Magyar Bancorp (MGYR) Q3 2024 earnings summary

Executive summary

• Total assets grew 4.1% to $944.4 million at June 30, 2024, driven by higher loan balances, especially in commercial real estate, while interest-earning deposits with banks declined as funds were deployed into loans.

• Net income for the quarter was $1.7 million, down 11.8% year-over-year, and $5.2 million for the nine months, down 5.1% from the prior year, mainly due to lower net interest margin and higher expenses.

• Basic and diluted EPS were $0.27 for the quarter and $0.83 for the nine months.

• The company adopted ASU 2016-13, impacting the allowance for credit losses and retained earnings.

• Michael R. Lombardi was appointed as Director, with a term expiring after fiscal year 2026.

Financial highlights

• Net interest and dividend income for the quarter was $6.8 million, down 1.5% year-over-year; for the nine months, it was $21.0 million, up 1.1%.

• Net interest margin declined to 3.02% for the quarter (from 3.46%) and 3.16% for the nine months (from 3.55%).

• Interest expense rose sharply, up 92% for the quarter and 121% for the nine months, reflecting higher market rates and deposit growth.

• Provision for credit losses was a net reduction of $54 thousand for the quarter and $441 thousand for the nine months, reflecting portfolio growth and recoveries.

• Non-performing loans declined to 0.60% of total loans during the quarter.

Outlook and guidance

• Management expects continued focus on loan growth, especially in commercial real estate, while monitoring asset quality and economic conditions.

• Net interest margin remains pressured by a challenging interest rate environment, but is expected to stabilize in the second half of the calendar year.

• Continued loan growth is anticipated to help offset higher funding costs.

• No material changes to risk factors or critical accounting policies, except for the new credit loss methodology.