-000737
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001174947-24-001002
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 74 previous paragraphs and 74 current paragraphs.
25 unchanged; 44 reworded; 5 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 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 (5)
Current report
Investment security purchases during the nine months ended June 30, 2024 consisted of a $4.0 million corporate note issued by Provident Financial Services, Inc., a $2.0 million bond issued by the Federal Home Loan Bank of New York, a $2.0 million mortgage-backed security issued by the Federal National Mortgage Association and a $2.0 million participation certificate issued by the U.S. Small Business Administration.
Current report
Interest paid on borrowings decreased $33 thousand, or 13.8%, to $206 thousand for the three months ended June 30, 2024 from $239 thousand for the three months ended June 30, 2023, while a 53-basis point decrease in the cost of borrowings to 2.90% for the three months ended June 30, 2024 from 3.43% for the three months ended June 30, 2023. The average balance of borrowings increased $543 thousand to $28.5 million for the three months ended June 30, 2024 compared to $28.0 million for the three months ended June 30, 2023.
Current report
Also contributing to the higher other expenses were occupancy, professional and FDIC insurance premiums. Occupancy expenses increased $22 thousand, or 2.7%, from higher rental expense related to a new lease executed April 1, 2024 for a new branch office in Martinsville, NJ. Professional fees increased $12,000, or 6.4%, from higher legal and foreclosure expenses incurred by the Company compared with the prior year period. FDIC insurance premiums increased $10,000, or 10.4%, from deposit growth.
Current report
***Other Income.***Other income decreased $213 thousand, or 11.5%, to $1.6 million during the nine months ended June 30, 2024 compared with $1.9 million for the nine months ended June 30, 2023. The decrease was due to lower loan prepayment fees, which declined by $79 thousand to $878 thousand from $957 thousand, and lower gains from the sale of Small Business Administration 7(a) loans, which decreased by $143 thousand between the two periods.
Current report
Also contributing to the increase were higher occupancy expenses, professional expenses, FDIC deposit insurance premiums and other expenses. Occupancy expenses increased $63 thousand, or 2.7%, from higher rental expense, furniture and equipment related to a new lease executed April 1, 2024 for a new branch office in Martinsville, NJ. Professional fees increased $33,000, or 5.8%, from higher legal and foreclosure expenses incurred by the Company compared with the prior year period. Deposit insurance premiums increased $71,000, or 29.2%, from deposit growth and higher insurance assessment rates implemented by the FDIC for all insured institutions effective January 1, 2023. Other expenses increased $237,000, or 15.4%, from higher loan origination and servicing costs, higher losses on fraudulent checks, higher recruitment costs and higher data communication costs.
Removed paragraphs (5)
Previous report
** **MAGYAR BANCORP, INC. AND SUBSIDIARY
Previous report
Comparative Average Balance Sheets
Previous report
(Dollars In Thousands)
Previous report
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 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.
Reworded paragraphs (44)
Previous wording
When used in this filing and in future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases, “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected,” “believes”, or similar expressions are intended to identify “forward looking statements.” Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks previously disclosed by the Company in Item 1A of its Annual Report on Form 10-K as may be supplemented by Quarterly Reports on Form 10-Q filed with the SEC, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services, and with respect to the loans extended by the Company and real estate owned, the following: risks related to the economic environment in the market areas in which the Bank operates, particularly with respect to the real estate market in New Jersey; the risk that the value of the real estate securing these loans may decline in value; and the risk that significant expense may be incurred by the Company in connection with the resolution of these loans.
Current wording
When used in this filing and in future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases, “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected,” “believes”, or similar expressions are intended to identify “forward looking statements.” Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks previously disclosed by the Company in Item 1A of its Annual Report on Form 10-K as may be supplemented by Quarterly Reports on Form 10-Q filed with the SEC, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services, levels of uninsured deposits, and with respect to the loans extended by the Company and real estate owned, the following: risks related to the economic environment in the market areas in which the Bank operates, particularly with respect to the real estate market in New Jersey; the risk that the value of the real estate securing these loans may decline in value; and the risk that significant expense may be incurred by the Company in connection with the resolution of these loans.
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, other than a change to the methodology for calculating the allowance for credit losses during the six months ended March 31, 2024.
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 nine months ended June 30, 2024.
Previous 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.
Current wording
Total Assets. Total assets increased $37.1 million, or 4.1%, to $944.4 million at June 30, 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 $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.
Current wording
Interest Earning Deposits. Interest-earning deposits with banks decreased $23.6 million, or 34.0%, to $45.8 million at June 30, 2024 from $69.4 million at September 30, 2023 resulting primarily from deployment of these fund into loans receivable during the nine months ended June 30, 2024.
Previous 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.
Current wording
Loans Receivable. Total loans receivable increased $62.2 million, or 8.9%, to $760.4 million at June 30, 2024 from $698.2 million at September 30, 2023. The increase in total loans receivable during the nine months ended June 30, 2024 occurred in commercial real estate loans, which increased $57.9 million, one-to four-family residential real estate loans (including home equity lines of credit), which increased $8.0 million, and construction and land loans, which increased $2.2 million. Partially offsetting these increases were commercial business loans, which decreased $5.8 million and other loans, which decreased $114 thousand.
Previous 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.
Current wording
As of June 30, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 262%. 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
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 wording
Our asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions. As of June 30, 2024 and September 30, 2023, we had $2.8 million and $2.2 million of non-performing commercial real estate loans, respectively. Such amounts totaled 0.6% of total commercial real estate loans as of June 30, 2024 and September 30, 2023.
Previous 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.
Current wording
Total non-performing loans decreased $532 thousand, or 10.5%, to $4.6 million at June 30, 2024 from $5.1 million at September 30, 2023. The decline was attributable to the foreclosure of a residential property previously securing a $777 thousand construction loan and payments totaling $386 thousand, partially offset by a $631 thousand increase from new non-performing loans secured by three commercial real estate properties and one single family residential property. The ratio of non-performing loans to total loans decreased to 0.60% at June 30, 2024 from 0.73% at September 30, 2023.
Previous 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.
Current wording
The allowance for credit losses increased $16 thousand to $8.3 million during the nine months ended June 30, 2024. Upon adoption of ASU 2016-13 on October 1, 2023, the Company’s allowance for credit losses decreased $492 thousand. Growth in loans receivable and loan commitments during the nine months ended June 30, 2024 resulted in additional provisions for credit loss totaling $441 thousand and there were $67 thousand in loan recoveries. The allowance for on-balance sheet credit losses decreased to $7.7 million at June 30, 2024 from $8.3 million at September 30, 2023 while its reserve for off-balance sheet commitments increased to $602 thousand at June 30, 2024 from $0 at September 30, 2023.
Previous 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.
Current wording
The allowance for on-balance sheet loan losses as a percentage of non-performing loans increased to 170.1% at June 30, 2024 from 163.9% at September 30, 2023. The allowance for on-balance sheet loan losses as a percentage of total loans was 1.02% at June 30, 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 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.
Current wording
Investment Securities. At June 30, 2024, investment securities totaled $94.5 million, reflecting a decrease of $1.5 million, or 1.5%, from $96.0 at September 30, 2023. The decrease resulted from matured bonds totaling $6.5 million and payments from mortgage-backed securities totaling $5.4 million during the nine months ended June 30, 2024. Offsetting these decreases were purchases totaling $10.0 million and a $400 thousand increase in the market value of the Company’s available-for-sale investment securities. There were no credit losses recorded for the Company’s investment securities during the nine months ended June 30, 2024.
Previous 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.
Current wording
Investment securities at June 30, 2024 consisted of $64.8 million in mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $19.0 million in U.S. government-sponsored enterprise debt securities, $7.0 million in corporate notes, $3.5 million in municipal bonds, and $195 thousand in “private-label” mortgage-backed securities. There was no allowance for credit losses for the Company’s investment securities for the nine months ended June 30, 2024.
Previous 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.
Current wording
Deposits. Total deposits increased $33.7 million, or 4.5%, to $789.2 million at June 30, 2024 from $755.4 million at September 30, 2023.
Previous 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.
Current wording
The inflow in deposits occurred in certificates of deposit (including individual retirement accounts), which increased $38.9 million, or 37.2%, to $143.6 million, in interest-bearing checking accounts (NOW), which increased $35.2 million, or 30.6%, to $150.4 million and in money market accounts, which increased $18.7 million, or 6.6%, to $303.6 million. Partially offsetting these increases were decreases in non-interest bearing checking accounts, which decreased $51.6 million, or 27.4%, to $136.9 million and in savings accounts, which decreased $7.5 million, or 12.1%, to $54.7 million. Brokered deposits, which are included in certificates of deposit within total deposits, increased $7.8 million to $21.6 million at June 30, 2024 from $13.8 million at September 30, 2023. The Company utilized brokered deposits to extend the duration of its liabilities as part of its interest rate risk management.
Previous 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.
Current wording
***Borrowed Funds.***Borrowings decreased $947 thousand, or 3.2%, to $28.6 million at June 30, 2024 from $29.5 million at September 30, 2023. The Company repaid a matured long term advance totaling $4.4 million and utilized a new $3.4 million long term advance from the Federal Home Loan Bank of New York during the nine months ended June 30, 2024.
Previous 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.
Current wording
Stockholders’ Equity. Stockholders’ equity increased $4.2 million, or 4.1%, to $109.0 million at June 30, 2024 from $104.8 million at September 30, 2023. The increase was primarily due to net income of $5.2 million, followed by a $367 thousand reduction in other accumulated comprehensive loss, a $354 thousand increase for the Company’s adoption of ASU 2016-13, a $484 thousand increase from stock-based compensation and an $118 thousand increase for ESOP shares allocated for the nine months ended June 30, 2024. Partially offsetting these increases were $1.4 million in dividends ($0.21 per share) paid and 85,628 shares repurchased during the period totaling $953 thousand. As a result, the Company’s book value per share increased to $16.55 at June 30, 2024 from $15.70 at September 30, 2023.
Previous wording
Average Balance Sheets for the Three and Six Months Ended March 31, 2024 and 2023
Current wording
Average Balance Sheets for the Three and Nine Months Ended June 30, 2024 and 2023
Previous 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.
Current wording
The following tables present certain information regarding the Company’s financial condition and net interest income for the three and nine months ended June 30, 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
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.
Current wording
Net Income. Net income decreased $227 thousand, or 11.8%, to $1.7 million for the three-month period ended June 30, 2024 compared with net income of $1.9 million for the three months ended June 30, 2023. The decrease was due to lower net interest and dividend income, lower other income and higher other expenses.
Previous wording
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 wording
Net Interest and Dividend Income. Net interest and dividend income decreased $106 thousand, or 1.5%, to $6.8 million for the three months ended June 30, 2024 from $6.9 million for the three months ended June 30, 2023. The decrease was attributable to a 44-basis point decrease in the Company’s net interest margin to 3.02% for the three months ended June 30, 2024 from 3.46% for the three months ended June 30, 2023, partially offset by a $100.5 million increase in the average balance of interest-earning assets between the periods.
Previous wording
***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 wording
***Interest and Dividend Income.***Interest and dividend income increased $2.5 million, or 26.1%, to $12.3 million for the three months ended June 30, 2024 compared with $9.8 million for the three months ended June 30, 2023. The increase was attributable to a 59-basis point increase in the yield on interest-earning assets to 5.50% for the three months ended June 30, 2024 from 4.91% for the three months ended June 30, 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 $69.9 million and $32.2 million, respectively.
Previous 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.
Current wording
The average balance of loans receivable, net of allowance for credit loss, increased $69.9 million to $744.9 million during the three months ended June 30, 2024 from $675.0 million during the three months ended June 30, 2023 while the yield on loans receivable increased 53 basis points to 5.90% for the three months ended June 30, 2024 from 5.37% for the three months ended June 30, 2023 due to higher market interest rates. The higher average balance and yield accounted for a $1.9 million, or 21.4%, increase in loan interest income between periods.
Previous 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.
Current wording
Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, increased $606 thousand, or 85.8%, to $1.3 million for the three months ended June 30, 2024 from $706 thousand for the three months ended June 30, 2023. The average yield on such assets increased 113 basis points to 3.46% for the three months ended June 30, 2024 from 2.33% for the three months ended June 30, 2023, and the average balance of investment securities and interest-earning deposits increased by $30.4 million, or 24.8%, to $152.8 million for the three months ended June 30, 2024 from $122.4 million for the three months ended June 30, 2023.
Previous wording
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 wording
Interest Expense. Interest expense increased $2.6 million, or 92.0%, to $5.5 million for the three months ended June 30, 2024 from $2.9 million for the three months ended June 30, 2023. The cost of interest-bearing liabilities increased 105 basis points to 3.24% for the three months ended June 30, 2024 compared with 2.19% for the three months ended June 30, 2023 resulting primarily from higher market interest rates. In addition, the average balance of interest-bearing liabilities increased $157.4 million, or 29.7%, to $686.7 million from higher money market and time deposit account balances.
Previous 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.
Current wording
The average balance of interest-bearing deposits increased $156.9 million, or 31.3%, to $658.2 million for the three months ended June 30, 2024 from $501.3 million for the three months ended June 30, 2023, while the average cost of such deposits increased 113 basis points to 3.25% from 2.12%. As a result, interest paid on interest-bearing deposits increased $2.7 million to $5.3 million for the three months ended June 30, 2024 compared with $2.6 million for the three months ended June 30, 2023. The increase in the cost of deposits due to higher market interest rate environment.
Previous wording
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 wording
Provision for Credit Losses. The Company recorded a net reduction of $54 thousand in its provision for credit losses for the three months ended June 30, 2024 compared with a net reduction of $81 thousand for the three months ended June 30, 2023. The net reduction in provisions resulted from lower balances (including commitments) of construction loans and commercial lines of credit, which require higher provisions for credit loss. The Company recorded $1 thousand in net loan recoveries during the three months ended June 30, 2024 compared with $385 thousand in net loan charge-offs during the three months ended June 30, 2023.
Previous wording
***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 wording
***Other Income.***Other income decreased $212 thousand, or 34.1%, to $409 thousand during the three months ended June 30, 2024 compared to $621 thousand for the three months ended June 30, 2023. The decrease was due to lower loan prepayment fees, which caused service charges to decline by $110 thousand to $282 thousand from $392 thousand and lower gains from the sale of Small Business Administration 7(a) loans, which decreased by $103 thousand between the two periods.
Previous wording
***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 wording
***Other Expenses.***Other expenses increased $169 thousand, or 3.5%, to $5.1 million during the three months ended June 30, 2024 compared with $4.9 million for the three months ended June 30, 2023. The increase was primarily attributable to higher compensation and benefit expense, which increased $91 thousand, or 3.2%, to $2.9 million, due to the additions of a commercial lender and a commercial credit analyst, as well as annual merit increases.
Previous 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.
Current wording
Income Tax Expense. The Company recorded tax expense of $501 thousand on pre-tax income of $2.2 million for the three months ended June 30, 2024, compared with $788 thousand on pre-tax income of $2.7 million for the three months ended June 30, 2023. The Company’s effective tax rate for the three months ended June 30, 2024 was 22.9% compared with 29.1% for the three months ended June 30, 2023. The decrease in income tax expense was driven by changes in deferred tax items between the periods as well as changes in the State of New Jersey’s entity consolidation rule.
Previous wording
Comparison of Operating Results for the Six Months Ended March 31, 2024 and 2023
Current wording
Comparison of Operating Results for the Nine Months Ended June 30, 2024 and 2023
Previous wording
***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 wording
***Net Income.***Net income decreased $284 thousand, or 5.1%, to $5.2 million during the nine months ended June 30, 2024 compared with $5.5 million for the nine months ended June 30, 2023. The decrease was due to lower other income and higher other expenses, partially offset by higher net interest and dividend income.
Previous 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.
Current wording
Net Interest and Dividend Income. Net interest and dividend income increased $226 thousand, or 1.1%, to $21.0 million for the nine months ended June 30, 2024 from $20.7 million for the nine months ended June 30, 2023. The increase was attributable to a $106.7 million, or 13.7%, increase in the average balance of interest-earning assets between the periods, partially offset by a 39-basis point decrease in the Company’s net interest margin to 3.16% for the nine months ended June 30, 2024 from 3.55% for the nine months ended June 30, 2023.
Previous 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.
Current wording
Interest and Dividend Income. Interest and dividend income increased $8.3 million, or 30.4%, to $35.8 million for the nine months ended June 30, 2024 from $27.5 million for the nine months ended June 30, 2023. The increase was attributable to a 69-basis point increase in the yield on interest-earning assets to 5.40% from 4.71%, as well as a $63.5 million increase in the average balance of net loans receivable and a $46.1 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
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 wording
The average balance of loans receivable, net of allowance for credit losses, increased $63.5 million to $724.8 million during the nine months ended June 30, 2024 from $661.3 million during the nine months ended June 30, 2023. The average interest earned on loans receivable, net of allowance for credit losses, increased $6.0 million, or 23.3%, to $31.6 million for the nine months ended June 30, 2024 from $25.6 million for the same period prior year. The increase was due to higher market interest rates, which resulted in a 65-basis point increase in the yield on the average balance of loans receivable, net of allowance for credit losses to 5.83% for the nine months ended June 30, 2024 from 5.18% for the nine months ended June 30, 2023.
Previous wording
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 wording
Interest earned on investment securities, including interest-earning deposits and excluding FHLBNY stock, increased $2.3 million, or 131.8%, to $4.1 million for the nine months ended June 30, 2024 from $1.8 million for the nine months ended June 30, 2023. The increase was attributable to a 138-basis point increase in the yield to 3.41 for the nine months ended June 30, 2024 from 2.03% for the nine months ended June 30, 2023, and the average balance of investment securities and interest-earning deposits increased by $42.9 million, or 36.9%, to $159.2 million for the nine months ended June 30, 2024 from $116.3 million for the nine months ended June 30, 2023.
Previous 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.
Current wording
Interest Expense. Interest expense increased $8.1 million, or 120.8%, to $14.9 million for the nine months ended June 30, 2024 from $6.7 million for the nine months ended June 30, 2023. The cost of interest-bearing liabilities increased 133-basis points to 3.07% for the nine months ended June 30, 2024 compared with 1.74% for the nine months ended June 30, 2023 resulting primarily from higher market interest rates between periods. In addition, the average balance of interest-bearing liabilities increased $130.6 million, or 25.3%, to $646.6 million from $516.0 million primarily due to the higher money market account and time deposit account balances.
Previous wording
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 wording
The average balance of interest-bearing deposits increased $126.2 million, or 25.7%, to $617.7 million for the nine months ended June 30, 2024 from $491.5 million for the nine months ended March 31, 2023, while the average interest paid on the interest-bearing deposits increased 140 basis points to 3.07% for the nine months ended June 30, 2024 from 1.67% for the nine months ended June 30, 2023 due to the higher market interest rate environment. As a result, interest paid on interest-bearing deposits increased $8.1 million to $14.2 million for the nine months ended June 30, 2024 from $6.1 million for the nine months ended June 30, 2023.
Previous wording
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 wording
Interest expense on borrowings increased $69 thousand, or 11.6%, to $663 thousand for the nine months ended June 30, 2024 from $594 thousand for the nine months ended June 30, 2023, partially offset by an 18-basis point decrease in the cost of borrowings to 3.06% for the nine months ended June 30, 2024 from 3.24% for the nine months ended June 30, 2023. The average balance of borrowings increased $4.4 million to $28.9 million for the nine months ended June 30, 2024 from $24.5 million for the nine months ended June 30, 2023 to partially fund the growth in the Company’s loans receivable. The Company was able to lower the cost of borrowings while increasing the balance of its borrowings with zero-cost advances from the Federal Home Loan Bank of New York;
Previous 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.
Current wording
Provision for Credit Losses. The Company’s provision for credit losses was $441 thousand for the nine months ended June 30, 2024 compared with $432 thousand for the nine months ended June 30, 2023. Provisions for credit losses resulted from growth in the Company’s loan portfolio, particularly commercial real estate loans, during the nine months ended June 30, 2024. The Company recorded $67 thousand in net loan recoveries during the nine months ended June 30, 2024 compared with $487 thousand in net loan charge-offs during the nine months ended June 30, 2023.
Previous wording
***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 wording
***Other Expenses.***Other expenses increased $920 thousand, or 6.4%, to $15.2 million during the nine months ended June 30, 2024 from $14.3 million during the nine months ended June 30, 2023. The increase was primarily attributable to higher compensation and benefit expense, which increased $549 thousand, or 6.7%, to $8.7 million, due to fewer open positions between periods and the additions of a commercial lender and a commercial credit analyst, as well as annual merit increases.
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