10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 000-51726

Magyar Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-4154978
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
400 Somerset Street, New Brunswick, New Jersey	08901
(Address of Principal Executive Office)	(Zip Code)
(732) 342-7600
(Issuer’s Telephone Number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $.01 per share	MGYR	The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐   No ☑

The number of shares outstanding of the issuer's common stock at February 1, 2022 was 7,097,825.

 

MAGYAR BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

PART I. FINANCIAL INFORMATION

		Page Number
Item 1.	Financial Statements		1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		31
Item 4.	Controls and Procedures		31
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		32
Item 1A.	Risk Factors		32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3.	Defaults Upon Senior Securities		32
Item 4.	Mine Safety Disclosures		32
Item 5.	Other Information		32
Item 6.	Exhibits		32
Signature Pages			33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Data)

	December 31,			September 30,
	2021			2021
	(Unaudited)
Assets
Cash	$	2,141		$	1,808
Interest earning deposits with banks		80,130			73,393
Total cash and cash equivalents		82,271			75,201
Investment securities - available for sale, at fair value		12,181			12,927
Investment securities - held to maturity, at amortized cost (fair value of $65,671 and $57,282 at December 31, 2021 and September 30, 2021, respectively)		66,467			57,660
Federal Home Loan Bank of New York stock, at cost		1,661			1,738
Loans receivable, net of allowance for loan losses of $8,228 and $8,075 at December 31, 2021 and September 30, 2021, respectively		574,266			585,301
Bank owned life insurance		17,375			14,288
Accrued interest receivable		3,584			3,533
Premises and equipment, net		14,199			14,331
Other real estate owned ("OREO")		649			636
Other assets		8,001			8,375
Total assets	$	780,654		$	773,990
Liabilities and Stockholders' Equity
Liabilities
Deposits	$	647,675		$	639,814
Escrowed funds		3,277			3,242
Borrowings		21,356			23,356
Accrued interest payable		81			85
Accounts payable and other liabilities		9,822			9,852
Total liabilities		682,211			676,349
Stockholders' equity
Preferred stock: $.01 Par Value, 500,000 shares authorized; at December 31, 2021 and September 30, 2021, none issued		-			-
Common stock: $.01 Par Value, 14,000,000 shares authorized; 7,097,825 shares issued; 7,097,825 shares outstanding at December 31, 2021 and September 30, 2021, at cost		71			71
Additional paid-in capital		63,681			63,713
Treasury stock: 112,996 shares at cost		(1,242	)		(1,242	)
Unearned Employee Stock Ownership Plan shares		(3,240	)		(3,235	)
Retained earnings		40,160			39,281
Accumulated other comprehensive loss		(987	)		(947	)
Total stockholders' equity		98,443			97,641
Total liabilities and stockholders' equity	$	780,654		$	773,990

The accompanying notes are an integral part of these consolidated financial statements.

1

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Data)

	For the Three Months Ended December 31,
	2021		2020
	(Unaudited)
Interest and dividend income
Loans, including fees	$	6,721	$	6,751
Investment securities
Taxable		261		225
Tax-exempt		7		-
Federal Home Loan Bank of New York stock		20		25
Total interest and dividend income		7,009		7,001
Interest expense
Deposits		451		765
Borrowings		119		191
Total interest expense		570		956
Net interest and dividend income		6,439		6,045
Provision for loan losses		101		640
Net interest and dividend income after provision for loan losses		6,338		5,405
Other income
Service charges		257		293
Income on bank owned life insurance		87		78
Fees for other customer services		-		464
Interest rate swap fees		-		102
Other operating income		25		25
Gains on sales of loans		281		263
Total other income		650		1,225
Other expenses
Compensation and employee benefits		2,702		2,547
Occupancy expenses		739		725
Professional fees		387		528
Data processing expenses		134		132
Marketing and business development		125		44
OREO expenses		34		180
FDIC deposit insurance premiums		57		130
Loan servicing expenses		46		84
Other expenses		397		354
Total other expenses		4,621		4,724
Income before income tax expense		2,367		1,906
Income tax expense		674		569
Net income	$	1,693	$	1,337
Net income per share-basic and diluted	$	0.25	$	0.19
Weighted average basic and diluted shares outstanding		6,792,477		7,096,664

The accompanying notes are an integral part of these consolidated financial statements.

2

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(In Thousands)

	For the Three Months Ended December 31,
	2021			2020
	(Unaudited)
Net income	$	1,693		$	1,337
Other comprehensive income
Unrealized loss on securities available for sale		(53	)		(51	)
Other comprehensive loss, before tax		(53	)		(51	)
Deferred income tax effect		13			15
Total other comprehensive loss	$	(40	)	$	(36	)
Total comprehensive income	$	1,653		$	1,301

The accompanying notes are an integral part of these consolidated financial statements.

3

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders' Equity

For the Three Months Ended December 31, 2021 and 2020

(In Thousands, Except for Share Amounts)

	Common Stock				Additional						Unearned						Accumulated Other
	Shares		Par		Paid-In			Treasury			ESOP			Retained			Comprehensive
	Outstanding		Value		Capital			Stock			Shares			Earnings			Loss			Total
	(Unaudited)
Balance, September 30,  2021		7,097,825	$	71	$	63,713		$	(1,242	)	$	(3,235	)	$	39,281		$	(947	)	$	97,641
Net income		-		-		-			-			-			1,693			-			1,693
Dividends paid on common stock ($0.12 per share)		-		-		-			-			-			(814	)		-			(814	)
Other comprehensive  income		-		-		-			-			-			-			(40	)		(40	)
Common stock acquired by ESOP		-		-		-			-			(98	)		-			-			(98	)
ESOP shares allocated		-		-		(32	)		-			93			-			-			61
Balance, December 31,  2021		7,097,825	$	71	$	63,681		$	(1,242	)	$	(3,240	)	$	40,160		$	(987	)	$	98,443

	Common Stock				Additional						Unearned					Accumulated Other
	Shares		Par		Paid-In			Treasury			ESOP			Retained		Comprehensive
	Outstanding		Value		Capital			Stock			Shares			Earnings		Loss			Total
	(Unaudited)
Balance, September 30,  2020		5,810,746	$	59	$	26,294		$	(1,242	)	$	(65	)	$	33,161	$	(1,357	)	$	56,850
Net income		-		-		-			-			-			1,337		-			1,337
Other comprehensive  income		-		-		-			-			-			-		(36	)		(36	)
ESOP shares allocated		-		-		(15	)		-			65			-		-			50
Balance, December 31,  2020		5,810,746	$	59	$	26,279		$	(1,242	)	$	-		$	34,498	$	(1,393	)	$	58,201

The accompanying notes are an integral part of these consolidated financial statements.

4

MAGYAR BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(In Thousands)

	For the Three Months Ended December 31,
	2021			2020
	(Unaudited)
Operating activities
Net income	$	1,693		$	1,337
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense		209			207
Premium amortization on investment securities, net		58			33
Provision for loan losses		101			640
Provision for loss on other real estate owned		-			150
Originations of SBA loans held for sale		(2,437	)		(2,513	)
Proceeds from the sales of SBA loans		2,718			2,776
Gains on sale of loans receivable		(281	)		(263	)
Gains on the sales of other real estate owned		-			(1	)
ESOP compensation expense		61			50
Deferred income tax expense (benefit)		26			(134	)
Increase in accrued interest receivable		(51	)		(66	)
Increase in surrender value of bank owned life insurance		(87	)		(78	)
Decrease (increase) in other assets		360			(105	)
Decrease in accrued interest payable		(4	)		(39	)
Increase in accounts payable and other liabilities		(30	)		(351	)
Net cash provided by operating activities		2,336			1,643
Investing activities
Net decrease in loans receivable		10,934			(3,940	)
Purchases of investment securities held to maturity		(10,064	)		(4,652	)
Purchases of investment securities available for sale		-			(4,060	)
Principal repayments on investment securities held to maturity		1,221			2,586
Principal repayments on investment securities available for sale		671			3,755
Purchase of bank owned life insurance		(3,000	)		-
Purchases of premises and equipment		(77	)		(68	)
Investment in other real estate owned		(12	)		(13	)
Proceeds from other real estate owned		-			387
Redemption of Federal Home Loan Bank stock		77			-
Net cash (used in) provided by investing activities		(250	)		1,875
Financing activities
Net increase (decrease) in deposits		7,861			(6,266	)
Purchase of common stock for ESOP		(98	)		-
Net increase in escrowed funds		35			242
Repayments of long-term advances		(2,000	)		(7,150	)
Cash paid on common stock dividends		(814	)		-
Net cash provided by (used in) financing activities		4,984			(13,174	)
Net increase (decrease) in cash and cash equivalents		7,070			(9,656	)
Cash and cash equivalents, beginning of year		75,201			61,726
Cash and cash equivalents, end of year	$	82,271		$	52,070
Supplemental disclosures of cash flow information
Cash paid for
Interest	$	575		$	995

The accompanying notes are an integral part of these consolidated financial statements.

5

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A – BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Magyar Bancorp, Inc. (the “Company”), its wholly owned subsidiary, Magyar Bank (the “Bank”), and the Bank’s wholly owned subsidiaries Magyar Service Corporation, Hungaria Urban Renewal, LLC, and MagBank Investment Company. All material intercompany transactions and balances have been eliminated. The Company prepares its financial statements on the accrual basis and in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). The unaudited information furnished herein reflects all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

Operating results for the three months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021. The September 30, 2020 information has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete consolidated financial statements.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of other real estate owned (“OREO”), and the assessment of realizability of deferred income tax assets.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of December 31, 2021 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

NOTE B – RECENT ACCOUNTING PRONOUNCEMENTS

In connection with the preparation of quarterly and annual reports in accordance with the Securities and Exchange Commission’s (“SEC”) Securities Exchange Act of 1934, SEC Staff Accounting Bulletin Topic 11.M requires the disclosure of the impact that recently issued accounting standards will have on financial statements when they are adopted in the future.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

In October 2019, the FASB voted to defer the effective date of ASU 2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2022 (October 1, 2023 for the Company), and interim periods within those fiscal years. The Company currently expects to continue to qualify as a smaller reporting company, based upon the current SEC definition, and as a result, will be able to defer implementation of the new standard for a period of time. The Company did not early adopt as of December 31, 2021, but will continue to review factors that might indicate that the full deferral time period should not be used. The Company continues to evaluate the impact the new standard will have on the accounting for credit losses, but the Company may recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, consistent with regulatory expectations set forth in interagency guidance issued at the end of 2016. The Company cannot yet determine the magnitude of any such one-time cumulative adjustment or of the overall impact of the new standard on its consolidated financial condition or results of operations.

6

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The ASU removes the disclosures of 1) the amounts in accumulated other comprehensive income that the entity expects to recognize in net periodic benefit cost during the next fiscal year, 2) the amount and timing of plan assets expected to be returned to the employer and 3) certain related party disclosures. The ASU clarifies the disclosure requirements for the projected benefit obligation (“PBO”) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (“ABO”) and fair value of plan assets for plans with ABOs in excess of plan assets. The ASU adds disclosure requirements for the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and for an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. ASU 2018-14 was effective for the Company beginning October 1, 2021 and did not have a material impact on its consolidated financial condition or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

NOTE C – CONTINGENCIES

The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of this litigation, if any, would not have a material adverse effect on the Company’s consolidated financial position or results of operations.

NOTE D – EARNINGS PER SHARE

The following table presents a calculation of basic and diluted earnings per share for the three months ended December 31, 2021 and 2020. Basic and diluted earnings per share were calculated by dividing net income by the weighted-average number of shares outstanding for the periods. As a result of the second-step conversion completed on July 14, 2021, the previously reported number of shares for the year ended December 31, 2020 were adjusted to reflect the 1.2213 exchange ratio for comparative purposes.

	For the Three Months Ended December 31,
	2021						2020
			Weighted		Per				Weighted		Per
			average		share				average		share
	Income		shares		Amount		Income		shares		Amount
	(Dollars in thousands, except share and per share data)
Basic and diluted EPS
Net income available to weighted average common shareholders	$	1,693		6,792,477	$	0.25	$	1,337		7,096,664	$	0.19

There were no outstanding stock awards or options to purchase common stock at December 31, 2021 and 2020.

7

NOTE E – STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

The Company follows FASB Accounting Standards Codification (“ASC”) Section 718, Compensation-Stock Compensation, which covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in consolidated financial statements. The cost is measured based on the fair value of the equity or liability instruments issued.

There were no grants, vested shares or forfeitures of non-vested restricted stock awards for the three months ended December 31, 2021 and 2020. There were also no stock option and stock award expenses included with compensation expense for the three months ended December 31, 2021 and 2020.

The Company completed its first stock repurchase program of 130,927 shares in November 2007, and announced its second stock repurchase program of up to 5% of its publicly-held outstanding shares of common stock, or 129,924 shares, in November 2007. Through December 31, 2021, the Company had repurchased a total of 91,000 shares of its common stock at an average cost of $8.41 per share under this program.

Under current federal regulations, subject to limited exceptions, the Company may not repurchase shares of our common stock during the first year following the completion of its second-step conversion offering, which was completed on July 14, 2021. The Company did not repurchase any shares of its common stock during the three months ended December 31, 2021 and 2020. The Company held 112,996 total treasury stock shares at December 31, 2021.

The Company has an Employee Stock Ownership Plan ("ESOP") for the benefit of employees who meet certain eligibility requirements. The ESOP trust purchases shares of common stock in the open market using proceeds of a loan from the Company. The loan is secured by shares of the Company’s stock. The Bank makes cash contributions to the ESOP on an annual basis sufficient to enable the ESOP to make the required loan payments to the Company.

As the debt is repaid, shares are released as collateral and allocated to qualified employees. Accordingly, the shares pledged as collateral are reported as unearned ESOP shares in the Consolidated Balance Sheets. The Company accounts for its ESOP in accordance with FASB ASC Topic 718, “Employer’s Accounting for Employee Stock Ownership Plans.” As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations.

The Company’s ESOP (“2006 ESOP”) was established in 2006 as part of the Company’s initial public offering. The total cost of the 217,863 shares purchased by the 2006 ESOP trust was $2.3 million, reflecting an average cost per share of $10.58. The 2006 ESOP loan was fully repaid during the year ended September 30, 2021, and all shares were allocated to participants.

In connection with the second-step conversion offering, the ESOP trustees purchased 8% of the shares sold in the offering, or 312,800 shares (“2021 ESOP”). As a result of the second-step conversion offering being oversubscribed in the first tier of subscription priorities, the ESOP trustees were unable to purchase shares of the Company’s common stock in the second-step conversion offering. The total cost of the shares purchased by the 2021 ESOP trust was $3.4 million, reflecting an average cost per share of $10.77. The 2021 ESOP loan bears a variable interest rate that adjusts annually to Prime Rate (3.25% at January 1, 2022) with principal and interest payable annually in equal installments over thirty years.

The Company's contribution expense for the ESOP was $61,000 and $50,000 for the three months ended December 31, 2021 and 2020, respectively.

8

NOTE F – OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive loss and the related income tax effects are as follows:

	Three Months Ended December 31,
	2021								2020
				Tax		Net of						Tax		Net of
	Before Tax			(Benefit)		Tax			Before Tax			(Benefit)		Tax
	Amount			Expense		Amount			Amount			Expense		Amount
	(In thousands)
Unrealized holding loss arising during period on:
Available-for-sale investments	$	(53	)	$	13	$	(40	)	$	(51	)	$	15	$	(36	)
Other comprehensive loss, net	$	(53	)	$	13	$	(40	)	$	(51	)	$	15	$	(36	)

NOTE G – FAIR VALUE DISCLOSURES

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity securities, mortgage servicing rights, loans receivable and OREO. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.

In accordance with ASC 820, the Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 -Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 -Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 -Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.

The Company based its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following is a description of valuation methodologies used for assets measured at fair value on a recurring basis.

Securities available-for-sale

The securities available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The securities available-for-sale portfolio consists of U.S government-sponsored mortgage-backed securities and private label mortgage-backed securities. The fair values of these securities are obtained from an independent nationally recognized pricing service. An independent pricing service provides the Company with prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

Derivatives

Magyar Bank executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. The fair values of such derivatives are based on valuation models from a third party using current market terms (including interest rates and fees), the remaining terms of the agreements and the credit worthiness of the counter party as of the measurement date (Level 2).

9

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a recurring basis.

December 31, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Securities available for sale:
Mortgage-backed securities	$	12,181	$	-	$	12,181	$	-
Debt securities		-		-		-		-
Total securities available for sale		12,181		-		12,181		-
Derivative assets		164		-		164		-
Total Assets	$	12,345	$	-	$	12,345	$	-
Liabilities:
Derivative liabilities	$	164	$	-	$	164	$	-
Total Liabilities	$	164	$	-	$	164	$	-

September 30, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Securities available for sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	186	$	-	$	186	$	-
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,741		-		12,741		-
Total securities available for sale	$	12,927	$	-	$	12,927	$	-
Derivative assets		183		-		183		-
Total assets	$	13,110	$	-	$	13,110	$	-
Liabilities:
Derivative liabilities	$	183	$	-	$	183	$	-
Total Liabilities	$	183	$	-	$	183	$	-

The following is a description of valuation methodologies used for assets measured at fair value on a non-recurring basis.

Mortgage Servicing Rights, net

Mortgage Servicing Rights (MSRs) are carried at the lower of cost or estimated fair value. The estimated fair value of MSRs is determined through a calculation of future cash flows, incorporating estimates of assumptions market participants would use in determining fair value including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market driven data, including the market’s perception of future interest rate movements and, as such, are classified as Level 3. The Company had MSRs totaling $3,000 and $4,000 at December 31, 2021 and September 30, 2021, respectively.

Impaired Loans

Loans which meet certain criteria are evaluated individually for impairment. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the loan agreement. Three impairment measurement methods are used, depending upon the collateral securing the asset: 1) the present value of expected future cash flows discounted at the loan’s effective interest rate (the rate of return implicit in the loan); 2) the asset’s observable market price; or 3) the fair value of the collateral, less anticipated selling and disposition costs, if the asset is collateral dependent. The regulatory agencies require the last method for loans from which repayment is expected to be provided solely by the underlying collateral. The Company’s impaired loans are generally collateral dependent and, as such, are carried at the estimated fair value of the collateral less estimated selling costs. Fair value is estimated through current appraisals, and adjusted by management as necessary, to reflect current market conditions and, as such, are generally classified as Level 3.

10

Appraisals of collateral securing impaired loans are conducted by approved, qualified, and independent third-party appraisers. Such appraisals are ordered via the Company’s credit administration department, independent from the lender who originated the loan, once the loan is deemed impaired, as described in the previous paragraph. Impaired loans are generally re-evaluated with an updated appraisal within one year of the last appraisal. The Company discounts the appraised “as is” value of the collateral for estimated selling and disposition costs and compares the resulting fair value of collateral to the outstanding loan amount. If the outstanding loan amount is greater than the discounted fair value, the Company requires a reduction in the outstanding loan balance or additional collateral before considering an extension to the loan. If the borrower is unwilling or unable to reduce the loan balance or increase the collateral securing the loan, it is deemed impaired and the difference between the loan amount and the fair value of collateral, net of estimated selling and disposition costs, is charged off through a reduction of the allowance for loan loss.

Other Real Estate Owned

The fair value of other real estate owned is determined through current appraisals, and adjusted as necessary, by management, to reflect current market conditions and anticipated selling and disposition costs. As such, other real estate owned is generally classified as Level 3.

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a non-recurring basis at December 31, 2021 and September 30, 2021.

December 31, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	10,506	$	-	$	-	$	10,506
Other real estate owned		649		-		-		649
Total	$	11,155	$	-	$	-	$	11,155

September 30, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	11,134	$	-	$	-	$	11,134
Other real estate owned		636		-		-		636
Total	$	11,770	$	-	$	-	$	11,770

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Company has utilized Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands)

December 31, 2021	Fair Value Estimate			Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans		$	10,506	Appraisal of collateral (1)	Appraisal adjustments (2)	-8.0% to -42.8% (-25.0%)
Other real estate owned		$	649	Appraisal of collateral (1)	Liquidation expenses (2)	-31.2% to -45.5% (-39.4%)

September 30, 2021	Fair Value Estimate			Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans		$	11,134	Appraisal of collateral (1)	Appraisal adjustments (2)	-8.0% to -42.8% (-23.6%)
Other real estate owned		$	636	Appraisal of collateral (1)	Liquidation expenses (2)	-31.2% to -45.5% (-39.4%)

(1)Fair value is generally determined through independent appraisals for the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

11

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments carried at cost or amortized cost as of December 31, 2021 and September 30, 2021. For short-term financial assets such as cash and cash equivalents and accrued interest receivable, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as interest-bearing demand, NOW, and money market savings deposits, the carrying amount is a reasonable estimate of fair value due to these products being payable on demand and having no stated maturity.

	Carrying		Fair		Fair Value Measurement Placement
	Value		Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2021
Financial instruments - assets
Investment securities held to maturity	$	66,467	$	65,671	$	-	$	65,671	$	-
Loans		574,266		579,562		-		-		579,562
Financial instruments - liabilities
Certificates of deposit including retirement certificates		97,002		97,937		-		97,937		-
Borrowings		21,356		21,520		-		21,520		-
September 30, 2021
Financial instruments - assets
Investment securities held-to-maturity	$	57,660	$	57,282	$	-	$	57,282	$	-
Loans		585,301		594,674		-		-		594,674
Financial instruments - liabilities
Certificates of deposit		116,892		118,144		-		118,144		-
Borrowings		23,356		23,753		-		23,753		-

NOTE H – LEASES

The Company accounts for its leases in accordance with ASU 2016-02, Leases (Topic 842). Topic 842 requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset, measured at the present value of the future minimum lease payments, at the lease commencement date.

The Company holds operating leases for five branch locations. Our leases have remaining lease terms of up to 11 years, some of which include options to extend the leases for up to 10 additional years. Operating leases are recorded as ROU assets and lease liabilities and are included within Other assets and Accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement base on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate used by the Company to value its operating leases is based on the interpolated term advance rate available from the Federal Home Loan Bank of New York, based on the remaining lease term.

At December 31, 2021, the Company’s operating lease right-of-use assets and operating lease liabilities totaled $3.7 million and $4.1 million, respectively.

12

The following table presents the balance sheet information related to our leases:

	December 31, 2021			September 30, 2021
	(Dollars in thousands)
Operating lease right-of-use asset	$	3,743		$	3,894
Operating lease liabilities	$	4,096		$	4,254
Weighted average remaining lease term in years		7.5			7.7
Weighted average discount rate		2.2	%		2.2	%

The following table summarizes the maturity of our remaining lease liabilities by year:

	December 31, 2021
	(In thousands)
For the Year Ending:
2022	$	550
2023		738
2024		747
2025		523
2026		455
2027 and thereafter		1,533
Total lease payments		4,546
Less imputed interest		(450	)
Present value of lease liabilities	$	4,096

Total leases expense recorded on the Consolidated Statements of Income within Occupancy expense were $207,000 and $204,000 for the three months ended December 31, 2021 and 2020, respectively.

NOTE I – INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at December 31, 2021:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	153	$	5	$	-		$	158
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,255		23		(255	)		12,023
Total securities available-for-sale	$	12,408	$	28	$	(255	)	$	12,181
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	3,447	$	1	$	(25	)	$	3,423
Mortgage-backed securities - commercial		684		-		-			684
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed-securities - residential		41,939		308		(560	)		41,687
Debt securities		14,498		-		(307	)		14,191
Private label mortgage-backed securities - residential		238		5		-			243
Obligations of state and political subdivisions		2,661		1		(22	)		2,640
Corporate securities		3,000		-		(197	)		2,803
Total securities held-to-maturity	$	66,467	$	315	$	(1,111	)	$	65,671
Total investment securities	$	78,875	$	343	$	(1,366	)	$	77,852

13

The contractual maturities of mortgage-backed securities generally exceed 10 years; however, the effective lives are expected to be shorter due to anticipated prepayments. The maturities of the debt securities, municipal bonds and certain information regarding the mortgage backed securities at December 31, 2021 are summarized in the following table:

	Amortized		Fair
	Cost		Value
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities:
Residential		12,408		12,181
Commercial		-		-
Total		12,408		12,181
Securities held-to-maturity
Due within 1 year	$	-	$	-
Due after 1 but within 5 years		13,498		13,091
Due after 5 but within 10 years		6,146		6,035
Due after 10 years		515		508
Total debt securities		20,159		19,634
Mortgage-backed securities:
Residential		45,624		45,353
Commercial		684		684
Total	$	66,467	$	65,671

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, 2021:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage backed securities - residential	$	179	$	7	$	-		$	186
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,922		27		(208	)		12,741
Total securities available-for-sale	$	13,101	$	34	$	(208	)	$	12,927
Securities-held to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	574	$	-	$	(25	)	$	549
Mortgage-backed securities - commercial		703		-		-			703
Obligations of U.S. government-sponsored enterprises:
Mortgage backed securities - residential		38,596		416		(389	)		38,623
Debt securities		12,498		-		(156	)		12,342
Private label mortgage-backed securities - residential		242		6		-			248
Corporate securities		3,000		-		(196	)		2,804
Total securities held-to-maturity	$	57,660	$	422	$	(800	)	$	57,282
Total investment securities	$	70,761	$	456	$	(1,008	)	$	70,209

14

NOTE J – IMPAIRMENT OF INVESTMENT SECURITIES

The Company recognizes credit-related other-than-temporary impairment on debt securities in earnings while noncredit-related other-than-temporary impairment on debt securities not expected to be sold are recognized in other comprehensive income.

The Company reviews its investment portfolio on a quarterly basis for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. The Company evaluates its intent and ability to hold debt securities based upon its investment strategy for the particular type of security and its cash flow needs, liquidity position, capital adequacy and interest rate risk position. In addition, the risk of future other-than-temporary impairment may be influenced by prolonged recession in the U.S. economy, changes in real estate values and interest deferrals.

Investment securities with fair values greater than their amortized cost contain unrealized gains. Investment securities with fair values less than their amortized cost contain unrealized losses. The following tables present the gross unrealized losses and fair value at December 31, 2021 and September 30, 2021 for both available for sale and held to maturity securities by investment category and time frame for which the loss has been outstanding:

			Less Than 12 Months					12 Months Or Greater					Total
	Number of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Securities		Value		Losses			Value		Losses			Value		Losses
			(Dollars in thousands)
December 31, 2021
Obligations of U.S. government agencies:
Mortgage-backed securities - residential		3	$	2,952	$	(3	)	$	401	$	(22	)	$	3,353	$	(25	)
Mortgage-backed securities - commercial		1		-		-			684		-			684		-
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential		24		42,010		(815	)		-		-			42,010		(815	)
Debt securities		8		9,774		(224	)		4,417		(83	)		14,191		(307	)
Obligations of state and political subdivisions		4		2,022		(22	)		-		-			2,022		(22	)
Corporate securities		1		-		-			2,804		(197	)		2,804		(197	)
Total		41	$	56,758	$	(1,064	)	$	8,306	$	(302	)	$	65,064	$	(1,366	)

September 30, 2021
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	3	$	318	$	(12	)	$	232	$	(13	)	$	550	$	(25	)
Mortgage-backed securities - commercial	1		-		-			703		-			703		-
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential	20		33,690		(539	)		1,610		(58	)		35,300		(597	)
Debt securities	7		10,859		(139	)		1,483		(17	)		12,342		(156	)
Obligations of state and political subdivisions	4		2,013		(34	)		-		-			2,013		(34	)
Corporate securities	1		-		-			2,804		(196	)		2,804		(196	)
Total	36	$	46,880	$	(724	)	$	6,832	$	(284	)	$	53,712	$	(1,008	)

The Company evaluated these securities and determined that the decline in value was primarily related to fluctuations in the interest rate environment and were not related to any company or industry specific event. At December 31, 2021 and September 30, 2021, there were 41 and 36, respectively, investment securities with unrealized losses.

The Company anticipates full recovery of amortized costs with respect to these securities. The Company does not intend to sell these securities and has determined that it is not more likely than not that the Company would be required to sell these securities prior to maturity or market price recovery. Management has considered factors regarding other than temporarily impaired securities and determined that there are no securities with impairment that is other than temporary as of December 31, 2021 and September 30, 2021.

15

NOTE K – LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES

Loans receivable, net were comprised of the following:

	December 31,			September 30,
	2021			2021
	(In thousands)
One-to-four family residential	$	200,807		$	203,019
Commercial real estate		278,989			280,848
Construction		24,282			20,350
Home equity lines of credit		17,667			17,930
Commercial business		58,320			68,719
Other		3,289			3,751
Total loans receivable		583,354			594,617
Net deferred loan costs		(860	)		(1,241	)
Allowance for loan losses		(8,228	)		(8,075	)
Total loans receivable, net	$	574,266		$	585,301

The Bank participated in the Paycheck Protection Program (“PPP”), which was designed by the U.S. Treasury under the Coronavirus Aid, Relief and Economic Security Act of 2020 (subsequently extended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act) to provide liquidity using the SBA’s platform to small businesses and self-employed individuals to maintain their staff and operations through the COVID-19 pandemic. This liquidity is in the form of a loan, 100% guaranteed by the SBA, that is forgivable provided the funds are used on qualifying payroll costs, and to a lesser extent, rent, utilities and interest on qualifying mortgage payments. The loans bear a fixed rate of 1.0% and loan payments are deferred through the date that the SBA remits the borrower’s loan forgiveness amount to the lender. Included in commercial business loans at December 31, 2021 were 52 PPP loans totaling $14.8 million compared with 111 PPP loans totaling $25.1 million at September 30, 2021. The Company expects most of these loans to be approved for full forgiveness by the SBA.

The segments of the Bank’s loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The residential mortgage loan segment is further disaggregated into two classes: amortizing term loans, which are primarily first liens, and home equity lines of credit, which are generally second liens. The commercial real estate loan segment is further disaggregated into three classes: loans secured by multifamily structures, owner-occupied commercial structures, and non-owner occupied nonresidential properties. The construction loan segment consists primarily of loans to developers or investors for the purpose of acquiring, developing and constructing residential or commercial structures and to a lesser extent one-to-four family residential construction loans made to individuals for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built. Construction loans to developers and investors have a higher risk profile because the ultimate buyer, once development is completed, is generally not known at the time of the loan. The commercial business loan segment consists of loans made for the purpose of financing the activities of commercial customers and consists primarily of revolving lines of credit. The other loan segment consists primarily of stock-secured installment consumer loans, but also includes unsecured personal loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all segments for possible impairment if the loan either is in nonaccrual status, or is risk rated Substandard and is 90 days or more past due. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Once the determination has been made that a loan is impaired, the recorded investment in the loan is compared to the fair value of the loan using one of three methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral securing the loan, less anticipated selling and disposition costs. The method is selected on a loan by loan basis, with management primarily utilizing the fair value of collateral method. If there is a shortfall between the fair value of the loan and the recorded investment in the loan, the Company charges the difference to the allowance for loan loss as a charge-off and carries the impaired loan on its books at fair value. It is the Company’s policy to evaluate impaired loans on an annual basis to ensure the recorded investment in a loan does not exceed its fair value.

16

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and charged-off and those for which a specific allowance was not necessary at the dates presented:

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
	(In thousands)
December 31, 2021
One-to-four family residential	$	-	$	-	$	2,217	$	2,217	$	2,217
Commercial real estate		-		-		2,202		2,202		2,202
Construction		2,835		224		1,745		4,580		4,645
Commercial business		-		-		1,506		1,506		1,506
Total impaired loans	$	2,835	$	224	$	7,670	$	10,505	$	10,570
September 30, 2021
One-to-four family residential	$	-	$	-	$	2,711	$	2,711	$	2,711
Commercial real estate		-		-		2,270		2,270		2,270
Construction		2,835		224		1,745		4,580		4,645
Commercial business		-		-		1,507		1,507		1,507
Total impaired loans	$	2,835	$	224	$	8,233	$	11,068	$	11,133

The average recorded investment in impaired loans was $10.8 million and $13.7 million for the three months ended December 31, 2021 and 2020, respectively. The Company’s impaired loans include delinquent non-accrual loans and performing Troubled Debt Restructurings (“TDRs”), as TDRs remain impaired loans until fully repaid. There were no TDRs during the three months ended December 31, 2021 and there was one TDR totaling $218,000 during the three months ended December 31, 2020.

The following tables present the average recorded investment in impaired loans for the three and nine months ended December 31, 2021 and 2020. There was no interest income recognized on impaired loans during the periods presented.

	Three Months
	Ended December 31, 2021
	(In thousands)
One-to-four family residential	$	2,464
Commercial real estate		2,236
Construction		4,580
Commercial business		1,507
Average investment in impaired loans	$	10,787

	Three Months
	Ended December 31, 2020
	(In thousands)
One-to-four family residential	$	2,490
Commercial real estate		4,370
Construction		4,861
Commercial business		1,959
Average investment in impaired loans	$	13,680

17

Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. All loans greater than three months past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as severe delinquency, bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Bank’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Asset Review Committee performs monthly reviews of all commercial relationships internally rated 6 (“Watch”) or worse. Confirmation of the appropriate risk grade is performed by an external loan review company that semi-annually reviews and assesses loans within the portfolio. Generally, the external consultant reviews commercial relationships greater than $500,000 and/or criticized relationships greater than $250,000. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a monthly basis.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the Bank’s internal risk rating system at the dates presented:

			Special
	Pass		Mention		Substandard		Doubtful		Total
	(In thousands)
December 31, 2021
One-to-four family residential	$	198,911	$	997	$	899	$	-	$	200,807
Commercial real estate		277,647		201		1,141		-		278,989
Construction		19,702		-		4,580		-		24,282
Home equity lines of credit		19,702		-		-		-		17,667
Commercial business		56,971		-		1,349		-		58,320
Other		3,289		-		-		-		3,289
Total	$	574,187	$	1,198	$	7,969	$	-	$	583,354
September 30, 2021
One-to-four family residential	$	201,512	$	-	$	1,507	$	-	$	203,019
Commercial real estate		272,408		6,679		1,761		-		280,848
Construction		15,770		-		4,580		-		20,350
Home equity lines of credit		17,930		-		-		-		17,930
Commercial business		67,360		10		1,349		-		68,719
Other		3,751		-		-		-		3,751
Total	$	578,731	$	6,689	$	9,197	$	-	$	594,617

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans at the dates presented:

18

			30-59		60-89
			Days		Days		90 Days +		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
	(In thousands)
December 31, 2021
One-to-four family residential	$	200,679	$	-	$	98	$	30	$	128	$	30	$	200,807
Commercial real estate		278,735		-		-		254		254		254		278,989
Construction		19,702		-		-		4,580		4,580		4,580		24,282
Home equity lines of credit		17,667		-		-		-		-		-		17,667
Commercial business		56,971		-		-		1,349		1,349		1,349		58,320
Other		3,289		-		-		-		-		-		3,289
Total	$	577,043	$	-	$	98	$	6,213	$	6,311	$	6,213	$	583,354
September 30, 2021
One-to-four family residential	$	201,868	$	-	$	-	$	1,151	$	1,151	$	1,151	$	203,019
Commercial real estate		279,769		-		-		1,079		1,079		1,079		280,848
Construction		15,770		-		-		4,580		4,580		4,580		20,350
Home equity lines of credit		17,930		-		-		-		-		-		17,930
Commercial business		67,370		-		-		1,349		1,349		1,349		68,719
Other		3,751		-		-		-		-		-		3,751
Total	$	586,458	$	-	$	-	$	8,159	$	8,159	$	8,159	$	594,617

An allowance for loan losses (“ALL”) is maintained to absorb losses from the loan portfolio. The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

The Bank’s methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative and economic factors.

The loans are segmented into classes based on their inherent varying degrees of risk, as described above. Management tracks the historical net charge-off activity by segment and utilizes this figure, as a percentage of the segment, as the general reserve percentage for pooled, homogenous loans that have not been deemed impaired. Typically, an average of losses incurred over a defined number of consecutive historical years is used.

Non-impaired credits are segregated for the application of qualitative factors. Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources include: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. Since loans individually evaluated for impairment are promptly written down to their fair value, typically there is no portion of the ALL for loans individually evaluated for impairment.

19

The following table summarizes the ALL by loan category and the related activity for the three months ended December 31, 2021 and 2020:

	One-to-Four									Home Equity
	Family			Commercial						Lines of		Commercial
	Residential			Real Estate			Construction			Credit		Business		Other			Unallocated			Total
	(In thousands)
Balance- September 30,  2021	$	1,136		$	3,744		$	594		$	232	$	2,046	$	15		$	308		$	8,075
Charge-offs		-			-			-			-		-		-			-			-
Recoveries		-			52			-			-		-		-			-			52
Provision (credit)		(43	)		(90	)		130			-		83		(14	)		35			101
Balance- December 31,  2021	$	1,093		$	3,706		$	724		$	232	$	2,129	$	1		$	343		$	8,228
Balance- September 30,  2020	$	1,035		$	3,232		$	672		$	179	$	1,034	$	1		$	247		$	6,400
Charge-offs		-			-			-			-		-		-			-			-
Recoveries		-			-			-			-		90		-			-			90
Provision (credit)		120			176			(202	)		88		592		1			(135	)		640
Balance- December 31,  2020	$	1,155		$	3,408		$	470		$	267	$	1,716	$	2		$	112		$	7,130

The following tables summarize the ALL by loan category, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2021 and September 30, 2021:

	One-to-Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan  Losses:
Balance - December 31, 2021	$	1,093	$	3,706	$	724	$	232	$	2,129	$	1	$	343	$	8,228
Individually evaluated for impairment		-		-		224		-		-		-		-		224
Collectively evaluated for impairment		1,093		3,706		500		232		2,129		1		343		8,004
Loans receivable:
Balance - December 31, 2021	$	200,807	$	278,989	$	24,282	$	17,667	$	58,320	$	3,289	$	-	$	583,354
Individually evaluated for impairment		2,217		2,202		4,580		-		1,506		-		-		10,505
Collectively evaluated for impairment		198,590		276,787		19,702		17,667		56,814		3,289		-		572,849

	One-to- Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance - September 30, 2021	$	1,136	$	3,744	$	594	$	232	$	2,046	$	15	$	308	$	8,075
Individually evaluated for impairment		-		-		224		-		-		-		-		224
Collectively evaluated for impairment		1,136		3,744		370		232		2,046		15		308		7,851
Loans receivable:
Balance - September 30, 2021	$	203,019	$	280,848	$	20,350	$	17,930	$	68,719	$	3,751	$	-	$	594,617
Individually evaluated for impairment		2,711		2,270		4,580		-		1,507		-		-		11,068
Collectively evaluated for impairment		200,308		278,578		15,770		17,930		67,212		3,751		-		583,549

20

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates. Management believes that the segmentation of the loan portfolio into homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

A Troubled Debt Restructuring (“TDR”) is a loan that has been modified whereby the Bank has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Bank to maximize the ultimate recovery of a loan. TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted generally include, but are not limited to, interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal.

A default on a TDR loan for purposes of this disclosure occurs when a borrower is 90 days past due or a foreclosure or repossession of the applicable collateral has occurred. There were no TDRs for the three months ended December 31, 2021, and there was one TDR totaling $218,000 during the three months ended December 31, 2020.

	Three Months Ended December 31, 2020
	Number of		Investment Before		Investment After
	Loans		TDR Modification		TDR Modification
	(Dollars in thousands)
One-to-four family residential		1	$	218	$	249
Total		1	$	218	$	249

NOTE L – DEPOSITS

A summary of deposits by type of account are summarized as follows:

	December 31,		September 30,
	2021		2021
	(In thousands)
Demand accounts	$	182,411	$	181,975
Savings accounts		86,698		81,724
NOW accounts		83,736		71,325
Money market accounts		197,828		187,898
Certificates of deposit		82,503		101,888
Retirement certificates		14,499		15,004
Total deposits	$	647,675	$	639,814

NOTE M – INCOME TAXES

The Company records income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled.

Where applicable, deferred tax assets are reduced by a valuation allowance for any portions determined not likely to be realized. The valuation allowance is assessed by management on a quarterly basis and adjusted, by a charge or credit to income tax expense, as changes in facts and circumstances warrant. In assessing whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, management considers projections of future taxable income, the projected periods in which current temporary differences will be deductible, the availability of carry forwards, feasible and permissible tax planning strategies and existing tax laws and regulations. The Company did not have a valuation allowance against its net deferred tax assets at December 31, 2021 or September 30, 2021.

21

A reconciliation of income tax between the amounts calculated based upon pre-tax income at the Company’s federal statutory rate and the amounts reflected in the consolidated statements of operations are as follows:

	For the Three Months
	Ended December 31,
	2021			2020
	(In thousands)
Income tax expense at the statutory federal tax rate of 21% for the three months ended December 31, 2021 and 2020	$	497		$	400
State tax expense		194			182
Other		(17	)		(13	)
Income tax expense	$	674		$	569

The Company’s statutory income tax rate in the State of New Jersey was 9.0% for the three months ending December 31, 2021 and 2020. The State of New Jersey imposed a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million. The surtax is set at a rate of 2.5% and is currently effective through December 31, 2023. Accordingly, the Company used an 11.5% State tax rate for the calculation of its State income tax expense the three months ended December 31, 2021 and 2020.

NOTE N – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company may use derivative financial instruments, such as interest rate swaps and interest rate floors and caps, as part of its interest rate risk management. Interest rate caps and floors are agreements whereby one party agrees to pay or receive a floating rate of interest on a notional principal amount for a predetermined period of time if certain market interest rate thresholds are met. The Company considers the credit risk inherent in these contracts to be negligible.

The Company is a party to interest rate derivatives that are not designated as hedging instruments. Under a program, the Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third-party financial institution, such that the Company minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. The Company had $300,000 in cash pledged for collateral on its interest rate swaps with financial institutions at December 31, 2021 and September 30, 2021.

The following table presents summary information regarding these derivatives as of December 31, 2021 and September 30, 2021.

	Notional Amount	Average Maturity (Years)	Weighted Average Fixed Rate	Weighted Average Variable Rate	Fair Value
	(Dollars in thousands)
December 31, 2021
Classified in Other Assets:
Customer interest rate swaps	$ 19,971	6.6	3.61%	1 Mo. LIBOR + 2.50	$ 164
Classified in Other Liabilities:
3rd Party interest rate swaps	$ 19,971	6.6	3.61%	1 Mo. LIBOR + 2.50	$ 164
September 30, 2021
Classified in Other Assets:
Customer interest rate swaps	$ 20,111	6.9	3.61%	1 Mo. LIBOR + 2.50	$ 183
Classified in Other Liabilities:
3rd Party interest rate swaps	$ 20,111	6.9	3.61%	1 Mo. LIBOR + 2.50	$ 183

22

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit are summarized in the below table. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

	December 31,		September 30,
	2021		2021
	(In thousands)
Financial instruments whose contract amounts represent credit risk
Letters of credit	$	2,808	$	2,901
Unused lines of credit		61,901		63,798
Fixed rate loan commitments		10,039		9,156
Variable rate loan commitments		18,502		14,558
Total	$	93,250	$	90,413

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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. In addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. The adverse effect of the COVID-19 pandemic on the Company, its customers and the communities where it operates may adversely affect the Company’s business, results of operations and financial condition for an indefinite period of time.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and advises readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investing activities, and competitive and regulatory factors, could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from those anticipated or projected.

The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

Critical Accounting Policies

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. We consider the following to be our critical accounting policies.

Allowance for Loan Loss. The allowance for loan losses is the amount estimated by management as necessary to cover credit losses in the loan portfolio both probable and reasonably estimable at the balance sheet date. The allowance is established through the provision for loan losses which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical. Due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses, the methodology for determining the allowance for loan losses is considered a critical accounting policy by management.

23 

As a substantial amount of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash flow valuations of properties are critical in determining the amount of the allowance required for specific loans. Assumptions for appraisals and discounted cash flow valuations are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance determined. The assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable on the related loans.

Management performs a quarterly evaluation of the adequacy of the allowance for loan losses. We consider a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions.

The evaluation has a specific and general component. The specific component relates to loans that are delinquent or otherwise identified as impaired through the application of our loan review process and our loan grading system. All such loans are evaluated individually, with principal consideration given to the value of the collateral securing the loan and discounted cash flows. Specific impairment allowances are established as required by this analysis. However, the Bank’s Federal and State regulators generally require that the specific reserve against impaired collateral-dependent loans be charged-off, reducing the carrying balance of the loan and allowance for loan loss. The general component is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations in establishing the general portion of the reserve. This analysis establishes factors that are applied to the loan groups to determine the amount of the general component of the allowance for loan losses.

Actual loan losses may be significantly greater than the allowances we have established, which could have a material negative effect on our financial results.

Other Real Estate Owned. Real estate acquired through foreclosure, or a deed-in-lieu of foreclosure, is recorded at fair value less estimated selling costs at the date of acquisition or transfer, and subsequently at the lower of its new cost or fair value less estimated selling costs. Adjustments to the carrying value at the date of acquisition or transfer are charged to the allowance for loan losses. The carrying value of the individual properties is subsequently adjusted to the extent it exceeds estimated fair value less estimated selling costs, at which time a provision for losses on such real estate is charged to operations.

Appraisals are critical in determining the fair value of the other real estate owned amount. Assumptions for appraisals are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property. The assumptions supporting such appraisals are carefully reviewed by management to determine that the resulting values reasonably reflect amounts realizable.

Investment Securities. If the fair value of a security is less than its amortized cost, the security is deemed to be impaired. Management evaluates all securities with unrealized losses quarterly to determine if such impairments are “temporary” or “other-than-temporary” in accordance with applicable accounting guidance. The Company accounts for temporary impairments based upon security classification as either available-for-sale, held-to-maturity, or trading. Temporary impairments on “available-for-sale” securities are recognized, on a tax-effected basis, through accumulated other comprehensive income (“AOCI”) with offsetting entries adjusting the carrying value of the security and the balance of deferred taxes. Conversely, the Company does not adjust the carrying value of “held-to-maturity” securities for temporary impairments, although information concerning the amount and duration of impairments on held to maturity securities is generally disclosed in periodic financial statements. The carrying value of securities held in a trading portfolio is adjusted to their fair value through earnings on a daily basis. However, the Company maintained no securities in trading portfolios at or during the periods presented in these financial statements.

24 

The Company accounts for other-than-temporary impairments based upon several considerations. First, other-than-temporary impairments on securities that the Company has decided to sell as of the close of a fiscal period, or will, more likely than not, be required to sell prior to the full recovery of their fair value to a level equal to their amortized cost, are recognized in operations. If neither of these criteria apply, then the other-than-temporary impairment is separated into credit-related and noncredit-related components. The credit-related impairment generally represents the amount by which the present value of the cash flows that are expected to be collected on an other-than-temporarily impaired security fall below its amortized cost while the noncredit-related component represents the remaining portion of the impairment not otherwise designated as credit-related. The Company recognizes credit-related, other-than-temporary impairments in earnings, while noncredit-related, other-than-temporary impairments on debt securities are recognized, net of deferred taxes, in AOCI. Management did not account for any other-than-temporary impairments at or during the periods presented in these financial statements.

Fair Value. We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Our securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity securities, mortgage servicing rights, loans receivable and other real estate owned. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.

In accordance with ASC 820, Fair Value Measurements and Disclosures, we group our assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. We base our fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Deferred Income Taxes. The Company records income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled.

Where applicable, deferred tax assets are reduced by a valuation allowance for any portions determined not likely to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period of enactment. The valuation allowance is adjusted, by a charge or credit to income tax expense, as changes in facts and circumstances warrant.

Impact of the Coronavirus/COVID-19 Pandemic.

During 2020 and continuing into 2021, the extraordinary impact of the COVID-19 pandemic has created an unprecedented environment for consumers and businesses alike. To protect our employees and customers from potential exposure to the virus, all Magyar Bank lobbies and operational areas continue to observe best practice protocols to limit exposure and/or spread of the virus.

To assist our loan customers, Magyar Bank has offered loan payment deferrals to borrowers unable to make their contractual payments due to COVID-19. Loan payments are deferred until the contractual maturity of the loan. Deferral requests are considered on a case-by-case basis and are initially approved for a three-month period for principal and interest payments or for interest-only payments depending on the borrower’s circumstances. An additional three-month period is available for businesses that remain unable to operate and for consumers unable to make their mortgage or home equity payments due to COVID-19. Additional deferrals were considered for businesses experiencing a prolonged impact from the COVID-19 pandemic, such as the accommodation and food service industries. Magyar Bank’s loan portfolio does not have a significant exposure to the travel or entertainment industry.

Through December 31, 2021, we had modified 284 loans aggregating $150.9 million for the deferral of principal and/or interest payments. Of these loans, 105 loans totaling $52.6 million repaid their deferred payments in full and 178 loans aggregating $96.9 million have resumed making their contractual loan payments. One loan totaling $1.4 million was past its deferral period and delinquent at December 31, 2021. The Company was not deferring any additional loan payments due to the COVID-19 pandemic at December 31, 2021. A total of $1.4 million in interest payments were deferred as of December 31, 2021.

The Bank participated in the PPP to provide liquidity using the SBA platform to small businesses and self-employed individuals to maintain their staff and operations through the COVID-19 pandemic. This liquidity is in the form of a loan, 100% guaranteed by the SBA, that is forgivable provided the funds are used on qualifying payroll costs, and to a lesser extent, rent, utilities and interest on qualifying mortgage payments. The loans bear a fixed rate of 1.0% and loan payments are deferred for the first 10 months following the covered period, which is eight to twenty-four weeks following the date the loan is made. We originated 562 PPP loans totaling $91.3 million for which we received $3.5 million in origination fees from the SBA. These fees are being amortized over the five year contractual term of the loan unless repaid or forgiven sooner. Through December 31, 2021, 510 loans totaling $76.5 million had been repaid, leaving 52 loans totaling $14.8 million at December 31, 2021. The Company expects most of these loans to be approved for full forgiveness by the SBA.

25 

The health of the banking industry is highly correlated with that of the economy. The temporary and/or partial closures of non-essential businesses in our local and national economies increases the likelihood of recession, which typically results in an increased level of credit losses. Accordingly, our provisions for loan losses have increased and will be closely monitored throughout the pandemic. In addition to utilizing quantitative loss factors, the Company considers qualitative factors, such as changes in underwriting policies, current economic conditions, delinquency statistics, the adequacy of the underlying collateral, and the financial strength of the borrower. The impact of the COVID-19 pandemic on the performance of our loan portfolio in future quarters is unknown, however all of these factors are likely to be affected by the COVID-19 pandemic.

Comparison of Financial Condition at December 31, 2021 and September 30, 2021

Total Assets. Total assets increased $6.7 million, or 0.9%, to $780.7 million during the three months ended December 31, 2021 from $774.0 million at September 30, 2021. The increase was primarily attributable to increases in cash, interest-earning deposits and investment securities, partially offset by lower balances of loans receivable, net of allowance for loan loss.

Cash and Interest-Earning Deposits with Banks. Cash and interest-earning deposits with banks increased $7.1 million, or 9.4%, to $82.3 million at December 31, 2021 from $75.2 million at September 30, 2021 from net loan repayments and deposit inflows during the three months ended December 31, 2021.

Total Loans Receivable. Total loans receivable decreased $11.3 million, or 1.9%, to $583.4 million at December 31, 2021 from $594.6 million at September 30, 2021. The loans receivable were comprised of $279.0 million (47.8%) in commercial real estate loans, $200.8 million (34.4%) in one-to four-family residential mortgage loans, $58.3 million (10.0%) in commercial business loans, $24.3 million (4.2%) in construction loans, $17.7 million (3.0%) in home equity lines of credit, and $3.3 million (0.6%) in other loans. Included with the commercial business loans were $14.8 million in PPP loans. The decrease in total loans receivable during the quarter occurred in commercial business loans, which decreased $10.4 million (PPP loans decreased $10.3 million), one-to four-family residential real estate loans (including home equity lines of credit), which decreased $2.5 million, commercial real estate loans, which decreased $1.9 million, and other loans, which decreased $462,000. Partially offsetting these decreases were construction loans, which increased $3.9 million during the quarter.

Total Non-Performing Loans. Total non-performing loans decreased $2.0 million, or 23.9%, to $6.2 million at December 31, 2021 from $8.2 million at September 30, 2021. Five loans totaling $1.5 million were brought current by payments from the borrowers. In addition, one non-performing residential mortgage loan totaling $473,000 was paid in full. There were no additions to the non-performing loans during the three months ended December 31, 2021.

Included in the non-performing loan totals were two construction loans totaling $4.6 million, one commercial business loan totaling $1.3 million, three commercial real estate loans totaling $254,000, and one residential mortgage loan totaling $30,000. The ratio of non-performing loans to total loans decreased to 1.1% at December 31, 2021 from 1.4% at September 30, 2021.

During the three months ended December 31, 2021, the allowance for loan losses increased $153,000 to $8.2 million from $8.1 million at September 30, 2021. The increase was attributable to provisions for loan losses totaling $101,000 and a $52,000 recovery from a loan previously charged off. The allowance for loan losses as a percentage of non-performing loans increased to 132.4% at December 31, 2021 from 99.0% at September 30, 2021. Our allowance for loan losses as a percentage of total loans was 1.41% at December 31, 2021 compared with 1.36% at September 30, 2021.

Future increases in the allowance for loan 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.

Investment Securities. At December 31, 2021, investment securities totaled $78.6 million, reflecting an increase of $8.1 million, or 11.4%, from September 30, 2021. The Company purchased three mortgage-backed securities totaling $7.5 million, one callable U.S. government-sponsored enterprise bond totaling $2.0 million, and one municipal bond totaling $600,000 during the three months ended December 31, 2021. During the quarter, the Company received payments from mortgage-backed securities totaling $2.0 million. There were no sales of investment securities during the period.

26 

Investment securities at December 31, 2021 consisted of $58.2 million in mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $14.5 million in U.S. government-sponsored enterprise debt securities, $3.0 million in corporate notes, $2.7 million in municipal bonds, and $238,000 in “private-label” mortgage-backed securities. There were no other-than-temporary-impairment charges for the Company’s investment securities for the three months ended December 31, 2021.

Other Real Estate Owned. Other real estate owned increased $13,000, or 2.0%, to $649,000 at December 31, 2021 from $636,000 at September 30, 2021. The increase was due to capital improvements to one property in order to market it for sale. At December 31, 2021, of the two properties that remain in the OREO portfolio, one was under contract of sale and the other was listed for sale. The Company is determining the proper course of action for its remaining other real estate owned, which may include holding the properties until the real estate market further improves, leasing properties to offset carrying costs and selling the properties.

Total Deposits. Total deposits increased $7.9 million, or 1.2%, to $647.7 million at December 31, 2021 from $639.8 million at September 30, 2021. The inflow in deposits occurred in interest-bearing checking accounts (NOW), which increased $12.4 million, or 17.4%, to $83.7 million, in money market accounts, which increased $9.9 million, or 5.3%, to $197.8 million, in savings accounts, which increased $5.0 million, or 6.1%, to $86.7 million, and in non-interest bearing checking accounts, which increased $436,000, or 0.2%, to $182.4 million. Partially offsetting these increases were certificates of deposit (including individual retirement accounts), which decreased $19.9 million, or 17.0%, to $97.0 million. The Company held $6.0 million in brokered certificates of deposit at December 31, 2021 and September 30, 2021.

Borrowings. Borrowings decreased $2.0 million, or 8.6%, to $21.4 million at December 31, 2021 from $23.4 million at September 30, 2021. The Company repaid a matured $2.0 million term borrowings from the Federal Home Loan Bank of New York during the quarter.

Stockholders’ Equity. Stockholders’ equity increased $802,000, or 0.8%, to $98.4 million at December 31, 2021 from $97.6 million at September 30, 2021. The Company’s book value per share increased to $13.87 at December 31, 2021 from $13.76 at September 30, 2021. The increase in stockholders’ equity was attributable to the Company’s results from operations, partially offset by the special dividends paid during the quarter.

The Company did not repurchase shares of its common stock during the three months ended December 31, 2021. Through December 31, 2021, the Company had repurchased 91,000 shares at an average price of $8.41 pursuant to the second stock repurchase plan.

Average Balance Sheet for the Three Months Ended December 31, 2021 and 2020

The following table presents certain information regarding the Company’s financial condition and net interest income for the three months ended December 31, 2021 and 2020. 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.

27 

	For the Three Months Ended December 31,
	2021							2020
	Average Balance		Interest Income/ Expense			Yield/Cost (Annualized)		Average Balance		Interest Income/ Expense		Yield/Cost (Annualized)
	(Dollars In Thousands)
Interest-earning assets:
Interest-earning deposits	$	84,088	$	35			0.17%	$	54,463	$	20		0.14%
Loans receivable, net		579,131		6,721			4.60%		606,109		6,751		4.42%
Securities
Taxable		71,946		226			1.25%		47,624		205		1.71%
Tax-exempt (1)		2,198		9			1.63%		—		—		—
FHLBNY stock		1,676		20			4.81%		1,981		25		5.05%
Total interest-earning assets		739,039		7,011			3.76%		710,177		7,001		3.91%
Noninterest-earning assets		44,299							43,502
Total assets	$	783,338						$	753,679
Interest-bearing liabilities:
Savings accounts (2)	$	84,542		36			0.17%	$	75,464		47		0.24%
NOW accounts (3)		263,626		140			0.21%		256,876		262		0.40%
Time deposits (4)		111,911		275			0.98%		120,898		456		1.50%
Total interest-bearing deposits		460,079		451			0.39%		453,238		765		0.67%
Borrowings		21,877		119			2.16%		65,387		191		1.16%
Total interest-bearing liabilities		481,956		570			0.47%		518,625		956		0.73%
Noninterest-bearing liabilities		202,334							176,867
Total liabilities		684,290							695,492
Retained earnings		99,048							58,187
Total liabilities and retained earnings	$	783,338						$	753,679
Tax-equivalent basis adjustment				(2	)						—
Net interest and dividend income			$	6,439						$	6,045
Interest rate spread							3.29%						3.18%
Net interest-earning assets	$	257,083						$	191,552
Net interest margin (5)							3.46%						3.38%
Average interest-earning assets to
average interest-bearing liabilities		153.34%							136.93%

⁽¹⁾    Calculated using the Company's 21% federal tax rate.

⁽²⁾    Includes passbook savings, money market passbook and club accounts.

⁽³⁾    Includes interest-bearing checking and money market accounts.

⁽⁴⁾    Includes certificates of deposits and individual retirement accounts.

⁽⁵⁾    Calculated as annualized net interest income divided by average total interest-earning assets.  

Comparison of Operating Results for the Three Months Ended December 31, 2021 and 2020

Net Income. Net income increased $356,000, or 26.6% to $1.7 million for the three-month period ended December 31, 2021 compared with net income of $1.3 million for the three-month period ended December 31, 2020. The increase was due to higher net interest and dividend income, lower provisions for loan loss and lower other expenses, partially offset by lower non-interest income.

28 

Net Interest and Dividend Income. Net interest and dividend income increased $394,000, or 6.5%, to $6.4 million for the three months ended December 31, 2021 from $6.0 million for the three months ended December 31, 2020.

An eight basis point increase in the Company’s net interest margin to 3.46% for the three months ended December 31, 2021 from 3.38% for the three months ended December 31, 2020 as well as a $28.9 million increase in average-interest-earning assets to $739.0 million for the 2021 quarter from $710.1 million for the 2020 quarter resulted in higher net interest and dividend income.

The cost of the Company’s interest-bearing liabilities decreased 26 basis points to 0.47% for the three months ended December 31, 2021 from 0.73% for the three months ended December 31, 2020 due to lower market interest rates. The cost of interest-bearing deposits decreased 28 basis points to 0.39% for the three months ended December 31, 2021 from 0.67% for the three months ended December 31, 2020. In addition, the average balance of non-interest bearing liabilities increased $28.1 million to $204.0 million for the three months ended December 31, 2021 from $175.9 million for the three months ended December 31, 2020. The increase in non-interest bearing liabilities was due to higher business checking account balances resulting from supply chain issues and a preference for liquidity during the COVID-19 pandemic.

Interest and Dividend Income. Interest and dividend income was unchanged at $7.0 million for the three months ended December 31, 2021 and December 31, 2020. A $28.9 million, or 4.1%, increase in the average balance of interest-earning assets to $739.0 million was entirely offset by a 15 basis point decrease in the yield on such assets to 3.76% for the three months ended December 31, 2021 compared with 3.91% the prior year period.

The yield on average investment securities and interest-earning deposits decreased 19 basis points to 0.68% for the three months ended December 31, 2021 from 0.87% for the three months ended December 31, 2020 due to lower market interest rates. Offsetting this decrease was an 18 basis point increase in the yield on loans receivable to 4.60% for the three months ended December 31, 2021 from 4.42% for the three months ended December 31, 2020. Lower interest income from lower average balances of loans receivable was offset by the receipt of $173,000 in interest payments received during the current quarter on previously non-performing loans. Also included in the yield on loans receivable is the recognition of PPP loan fees, which have been accelerated with the repayment of PPP loans through forgiveness by the SBA. The Company recorded $407,000 in PPP fees during the three months ended December 31, 2021 compared with $417,000 during the three months ended December 31, 2020.

Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, increased $43,000, or 19.1%, to $268,000 for the quarter ended December 31, 2021 from $225,000 for the prior year quarter. A $56.1 million, or 55.0%, increase in the average balance of investment securities and interest-earning deposits to $158.2 million for the quarter ended December 31, 2021 more than offset the 19 basis point decrease in their average yield.

Interest Expense. Interest expense decreased $386,000, or 40.4%, to $570,000 for the three months ended December 31, 2021 from $956,000 for the three months ended December 31, 2020. A 26 basis point decrease in the cost of interest-bearing liabilities to 0.47% for the three months ended December 31, 2021 as well as a lower average balance of interest-bearing liabilities, which decreased $36.7 million, or 7.1%, to $482.0 million, accounted for the lower interest expense between periods.

The average balance of interest-bearing deposits increased $6.8 million, or 1.5%, to $460.0 million for the quarter ended December 31, 2021 from $453.2 million for the same quarter ended December 31, 2020, while the average cost of such deposits decreased 28 basis points to 0.39% from 0.67% between the two periods. As a result, interest paid on interest-bearing deposits decreased $314,000 to $451,000 for the three months ended December 31, 2021 compared with $765,000 for the three months ended December 31, 2020.

Interest paid on borrowings decreased $72,000, or 37.7%, to $119,000 for the three months ended December 31, 2021 from $191,000 for the prior year period. A $43.5 million decrease in the average balance of such borrowings to $21.9 million for the quarter ended December 31, 2021 from $65.4 million for the quarter ended December 31, 2020 more than offset a 100 basis point increase in the cost of borrowings to 2.16% for the three months ended December 31, 2021 from 1.16% for the three months ended December 31, 2020. The reduction in average balances and corresponding increase in cost of borrowings between periods resulted from the repayment of $29.8 million in PPP Liquidity Facility borrowings costing 0.35% from the Federal Reserve Bank of New York.

Provision for Loan Losses. We establish provisions for loan losses, which are charged to earnings, at a level necessary to absorb known and inherent losses that are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events occur.

29 

After an evaluation of these factors, management recorded a provision of $101,000 for the three months ended December 31, 2021 compared to $640,000 for the three months ended December 31, 2020. The decreased provision for loan losses resulted from contraction in the Company’s loan portfolio and a decrease in non-performing loans between periods. In addition, the Company recorded higher provisions during the three months ended December 31, 2020 related to COVID-19 pandemic adjustments to the historical loss rates used in its calculation. The Company recorded $52,000 in net recoveries for the three months ended December 31, 2021 compared with $90,000 in net recoveries during the three months ended December 31, 2020.

Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Management reviews the level of the allowance on a quarterly basis, and establishes the provision for loan losses based on the factors set forth in the preceding paragraph. As management evaluates the allowance for loan losses, the increased risk associated with larger non-homogenous construction, commercial real estate and commercial business loans may result in larger additions to the allowance for loan losses in future periods. In addition, the ongoing effects of the COVID-19 pandemic on the Company’s loan portfolio may also result in larger additions to the allowance for loan losses in future periods.

Other Income. Other income decreased $575,000, or 46.9%, to $650,000 during the three months ended December 31, 2021 compared to $1.2 million for the three months ended December 31, 2020.

Fees for other customer services were $0 for the three months ended December 31, 2021 compared with $464,000 for the three months ended December 31, 2020. The fees in the 2020 quarter were earned from the a local Small Business Relief Grant program offered in 2020 in response to the COVID-19 pandemic for which the Company received a fee of 3.0% of the grants it assisted with processing. In addition, the Company did not receive any interest rate swap fees during the three months ended December 31, 2021, compared with $102,000 during the three months ended December 31, 2020.

Other Expenses. Other expenses decreased $103,000, or 2.2%, to $4.6 million during the three months ended December 31, 2021 from $4.7 million during the three months ended December 31, 2020.

The decrease in other expenses was primarily attributable to decreases in professional fees, which decreased $141,000 to $387,000, due to lower legal and consulting fees related to the collection and foreclosure of non-performing loans, and in OREO expenses, which decreased $146,000 to $34,000, due to lower valuation allowances and fewer OREO properties between periods.

Partially offsetting the decrease in professional fees and OREO expenses were increases in compensation and benefit expenses as well as marketing and business development expenses. Compensation and benefit expense increased $155,000, or 6.1%, to $2.7 million for the three months ended December 31, 2021 from $2.5 million for the three months ended December 31, 2020 from the addition of one commercial lending position as well as annual merit increases for employees and higher education and training expenses. Marketing and business development expense increased $81,000, or 184.1%, to $125,000 for the three months ended December 31, 2021 from $44,000 for the three months ended December 31, 2020 due to COVID-19 pandemic restrictions suppressing the 2020 spend and reflecting a higher spend in the current year as the Company celebrates its 100^th year anniversary in 2022.

Income Tax Expense. The Company recorded tax expense of $674,000 on pre-tax income of $2.4 million for the three months ended December 31, 2021, compared to $569,000 on pre-tax income of $1.9 million for the three months ended December 31, 2020. The Company’s effective tax rate for the three months ended December 31, 2021 was 28.5% compared with 29.9% for the three months ended December 31, 2020.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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 Federal Home Loan Bank. There has been no material adverse change during the three months ended December 31, 2021 in the ability of the Company and its subsidiaries to fund their operations.

30 

Whether through significant deposit withdrawals, reductions in interest and principal payments on loans, or the tightening of the capital markets, it is possible that the COVID-19 pandemic will have a negative effect on the liquidity and capital resources of the Company.

At December 31, 2021, the Company had commitments outstanding under letters of credit of $2.8 million, commitments to originate loans of $28.5 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit of $61.9 million. There has been no material change during the three months ended December 31, 2021 in any of the Company’s other contractual obligations or commitments to make future payments.

Capital Requirements

At December 31, 2021, the Bank’s Tier 1 capital as a percentage of the Bank's total assets was 10.50%, and total qualifying capital as a percentage of risk-weighted assets was 17.18%.

Under section 1102 of the CARES Act, a PPP loan is assigned a risk weight of zero percent under the risk-based capital rules of the federal banking agencies. On April 9, 2020, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued an interim final rule to allow banking organizations to neutralize the effect of PPP loans financed under the PPP Liquidity Facility on Tier 1 leverage capital ratios.

Item 3- Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

Item 4 – Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

There has been no change in the Company's internal control over financial reporting during the three months ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

31 

PART II - OTHER INFORMATION

Item 1. Legal proceedings

None.

Item 1A. Risk Factors

Not applicable to smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

a.) Not applicable.

b.) Not applicable.

c.) The Company did not repurchase shares of its common stock during the three months ended December 31, 2021. Through December 31, 2021, the Company had repurchased 91,000 shares at an average price of $8.41 pursuant to the second stock repurchase plan.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

a.) Not applicable.

b.) None.

Item 6. Exhibits

Exhibits

31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)

31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)

32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 Interactive data file containing the following financial statements formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2021 and September 30, 2021; (ii) the Consolidated Statements of Operations for the three months ended December 31, 2021 and 2020; (iii) the Consolidated Statements of Comprehensive Income for the three months ended December 31, 2021 and 2020; (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the three months ended December 31, 2021 and 2020; (v) the Consolidated Statements of Cash Flows for the three months ended December 31, 2021 and 2020; and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text.

104 Cover Page Interactive Data File (embedded within Inline XBRL document contained in Exhibit 101).

32 

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MAGYAR BANCORP, INC.
	(Registrant)
Date: February 11, 2022	/s/ John S. Fitzgerald
	John S. Fitzgerald
	President and Chief Executive Officer
Date: February 11, 2022	/s/ Jon R. Ansari
	Jon R. Ansari
	Executive Vice President and Chief Financial Officer

33 

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, John S. Fitzgerald, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Magyar Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over finance reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 11, 2022

/s/ John S. Fitzgerald                            

John S. Fitzgerald

President and Chief Executive Officer

34 

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Jon R. Ansari, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Magyar Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over finance reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: February 11, 2022

/s/ Jon R. Ansari                                                                

Jon R. Ansari

Executive Vice President and Chief Financial Officer

35 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Magyar Bancorp, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John S. Fitzgerald, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 11, 2022

/s/ John S. Fitzgerald                                

John S. Fitzgerald

President and Chief Executive Officer

36 

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Magyar Bancorp, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon R. Ansari, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 11, 2022

/s/ Jon R. Ansari                                                            

Jon R. Ansari

Executive Vice President and Chief Financial Officer

37 

XML

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2021	Feb. 01, 2022
Cover [Abstract]
Document Type	10-Q
Entity Central Index Key	0001337068
Document Period End Date	Dec. 31, 2021
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-51726
Entity Registrant Name	Magyar Bancorp, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-4154978
Entity Address, Address Line One	400 Somerset Street
Entity Address, City or Town	New Brunswick
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08901
City Area Code	732
Local Phone Number	342-7600
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $.01 per share
Trading Symbol	MGYR
Name of Exchange on which Security is Registered	NASDAQ
Entity Common Stock, Shares Outstanding		7,097,825

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Assets
Cash	$ 2,141	$ 1,808
Interest earning deposits with banks	80,130	73,393
Total cash and cash equivalents	82,271	75,201
Investment securities - available for sale, at fair value	12,181	12,927
Investment securities - held to maturity, at amortized cost (fair value of $65,671 and $57,282 at December 31, 2021 and September 30, 2021, respectively)	66,467	57,660
Federal Home Loan Bank of New York stock, at cost	1,661	1,738
Loans receivable, net of allowance for loan losses of $8,228 and $8,075 at December 31, 2021 and September 30, 2021, respectively	574,266	585,301
Bank owned life insurance	17,375	14,288
Accrued interest receivable	3,584	3,533
Premises and equipment, net	14,199	14,331
Other real estate owned ("OREO")	649	636
Other assets	8,001	8,375
Total assets	780,654	773,990
Liabilities
Deposits	647,675	639,814
Escrowed funds	3,277	3,242
Borrowings	21,356	23,356
Accrued interest payable	81	85
Accounts payable and other liabilities	9,822	9,852
Total liabilities	682,211	676,349
Stockholders' equity
Preferred stock: $.01 Par Value, 500,000 shares authorized; at December 31, 2021 and September 30, 2021, none issued
Common stock: $.01 Par Value, 14,000,000 shares authorized; 7,097,825 shares issued; 7,097,825 shares outstanding at December 31, 2021 and September 30, 2021, at cost	71	71
Additional paid-in capital	63,681	63,713
Treasury stock: 112,996 shares, at cost	(1,242)	(1,242)
Unearned Employee Stock Ownership Plan shares	(3,240)	(3,235)
Retained earnings	40,160	39,281
Accumulated other comprehensive loss	(987)	(947)
Total stockholders' equity	98,443	97,641
Total liabilities and stockholders' equity	$ 780,654	$ 773,990

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Statement of Financial Position [Abstract]
Fair value of investment securities - held to maturity	$ 65,671	$ 57,282
Allowance for loan losses	$ 8,228	$ 8,075
Preferred stock; par value	$ 0.01	$ 0.01
Preferred stock; shares authorized	500,000	500,000
Preferred stock; shares issued	0	0
Common stock; par value	$ 1	$ 1
Common stock; shares authorized	14,000,000	14,000,000
Common stock; shares issued	7,097,825	7,097,825
Common stock, shares outstanding	7,097,825	7,097,825
Treasury stock, shares	112,996	112,996

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Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Interest and dividend income
Loans, including fees	$ 6,721	$ 6,751
Investment securities
Taxable	261	225
Tax-exempt	7
Federal Home Loan Bank of New York stock	20	25
Total interest and dividend income	7,009	7,001
Interest expense
Deposits	451	765
Borrowings	119	191
Total interest expense	570	956
Net interest and dividend income	6,439	6,045
Provision for loan losses	101	640
Net interest and dividend income after provision for loan losses	6,338	5,405
Other income
Service charges	257	293
Income on bank owned life insurance	87	78
Fees for other customer services		464
Interest rate swap fees		102
Other operating income	25	25
Gains on sales of loans	281	263
Total other income	650	1,225
Other expenses
Compensation and employee benefits	2,702	2,547
Occupancy expenses	739	725
Professional fees	387	528
Data processing expenses	134	132
Marketing and business development	125	44
OREO expenses	34	180
FDIC deposit insurance premiums	57	130
Loan servicing expenses	46	84
Other expenses	397	354
Total other expenses	4,621	4,724
Income before income tax expense	2,367	1,906
Income tax expense	674	569
Net income	$ 1,693	$ 1,337
Net income per share-basic and diluted	$ 0.25	$ 0.19
Weighted average basic and diluted shares outstanding	6,792,477	7,096,664

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income	$ 1,693	$ 1,337
Other comprehensive income
Unrealized loss on securities available for sale	(53)	(51)
Other comprehensive loss, before tax	(53)	(51)
Deferred income tax effect	13	15
Total other comprehensive loss	(40)	(36)
Total comprehensive income	$ 1,653	$ 1,301

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Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Unearned ESOP Shares [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Balance at Sep. 30, 2020	$ 59	$ 26,294	$ (1,242)	$ (65)	$ 33,161	$ (1,357)	$ 56,850
Balance, shares at Sep. 30, 2020	5,810,746
Net income					1,337		1,337
Other comprehensive income						(36)	(36)
ESOP shares allocated		(15)		65			50
Balance at Dec. 31, 2020	$ 59	26,279	(1,242)		34,498	(1,393)	58,201
Balance, shares at Dec. 31, 2020	5,810,746
Balance at Sep. 30, 2021	$ 71	63,713	(1,242)	(3,235)	39,281	(947)	$ 97,641
Balance, shares at Sep. 30, 2021	7,097,825						7,097,825
Dividends paid on common stock					(814)		$ (814)
Net income					1,693		1,693
Other comprehensive income						(40)	(40)
Common stock acquired by ESOP				(98)			(98)
ESOP shares allocated		(32)		93			61
Balance at Dec. 31, 2021	$ 71	$ 63,681	$ (1,242)	$ (3,240)	$ 40,160	$ (987)	$ 98,443
Balance, shares at Dec. 31, 2021	7,097,825						7,097,825

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Consolidated Statements of Changes in Stockholders' Equity (Parenthetical)	3 Months Ended
	Dec. 31, 2021 $ / shares
Statement of Stockholders' Equity [Abstract]
Dividends paid	$ 0.12

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Operating activities
Net income	$ 1,693	$ 1,337
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	209	207
Premium amortization on investment securities, net	58	33
Provision for loan losses	101	640
Provision for loss on other real estate owned		150
Originations of SBA loans held for sale	(2,437)	(2,513)
Proceeds from the sales of SBA loans	2,718	2,776
Gains on sale of loans receivable	(281)	(263)
Gains on the sales of other real estate owned		(1)
ESOP compensation expense	61	50
Deferred income tax expense (benefit)	26	(134)
Increase in accrued interest receivable	(51)	(66)
Increase in surrender value of bank owned life insurance	(87)	(78)
Decrease (increase) in other assets	360	(105)
Decrease in accrued interest payable	(4)	(39)
Increase in accounts payable and other liabilities	(30)	(351)
Net cash provided by operating activities	2,336	1,643
Investing activities
Net decrease in loans receivable	10,934	3,940
Purchases of investment securities held to maturity	(10,064)	(4,652)
Purchases of investment securities available for sale		(4,060)
Principal repayments on investment securities held to maturity	1,221	2,586
Principal repayments on investment securities available for sale	671	3,755
Purchase of bank owned life insurance	(3,000)
Purchases of premises and equipment	(77)	(68)
Investment in other real estate owned	(12)	(13)
Proceeds from other real estate owned		387
Redemption of Federal Home Loan Bank stock	77
Net cash (used in) provided by investing activities	(250)	1,875
Financing activities
Net increase (decrease) in deposits	7,861	(6,266)
Purchase of common stock for ESOP	(98)
Net increase in escrowed funds	35	242
Repayments of long-term advances	(2,000)	(7,150)
Cash paid on common stock dividends	(814)
Net cash provided by (used in) financing activities	4,984	(13,174)
Net increase (decrease) in cash and cash equivalents	7,070	(9,656)
Cash and cash equivalents, beginning of year	75,201	61,726
Cash and cash equivalents, end of year	82,271	52,070
Supplemental disclosures of cash flow information
Interest	$ 575	$ 995

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BASIS OF PRESENTATION

3 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE A – BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Magyar Bancorp, Inc. (the “Company”), its wholly owned subsidiary, Magyar Bank (the “Bank”), and the Bank’s wholly owned subsidiaries Magyar Service Corporation, Hungaria Urban Renewal, LLC, and MagBank Investment Company. All material intercompany transactions and balances have been eliminated. The Company prepares its financial statements on the accrual basis and in conformity with accounting principles generally accepted in the United States of America ("US GAAP"). The unaudited information furnished herein reflects all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.

Operating results for the three months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2021. The September 30, 2020 information has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete consolidated financial statements.

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of other real estate owned (“OREO”), and the assessment of realizability of deferred income tax assets.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of December 31, 2021 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

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RECENT ACCOUNTING PRONOUNCEMENTS

3 Months Ended

Dec. 31, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE B – RECENT ACCOUNTING PRONOUNCEMENTS

In connection with the preparation of quarterly and annual reports in accordance with the Securities and Exchange Commission’s (“SEC”) Securities Exchange Act of 1934, SEC Staff Accounting Bulletin Topic 11.M requires the disclosure of the impact that recently issued accounting standards will have on financial statements when they are adopted in the future.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses. ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.

In October 2019, the FASB voted to defer the effective date of ASU 2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2022 (October 1, 2023 for the Company), and interim periods within those fiscal years. The Company currently expects to continue to qualify as a smaller reporting company, based upon the current SEC definition, and as a result, will be able to defer implementation of the new standard for a period of time. The Company did not early adopt as of December 31, 2021, but will continue to review factors that might indicate that the full deferral time period should not be used. The Company continues to evaluate the impact the new standard will have on the accounting for credit losses, but the Company may recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, consistent with regulatory expectations set forth in interagency guidance issued at the end of 2016. The Company cannot yet determine the magnitude of any such one-time cumulative adjustment or of the overall impact of the new standard on its consolidated financial condition or results of operations.

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In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. The ASU removes the disclosures of 1) the amounts in accumulated other comprehensive income that the entity expects to recognize in net periodic benefit cost during the next fiscal year, 2) the amount and timing of plan assets expected to be returned to the employer and 3) certain related party disclosures. The ASU clarifies the disclosure requirements for the projected benefit obligation (“PBO”) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (“ABO”) and fair value of plan assets for plans with ABOs in excess of plan assets. The ASU adds disclosure requirements for the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and for an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. ASU 2018-14 was effective for the Company beginning October 1, 2021 and did not have a material impact on its consolidated financial condition or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

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CONTINGENCIES

3 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES

NOTE C – CONTINGENCIES

The Company, from time to time, is a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution of this litigation, if any, would not have a material adverse effect on the Company’s consolidated financial position or results of operations.

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EARNINGS PER SHARE

3 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE D – EARNINGS PER SHARE

The following table presents a calculation of basic and diluted earnings per share for the three months ended December 31, 2021 and 2020. Basic and diluted earnings per share were calculated by dividing net income by the weighted-average number of shares outstanding for the periods. As a result of the second-step conversion completed on July 14, 2021, the previously reported number of shares for the year ended December 31, 2020 were adjusted to reflect the 1.2213 exchange ratio for comparative purposes.

	For the Three Months Ended December 31,
	2021						2020
			Weighted		Per				Weighted		Per
			average		share				average		share
	Income		shares		Amount		Income		shares		Amount
	(Dollars in thousands, except share and per share data)
Basic and diluted EPS
Net income available to weighted average common shareholders	$	1,693		6,792,477	$	0.25	$	1,337		7,096,664	$	0.19

There were no outstanding stock awards or options to purchase common stock at December 31, 2021 and 2020.

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STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

3 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

NOTE E – STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

The Company follows FASB Accounting Standards Codification (“ASC”) Section 718, Compensation-Stock Compensation, which covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. ASC 718 requires that compensation cost relating to share-based payment transactions be recognized in consolidated financial statements. The cost is measured based on the fair value of the equity or liability instruments issued.

There were no grants, vested shares or forfeitures of non-vested restricted stock awards for the three months ended December 31, 2021 and 2020. There were also no stock option and stock award expenses included with compensation expense for the three months ended December 31, 2021 and 2020.

The Company completed its first stock repurchase program of 130,927 shares in November 2007, and announced its second stock repurchase program of up to 5% of its publicly-held outstanding shares of common stock, or 129,924 shares, in November 2007. Through December 31, 2021, the Company had repurchased a total of 91,000 shares of its common stock at an average cost of $8.41 per share under this program.

Under current federal regulations, subject to limited exceptions, the Company may not repurchase shares of our common stock during the first year following the completion of its second-step conversion offering, which was completed on July 14, 2021. The Company did not repurchase any shares of its common stock during the three months ended December 31, 2021 and 2020. The Company held 112,996 total treasury stock shares at December 31, 2021.

The Company has an Employee Stock Ownership Plan ("ESOP") for the benefit of employees who meet certain eligibility requirements. The ESOP trust purchases shares of common stock in the open market using proceeds of a loan from the Company. The loan is secured by shares of the Company’s stock. The Bank makes cash contributions to the ESOP on an annual basis sufficient to enable the ESOP to make the required loan payments to the Company.

As the debt is repaid, shares are released as collateral and allocated to qualified employees. Accordingly, the shares pledged as collateral are reported as unearned ESOP shares in the Consolidated Balance Sheets. The Company accounts for its ESOP in accordance with FASB ASC Topic 718, “Employer’s Accounting for Employee Stock Ownership Plans.” As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations.

The Company’s ESOP (“2006 ESOP”) was established in 2006 as part of the Company’s initial public offering. The total cost of the 217,863 shares purchased by the 2006 ESOP trust was $2.3 million, reflecting an average cost per share of $10.58. The 2006 ESOP loan was fully repaid during the year ended September 30, 2021, and all shares were allocated to participants.

In connection with the second-step conversion offering, the ESOP trustees purchased 8% of the shares sold in the offering, or 312,800 shares (“2021 ESOP”). As a result of the second-step conversion offering being oversubscribed in the first tier of subscription priorities, the ESOP trustees were unable to purchase shares of the Company’s common stock in the second-step conversion offering. The total cost of the shares purchased by the 2021 ESOP trust was $3.4 million, reflecting an average cost per share of $10.77. The 2021 ESOP loan bears a variable interest rate that adjusts annually to Prime Rate (3.25% at January 1, 2022) with principal and interest payable annually in equal installments over thirty years.

The Company's contribution expense for the ESOP was $61,000 and $50,000 for the three months ended December 31, 2021 and 2020, respectively.

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OTHER COMPREHENSIVE INCOME (LOSS)

3 Months Ended

Dec. 31, 2021

Other comprehensive income

OTHER COMPREHENSIVE INCOME (LOSS)

NOTE F – OTHER COMPREHENSIVE INCOME (LOSS)

The components of other comprehensive loss and the related income tax effects are as follows:

	Three Months Ended December 31,
	2021								2020
				Tax		Net of						Tax		Net of
	Before Tax			(Benefit)		Tax			Before Tax			(Benefit)		Tax
	Amount			Expense		Amount			Amount			Expense		Amount
	(In thousands)
Unrealized holding loss arising during period on:
Available-for-sale investments	$	(53	)	$	13	$	(40	)	$	(51	)	$	15	$	(36	)
Other comprehensive loss, net	$	(53	)	$	13	$	(40	)	$	(51	)	$	15	$	(36	)

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FAIR VALUE DISCLOSURES

3 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE DISCLOSURES

NOTE G – FAIR VALUE DISCLOSURES

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The securities available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity securities, mortgage servicing rights, loans receivable and OREO. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market accounting or write-downs of individual assets.

In accordance with ASC 820, the Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level 1 -Valuation is based upon quoted prices for identical instruments traded in active markets.

Level 2 -Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

Level 3 -Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.

The Company based its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The following is a description of valuation methodologies used for assets measured at fair value on a recurring basis.

Securities available-for-sale

The securities available-for-sale portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. The securities available-for-sale portfolio consists of U.S government-sponsored mortgage-backed securities and private label mortgage-backed securities. The fair values of these securities are obtained from an independent nationally recognized pricing service. An independent pricing service provides the Company with prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

Derivatives

Magyar Bank executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. The fair values of such derivatives are based on valuation models from a third party using current market terms (including interest rates and fees), the remaining terms of the agreements and the credit worthiness of the counter party as of the measurement date (Level 2).

9

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a recurring basis.

December 31, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Securities available for sale:
Mortgage-backed securities	$	12,181	$	-	$	12,181	$	-
Debt securities		-		-		-		-
Total securities available for sale		12,181		-		12,181		-
Derivative assets		164		-		164		-
Total Assets	$	12,345	$	-	$	12,345	$	-
Liabilities:
Derivative liabilities	$	164	$	-	$	164	$	-
Total Liabilities	$	164	$	-	$	164	$	-

September 30, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Securities available for sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	186	$	-	$	186	$	-
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,741		-		12,741		-
Total securities available for sale	$	12,927	$	-	$	12,927	$	-
Derivative assets		183		-		183		-
Total assets	$	13,110	$	-	$	13,110	$	-
Liabilities:
Derivative liabilities	$	183	$	-	$	183	$	-
Total Liabilities	$	183	$	-	$	183	$	-

The following is a description of valuation methodologies used for assets measured at fair value on a non-recurring basis.

Mortgage Servicing Rights, net

Mortgage Servicing Rights (MSRs) are carried at the lower of cost or estimated fair value. The estimated fair value of MSRs is determined through a calculation of future cash flows, incorporating estimates of assumptions market participants would use in determining fair value including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market driven data, including the market’s perception of future interest rate movements and, as such, are classified as Level 3. The Company had MSRs totaling $3,000 and $4,000 at December 31, 2021 and September 30, 2021, respectively.

Impaired Loans

Loans which meet certain criteria are evaluated individually for impairment. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the loan agreement. Three impairment measurement methods are used, depending upon the collateral securing the asset: 1) the present value of expected future cash flows discounted at the loan’s effective interest rate (the rate of return implicit in the loan); 2) the asset’s observable market price; or 3) the fair value of the collateral, less anticipated selling and disposition costs, if the asset is collateral dependent. The regulatory agencies require the last method for loans from which repayment is expected to be provided solely by the underlying collateral. The Company’s impaired loans are generally collateral dependent and, as such, are carried at the estimated fair value of the collateral less estimated selling costs. Fair value is estimated through current appraisals, and adjusted by management as necessary, to reflect current market conditions and, as such, are generally classified as Level 3.

10

Appraisals of collateral securing impaired loans are conducted by approved, qualified, and independent third-party appraisers. Such appraisals are ordered via the Company’s credit administration department, independent from the lender who originated the loan, once the loan is deemed impaired, as described in the previous paragraph. Impaired loans are generally re-evaluated with an updated appraisal within one year of the last appraisal. The Company discounts the appraised “as is” value of the collateral for estimated selling and disposition costs and compares the resulting fair value of collateral to the outstanding loan amount. If the outstanding loan amount is greater than the discounted fair value, the Company requires a reduction in the outstanding loan balance or additional collateral before considering an extension to the loan. If the borrower is unwilling or unable to reduce the loan balance or increase the collateral securing the loan, it is deemed impaired and the difference between the loan amount and the fair value of collateral, net of estimated selling and disposition costs, is charged off through a reduction of the allowance for loan loss.

Other Real Estate Owned

The fair value of other real estate owned is determined through current appraisals, and adjusted as necessary, by management, to reflect current market conditions and anticipated selling and disposition costs. As such, other real estate owned is generally classified as Level 3.

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a non-recurring basis at December 31, 2021 and September 30, 2021.

December 31, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	10,506	$	-	$	-	$	10,506
Other real estate owned		649		-		-		649
Total	$	11,155	$	-	$	-	$	11,155

September 30, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	11,134	$	-	$	-	$	11,134
Other real estate owned		636		-		-		636
Total	$	11,770	$	-	$	-	$	11,770

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Company has utilized Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands)

December 31, 2021	Fair Value Estimate			Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans		$	10,506	Appraisal of collateral (1)	Appraisal adjustments (2)	-8.0% to -42.8% (-25.0%)
Other real estate owned		$	649	Appraisal of collateral (1)	Liquidation expenses (2)	-31.2% to -45.5% (-39.4%)

September 30, 2021	Fair Value Estimate			Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans		$	11,134	Appraisal of collateral (1)	Appraisal adjustments (2)	-8.0% to -42.8% (-23.6%)
Other real estate owned		$	636	Appraisal of collateral (1)	Liquidation expenses (2)	-31.2% to -45.5% (-39.4%)

(1)Fair value is generally determined through independent appraisals for the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

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The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments carried at cost or amortized cost as of December 31, 2021 and September 30, 2021. For short-term financial assets such as cash and cash equivalents and accrued interest receivable, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as interest-bearing demand, NOW, and money market savings deposits, the carrying amount is a reasonable estimate of fair value due to these products being payable on demand and having no stated maturity.

	Carrying		Fair		Fair Value Measurement Placement
	Value		Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2021
Financial instruments - assets
Investment securities held to maturity	$	66,467	$	65,671	$	-	$	65,671	$	-
Loans		574,266		579,562		-		-		579,562
Financial instruments - liabilities
Certificates of deposit including retirement certificates		97,002		97,937		-		97,937		-
Borrowings		21,356		21,520		-		21,520		-
September 30, 2021
Financial instruments - assets
Investment securities held-to-maturity	$	57,660	$	57,282	$	-	$	57,282	$	-
Loans		585,301		594,674		-		-		594,674
Financial instruments - liabilities
Certificates of deposit		116,892		118,144		-		118,144		-
Borrowings		23,356		23,753		-		23,753		-

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LEASES

3 Months Ended

Dec. 31, 2021

Leases [Abstract]

LEASES

NOTE H – LEASES

The Company accounts for its leases in accordance with ASU 2016-02, Leases (Topic 842). Topic 842 requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset, measured at the present value of the future minimum lease payments, at the lease commencement date.

The Company holds operating leases for five branch locations. Our leases have remaining lease terms of up to 11 years, some of which include options to extend the leases for up to 10 additional years. Operating leases are recorded as ROU assets and lease liabilities and are included within Other assets and Accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

Operating lease ROU assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement base on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate used by the Company to value its operating leases is based on the interpolated term advance rate available from the Federal Home Loan Bank of New York, based on the remaining lease term.

At December 31, 2021, the Company’s operating lease right-of-use assets and operating lease liabilities totaled $3.7 million and $4.1 million, respectively.

12

The following table presents the balance sheet information related to our leases:

	December 31, 2021			September 30, 2021
	(Dollars in thousands)
Operating lease right-of-use asset	$	3,743		$	3,894
Operating lease liabilities	$	4,096		$	4,254
Weighted average remaining lease term in years		7.5			7.7
Weighted average discount rate		2.2	%		2.2	%

The following table summarizes the maturity of our remaining lease liabilities by year:

	December 31, 2021
	(In thousands)
For the Year Ending:
2022	$	550
2023		738
2024		747
2025		523
2026		455
2027 and thereafter		1,533
Total lease payments		4,546
Less imputed interest		(450	)
Present value of lease liabilities	$	4,096

Total leases expense recorded on the Consolidated Statements of Income within Occupancy expense were $207,000 and $204,000 for the three months ended December 31, 2021 and 2020, respectively.

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INVESTMENT SECURITIES

3 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

NOTE I – INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at December 31, 2021:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	153	$	5	$	-		$	158
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,255		23		(255	)		12,023
Total securities available-for-sale	$	12,408	$	28	$	(255	)	$	12,181
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	3,447	$	1	$	(25	)	$	3,423
Mortgage-backed securities - commercial		684		-		-			684
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed-securities - residential		41,939		308		(560	)		41,687
Debt securities		14,498		-		(307	)		14,191
Private label mortgage-backed securities - residential		238		5		-			243
Obligations of state and political subdivisions		2,661		1		(22	)		2,640
Corporate securities		3,000		-		(197	)		2,803
Total securities held-to-maturity	$	66,467	$	315	$	(1,111	)	$	65,671
Total investment securities	$	78,875	$	343	$	(1,366	)	$	77,852

13

The contractual maturities of mortgage-backed securities generally exceed 10 years; however, the effective lives are expected to be shorter due to anticipated prepayments. The maturities of the debt securities, municipal bonds and certain information regarding the mortgage backed securities at December 31, 2021 are summarized in the following table:

	Amortized		Fair
	Cost		Value
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities:
Residential		12,408		12,181
Commercial		-		-
Total		12,408		12,181
Securities held-to-maturity
Due within 1 year	$	-	$	-
Due after 1 but within 5 years		13,498		13,091
Due after 5 but within 10 years		6,146		6,035
Due after 10 years		515		508
Total debt securities		20,159		19,634
Mortgage-backed securities:
Residential		45,624		45,353
Commercial		684		684
Total	$	66,467	$	65,671

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, 2021:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage backed securities - residential	$	179	$	7	$	-		$	186
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,922		27		(208	)		12,741
Total securities available-for-sale	$	13,101	$	34	$	(208	)	$	12,927
Securities-held to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	574	$	-	$	(25	)	$	549
Mortgage-backed securities - commercial		703		-		-			703
Obligations of U.S. government-sponsored enterprises:
Mortgage backed securities - residential		38,596		416		(389	)		38,623
Debt securities		12,498		-		(156	)		12,342
Private label mortgage-backed securities - residential		242		6		-			248
Corporate securities		3,000		-		(196	)		2,804
Total securities held-to-maturity	$	57,660	$	422	$	(800	)	$	57,282
Total investment securities	$	70,761	$	456	$	(1,008	)	$	70,209

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IMPAIRMENT OF INVESTMENT SECURITIES

3 Months Ended

Dec. 31, 2021

Schedule of Investments [Abstract]

IMPAIRMENT OF INVESTMENT SECURITIES

NOTE J – IMPAIRMENT OF INVESTMENT SECURITIES

The Company recognizes credit-related other-than-temporary impairment on debt securities in earnings while noncredit-related other-than-temporary impairment on debt securities not expected to be sold are recognized in other comprehensive income.

The Company reviews its investment portfolio on a quarterly basis for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. The Company evaluates its intent and ability to hold debt securities based upon its investment strategy for the particular type of security and its cash flow needs, liquidity position, capital adequacy and interest rate risk position. In addition, the risk of future other-than-temporary impairment may be influenced by prolonged recession in the U.S. economy, changes in real estate values and interest deferrals.

Investment securities with fair values greater than their amortized cost contain unrealized gains. Investment securities with fair values less than their amortized cost contain unrealized losses. The following tables present the gross unrealized losses and fair value at December 31, 2021 and September 30, 2021 for both available for sale and held to maturity securities by investment category and time frame for which the loss has been outstanding:

			Less Than 12 Months					12 Months Or Greater					Total
	Number of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Securities		Value		Losses			Value		Losses			Value		Losses
			(Dollars in thousands)
December 31, 2021
Obligations of U.S. government agencies:
Mortgage-backed securities - residential		3	$	2,952	$	(3	)	$	401	$	(22	)	$	3,353	$	(25	)
Mortgage-backed securities - commercial		1		-		-			684		-			684		-
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential		24		42,010		(815	)		-		-			42,010		(815	)
Debt securities		8		9,774		(224	)		4,417		(83	)		14,191		(307	)
Obligations of state and political subdivisions		4		2,022		(22	)		-		-			2,022		(22	)
Corporate securities		1		-		-			2,804		(197	)		2,804		(197	)
Total		41	$	56,758	$	(1,064	)	$	8,306	$	(302	)	$	65,064	$	(1,366	)

September 30, 2021
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	3	$	318	$	(12	)	$	232	$	(13	)	$	550	$	(25	)
Mortgage-backed securities - commercial	1		-		-			703		-			703		-
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential	20		33,690		(539	)		1,610		(58	)		35,300		(597	)
Debt securities	7		10,859		(139	)		1,483		(17	)		12,342		(156	)
Obligations of state and political subdivisions	4		2,013		(34	)		-		-			2,013		(34	)
Corporate securities	1		-		-			2,804		(196	)		2,804		(196	)
Total	36	$	46,880	$	(724	)	$	6,832	$	(284	)	$	53,712	$	(1,008	)

The Company evaluated these securities and determined that the decline in value was primarily related to fluctuations in the interest rate environment and were not related to any company or industry specific event. At December 31, 2021 and September 30, 2021, there were 41 and 36, respectively, investment securities with unrealized losses.

The Company anticipates full recovery of amortized costs with respect to these securities. The Company does not intend to sell these securities and has determined that it is not more likely than not that the Company would be required to sell these securities prior to maturity or market price recovery. Management has considered factors regarding other than temporarily impaired securities and determined that there are no securities with impairment that is other than temporary as of December 31, 2021 and September 30, 2021.

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LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Dec. 31, 2021

Receivables [Abstract]

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES

NOTE K – LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES

Loans receivable, net were comprised of the following:

	December 31,			September 30,
	2021			2021
	(In thousands)
One-to-four family residential	$	200,807		$	203,019
Commercial real estate		278,989			280,848
Construction		24,282			20,350
Home equity lines of credit		17,667			17,930
Commercial business		58,320			68,719
Other		3,289			3,751
Total loans receivable		583,354			594,617
Net deferred loan costs		(860	)		(1,241	)
Allowance for loan losses		(8,228	)		(8,075	)
Total loans receivable, net	$	574,266		$	585,301

The Bank participated in the Paycheck Protection Program (“PPP”), which was designed by the U.S. Treasury under the Coronavirus Aid, Relief and Economic Security Act of 2020 (subsequently extended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act) to provide liquidity using the SBA’s platform to small businesses and self-employed individuals to maintain their staff and operations through the COVID-19 pandemic. This liquidity is in the form of a loan, 100% guaranteed by the SBA, that is forgivable provided the funds are used on qualifying payroll costs, and to a lesser extent, rent, utilities and interest on qualifying mortgage payments. The loans bear a fixed rate of 1.0% and loan payments are deferred through the date that the SBA remits the borrower’s loan forgiveness amount to the lender. Included in commercial business loans at December 31, 2021 were 52 PPP loans totaling $14.8 million compared with 111 PPP loans totaling $25.1 million at September 30, 2021. The Company expects most of these loans to be approved for full forgiveness by the SBA.

The segments of the Bank’s loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The residential mortgage loan segment is further disaggregated into two classes: amortizing term loans, which are primarily first liens, and home equity lines of credit, which are generally second liens. The commercial real estate loan segment is further disaggregated into three classes: loans secured by multifamily structures, owner-occupied commercial structures, and non-owner occupied nonresidential properties. The construction loan segment consists primarily of loans to developers or investors for the purpose of acquiring, developing and constructing residential or commercial structures and to a lesser extent one-to-four family residential construction loans made to individuals for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built. Construction loans to developers and investors have a higher risk profile because the ultimate buyer, once development is completed, is generally not known at the time of the loan. The commercial business loan segment consists of loans made for the purpose of financing the activities of commercial customers and consists primarily of revolving lines of credit. The other loan segment consists primarily of stock-secured installment consumer loans, but also includes unsecured personal loans and overdraft lines of credit connected with customer deposit accounts.

Management evaluates individual loans in all segments for possible impairment if the loan either is in nonaccrual status, or is risk rated Substandard and is 90 days or more past due. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Once the determination has been made that a loan is impaired, the recorded investment in the loan is compared to the fair value of the loan using one of three methods: (a) the present value of expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral securing the loan, less anticipated selling and disposition costs. The method is selected on a loan by loan basis, with management primarily utilizing the fair value of collateral method. If there is a shortfall between the fair value of the loan and the recorded investment in the loan, the Company charges the difference to the allowance for loan loss as a charge-off and carries the impaired loan on its books at fair value. It is the Company’s policy to evaluate impaired loans on an annual basis to ensure the recorded investment in a loan does not exceed its fair value.

16

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and charged-off and those for which a specific allowance was not necessary at the dates presented:

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
	(In thousands)
December 31, 2021
One-to-four family residential	$	-	$	-	$	2,217	$	2,217	$	2,217
Commercial real estate		-		-		2,202		2,202		2,202
Construction		2,835		224		1,745		4,580		4,645
Commercial business		-		-		1,506		1,506		1,506
Total impaired loans	$	2,835	$	224	$	7,670	$	10,505	$	10,570
September 30, 2021
One-to-four family residential	$	-	$	-	$	2,711	$	2,711	$	2,711
Commercial real estate		-		-		2,270		2,270		2,270
Construction		2,835		224		1,745		4,580		4,645
Commercial business		-		-		1,507		1,507		1,507
Total impaired loans	$	2,835	$	224	$	8,233	$	11,068	$	11,133

The average recorded investment in impaired loans was $10.8 million and $13.7 million for the three months ended December 31, 2021 and 2020, respectively. The Company’s impaired loans include delinquent non-accrual loans and performing Troubled Debt Restructurings (“TDRs”), as TDRs remain impaired loans until fully repaid. There were no TDRs during the three months ended December 31, 2021 and there was one TDR totaling $218,000 during the three months ended December 31, 2020.

The following tables present the average recorded investment in impaired loans for the three and nine months ended December 31, 2021 and 2020. There was no interest income recognized on impaired loans during the periods presented.

	Three Months
	Ended December 31, 2021
	(In thousands)
One-to-four family residential	$	2,464
Commercial real estate		2,236
Construction		4,580
Commercial business		1,507
Average investment in impaired loans	$	10,787

	Three Months
	Ended December 31, 2020
	(In thousands)
One-to-four family residential	$	2,490
Commercial real estate		4,370
Construction		4,861
Commercial business		1,959
Average investment in impaired loans	$	13,680

17

Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. All loans greater than three months past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as severe delinquency, bankruptcy, repossession, or death occurs to raise awareness of a possible credit event. The Bank’s Commercial Loan Officers are responsible for the timely and accurate risk rating of the loans in their portfolios at origination and on an ongoing basis. The Asset Review Committee performs monthly reviews of all commercial relationships internally rated 6 (“Watch”) or worse. Confirmation of the appropriate risk grade is performed by an external loan review company that semi-annually reviews and assesses loans within the portfolio. Generally, the external consultant reviews commercial relationships greater than $500,000 and/or criticized relationships greater than $250,000. Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a monthly basis.

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the Bank’s internal risk rating system at the dates presented:

			Special
	Pass		Mention		Substandard		Doubtful		Total
	(In thousands)
December 31, 2021
One-to-four family residential	$	198,911	$	997	$	899	$	-	$	200,807
Commercial real estate		277,647		201		1,141		-		278,989
Construction		19,702		-		4,580		-		24,282
Home equity lines of credit		19,702		-		-		-		17,667
Commercial business		56,971		-		1,349		-		58,320
Other		3,289		-		-		-		3,289
Total	$	574,187	$	1,198	$	7,969	$	-	$	583,354
September 30, 2021
One-to-four family residential	$	201,512	$	-	$	1,507	$	-	$	203,019
Commercial real estate		272,408		6,679		1,761		-		280,848
Construction		15,770		-		4,580		-		20,350
Home equity lines of credit		17,930		-		-		-		17,930
Commercial business		67,360		10		1,349		-		68,719
Other		3,751		-		-		-		3,751
Total	$	578,731	$	6,689	$	9,197	$	-	$	594,617

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans at the dates presented:

18

			30-59		60-89
			Days		Days		90 Days +		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
	(In thousands)
December 31, 2021
One-to-four family residential	$	200,679	$	-	$	98	$	30	$	128	$	30	$	200,807
Commercial real estate		278,735		-		-		254		254		254		278,989
Construction		19,702		-		-		4,580		4,580		4,580		24,282
Home equity lines of credit		17,667		-		-		-		-		-		17,667
Commercial business		56,971		-		-		1,349		1,349		1,349		58,320
Other		3,289		-		-		-		-		-		3,289
Total	$	577,043	$	-	$	98	$	6,213	$	6,311	$	6,213	$	583,354
September 30, 2021
One-to-four family residential	$	201,868	$	-	$	-	$	1,151	$	1,151	$	1,151	$	203,019
Commercial real estate		279,769		-		-		1,079		1,079		1,079		280,848
Construction		15,770		-		-		4,580		4,580		4,580		20,350
Home equity lines of credit		17,930		-		-		-		-		-		17,930
Commercial business		67,370		-		-		1,349		1,349		1,349		68,719
Other		3,751		-		-		-		-		-		3,751
Total	$	586,458	$	-	$	-	$	8,159	$	8,159	$	8,159	$	594,617

An allowance for loan losses (“ALL”) is maintained to absorb losses from the loan portfolio. The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

The Bank’s methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative and economic factors.

The loans are segmented into classes based on their inherent varying degrees of risk, as described above. Management tracks the historical net charge-off activity by segment and utilizes this figure, as a percentage of the segment, as the general reserve percentage for pooled, homogenous loans that have not been deemed impaired. Typically, an average of losses incurred over a defined number of consecutive historical years is used.

Non-impaired credits are segregated for the application of qualitative factors. Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources include: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the ALL. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. Since loans individually evaluated for impairment are promptly written down to their fair value, typically there is no portion of the ALL for loans individually evaluated for impairment.

19

The following table summarizes the ALL by loan category and the related activity for the three months ended December 31, 2021 and 2020:

	One-to-Four									Home Equity
	Family			Commercial						Lines of		Commercial
	Residential			Real Estate			Construction			Credit		Business		Other			Unallocated			Total
	(In thousands)
Balance- September 30,  2021	$	1,136		$	3,744		$	594		$	232	$	2,046	$	15		$	308		$	8,075
Charge-offs		-			-			-			-		-		-			-			-
Recoveries		-			52			-			-		-		-			-			52
Provision (credit)		(43	)		(90	)		130			-		83		(14	)		35			101
Balance- December 31,  2021	$	1,093		$	3,706		$	724		$	232	$	2,129	$	1		$	343		$	8,228
Balance- September 30,  2020	$	1,035		$	3,232		$	672		$	179	$	1,034	$	1		$	247		$	6,400
Charge-offs		-			-			-			-		-		-			-			-
Recoveries		-			-			-			-		90		-			-			90
Provision (credit)		120			176			(202	)		88		592		1			(135	)		640
Balance- December 31,  2020	$	1,155		$	3,408		$	470		$	267	$	1,716	$	2		$	112		$	7,130

The following tables summarize the ALL by loan category, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2021 and September 30, 2021:

	One-to-Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan  Losses:
Balance - December 31, 2021	$	1,093	$	3,706	$	724	$	232	$	2,129	$	1	$	343	$	8,228
Individually evaluated for impairment		-		-		224		-		-		-		-		224
Collectively evaluated for impairment		1,093		3,706		500		232		2,129		1		343		8,004
Loans receivable:
Balance - December 31, 2021	$	200,807	$	278,989	$	24,282	$	17,667	$	58,320	$	3,289	$	-	$	583,354
Individually evaluated for impairment		2,217		2,202		4,580		-		1,506		-		-		10,505
Collectively evaluated for impairment		198,590		276,787		19,702		17,667		56,814		3,289		-		572,849

	One-to- Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance - September 30, 2021	$	1,136	$	3,744	$	594	$	232	$	2,046	$	15	$	308	$	8,075
Individually evaluated for impairment		-		-		224		-		-		-		-		224
Collectively evaluated for impairment		1,136		3,744		370		232		2,046		15		308		7,851
Loans receivable:
Balance - September 30, 2021	$	203,019	$	280,848	$	20,350	$	17,930	$	68,719	$	3,751	$	-	$	594,617
Individually evaluated for impairment		2,711		2,270		4,580		-		1,507		-		-		11,068
Collectively evaluated for impairment		200,308		278,578		15,770		17,930		67,212		3,751		-		583,549

20

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates. Management believes that the segmentation of the loan portfolio into homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

A Troubled Debt Restructuring (“TDR”) is a loan that has been modified whereby the Bank has agreed to make certain concessions to a borrower to meet the needs of both the borrower and the Bank to maximize the ultimate recovery of a loan. TDR occurs when a borrower is experiencing, or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted to the borrower. The types of concessions granted generally include, but are not limited to, interest rate reductions, limitations on the accrued interest charged, term extensions, and deferment of principal.

A default on a TDR loan for purposes of this disclosure occurs when a borrower is 90 days past due or a foreclosure or repossession of the applicable collateral has occurred. There were no TDRs for the three months ended December 31, 2021, and there was one TDR totaling $218,000 during the three months ended December 31, 2020.

	Three Months Ended December 31, 2020
	Number of		Investment Before		Investment After
	Loans		TDR Modification		TDR Modification
	(Dollars in thousands)
One-to-four family residential		1	$	218	$	249
Total		1	$	218	$	249

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DEPOSITS

3 Months Ended

Dec. 31, 2021

Deposits [Abstract]

DEPOSITS

NOTE L – DEPOSITS

A summary of deposits by type of account are summarized as follows:

	December 31,		September 30,
	2021		2021
	(In thousands)
Demand accounts	$	182,411	$	181,975
Savings accounts		86,698		81,724
NOW accounts		83,736		71,325
Money market accounts		197,828		187,898
Certificates of deposit		82,503		101,888
Retirement certificates		14,499		15,004
Total deposits	$	647,675	$	639,814

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INCOME TAXES

3 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE M – INCOME TAXES

The Company records income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled.

Where applicable, deferred tax assets are reduced by a valuation allowance for any portions determined not likely to be realized. The valuation allowance is assessed by management on a quarterly basis and adjusted, by a charge or credit to income tax expense, as changes in facts and circumstances warrant. In assessing whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, management considers projections of future taxable income, the projected periods in which current temporary differences will be deductible, the availability of carry forwards, feasible and permissible tax planning strategies and existing tax laws and regulations. The Company did not have a valuation allowance against its net deferred tax assets at December 31, 2021 or September 30, 2021.

21

A reconciliation of income tax between the amounts calculated based upon pre-tax income at the Company’s federal statutory rate and the amounts reflected in the consolidated statements of operations are as follows:

	For the Three Months
	Ended December 31,
	2021			2020
	(In thousands)
Income tax expense at the statutory federal tax rate of 21% for the three months ended December 31, 2021 and 2020	$	497		$	400
State tax expense		194			182
Other		(17	)		(13	)
Income tax expense	$	674		$	569

The Company’s statutory income tax rate in the State of New Jersey was 9.0% for the three months ending December 31, 2021 and 2020. The State of New Jersey imposed a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million. The surtax is set at a rate of 2.5% and is currently effective through December 31, 2023. Accordingly, the Company used an 11.5% State tax rate for the calculation of its State income tax expense the three months ended December 31, 2021 and 2020.

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

3 Months Ended

Dec. 31, 2021

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract]

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

NOTE N – FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company may use derivative financial instruments, such as interest rate swaps and interest rate floors and caps, as part of its interest rate risk management. Interest rate caps and floors are agreements whereby one party agrees to pay or receive a floating rate of interest on a notional principal amount for a predetermined period of time if certain market interest rate thresholds are met. The Company considers the credit risk inherent in these contracts to be negligible.

The Company is a party to interest rate derivatives that are not designated as hedging instruments. Under a program, the Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third-party financial institution, such that the Company minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. The Company had $300,000 in cash pledged for collateral on its interest rate swaps with financial institutions at December 31, 2021 and September 30, 2021.

The following table presents summary information regarding these derivatives as of December 31, 2021 and September 30, 2021.

	Notional Amount	Average Maturity (Years)	Weighted Average Fixed Rate	Weighted Average Variable Rate	Fair Value
	(Dollars in thousands)
December 31, 2021
Classified in Other Assets:
Customer interest rate swaps	$ 19,971	6.6	3.61%	1 Mo. LIBOR + 2.50	$ 164
Classified in Other Liabilities:
3rd Party interest rate swaps	$ 19,971	6.6	3.61%	1 Mo. LIBOR + 2.50	$ 164
September 30, 2021
Classified in Other Assets:
Customer interest rate swaps	$ 20,111	6.9	3.61%	1 Mo. LIBOR + 2.50	$ 183
Classified in Other Liabilities:
3rd Party interest rate swaps	$ 20,111	6.9	3.61%	1 Mo. LIBOR + 2.50	$ 183

22

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit are summarized in the below table. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets.

	December 31,		September 30,
	2021		2021
	(In thousands)
Financial instruments whose contract amounts represent credit risk
Letters of credit	$	2,808	$	2,901
Unused lines of credit		61,901		63,798
Fixed rate loan commitments		10,039		9,156
Variable rate loan commitments		18,502		14,558
Total	$	93,250	$	90,413

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EARNINGS PER SHARE (Tables)

3 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Schedule of earnings per share

The following table presents a calculation of basic and diluted earnings per share for the three months ended December 31, 2021 and 2020. Basic and diluted earnings per share were calculated by dividing net income by the weighted-average number of shares outstanding for the periods. As a result of the second-step conversion completed on July 14, 2021, the previously reported number of shares for the year ended December 31, 2020 were adjusted to reflect the 1.2213 exchange ratio for comparative purposes.

	For the Three Months Ended December 31,
	2021						2020
			Weighted		Per				Weighted		Per
			average		share				average		share
	Income		shares		Amount		Income		shares		Amount
	(Dollars in thousands, except share and per share data)
Basic and diluted EPS
Net income available to weighted average common shareholders	$	1,693		6,792,477	$	0.25	$	1,337		7,096,664	$	0.19

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OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

3 Months Ended

Dec. 31, 2021

Other comprehensive income

Schedule of components of other comprehensive income (loss) and the related income tax effects

The components of other comprehensive loss and the related income tax effects are as follows:

	Three Months Ended December 31,
	2021								2020
				Tax		Net of						Tax		Net of
	Before Tax			(Benefit)		Tax			Before Tax			(Benefit)		Tax
	Amount			Expense		Amount			Amount			Expense		Amount
	(In thousands)
Unrealized holding loss arising during period on:
Available-for-sale investments	$	(53	)	$	13	$	(40	)	$	(51	)	$	15	$	(36	)
Other comprehensive loss, net	$	(53	)	$	13	$	(40	)	$	(51	)	$	15	$	(36	)

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FAIR VALUE DISCLOSURES (Tables)

3 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on a recurring basis

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a recurring basis.

December 31, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Securities available for sale:
Mortgage-backed securities	$	12,181	$	-	$	12,181	$	-
Debt securities		-		-		-		-
Total securities available for sale		12,181		-		12,181		-
Derivative assets		164		-		164		-
Total Assets	$	12,345	$	-	$	12,345	$	-
Liabilities:
Derivative liabilities	$	164	$	-	$	164	$	-
Total Liabilities	$	164	$	-	$	164	$	-

September 30, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Securities available for sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	186	$	-	$	186	$	-
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,741		-		12,741		-
Total securities available for sale	$	12,927	$	-	$	12,927	$	-
Derivative assets		183		-		183		-
Total assets	$	13,110	$	-	$	13,110	$	-
Liabilities:
Derivative liabilities	$	183	$	-	$	183	$	-
Total Liabilities	$	183	$	-	$	183	$	-

Schedule of assets measured at fair value on a non-recurring basis

The following tables provide the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a non-recurring basis at December 31, 2021 and September 30, 2021.

December 31, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	10,506	$	-	$	-	$	10,506
Other real estate owned		649		-		-		649
Total	$	11,155	$	-	$	-	$	11,155

September 30, 2021	Total		Level 1		Level 2		Level 3
	(In thousands)
Impaired loans	$	11,134	$	-	$	-	$	11,134
Other real estate owned		636		-		-		636
Total	$	11,770	$	-	$	-	$	11,770

Schedule of quantitative information about assets measured at fair value on a nonrecurring bassis for which Level 3 inputs were used to determine fair value

The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Company has utilized Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements

(Dollars in thousands)

December 31, 2021	Fair Value Estimate			Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans		$	10,506	Appraisal of collateral (1)	Appraisal adjustments (2)	-8.0% to -42.8% (-25.0%)
Other real estate owned		$	649	Appraisal of collateral (1)	Liquidation expenses (2)	-31.2% to -45.5% (-39.4%)

September 30, 2021	Fair Value Estimate			Valuation Techniques	Unobservable Input	Range (Weighted Average)
Impaired loans		$	11,134	Appraisal of collateral (1)	Appraisal adjustments (2)	-8.0% to -42.8% (-23.6%)
Other real estate owned		$	636	Appraisal of collateral (1)	Liquidation expenses (2)	-31.2% to -45.5% (-39.4%)

(1)Fair value is generally determined through independent appraisals for the underlying collateral, which generally include various level 3 inputs which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Schedule of the carrying amount, fair value, and placement in the fair value hierarchy of financial instruments carried at cost or amortized cost

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments carried at cost or amortized cost as of December 31, 2021 and September 30, 2021. For short-term financial assets such as cash and cash equivalents and accrued interest receivable, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as interest-bearing demand, NOW, and money market savings deposits, the carrying amount is a reasonable estimate of fair value due to these products being payable on demand and having no stated maturity.

	Carrying		Fair		Fair Value Measurement Placement
	Value		Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
December 31, 2021
Financial instruments - assets
Investment securities held to maturity	$	66,467	$	65,671	$	-	$	65,671	$	-
Loans		574,266		579,562		-		-		579,562
Financial instruments - liabilities
Certificates of deposit including retirement certificates		97,002		97,937		-		97,937		-
Borrowings		21,356		21,520		-		21,520		-
September 30, 2021
Financial instruments - assets
Investment securities held-to-maturity	$	57,660	$	57,282	$	-	$	57,282	$	-
Loans		585,301		594,674		-		-		594,674
Financial instruments - liabilities
Certificates of deposit		116,892		118,144		-		118,144		-
Borrowings		23,356		23,753		-		23,753		-

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LEASES (Tables)

3 Months Ended

Dec. 31, 2021

Leases [Abstract]

Schedule of Balance Sheet Information Related to Leases

The following table presents the balance sheet information related to our leases:

	December 31, 2021			September 30, 2021
	(Dollars in thousands)
Operating lease right-of-use asset	$	3,743		$	3,894
Operating lease liabilities	$	4,096		$	4,254
Weighted average remaining lease term in years		7.5			7.7
Weighted average discount rate		2.2	%		2.2	%

Schedule of Maturity of Remaining Lease Liabilities

The following table summarizes the maturity of our remaining lease liabilities by year:

	December 31, 2021
	(In thousands)
For the Year Ending:
2022	$	550
2023		738
2024		747
2025		523
2026		455
2027 and thereafter		1,533
Total lease payments		4,546
Less imputed interest		(450	)
Present value of lease liabilities	$	4,096

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INVESTMENT SECURITIES (Tables)

3 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Summary of the amortized cost and fair values of securities mortgage-backed and securities held to maturity

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at December 31, 2021:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	153	$	5	$	-		$	158
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,255		23		(255	)		12,023
Total securities available-for-sale	$	12,408	$	28	$	(255	)	$	12,181
Securities held-to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	3,447	$	1	$	(25	)	$	3,423
Mortgage-backed securities - commercial		684		-		-			684
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed-securities - residential		41,939		308		(560	)		41,687
Debt securities		14,498		-		(307	)		14,191
Private label mortgage-backed securities - residential		238		5		-			243
Obligations of state and political subdivisions		2,661		1		(22	)		2,640
Corporate securities		3,000		-		(197	)		2,803
Total securities held-to-maturity	$	66,467	$	315	$	(1,111	)	$	65,671
Total investment securities	$	78,875	$	343	$	(1,366	)	$	77,852

The following table summarizes the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, 2021:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
Securities available-for-sale:
Obligations of U.S. government agencies:
Mortgage backed securities - residential	$	179	$	7	$	-		$	186
Obligations of U.S. government-sponsored enterprises:
Mortgage-backed securities-residential		12,922		27		(208	)		12,741
Total securities available-for-sale	$	13,101	$	34	$	(208	)	$	12,927
Securities-held to-maturity:
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	$	574	$	-	$	(25	)	$	549
Mortgage-backed securities - commercial		703		-		-			703
Obligations of U.S. government-sponsored enterprises:
Mortgage backed securities - residential		38,596		416		(389	)		38,623
Debt securities		12,498		-		(156	)		12,342
Private label mortgage-backed securities - residential		242		6		-			248
Corporate securities		3,000		-		(196	)		2,804
Total securities held-to-maturity	$	57,660	$	422	$	(800	)	$	57,282
Total investment securities	$	70,761	$	456	$	(1,008	)	$	70,209

Schedule amortized cost, gross unrealized gians or losses and fair values of investment securities available for sale and held to maturity

The contractual maturities of mortgage-backed securities generally exceed 10 years; however, the effective lives are expected to be shorter due to anticipated prepayments. The maturities of the debt securities, municipal bonds and certain information regarding the mortgage backed securities at December 31, 2021 are summarized in the following table:

	Amortized		Fair
	Cost		Value
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities:
Residential		12,408		12,181
Commercial		-		-
Total		12,408		12,181
Securities held-to-maturity
Due within 1 year	$	-	$	-
Due after 1 but within 5 years		13,498		13,091
Due after 5 but within 10 years		6,146		6,035
Due after 10 years		515		508
Total debt securities		20,159		19,634
Mortgage-backed securities:
Residential		45,624		45,353
Commercial		684		684
Total	$	66,467	$	65,671

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IMPAIRMENT OF INVESTMENT SECURITIES (Tables)

3 Months Ended

Dec. 31, 2021

Schedule of Investments [Abstract]

Schedule of gross unrealized losses and fair value for both available for sale and held to maturity securities by investment category and time frame for which the loss has been outstanding

Investment securities with fair values greater than their amortized cost contain unrealized gains. Investment securities with fair values less than their amortized cost contain unrealized losses. The following tables present the gross unrealized losses and fair value at December 31, 2021 and September 30, 2021 for both available for sale and held to maturity securities by investment category and time frame for which the loss has been outstanding:

			Less Than 12 Months					12 Months Or Greater					Total
	Number of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Securities		Value		Losses			Value		Losses			Value		Losses
			(Dollars in thousands)
December 31, 2021
Obligations of U.S. government agencies:
Mortgage-backed securities - residential		3	$	2,952	$	(3	)	$	401	$	(22	)	$	3,353	$	(25	)
Mortgage-backed securities - commercial		1		-		-			684		-			684		-
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential		24		42,010		(815	)		-		-			42,010		(815	)
Debt securities		8		9,774		(224	)		4,417		(83	)		14,191		(307	)
Obligations of state and political subdivisions		4		2,022		(22	)		-		-			2,022		(22	)
Corporate securities		1		-		-			2,804		(197	)		2,804		(197	)
Total		41	$	56,758	$	(1,064	)	$	8,306	$	(302	)	$	65,064	$	(1,366	)

September 30, 2021
Obligations of U.S. government agencies:
Mortgage-backed securities - residential	3	$	318	$	(12	)	$	232	$	(13	)	$	550	$	(25	)
Mortgage-backed securities - commercial	1		-		-			703		-			703		-
Obligations of U.S. government-sponsored enterprises
Mortgage-backed securities - residential	20		33,690		(539	)		1,610		(58	)		35,300		(597	)
Debt securities	7		10,859		(139	)		1,483		(17	)		12,342		(156	)
Obligations of state and political subdivisions	4		2,013		(34	)		-		-			2,013		(34	)
Corporate securities	1		-		-			2,804		(196	)		2,804		(196	)
Total	36	$	46,880	$	(724	)	$	6,832	$	(284	)	$	53,712	$	(1,008	)

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LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Dec. 31, 2021

Receivables [Abstract]

Schedule of loans receivable, net

Loans receivable, net were comprised of the following:

	December 31,			September 30,
	2021			2021
	(In thousands)
One-to-four family residential	$	200,807		$	203,019
Commercial real estate		278,989			280,848
Construction		24,282			20,350
Home equity lines of credit		17,667			17,930
Commercial business		58,320			68,719
Other		3,289			3,751
Total loans receivable		583,354			594,617
Net deferred loan costs		(860	)		(1,241	)
Allowance for loan losses		(8,228	)		(8,075	)
Total loans receivable, net	$	574,266		$	585,301

Schedule of impaired loans

The following tables present impaired loans by class, segregated by those for which a specific allowance was required and charged-off and those for which a specific allowance was not necessary at the dates presented:

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
									Unpaid
	Recorded		Related		Recorded		Recorded		Principal
	Investment		Allowance		Investment		Investment		Balance
	(In thousands)
December 31, 2021
One-to-four family residential	$	-	$	-	$	2,217	$	2,217	$	2,217
Commercial real estate		-		-		2,202		2,202		2,202
Construction		2,835		224		1,745		4,580		4,645
Commercial business		-		-		1,506		1,506		1,506
Total impaired loans	$	2,835	$	224	$	7,670	$	10,505	$	10,570
September 30, 2021
One-to-four family residential	$	-	$	-	$	2,711	$	2,711	$	2,711
Commercial real estate		-		-		2,270		2,270		2,270
Construction		2,835		224		1,745		4,580		4,645
Commercial business		-		-		1,507		1,507		1,507
Total impaired loans	$	2,835	$	224	$	8,233	$	11,068	$	11,133

Schedule of average recorded investment in impaired loans

The following tables present the average recorded investment in impaired loans for the three and nine months ended December 31, 2021 and 2020. There was no interest income recognized on impaired loans during the periods presented.

	Three Months
	Ended December 31, 2021
	(In thousands)
One-to-four family residential	$	2,464
Commercial real estate		2,236
Construction		4,580
Commercial business		1,507
Average investment in impaired loans	$	10,787

	Three Months
	Ended December 31, 2020
	(In thousands)
One-to-four family residential	$	2,490
Commercial real estate		4,370
Construction		4,861
Commercial business		1,959
Average investment in impaired loans	$	13,680

Schedule of loan portfolio summarized by Bank's internal risk rating system

The following tables present the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the Bank’s internal risk rating system at the dates presented:

			Special
	Pass		Mention		Substandard		Doubtful		Total
	(In thousands)
December 31, 2021
One-to-four family residential	$	198,911	$	997	$	899	$	-	$	200,807
Commercial real estate		277,647		201		1,141		-		278,989
Construction		19,702		-		4,580		-		24,282
Home equity lines of credit		19,702		-		-		-		17,667
Commercial business		56,971		-		1,349		-		58,320
Other		3,289		-		-		-		3,289
Total	$	574,187	$	1,198	$	7,969	$	-	$	583,354
September 30, 2021
One-to-four family residential	$	201,512	$	-	$	1,507	$	-	$	203,019
Commercial real estate		272,408		6,679		1,761		-		280,848
Construction		15,770		-		4,580		-		20,350
Home equity lines of credit		17,930		-		-		-		17,930
Commercial business		67,360		10		1,349		-		68,719
Other		3,751		-		-		-		3,751
Total	$	578,731	$	6,689	$	9,197	$	-	$	594,617

Schedule of aging analysis of past due loans, segregated by class of loans

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans at the dates presented:

18

			30-59		60-89
			Days		Days		90 Days +		Total		Non-		Total
	Current		Past Due		Past Due		Past Due		Past Due		Accrual		Loans
	(In thousands)
December 31, 2021
One-to-four family residential	$	200,679	$	-	$	98	$	30	$	128	$	30	$	200,807
Commercial real estate		278,735		-		-		254		254		254		278,989
Construction		19,702		-		-		4,580		4,580		4,580		24,282
Home equity lines of credit		17,667		-		-		-		-		-		17,667
Commercial business		56,971		-		-		1,349		1,349		1,349		58,320
Other		3,289		-		-		-		-		-		3,289
Total	$	577,043	$	-	$	98	$	6,213	$	6,311	$	6,213	$	583,354
September 30, 2021
One-to-four family residential	$	201,868	$	-	$	-	$	1,151	$	1,151	$	1,151	$	203,019
Commercial real estate		279,769		-		-		1,079		1,079		1,079		280,848
Construction		15,770		-		-		4,580		4,580		4,580		20,350
Home equity lines of credit		17,930		-		-		-		-		-		17,930
Commercial business		67,370		-		-		1,349		1,349		1,349		68,719
Other		3,751		-		-		-		-		-		3,751
Total	$	586,458	$	-	$	-	$	8,159	$	8,159	$	8,159	$	594,617

Schedule of activity in the allowance for loan losses by portfolio segment

The following table summarizes the ALL by loan category and the related activity for the three months ended December 31, 2021 and 2020:

	One-to-Four									Home Equity
	Family			Commercial						Lines of		Commercial
	Residential			Real Estate			Construction			Credit		Business		Other			Unallocated			Total
	(In thousands)
Balance- September 30,  2021	$	1,136		$	3,744		$	594		$	232	$	2,046	$	15		$	308		$	8,075
Charge-offs		-			-			-			-		-		-			-			-
Recoveries		-			52			-			-		-		-			-			52
Provision (credit)		(43	)		(90	)		130			-		83		(14	)		35			101
Balance- December 31,  2021	$	1,093		$	3,706		$	724		$	232	$	2,129	$	1		$	343		$	8,228
Balance- September 30,  2020	$	1,035		$	3,232		$	672		$	179	$	1,034	$	1		$	247		$	6,400
Charge-offs		-			-			-			-		-		-			-			-
Recoveries		-			-			-			-		90		-			-			90
Provision (credit)		120			176			(202	)		88		592		1			(135	)		640
Balance- December 31,  2020	$	1,155		$	3,408		$	470		$	267	$	1,716	$	2		$	112		$	7,130

The following tables summarize the ALL by loan category, segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment as of December 31, 2021 and September 30, 2021:

	One-to-Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan  Losses:
Balance - December 31, 2021	$	1,093	$	3,706	$	724	$	232	$	2,129	$	1	$	343	$	8,228
Individually evaluated for impairment		-		-		224		-		-		-		-		224
Collectively evaluated for impairment		1,093		3,706		500		232		2,129		1		343		8,004
Loans receivable:
Balance - December 31, 2021	$	200,807	$	278,989	$	24,282	$	17,667	$	58,320	$	3,289	$	-	$	583,354
Individually evaluated for impairment		2,217		2,202		4,580		-		1,506		-		-		10,505
Collectively evaluated for impairment		198,590		276,787		19,702		17,667		56,814		3,289		-		572,849

	One-to- Four						Home Equity
	Family		Commercial				Lines of		Commercial
	Residential		Real Estate		Construction		Credit		Business		Other		Unallocated		Total
	(In thousands)
Allowance for Loan Losses:
Balance - September 30, 2021	$	1,136	$	3,744	$	594	$	232	$	2,046	$	15	$	308	$	8,075
Individually evaluated for impairment		-		-		224		-		-		-		-		224
Collectively evaluated for impairment		1,136		3,744		370		232		2,046		15		308		7,851
Loans receivable:
Balance - September 30, 2021	$	203,019	$	280,848	$	20,350	$	17,930	$	68,719	$	3,751	$	-	$	594,617
Individually evaluated for impairment		2,711		2,270		4,580		-		1,507		-		-		11,068
Collectively evaluated for impairment		200,308		278,578		15,770		17,930		67,212		3,751		-		583,549

Schedule of troubled debt restructurings

A default on a TDR loan for purposes of this disclosure occurs when a borrower is 90 days past due or a foreclosure or repossession of the applicable collateral has occurred. There were no TDRs for the three months ended December 31, 2021, and there was one TDR totaling $218,000 during the three months ended December 31, 2020.

	Three Months Ended December 31, 2020
	Number of		Investment Before		Investment After
	Loans		TDR Modification		TDR Modification
	(Dollars in thousands)
One-to-four family residential		1	$	218	$	249
Total		1	$	218	$	249

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DEPOSITS (Tables)

3 Months Ended

Dec. 31, 2021

Deposits [Abstract]

Schedule of deposits by type of account

A summary of deposits by type of account are summarized as follows:

	December 31,		September 30,
	2021		2021
	(In thousands)
Demand accounts	$	182,411	$	181,975
Savings accounts		86,698		81,724
NOW accounts		83,736		71,325
Money market accounts		197,828		187,898
Certificates of deposit		82,503		101,888
Retirement certificates		14,499		15,004
Total deposits	$	647,675	$	639,814

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INCOME TAXES (Tables)

3 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of reconciliation of income tax between the amounts calculated based upon pre-tax income at the Company's federal statutory rate and the amounts reflected in the consolidated statements of operations

A reconciliation of income tax between the amounts calculated based upon pre-tax income at the Company’s federal statutory rate and the amounts reflected in the consolidated statements of operations are as follows:

	For the Three Months
	Ended December 31,
	2021			2020
	(In thousands)
Income tax expense at the statutory federal tax rate of 21% for the three months ended December 31, 2021 and 2020	$	497		$	400
State tax expense		194			182
Other		(17	)		(13	)
Income tax expense	$	674		$	569

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Tables)

3 Months Ended

Dec. 31, 2021

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK [Abstract]

Schedule of Information Regarding Derivatives

The following table presents summary information regarding these derivatives as of December 31, 2021 and September 30, 2021.

	Notional Amount	Average Maturity (Years)	Weighted Average Fixed Rate	Weighted Average Variable Rate	Fair Value
	(Dollars in thousands)
December 31, 2021
Classified in Other Assets:
Customer interest rate swaps	$ 19,971	6.6	3.61%	1 Mo. LIBOR + 2.50	$ 164
Classified in Other Liabilities:
3rd Party interest rate swaps	$ 19,971	6.6	3.61%	1 Mo. LIBOR + 2.50	$ 164
September 30, 2021
Classified in Other Assets:
Customer interest rate swaps	$ 20,111	6.9	3.61%	1 Mo. LIBOR + 2.50	$ 183
Classified in Other Liabilities:
3rd Party interest rate swaps	$ 20,111	6.9	3.61%	1 Mo. LIBOR + 2.50	$ 183

Schedule of fair value, off-balance sheet financial instruments

	December 31,		September 30,
	2021		2021
	(In thousands)
Financial instruments whose contract amounts represent credit risk
Letters of credit	$	2,808	$	2,901
Unused lines of credit		61,901		63,798
Fixed rate loan commitments		10,039		9,156
Variable rate loan commitments		18,502		14,558
Total	$	93,250	$	90,413

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EARNINGS PER SHARE (Schedule of Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Basic and diluted EPS
Income applicable to common shares	$ 1,693	$ 1,337
Weighted average number of common shares outstanding - basic and diluted	6,792,477	7,096,664
Basic and diluted and earnings per share	$ 0.25	$ 0.19

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STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		170 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2021	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Treasury stock, shares	112,996		112,996	112,996
ESOP compensation expense	$ 61	$ 50
Number of ESOP shares intended to by purchased by Trustees in connection with the second-step conversion offerring	312,800		312,800
Percentage of common shares sold	8.00%
2006 ESOP Trust [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cost of shares repurchased by ESOP trust	$ 2,300
Average cost of shares repurchased (per share)	$ 10.58
Description of loan with respect to employee stock ownership plan	The Company’s ESOP (“2006 ESOP”) was established in 2006 as part of the Company’s initial public offering. The total cost of the 217,863 shares purchased by the 2006 ESOP trust was $2.3 million, reflecting an average cost per share of $10.58. The 2006 ESOP loan was fully repaid during the year ended September 30, 2021, and all shares were allocated to participants.
Shares allocated	217,863		217,863
2021 ESOP Trust [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Cost of shares repurchased by ESOP trust	$ 3,400
Average cost of shares repurchased (per share)	$ 10.77
Description of loan with respect to employee stock ownership plan	The total cost of the shares purchased by the 2021 ESOP trust was $3.4 million, reflecting an average cost per share of $10.77. The 2021 ESOP loan bears a variable interest rate that adjusts annually to Prime Rate (3.25% at January 1, 2022) with principal and interest payable annually in equal installments over thirty years.
Interest rate of loan with respect to employee stock ownership plan	3.25%		3.25%
First Repurchase Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock authorized to be repurchased (in shares)	130,927		130,927
Second Repurchase Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum stock repurchase authorization (as a percent)			5.00%
Stock authorized to be repurchased (in shares)	129,924		129,924
Stock repurchased during period (in shares)			91,000
Common stock average cost (in dollars per share)			$ 8.41

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OTHER COMPREHENSIVE INCOME (LOSS) (Schedule of Components of Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Other comprehensive income
Available-for-sale investments before tax	$ (53)	$ (51)
Tax benefit (expense)	13	15
Available-for-sale investments after tax	(40)	(36)
Other comprehensive income, net before tax	(53)	(51)
Tax benefit (expense), Total	13	15
Other comprehensive income, net after tax	$ (40)	$ (36)

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FAIR VALUE DISCLOSURES (Narrative) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Fair Value Disclosures [Abstract]
Mortgage Servicing Rights	$ 3	$ 4

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FAIR VALUE DISCLOSURES (Schedule of Assets Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Fair value measured on recurring basis:
Securities available for sale	$ 12,181	$ 12,927
Total Assets	780,654	773,990
Liabilities:
Total Liabilities	682,211	676,349
Fair Value, Measurements, Recurring [Member]
Fair value measured on recurring basis:
Securities available for sale	12,181	12,927
Derivative assets	164	183
Total Assets	12,345	13,110
Liabilities:
Derivative liabilities	164	183
Total Liabilities	164	183
Fair Value, Measurements, Recurring [Member] | Obligations of U.S. government enterprises Mortgage-backed securities [Member]
Fair value measured on recurring basis:
Securities available for sale	12,181	186
Fair Value, Measurements, Recurring [Member] | Obligations of U.S. government-sponsored enterprises Debt securities [Member]
Fair value measured on recurring basis:
Securities available for sale		12,741
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair value measured on recurring basis:
Securities available for sale
Derivative assets
Total Assets
Liabilities:
Derivative liabilities
Total Liabilities
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Obligations of U.S. government enterprises Mortgage-backed securities [Member]
Fair value measured on recurring basis:
Securities available for sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Obligations of U.S. government-sponsored enterprises Debt securities [Member]
Fair value measured on recurring basis:
Securities available for sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair value measured on recurring basis:
Securities available for sale	12,181	12,927
Derivative assets	164	183
Total Assets	12,345	13,110
Liabilities:
Derivative liabilities	164	183
Total Liabilities	164	183
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Obligations of U.S. government enterprises Mortgage-backed securities [Member]
Fair value measured on recurring basis:
Securities available for sale	12,181	186
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Obligations of U.S. government-sponsored enterprises Debt securities [Member]
Fair value measured on recurring basis:
Securities available for sale		12,741
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair value measured on recurring basis:
Securities available for sale
Derivative assets
Total Assets
Liabilities:
Derivative liabilities
Total Liabilities
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Obligations of U.S. government enterprises Mortgage-backed securities [Member]
Fair value measured on recurring basis:
Securities available for sale
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Obligations of U.S. government-sponsored enterprises Debt securities [Member]
Fair value measured on recurring basis:
Securities available for sale

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FAIR VALUE DISCLOSURES (Schedule of Assets Measured at Fair Value on a Non-Recurring Basis) (Details) - Fair Value Measured on a Nonrecurring Basis [Member] - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 10,506	$ 11,134
Other real estate owned	649	636
Assets measured at fair value on a non-recurring basis	11,155	11,770
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Other real estate owned
Assets measured at fair value on a non-recurring basis
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Other real estate owned
Assets measured at fair value on a non-recurring basis
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	10,506	11,134
Other real estate owned	649	636
Assets measured at fair value on a non-recurring basis	$ 11,155	$ 11,770

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FAIR VALUE DISCLOSURES (Schedule of Additional Quantitative Information About Assets Measured at Fair Value) (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Dec. 31, 2021	Sep. 30, 2020	Sep. 30, 2021
Fair Value Measured on a Nonrecurring Basis [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value estimate		$ 11,155		$ 11,770
Impaired Loans [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Valuation techniques	[1]	Appraisal of collateral	Appraisal of collateral
Unobservable Input	[2]	Appraisal adjustments	Appraisal adjustments
Impaired Loans [Member] | Fair Value Measured on a Nonrecurring Basis [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value estimate		$ 10,506		11,134
Impaired Loans [Member] | Fair Value Measured on a Nonrecurring Basis [Member] | Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value input- appraisal of collateral		(8.00%)	(8.00%)
Impaired Loans [Member] | Fair Value Measured on a Nonrecurring Basis [Member] | Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value input- appraisal of collateral		(42.80%)	(42.80%)
Impaired Loans [Member] | Fair Value Measured on a Nonrecurring Basis [Member] | Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value input- appraisal of collateral		(25.00%)	(23.60%)
Other Real Estate Owned [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Valuation techniques	[1]	Appraisal of collateral	Appraisal of collateral
Unobservable Input	[2]	Liquidation expenses	Liquidation expenses
Other Real Estate Owned [Member] | Fair Value Measured on a Nonrecurring Basis [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value estimate		$ 649		$ 636
Other Real Estate Owned [Member] | Fair Value Measured on a Nonrecurring Basis [Member] | Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value input- appraisal of collateral		(31.20%)	(31.20%)
Other Real Estate Owned [Member] | Fair Value Measured on a Nonrecurring Basis [Member] | Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value input- appraisal of collateral		(45.50%)	(45.50%)
Other Real Estate Owned [Member] | Fair Value Measured on a Nonrecurring Basis [Member] | Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value input- appraisal of collateral		(39.40%)	(39.40%)

[1] Fair value is generally determined through independent appraisals for the underlying collateral, which generally include various level 3 inputs which are not identifiable.

[2] Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

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FAIR VALUE DISCLOSURES (Schedule of the Carrying Amount, Fair Value, and Placement in the Fair Value Hierarchy of Financial Instruments) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Financial instruments - assets
Investment securities held-to-maturity	$ 66,467	$ 57,660
Fair Value, Inputs, Level 1 [Member]
Financial instruments - assets
Investment securities held-to-maturity
Loans
Financial instruments - liabilities
Certificates of deposit
Borrowings
Fair Value, Inputs, Level 2 [Member]
Financial instruments - assets
Investment securities held-to-maturity	65,671	57,282
Loans
Financial instruments - liabilities
Certificates of deposit	97,937	118,144
Borrowings	21,520	23,753
Fair Value, Inputs, Level 3 [Member]
Financial instruments - assets
Investment securities held-to-maturity
Loans	579,562	594,674
Financial instruments - liabilities
Certificates of deposit
Borrowings
Carrying Value [Member]
Financial instruments - assets
Investment securities held-to-maturity	66,467	57,660
Loans	579,562	585,301
Financial instruments - liabilities
Certificates of deposit	97,002	116,892
Borrowings	21,356	23,356
Fair Value [Member]
Financial instruments - assets
Investment securities held-to-maturity	65,671	57,282
Loans	574,266	594,674
Financial instruments - liabilities
Certificates of deposit	97,937	118,144
Borrowings	$ 21,520	$ 23,753

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LEASES (Narrative) (Details) - USD ($)	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease liabilities	$ 4,100,000
Operating lease right-of-use asset and liability	3,700,000
Total lease expense	$ 207,000	$ 204,000
Lease term, minimum	10 years
Lease term, maximum	11 years

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LEASES (Schedule of Balance Sheet Information Related to Leases) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Leases [Abstract]
Operating lease right-of-use asset	$ 3,743	$ 3,894
Operating lease liabilities	$ 4,096	$ 4,254
Weighted average remaining lease term in years	7 years 6 months	7 years 8 months 12 days
Weighted average discount rate	2.20%	2.20%

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LEASES (Schedule of Maturity of Remaining Lease Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
For the Year Ending:
2022	$ 550
2023	738
2024	747
2025	523
2026	455
2027 and thereafter	1,533
Total lease payments	4,546
Less imputed interest	(450)
Present value of lease liabilities	$ 4,096	$ 4,254

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INVESTMENT SECURITIES (Schedule of the Unamortized Cost, Gross Unrealized Gains or Losses and Fair Value of Investment Securities Available-For-Sale and Held-To-Maturity) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Securities available-for-sale:
Amortized Cost	$ 12,408	$ 13,101
Gross Unrealized Gains	28	34
Gross Unrealized Losses	(255)	(208)
Fair Value	12,181	12,927
Securities held-to-maturity:
Amortized Cost	66,467	57,660
Gross Unrealized Gains	315	422
Gross Unrealized Losses	(1,111)	(800)
Fair Value	65,671	57,282
Investment Securities [Member]
Securities held-to-maturity:
Amortized Cost	78,875	70,761
Gross Unrealized Gains	343	456
Gross Unrealized Losses	(1,366)	(1,008)
Fair Value	77,852	70,209
Obligations of U.S. government agencies Mortgage backed securities - residential [Member]
Securities available-for-sale:
Amortized Cost	153	179
Gross Unrealized Gains	5	7
Gross Unrealized Losses
Fair Value	158	186
Securities held-to-maturity:
Amortized Cost	3,447	574
Gross Unrealized Gains	1
Gross Unrealized Losses	(25)	(25)
Fair Value	3,423	549
Obligations of U.S. government agencies Mortgage backed securities -commercial [Member]
Securities held-to-maturity:
Amortized Cost	684	703
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	684	703
Obligations of U.S. government-sponsored enterprises Mortgage-backed securities-residential [Member]
Securities available-for-sale:
Amortized Cost	12,255	12,922
Gross Unrealized Gains	23	27
Gross Unrealized Losses	(255)	(208)
Fair Value	12,023	12,741
Securities held-to-maturity:
Amortized Cost	41,939	38,596
Gross Unrealized Gains	308	416
Gross Unrealized Losses	(560)	(389)
Fair Value	41,687	38,623
Obligations of U.S. government-sponsored enterprises Debt securities [Member]
Securities held-to-maturity:
Amortized Cost	14,498	12,498
Gross Unrealized Gains
Gross Unrealized Losses	(307)	(156)
Fair Value	14,191	12,342
Private label mortgage-backed securities-residential [Member]
Securities held-to-maturity:
Amortized Cost	238	242
Gross Unrealized Gains	5	6
Gross Unrealized Losses
Fair Value	243	248
Obligations of state and political subdivisions [Member]
Securities held-to-maturity:
Amortized Cost	2,661
Gross Unrealized Gains	1
Gross Unrealized Losses	(22)
Fair Value	2,640
Corporate securities [Member]
Securities held-to-maturity:
Amortized Cost	3,000	3,000
Gross Unrealized Gains
Gross Unrealized Losses	(197)	(196)
Fair Value	$ 2,803	$ 2,804

XML

INVESTMENT SECURITIES (Summary of Amortized Cost and Fair Values of Securities Held to Maturity) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Available for Sale Securities, Amortized Cost
Mortgage-backed securities, Residential	$ 12,408
Mortgage-backed securities, Commercial
Amortized Cost	12,408	$ 13,101
Available for Sale Securities, Fair Value
Mortgage Backed Securities, Residential	12,181
Mortgage Backed Securities, Commercial
Fair Value	12,181	12,927
Held to Maturity Securities, Amortized Cost
Due within 1 year
Due after 1 but within 5 years	13,498
Due after 5 but within 10 years	6,146
Due after 10 years	515
Total debt securities	20,159
Mortgage Backed Securities, Residential	45,624
Mortgage Backed Securities, Commercial	684
Amortized cost	66,467	57,660
Held to Maturity Securities, Fair Value
Due within 1 year
Due after 1 but within 5 years	13,091
Due after 5 but within 10 years	6,035
Due after 10 years	508
Total debt securities	19,634
Mortgage Backed Securities, Residential	45,353
Mortgage Backed Securities, Commercial	684
Fair value	$ 65,671	$ 57,282

XML

IMPAIRMENT OF INVESTMENT SECURITIES (Schedule of Gross Unrealized Losses and Fair Value for Both Available For Sale and Held To Maturity Securities) (Details) $ in Thousands	Dec. 31, 2021 USD ($)	Sep. 30, 2021 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	41	36
Less Than 12 Months, Fair Value	$ 56,758	$ 46,880
Less Than 12 Months, Unrealized Losses	(1,064)	(724)
12 Months Or Greater, Fair Value	8,306	6,832
12 Months Or Greater, Unrealized Losses	(302)	(284)
Total, Fair Value	65,064	53,712
Total, Unrealized Losses	$ (1,366)	$ (1,008)
Obligations of U.S. government agencies Mortgage backed securities - residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	3	3
Less Than 12 Months, Fair Value	$ 2,952	$ 318
Less Than 12 Months, Unrealized Losses	(3)	(12)
12 Months Or Greater, Fair Value	401	232
12 Months Or Greater, Unrealized Losses	(22)	(13)
Total, Fair Value	3,353	550
Total, Unrealized Losses	$ (25)	$ (25)
Obligations of U.S. government agencies Mortgage backed securities -commercial [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	1	1
Less Than 12 Months, Fair Value
Less Than 12 Months, Unrealized Losses
12 Months Or Greater, Fair Value	684	703
12 Months Or Greater, Unrealized Losses
Total, Fair Value	684	703
Total, Unrealized Losses
Obligations of U.S. government-sponsored enterprises Mortgage-backed securities-residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	24	20
Less Than 12 Months, Fair Value	$ 42,010	$ 33,690
Less Than 12 Months, Unrealized Losses	(815)	(539)
12 Months Or Greater, Fair Value		1,610
12 Months Or Greater, Unrealized Losses		(58)
Total, Fair Value	42,010	35,300
Total, Unrealized Losses	$ (815)	$ (597)
Obligations of U.S. government-sponsored enterprises Debt securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	8	7
Less Than 12 Months, Fair Value	$ 9,774	$ 10,859
Less Than 12 Months, Unrealized Losses	(224)	(139)
12 Months Or Greater, Fair Value	4,417	1,483
12 Months Or Greater, Unrealized Losses	(83)	(17)
Total, Fair Value	14,191	12,342
Total, Unrealized Losses	$ (307)	$ (156)
Obligations of state and political subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	4
Less Than 12 Months, Fair Value	$ 2,022
Less Than 12 Months, Unrealized Losses	(22)
12 Months Or Greater, Fair Value
12 Months Or Greater, Unrealized Losses
Total, Fair Value	2,022
Total, Unrealized Losses	$ (22)
Corporate securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities	1	1
Less Than 12 Months, Fair Value
Less Than 12 Months, Unrealized Losses
12 Months Or Greater, Fair Value	2,804	2,804
12 Months Or Greater, Unrealized Losses	(197)	(196)
Total, Fair Value	2,804	2,804
Total, Unrealized Losses	$ (197)	$ (196)
Private label mortgage-backed securities residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Number of Securities		4
Less Than 12 Months, Fair Value		$ 2,013
Less Than 12 Months, Unrealized Losses		(34)
12 Months Or Greater, Fair Value
12 Months Or Greater, Unrealized Losses
Total, Fair Value		2,013
Total, Unrealized Losses		$ (34)

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Narrative) (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2021 USD ($) Loans	Dec. 31, 2020 USD ($)	Sep. 30, 2021 USD ($) Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 10,787	$ 13,680
Troubled debt restructurings pre-modification amount		$ 218
Number of loans | Loans	1
Paycheck Protection Program Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Interest rate of loan	1.00%
Paycheck Protection Program Loan [Member] | SBA [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Guarantee percentage	100.00%
Number of loans | Loans	52		111
Loan received	$ 14,800		$ 25,100

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Loans Receivable, Net) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	$ 583,354	$ 594,617
Net deferred loan costs	(860)	(1,241)
Allowance for loan losses	(8,228)	(8,075)
Total loans receivable, net	574,266	585,301
One-to four-family residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	200,807	203,019
Allowance for loan losses	(1,093)	(1,136)
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	278,989	280,848
Allowance for loan losses	(3,706)	(3,744)
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	24,282	20,350
Allowance for loan losses	(724)	(594)
Home equity lines of credit [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	17,667	17,930
Allowance for loan losses	(232)	(232)
Commercial business [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	58,320	68,719
Allowance for loan losses	(2,129)	(2,046)
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans receivable	3,289	3,751
Allowance for loan losses	$ (1)	$ (15)

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Impaired Loans by Class) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Financing Receivable, Impaired [Line Items]
Recorded Investment Impaired Loans with Specific Allowance	$ 2,835	$ 2,835
Related Allowance Impaired Loans with Specific Allowance	224	224
Recorded Investment Impaired Loans with No Specific Allowance	7,670	8,233
Total Impaired Loans Recorded Investment	10,505	11,068
Total Impaired Loans Unpaid Principal Balance	10,570	11,133
One-to four-family residential [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Impaired Loans with Specific Allowance
Related Allowance Impaired Loans with Specific Allowance
Recorded Investment Impaired Loans with No Specific Allowance	2,217	2,711
Total Impaired Loans Recorded Investment	2,217	2,711
Total Impaired Loans Unpaid Principal Balance	2,217	2,711
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Impaired Loans with Specific Allowance
Related Allowance Impaired Loans with Specific Allowance
Recorded Investment Impaired Loans with No Specific Allowance	2,202	2,270
Total Impaired Loans Recorded Investment	2,202	2,270
Total Impaired Loans Unpaid Principal Balance	2,202	2,270
Construction [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Impaired Loans with Specific Allowance	2,835	2,835
Related Allowance Impaired Loans with Specific Allowance	224	224
Recorded Investment Impaired Loans with No Specific Allowance	1,745	1,745
Total Impaired Loans Recorded Investment	4,580	4,580
Total Impaired Loans Unpaid Principal Balance	4,645	4,645
Commercial business [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment Impaired Loans with Specific Allowance
Related Allowance Impaired Loans with Specific Allowance
Recorded Investment Impaired Loans with No Specific Allowance	1,506	1,507
Total Impaired Loans Recorded Investment	1,506	1,507
Total Impaired Loans Unpaid Principal Balance	$ 1,506	$ 1,507

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Average Recorded Investment in Impaired Loans) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Financing Receivable, Impaired [Line Items]
Average investment in impaired loans	$ 10,787	$ 13,680
One-to four-family residential [Member]
Financing Receivable, Impaired [Line Items]
Average investment in impaired loans	2,464	2,490
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Average investment in impaired loans	2,236	4,370
Construction [Member]
Financing Receivable, Impaired [Line Items]
Average investment in impaired loans	4,580	4,861
Commercial business [Member]
Financing Receivable, Impaired [Line Items]
Average investment in impaired loans	$ 1,507	$ 1,959

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Classes of the Loan Portfolio Summarized by Bank's Internal Risk Rating System) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	$ 583,354	$ 594,617
Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	574,187	578,731
Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	1,198	6,689
Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	7,969	9,197
Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
One-to four-family residential [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	200,807	203,019
One-to four-family residential [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	198,911	201,512
One-to four-family residential [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	997
One-to four-family residential [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	899	1,507
One-to four-family residential [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Commercial real estate [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	278,989	280,848
Commercial real estate [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	277,647	272,408
Commercial real estate [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	201	6,679
Commercial real estate [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	1,141	1,761
Commercial real estate [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	24,282	20,350
Construction [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	19,702	15,770
Construction [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Construction [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	4,580	4,580
Construction [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Home equity lines of credit [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	17,667	17,930
Home equity lines of credit [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	19,702	17,930
Home equity lines of credit [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Home equity lines of credit [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Home equity lines of credit [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Commercial business [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	58,320	68,719
Commercial business [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	56,971	67,360
Commercial business [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross		10
Commercial business [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	1,349	1,349
Commercial business [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Other [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	3,289	3,751
Other [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross	3,289	3,751
Other [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Other [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross
Other [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Loans and Leases Receivable, Gross

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Classes of the Loan Portfolio Summarized by Aging Categories) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Financing Receivable, Past Due [Line Items]
Current	$ 577,043	$ 586,458
Total Past Due	6,311	8,159
Non - Accrual	6,213	8,159
Total loans receivable	583,354	594,617
30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	98
Non - Accrual
90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	6,213
Non - Accrual
One-to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Current	200,679	201,868
Total Past Due	128	1,151
Non - Accrual	30	1,151
Total loans receivable	200,807	203,019
One-to four-family residential [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
One-to four-family residential [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	98
Non - Accrual
One-to four-family residential [Member] | 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	30
Non - Accrual		8,159
Commercial real estate [Member]
Financing Receivable, Past Due [Line Items]
Current	278,735	279,769
Total Past Due	254	1,079
Non - Accrual	254	1,079
Total loans receivable	278,989	280,848
Commercial real estate [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Commercial real estate [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Commercial real estate [Member] | 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	254
Non - Accrual		1,151
Construction [Member]
Financing Receivable, Past Due [Line Items]
Current	19,702	15,770
Total Past Due	4,580	4,580
Non - Accrual	4,580	4,580
Total loans receivable	24,282	20,350
Construction [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Construction [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Construction [Member] | 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	4,580
Non - Accrual		1,079
Home equity lines of credit [Member]
Financing Receivable, Past Due [Line Items]
Current	17,667	17,930
Total Past Due
Non - Accrual
Total loans receivable	17,667	17,930
Home equity lines of credit [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Home equity lines of credit [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Home equity lines of credit [Member] | 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual		4,580
Commercial business [Member]
Financing Receivable, Past Due [Line Items]
Current	56,971	67,370
Total Past Due	1,349	1,349
Non - Accrual	1,349	1,349
Total loans receivable	58,320	68,719
Commercial business [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Commercial business [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Commercial business [Member] | 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due	1,349
Non - Accrual
Other [Member]
Financing Receivable, Past Due [Line Items]
Current	3,289	3,751
Total Past Due
Non - Accrual
Total loans receivable	3,289	3,751
Other [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Other [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual
Other [Member] | 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Total Past Due
Non - Accrual		$ 1,349

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Activity in the Allowance for Loan Losses by Loan Category) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	$ 8,075	$ 6,400
Charge-offs
Recoveries	52	90
Provision (credit)	101	640
Balance at the end of period	8,228	7,130
One-to four-family residential [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	1,136	1,035
Charge-offs
Recoveries
Provision (credit)	(43)	120
Balance at the end of period	1,093	1,155
Commercial real estate [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	3,744	3,232
Charge-offs
Recoveries	52
Provision (credit)	(90)	176
Balance at the end of period	3,706	3,408
Construction [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	594	672
Charge-offs
Recoveries
Provision (credit)	130	(202)
Balance at the end of period	724	470
Home equity lines of credit [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	232	179
Charge-offs
Recoveries
Provision (credit)		88
Balance at the end of period	232	267
Commercial business [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	2,046	1,034
Charge-offs
Recoveries		90
Provision (credit)	83	592
Balance at the end of period	2,129	1,716
Other [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	15	1
Charge-offs
Recoveries
Provision (credit)	(14)	1
Balance at the end of period	1	2
Unallocated [Member]
Activity in the allowance for loan losses by loan category:
Balance at beginning of period	308	247
Charge-offs
Recoveries
Provision (credit)	35	(135)
Balance at the end of period	$ 343	$ 112

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of ALL by Loan Category) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Allowance for Loan Losses:
Balance - Allowance for loans losses	$ 8,228	$ 8,075
Individually evaluated for impairment	224	224
Collectively evaluated for impairment	8,004	7,851
Balance - Loans receivable	583,354	594,617
Loan balance individually evaluated for impairment	10,505	11,068
Loan balance collectively evaluated for impairment	572,849	583,549
One-to four-family residential [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	1,093	1,136
Individually evaluated for impairment
Collectively evaluated for impairment	1,093	1,136
Balance - Loans receivable	200,807	203,019
Loan balance individually evaluated for impairment	2,217	2,711
Loan balance collectively evaluated for impairment	198,590	200,308
Commercial real estate [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	3,706	3,744
Individually evaluated for impairment
Collectively evaluated for impairment	3,706	3,744
Balance - Loans receivable	278,989	280,848
Loan balance individually evaluated for impairment	2,202	2,270
Loan balance collectively evaluated for impairment	276,787	278,578
Construction [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	724	594
Individually evaluated for impairment	224	224
Collectively evaluated for impairment	500	370
Balance - Loans receivable	24,282	20,350
Loan balance individually evaluated for impairment	4,580	4,580
Loan balance collectively evaluated for impairment	19,702	15,770
Home equity lines of credit [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	232	232
Individually evaluated for impairment
Collectively evaluated for impairment	232	232
Balance - Loans receivable	17,667	17,930
Loan balance individually evaluated for impairment
Loan balance collectively evaluated for impairment	17,667	17,930
Commercial business [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	2,129	2,046
Individually evaluated for impairment
Collectively evaluated for impairment	2,129	2,046
Balance - Loans receivable	58,320	68,719
Loan balance individually evaluated for impairment	1,506	1,507
Loan balance collectively evaluated for impairment	56,814	67,212
Other [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	1	15
Individually evaluated for impairment
Collectively evaluated for impairment	1	15
Balance - Loans receivable	3,289	3,751
Loan balance individually evaluated for impairment
Loan balance collectively evaluated for impairment	3,289	3,751
Unallocated [Member]
Allowance for Loan Losses:
Balance - Allowance for loans losses	343	308
Individually evaluated for impairment
Collectively evaluated for impairment	343	308
Balance - Loans receivable
Loan balance individually evaluated for impairment
Loan balance collectively evaluated for impairment

XML

LOANS RECEIVABLE, NET AND RELATED ALLOWANCE FOR LOAN LOSSES (Schedule of Troubled Debt Restructuring) (Details) $ in Thousands	3 Months Ended
	Dec. 31, 2021 USD ($) Loans
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | Loans	1
Investment Before TDR Modification	$ 218
Investment After TDR Modification	$ 249
One-to four-family residential [Member]
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Loans | Loans	1
Investment Before TDR Modification	$ 218
Investment After TDR Modification	$ 249

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DEPOSITS (Schedule of Deposits by Type of Account) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Deposits [Abstract]
Demand accounts	$ 182,411	$ 181,975
Savings accounts	86,698	81,724
NOW accounts	83,736	71,325
Money market accounts	197,828	187,898
Certificates of deposit	82,503	101,888
Retirement certificates	14,499	15,004
Total deposits	$ 647,675	$ 639,814

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INCOME TAXES (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		39 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2023
Income Tax Contingency [Line Items]
State tax rate	11.50%	11.50%
Surtax rate	9.00%	9.00%
Allocated income in excess in income taxes	$ 1
Subsequent Event [Member]
Income Tax Contingency [Line Items]
Surtax rate			2.50%

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INCOME TAXES (Schedule of Reconciliation of Income Tax) (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Income tax expense at the statutory federal tax rate	21.00%	21.00%
Income tax expense at the statutory federal tax rate of 21% for the three and nine months ended December 31, 2021 and 2020	$ 497	$ 400
State tax expense	194	182
Other	(17)	(13)
Income tax expense	$ 674	$ 569

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Narrative) (Details) - USD ($)	Dec. 31, 2021	Sep. 30, 2021
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Cash	$ 2,141,000	$ 1,808,000
Asset Pledged as Collateral [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Cash	$ 300,000	$ 300,000

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Schedule of Information Regarding Derivatives) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2021	Sep. 30, 2021
Customer Interest Rate Swaps [Member] | Classified in Other Assets [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Average Maturiy (Years)	6 years 7 months 6 days	6 years 10 months 24 days
Weighted Average Variable Rate	1 Mo. LIBOR + 2.50	1 Mo. LIBOR + 2.50
Customer Interest Rate Swaps [Member] | Classified in Other Assets [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Notional Amount	$ 19,971	$ 20,111
Weighted Average Fixed Rate	3.61%	3.61%
Fair Value	$ 164	$ 183
3rd Party Interest Rate Swaps [Member] | Classified in Other Liabilities [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Average Maturiy (Years)	6 years 7 months 6 days	6 years 10 months 24 days
Weighted Average Variable Rate	1 Mo. LIBOR + 2.50	1 Mo. LIBOR + 2.50
3rd Party Interest Rate Swaps [Member] | Classified in Other Liabilities [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Notional Amount	$ 19,971	$ 20,111
Weighted Average Fixed Rate	3.61%	3.61%
Fair Value	$ 164	$ 183

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Schedule of Financial Instruments Whose Contract Amounts Representing Credit Risk) (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Sep. 30, 2021
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments - contract amounts	$ 93,250	$ 90,413
Letters of credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments - contract amounts	2,808	2,901
Unused lines of credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments - contract amounts	61,901	63,798
Fixed rate loan commitments [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments - contract amounts	10,039	9,156
Variable rate loan commitments [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Financial instruments - contract amounts	$ 18,502	$ 14,558