Magyar Bancorp, Inc. (MGYR) Stock Analysis and Metrics

Magyar Bancorp

NASDAQ: MGYR

$18.29 ▲ +0.81 (+4.64%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap114.16 Mn

P/E10.56

P/S3.08

Div. Yield0.00

Total Debt (Qtr)49.05 Mn

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About

Magyar Bancorp, Inc. is a bank holding company that owns 100 percent of the outstanding shares of Magyar Bank, a New Jersey chartered savings bank. At September 30 2025 the company reported consolidated assets of $997.7 million total deposits of $814.3 million and stockholders’ equity of $118.8 million. Magyar Bank conducts business from its main office at 400 Somerset Street in New Brunswick New Jersey and operates seven branch offices located in New Brunswick North Brunswick South Brunswick Branchburg Edison and Martinsville New Jersey. The company’s principal business consists of attracting retail deposits from the general public in the areas surrounding its offices and investing those deposits together with funds generated from operations and wholesale funding in various loan types and investment securities. Magyar Bancorp, Inc. operates within the banking and financial services industry with a focus on community banking.

Revenue is generated primarily from interest earned on loans and securities supplemented by fees and service charges. The loan portfolio at September 30 2025 consisted of $533.2 million in commercial real estate loans representing 62.1% of total loans $242.5 million in residential mortgage loans representing 28.2% $29.3 million in construction and land loans representing 3.4% $31.8 million in home equity loans and lines of credit representing 3.7% $20.0 million in commercial business loans representing 2.3% and $2.1 million in other loans representing 0.2%. Investment securities mainly comprise mortgage backed securities and U. S. Government and government sponsored enterprise obligations. The bank also earns revenue from fees and service charges such as account maintenance fees transaction fees and other service related income. The company serves individuals and small to medium sized businesses professionals sole proprietorships and other enterprises that rely on the regional economy of central and northern New Jersey.

Magyar Bancorp, Inc. operates in a highly competitive market that includes large money center and regional banks community banks credit unions and mortgage banking firms. According to the Federal Deposit Insurance Corporation’s Summary of Deposits report the company’s deposit market share was 1.39% in Middlesex County and 0.69% in Somerset County as of June 30 2025. Competitive advantages stem from its focus on building profitable customer relationships its role as a community bank its deep knowledge of the local economy and its ability to deliver personalized relationship lending. The bank maintains strong capital ratios with a common equity Tier 1 ratio of 14.70% a total capital to risk based assets ratio of 15.79% and a Tier 1 leverage ratio of 11.41% indicating it is well capitalized under regulatory standards. Magyar Bank received a Satisfactory rating on its most recent Community Reinvestment Act examination conducted by the FDIC in 2025.

The customer base consists of individuals and small to medium sized businesses professionals sole proprietorships and other enterprises that are primarily located in central and northern New Jersey. Most of the bank’s lending relationships are with small to mid sized businesses and individual consumers who depend on the regional economy for their financial needs. A substantial portion of the loan portfolio is secured by real estate situated in New Jersey including commercial properties residential homes and land development projects. No specific customer names are disclosed in the filing.

Investment Thesis

▲ Bull case

The company posted a 37 basis point rise in its net interest margin to 3.59% for the quarter ended December 31 2025 from 3.22% a year earlier reflecting improved asset yields and disciplined deposit pricing. This margin expansion was powered by a 31 basis point increase in the yield on interest earning assets to 5.90% and a nine basis point decline in the cost of interest bearing liabilities to 2.96%. The growth in the yield came from higher market rates on loans and investments while the lower cost benefited from a shift toward lower cost non interest bearing deposits. The bank also added 62.3 million dollars to its average interest earning assets, boosting the base that drives net interest income. Management noted that the trend of margin expansion is expected to continue as commercial term loans reprice higher and the yield curve normalizes further. Together these factors suggest that the bank can sustain above average net interest margins even if the Federal Reserve pauses rate cuts, providing a durable earnings engine.
Total loans receivable rose 2.2% to 877.8 million dollars at December 31 2025 from 858.9 million dollars at September 30 2025 driven by strong commercial real estate and construction lending. Commercial real estate loans increased 15.7 million dollars or 2.9% to 548.9 million dollars representing 62.5% of the loan portfolio. Construction and land loans grew 5.4 million dollars or 18.6% to 34.7 million dollars showing the bank’s ability to capture higher yielding niche segments. On the funding side total deposits increased 5.5% to 859.1 million dollars with non interest bearing checking accounts up 22.0% to 143.0 million dollars. The shift toward low cost deposits helped reduce the overall cost of funds while supporting loan growth. This combination of asset expansion and liability improvement positions the bank to grow net interest income without relying heavily on volatile wholesale funding.
Non performing loans fell 20.0% to 361 thousand dollars at December 31 2025 from 451 thousand dollars at September 30 2025 lowering the non performing loan ratio to 0.04%. The bank sold its sole other real estate owned property eliminating 2.2 million dollars of OREO and cutting the non performing assets to total assets ratio to 0.03% from 0.26%. The allowance for credit losses rose modestly to 8.4 million dollars or 0.96% of total loans receivable indicating a conservative reserve stance. Total equity increased to 121.7 million dollars raising book value per share to 18.79 dollars from 18.34 dollars at the prior quarter. Strong capital levels support future loan expansion and provide a buffer against unexpected credit events. Improving asset quality combined with solid capital gives the bank flexibility to pursue growth opportunities while maintaining safety.
The board declared a quarterly cash dividend of 0.10 dollars per share payable on February 26 2026 to shareholders of record as of February 12 2026. At the current share price the dividend yields approximately 2.4% assuming a price near 16.85 dollars. The company also repurchased 2,037 shares during the quarter at an average price of 16.85 dollars returning capital to shareholders. Consistent dividend payments signal confidence in sustainable earnings and attract income focused investors. The combination of dividend and buyback activity enhances total shareholder return beyond pure earnings growth. As the bank continues to generate excess capital, the payout ratio has room to rise if earnings momentum persists.
The bank highlighted that commercial term loans are repricing higher as market rates rise, which should lift the yield on the loan book. With the Federal Reserve expected to keep rates higher for longer, the asset side of the balance sheet may benefit from continued upward pressure on loan yields. Deposit costs have shown limited sensitivity to rate changes given the growing share of non interest bearing and low cost money market accounts. This low beta deposit base means that increases in market rates translate more directly into higher net interest margins. If the yield curve steepens, the bank could capture additional spread between long term loan yields and short term funding costs. Such a scenario would boost pre tax income and improve return on equity metrics without requiring significant asset growth.

The company posted a 37 basis point rise in its net interest margin to 3.59% for the quarter ended December 31 2025 from 3.22% a year earlier reflecting improved asset yields and disciplined deposit pricing. This margin expansion was powered by a 31 basis point increase in the yield on interest earning assets to 5.90% and a nine basis point decline in the cost of interest bearing liabilities to 2.96%. The growth in the yield came from higher market rates on loans and investments while the lower cost benefited from a shift toward lower cost non interest bearing deposits. The bank also added 62.3 million dollars to its average interest earning assets, boosting the base that drives net interest income. Management noted that the trend of margin expansion is expected to continue as commercial term loans reprice higher and the yield curve normalizes further. Together these factors suggest that the bank can sustain above average net interest margins even if the Federal Reserve pauses rate cuts, providing a durable earnings engine.
Total loans receivable rose 2.2% to 877.8 million dollars at December 31 2025 from 858.9 million dollars at September 30 2025 driven by strong commercial real estate and construction lending. Commercial real estate loans increased 15.7 million dollars or 2.9% to 548.9 million dollars representing 62.5% of the loan portfolio. Construction and land loans grew 5.4 million dollars or 18.6% to 34.7 million dollars showing the bank’s ability to capture higher yielding niche segments. On the funding side total deposits increased 5.5% to 859.1 million dollars with non interest bearing checking accounts up 22.0% to 143.0 million dollars. The shift toward low cost deposits helped reduce the overall cost of funds while supporting loan growth. This combination of asset expansion and liability improvement positions the bank to grow net interest income without relying heavily on volatile wholesale funding.
Non performing loans fell 20.0% to 361 thousand dollars at December 31 2025 from 451 thousand dollars at September 30 2025 lowering the non performing loan ratio to 0.04%. The bank sold its sole other real estate owned property eliminating 2.2 million dollars of OREO and cutting the non performing assets to total assets ratio to 0.03% from 0.26%. The allowance for credit losses rose modestly to 8.4 million dollars or 0.96% of total loans receivable indicating a conservative reserve stance. Total equity increased to 121.7 million dollars raising book value per share to 18.79 dollars from 18.34 dollars at the prior quarter. Strong capital levels support future loan expansion and provide a buffer against unexpected credit events. Improving asset quality combined with solid capital gives the bank flexibility to pursue growth opportunities while maintaining safety.
The board declared a quarterly cash dividend of 0.10 dollars per share payable on February 26 2026 to shareholders of record as of February 12 2026. At the current share price the dividend yields approximately 2.4% assuming a price near 16.85 dollars. The company also repurchased 2,037 shares during the quarter at an average price of 16.85 dollars returning capital to shareholders. Consistent dividend payments signal confidence in sustainable earnings and attract income focused investors. The combination of dividend and buyback activity enhances total shareholder return beyond pure earnings growth. As the bank continues to generate excess capital, the payout ratio has room to rise if earnings momentum persists.
The bank highlighted that commercial term loans are repricing higher as market rates rise, which should lift the yield on the loan book. With the Federal Reserve expected to keep rates higher for longer, the asset side of the balance sheet may benefit from continued upward pressure on loan yields. Deposit costs have shown limited sensitivity to rate changes given the growing share of non interest bearing and low cost money market accounts. This low beta deposit base means that increases in market rates translate more directly into higher net interest margins. If the yield curve steepens, the bank could capture additional spread between long term loan yields and short term funding costs. Such a scenario would boost pre tax income and improve return on equity metrics without requiring significant asset growth.

▼ Bear case

The bank’s earnings growth is tightly linked to the direction of interest rates, as shown by the 37 basis point margin expansion tied to Fed policy shifts. If the Federal Reserve begins to cut rates more aggressively than anticipated, the yield on interest earning assets could compress faster than the cost of deposits can adjust. Such a scenario would pressure net interest margin and could reverse the recent improvement in profitability. Management’s outlook assumes continued normalization of the yield curve, but any pause or inversion would remove a key tailwind. The bank’s asset sensitive balance sheet means that falling rates would hurt earnings more than they would help. Investors should therefore consider interest rate risk as a primary headwind that is not fully reflected in the current valuation.
Provisions for credit losses increased sharply to 256 thousand dollars for the quarter ended March 31 2026 compared with a net recovery of 30 thousand dollars a year earlier. The increase was driven by higher specific reserves on construction loans and higher balances in commercial real estate lending. While the bank claims that improving economic conditions offset some of the pressure, the raw data shows a clear uptick in loss provisions. A growing provision level suggests that the underlying loan portfolio may be facing higher default risk than indicated by the low non performing loan ratios. The allowance for credit losses rose to 0.98% of total loans receivable, edging closer to levels seen during past credit cycles. If credit quality continues to worsen, earnings could be hit by larger loss provisions that offset net interest income gains.
Commercial real estate loans made up 62.5% of the total loan book at December 31 2025, and construction and land loans added another 4.0%. This concentration exposes the bank to fluctuations in the New Jersey real estate market, which can be sensitive to local economic conditions. A downturn in property values or a slowdown in new development could lead to higher loan delinquencies and losses. The bank’s reliance on these segments limits diversification and increases vulnerability to sector specific shocks. Management’s focus on growing these higher yielding loans may amplify returns in good times but also magnify losses when the cycle turns. Investors should watch for any signs of weakening demand for office, retail or multifamily space in the bank’s footprint.
Other income fell 32.4% to 857 thousand dollars for the quarter ended March 31 2026 from 1.268 million dollars a year earlier. The drop was primarily due to lower gains from the sale of Small Business Administration 7(a) loans, which decreased 343 thousand dollars. Fee income from loan sales and other real estate owned is inherently variable and can swing sharply from quarter to quarter. The bank has not developed substantial recurring fee streams such as wealth management or insurance commissions to offset this volatility. As a result, overall earnings stability relies heavily on net interest income, which itself is subject to rate movements. A lack of diversified revenue sources makes the earnings profile more cyclical than that of peers with broader fee businesses.
Compensation and benefit expenses increased 4.2% to 3.4 million dollars for the quarter ended March 31 2026 from 3.263 million dollars a year earlier. The rise was attributed to higher medical benefits, incentive accruals and annual merit increases. As the bank expands its loan portfolio and hires additional staff to support growth, personnel costs are likely to continue rising. Higher personnel expenses can erode the operating leverage gained from revenue growth if not offset by productivity improvements. The bank’s efficiency ratio may worsen, pressuring profitability especially in a slower revenue environment. Investors should monitor whether the bank can control its cost base while pursuing asset expansion.

The bank’s earnings growth is tightly linked to the direction of interest rates, as shown by the 37 basis point margin expansion tied to Fed policy shifts. If the Federal Reserve begins to cut rates more aggressively than anticipated, the yield on interest earning assets could compress faster than the cost of deposits can adjust. Such a scenario would pressure net interest margin and could reverse the recent improvement in profitability. Management’s outlook assumes continued normalization of the yield curve, but any pause or inversion would remove a key tailwind. The bank’s asset sensitive balance sheet means that falling rates would hurt earnings more than they would help. Investors should therefore consider interest rate risk as a primary headwind that is not fully reflected in the current valuation.
Provisions for credit losses increased sharply to 256 thousand dollars for the quarter ended March 31 2026 compared with a net recovery of 30 thousand dollars a year earlier. The increase was driven by higher specific reserves on construction loans and higher balances in commercial real estate lending. While the bank claims that improving economic conditions offset some of the pressure, the raw data shows a clear uptick in loss provisions. A growing provision level suggests that the underlying loan portfolio may be facing higher default risk than indicated by the low non performing loan ratios. The allowance for credit losses rose to 0.98% of total loans receivable, edging closer to levels seen during past credit cycles. If credit quality continues to worsen, earnings could be hit by larger loss provisions that offset net interest income gains.
Commercial real estate loans made up 62.5% of the total loan book at December 31 2025, and construction and land loans added another 4.0%. This concentration exposes the bank to fluctuations in the New Jersey real estate market, which can be sensitive to local economic conditions. A downturn in property values or a slowdown in new development could lead to higher loan delinquencies and losses. The bank’s reliance on these segments limits diversification and increases vulnerability to sector specific shocks. Management’s focus on growing these higher yielding loans may amplify returns in good times but also magnify losses when the cycle turns. Investors should watch for any signs of weakening demand for office, retail or multifamily space in the bank’s footprint.
Other income fell 32.4% to 857 thousand dollars for the quarter ended March 31 2026 from 1.268 million dollars a year earlier. The drop was primarily due to lower gains from the sale of Small Business Administration 7(a) loans, which decreased 343 thousand dollars. Fee income from loan sales and other real estate owned is inherently variable and can swing sharply from quarter to quarter. The bank has not developed substantial recurring fee streams such as wealth management or insurance commissions to offset this volatility. As a result, overall earnings stability relies heavily on net interest income, which itself is subject to rate movements. A lack of diversified revenue sources makes the earnings profile more cyclical than that of peers with broader fee businesses.
Compensation and benefit expenses increased 4.2% to 3.4 million dollars for the quarter ended March 31 2026 from 3.263 million dollars a year earlier. The rise was attributed to higher medical benefits, incentive accruals and annual merit increases. As the bank expands its loan portfolio and hires additional staff to support growth, personnel costs are likely to continue rising. Higher personnel expenses can erode the operating leverage gained from revenue growth if not offset by productivity improvements. The bank’s efficiency ratio may worsen, pressuring profitability especially in a slower revenue environment. Investors should monitor whether the bank can control its cost base while pursuing asset expansion.

Peer Comparison

Companies in the Banks - Regional

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	KB	KB Financial Group Inc.	42,090.38 Bn	0.00 Bn	0.01 Mn	56.66 Bn
2	SHG	Shinhan Financial Group Co Ltd	33,919.15 Bn	0.00 Bn	0.00 Mn	40.46 Bn
3	BCH	Bank Of Chile	4,123.52 Bn	368.17 Bn	1.57 Mn	0.00 Bn
4	LYG	Lloyds Banking Group plc	360.83 Bn	0.00 Bn	0.00 Mn	42.37 Bn
5	FCAP	First Capital Inc	204.17 Bn	0.00 Bn	0.03 Mn	-
6	LARK	Landmark Bancorp Inc	187.97 Bn	0.00 Bn	0.00 Mn	0.00 Bn
7	NWG	NatWest Group plc	144.82 Bn	0.00 Bn	0.00 Mn	94.66 Bn
8	PNC	Pnc Financial Services Group, Inc.	101.80 Bn	0.00 Bn	0.00 Mn	21.42 Bn

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