Breaking Down Magyar Bancorp, Inc. (MGYR) Financial Health: Key Insights for Investors

You've seen Magyar Bancorp, Inc. (MGYR) post a strong year, but the question is whether the underlying financials support the stock's recent run, especially with the market's unease about regional banks. Honestly, the 2025 fiscal year results are defintely worth a deeper look because they show a clear path of profitable growth: net income jumped to a record $9.8 million, a 25% increase over the prior year, driven by a 14.0% rise in net interest and dividend income to $31.9 million. That's a solid number, plus the net interest margin (NIM)-how much money the bank makes from lending versus what it pays out-expanded by 20 basis points to 3.34%, which is a great sign of effective balance sheet management in a high-rate environment. Still, while total assets are just shy of the billion-dollar mark at $997.7 million, the low non-performing loan ratio of 0.05% is excellent, but you need to understand the concentration risk in their commercial real estate exposure that this low figure might hide. The stock trading around $17.00 with a $0.08 per share quarterly dividend is interesting, so let's break down the full picture of what's driving that $18.34 book value per share.

Revenue Analysis

You want to know where the money is coming from at Magyar Bancorp, Inc. (MGYR), and the short answer is: lending. The company's revenue engine is overwhelmingly driven by its core banking function, generating interest income from its loan portfolio and investment securities. The big takeaway for the fiscal year ended September 30, 2025, is that the primary revenue stream saw powerful double-digit growth, a defintely positive sign.

The core revenue source, Net Interest and Dividend Income (NII), which is the difference between what the bank earns on loans and investments and what it pays on deposits, climbed to $31.9 million for the fiscal year 2025. That's a strong 14.0% increase, or $3.9 million more, compared to the $28.0 million NII reported in fiscal year 2024. This is where the bank makes its living.

Here's the quick math on what fueled that growth: The management team was able to grow the loan portfolio by 10% and simultaneously expand the Net Interest Margin (NIM)-the measure of lending profitability-by 20 basis points to 3.34% for the year. This is a classic one-two punch in banking: grow the asset base and improve the yield. For a deeper dive into the players betting on this strategy, check out Exploring Magyar Bancorp, Inc. (MGYR) Investor Profile: Who's Buying and Why?

The contribution of different business segments to overall revenue is starkly tilted toward NII. While a precise total operating revenue figure for a bank is complex, the NII figure of $31.9 million represents the vast majority of its operating revenue. The smaller component is Non-Interest Income, which includes fees, service charges, and other gains.

• Primary Revenue Source: Net Interest and Dividend Income from loans and securities.
• Secondary Revenue Source: Non-Interest Income from fees, service charges, and other gains.

You need to be aware of a significant change in the Non-Interest Income stream, though. While the NII was up, the Non-Interest Income for the fourth quarter of 2025 dropped to $853 thousand. This was a 56.8% decrease compared to the same quarter in the prior year. This dramatic shift wasn't due to a drop in service fees, but rather the absence of gains on the sale of other real estate owned, which had provided a $1.3 million boost in the prior year's fourth quarter. This is a one-off item, so don't panic, but it does show how volatile this smaller revenue segment can be.

The table below maps the core revenue trend, showing the clear acceleration in the most recent fiscal year.

Profitability Metrics

Magyar Bancorp, Inc. (MGYR) delivered a strong fiscal year 2025, with net income surging 25.4% year-over-year, which is the direct takeaway for investors. The bank's profitability is fundamentally driven by its Net Interest Income (NII), a key metric for banks that acts like a gross profit, and its operational efficiency.

Here's the quick math on the core margins for the fiscal year ended September 30, 2025, based on total revenue of approximately $35.61 million (Net Interest Income plus Non-Interest Income):

• Gross Profit Margin (NII Margin): The Net Interest Income of $31.9 million gives an NII Margin of about 89.58% of total revenue.
• Operating Profit Margin: Pre-tax, pre-provision income was approximately $14.21 million, resulting in a margin of roughly 39.90%.
• Net Profit Margin: The final Net Income of $9.8 million translates to a solid Net Profit Margin of about 27.52%.

This 27.52% net margin is defintely a strong indicator of the bank's ability to convert its core business revenue into shareholder earnings.

Profitability Trends and Operational Efficiency

The trend in profitability is clearly upward, driven by a widening Net Interest Margin (NIM) and effective cost control. Magyar Bancorp, Inc.'s net income jumped from $7.8 million in fiscal year 2024 to $9.8 million in fiscal year 2025.

The bank's NIM, which measures the difference between interest earned on assets and interest paid on liabilities, increased by 20 basis points to 3.34% for FY2025, up from 3.14% in the prior year. This expansion shows prudent balance sheet management, capturing higher yields on assets while managing the cost of funding. Operationally, Net Interest Income saw a robust 14.02% growth year-over-year.

While total Non-Interest Expense increased to $21.4 million in FY2025, the increase was managed well enough to allow the strong revenue growth to flow through to the bottom line. Non-interest income, however, remains a smaller component of the revenue mix at $3.71 million for the year, signaling that profitability is overwhelmingly reliant on traditional lending activities.

Industry Comparison: Where MGYR Stands

To assess Magyar Bancorp, Inc.'s performance, we need to compare its key ratios against the broader industry, specifically the US Community Bank segment, which generally consists of institutions with less than $10 billion in assets.

Here is a comparison of MGYR's fiscal year 2025 ratios against the most recent available industry averages for US banks:

Magyar Bancorp, Inc.'s ROA of 1.00% and ROE of 8.51% are slightly below the community bank and industry aggregates, suggesting there's still room for efficiency improvement and asset utilization compared to top performers. The NIM of 3.34% is below the community bank average of 3.62%, but it's higher than the overall industry aggregate of 3.26%, which includes the larger banks.

The key opportunity here is to close that NIM gap with peers, which would directly boost the ROA and ROE. You can read more about this in the full analysis: Breaking Down Magyar Bancorp, Inc. (MGYR) Financial Health: Key Insights for Investors.

Next step: Review the bank's asset mix to see if a shift toward higher-yielding loans can close the 28 basis point NIM gap with the community bank average.

Debt vs. Equity Structure

You want to know how Magyar Bancorp, Inc. (MGYR) is funding its growth, and the short answer is: conservatively, especially compared to its peers. The company's Debt-to-Equity (D/E) ratio for the fiscal year ending September 30, 2025, stood at 0.41. This is a strong, low-leverage position that sits comfortably below the regional bank industry average of 0.5 as of November 2025.

Keep in mind that for a bank, the D/E ratio is a bit different than for a manufacturer. Banks are inherently leveraged because customer deposits are technically a liability-a form of debt they owe back. So, a low ratio like 0.41 signals a substantial equity cushion against their balance sheet risks.

Here's the quick math on their core funding structure for the 2025 fiscal year:

• Total Equity (Shareholder Capital): $118.8 million
• Total Assets: $997.7 million
• Debt-to-Equity Ratio: 0.41

The Composition of Magyar Bancorp, Inc.'s Debt

Magyar Bancorp, Inc.'s debt is primarily comprised of borrowed funds used to match-fund its loan originations. As of June 30, 2025, the company's total borrowed funds-which represent its traditional debt like advances and other borrowings-increased by $7.5 million to $36.1 million. This increase shows a deliberate, albeit small, use of debt to fuel asset growth, specifically in commercial real estate loans.

The company leans on institutional sources for its longer-term funding. They regularly utilize long-term advances from the Federal Home Loan Bank of New York (FHLBNY). Plus, they issued $14.1 million in five-year term brokered certificates of deposit during the first nine months of the 2025 fiscal year. This is a strategic move to lock in funding costs for a fixed term, which is defintely smart in a fluctuating interest rate environment.

The table below illustrates the relative stability of the company's leverage compared to the broader financial sector's average Total Debt / Total Capital of 23.0%. Magyar Bancorp, Inc.'s ratio of 30.8% is higher, which is typical for a bank that includes deposits in its total capital structure, but it's still managed tightly.

Balancing Debt and Equity Funding

The company's capital strategy is a careful balance between using low-cost debt and actively managing its equity base. While they are increasing borrowings to support lending growth, they are simultaneously signaling confidence in their stock price through a new equity action. In May 2025, the Board authorized a stock repurchase program to buy back up to 323,547 shares, which represents 5% of its outstanding common stock.

This repurchase is a direct way to return capital to shareholders and reduce the equity base, which, all else equal, would slightly increase the D/E ratio. It's a classic move: use accretive debt (FHLB advances) to fund profitable assets (CRE loans), and use excess capital to boost shareholder value via buybacks. For a deeper dive into who is driving this demand, you should read Exploring Magyar Bancorp, Inc. (MGYR) Investor Profile: Who's Buying and Why?.

The action plan here is simple: Monitor the $36.1 million in total borrowings for any sharp, unexpected jumps.

Liquidity and Solvency

You need to know if Magyar Bancorp, Inc. (MGYR) has enough quick cash to cover its short-term obligations, and the short answer is that while traditional liquidity ratios are low-which is common for banks-their core funding model is stable. The real story here is how they are strategically deploying cash to drive future growth.

As a seasoned financial analyst, I look past the simple Current Ratio (current assets divided by current liabilities) for a bank. For Magyar Bancorp, Inc., this ratio is qualitatively assessed as Low, but that's because the vast majority of their liabilities are customer deposits, which are technically current but are the core of their business model. They don't have a high volume of inventory or accounts receivable like a manufacturing company. Instead, we look at their liquid assets versus their total liabilities.

Here's the quick math on their core liquidity position as of the fiscal year ended September 30, 2025:

• Cash and interest-earning deposits: $7.1 million.
• Investment Securities: $88.4 million.
• Total Liquid Assets: Approximately $95.5 million (Cash plus Securities).

This $95.5 million in highly liquid assets provides a buffer, but what's more important is the stability of their funding. Total deposits stood at $814.3 million, and 93% of their liabilities are considered low-risk sources of funding. They are a community bank, and that deposit base is sticky.

Working Capital and Cash Flow Trends

The movement of cash in a bank is all about lending. For Magyar Bancorp, Inc., the analysis of working capital (current assets minus current liabilities) is best viewed through their cash flow statement, which shows a strong, deliberate shift of cash from the balance sheet into the loan portfolio.

The company saw a significant decrease in cash and interest-earning deposits during the fiscal year, dropping by $18.5 million, or 72.3%, to fund new loan originations. This is not a liquidity crisis; it's a strategic choice to grow their interest-earning assets, which is exactly why their net interest margin increased by 20 basis points to 3.34% for FY 2025.

The cash flow statement overview for the year shows a healthy operational engine supporting this growth:

The positive Operating Cash Flow of $8.4 million (TTM June '25) indicates that the core business is generating enough cash to cover its operating expenses. The large outflow from Investing Activities is simply the cost of doing business for a bank that is growing its loan book by 10%. This is a growth-oriented cash flow profile, not a distressed one. Their capital base is also solid, with total equity increasing by 7.5% to $118.8 million at year-end. For a deeper dive into who is investing in this growth story, check out Exploring Magyar Bancorp, Inc. (MGYR) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking for a clear signal on whether Magyar Bancorp, Inc. (MGYR) is a buy, hold, or sell, and the valuation metrics give a mixed but grounded picture. The short takeaway is that the stock appears reasonably priced to slightly undervalued based on its book value, but its price momentum suggests recent strength. The current analyst consensus is a simple Hold.

Is Magyar Bancorp, Inc. Overvalued or Undervalued?

When we look at traditional banking metrics, Magyar Bancorp, Inc. (MGYR) is trading below its intrinsic value. As of the fiscal year ended September 30, 2025, the Price-to-Book (P/B) ratio stood at approximately 0.94. Since the P/B is below 1.0, it means the market is valuing the company at less than its stated book value per share of $18.34. That's defintely a classic sign of potential undervaluation in the banking sector, where a P/B of 1.0 is often considered fair value.

However, the Price-to-Earnings (P/E) ratio tells a slightly different story. The P/E is around 11.02 as of November 2025, which is broadly in line with or slightly above the average for many regional banks, suggesting the stock isn't a deep-value play on earnings alone. For context, the Enterprise Value (EV) is approximately $137.64 million, but the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is not a meaningful metric here. Why? Because banks are fundamentally different businesses; their liabilities (deposits) are their core product, making the debt component of EV less relevant than for a manufacturing or tech company.

Stock Performance and Income Profile

The stock price trend shows investors have been rewarding the company's performance, which reported a net income of $9.8 million for the fiscal year ended September 30, 2025. The stock has seen a strong run, increasing by 38.26% over the last 12 months. The latest closing price on November 14, 2025, was $16.57, sitting comfortably above the 52-week low of $12.10, but still below the high of $19.04. This recent momentum is strong, but you still have room to run before hitting the recent high.

For income investors, the dividend profile is solid and sustainable. The annual dividend is $0.32 per share, which translates to a yield of approximately 1.9%. Crucially, the dividend payout ratio (DPR) is a very conservative 20.51%. This low payout ratio signals that the dividend is well-covered by earnings, giving the company ample room for future increases or capital reinvestment. That's a good sign for stability.

Here's the quick math: with a DPR this low, even if earnings dip slightly, the dividend is safe. This financial health is a key reason why the stock has a consensus analyst rating of Hold. Analysts are essentially saying: keep your position; the valuation is fair, and the fundamentals are strong, but there's no immediate catalyst for a massive breakout. For a deeper dive into the company's fundamentals, you can check out Breaking Down Magyar Bancorp, Inc. (MGYR) Financial Health: Key Insights for Investors.

• Stock Price (Nov 14, 2025): $16.57
• 12-Month Price Change: +38.26%
• Dividend Yield: 1.9%
• Payout Ratio: 20.51%
• Analyst Consensus: Hold

Your next step should be to monitor interest rate movements, as a regional bank's net interest margin (NIM) is highly sensitive to Federal Reserve policy. Finance: track the NIM forecast for Q1 2026 by month-end.

Risk Factors

You're looking at Magyar Bancorp, Inc. (MGYR)'s recent performance, and the fiscal year 2025 numbers look strong-net income hit $9.8 million, a solid 25% jump from the prior year. That's the good news. But as a seasoned analyst, I have to map the risks that could quickly erode those gains, especially for a regional bank like this. Your primary focus should be on the credit portfolio's composition and the volatile interest rate environment.

Operational and Financial Risks: The Credit Portfolio

The biggest near-term risk for Magyar Bancorp is the concentration in its loan book, specifically its exposure to Commercial Real Estate (CRE) and construction loans. This isn't a secret; the market is defintely aware of the risk in the regional banking space. This strategic growth is what drove the increase in the provision for credit losses for the fiscal year ended September 30, 2025.

Here's the quick math: The company recorded $402 thousand in credit loss provisions for the year, a significant jump from just $90 thousand in the previous year. This increase is directly tied to the growth in their loan portfolio, particularly in those higher-risk commercial real estate and construction segments. While this is prudent accounting (building reserves for expected losses), it signals that the risk profile of the assets is shifting. One clean one-liner: Higher-yield loans come with higher potential losses.

What this estimate hides is the potential for a broader downturn in the commercial property market, which could push actual charge-offs beyond the reserve. For more context on who is investing in this profile, consider reading Exploring Magyar Bancorp, Inc. (MGYR) Investor Profile: Who's Buying and Why?.

External Risks: Rates, Regulation, and Competition

External factors, which are largely out of management's control, still pose a major threat to the bank's profitability and stability. The financial health of Magyar Bancorp, with its 2025 net interest margin at 3.34%, is highly sensitive to interest rate changes. If the Federal Reserve's policy shifts, it directly impacts their cost of funds and lending yields.

Also, the regulatory environment is constantly tightening, especially following recent regional banking instability. New regulations, potentially increasing capital reserve requirements or enhancing consumer protection, could raise compliance costs and limit the bank's ability to lend aggressively. Plus, competition from larger national banks and non-bank financial technology (FinTech) companies continues to put pressure on both lending margins and deposit gathering.

• Interest Rate Risk: Volatility can compress the 3.34% net interest margin.
• Regulatory Changes: Increased compliance costs from new capital or consumer protection rules.
• Market Competition: Pressure from larger banks and FinTech for both loans and deposits.

Mitigation Strategies and Outlook

Magyar Bancorp's management team is aware of these risks and has mitigation strategies in place, primarily centered on a community banking model with prudent lending practices. They emphasize customer-centric service and are investing in technology to stay competitive. The bank operates with a formal governance and risk management framework, including a dedicated Risk Management Committee and an annual compliance audit.

The key mitigation in their financial reporting is the increase in the credit loss provision to $402 thousand for fiscal year 2025. This is a concrete action to cushion against potential losses from their growing commercial loan book. Still, investors need to monitor the non-performing loan (NPL) ratio in upcoming quarters. If NPLs rise faster than expected, that $402 thousand reserve might not be enough.

Growth Opportunities

You're looking at Magyar Bancorp, Inc. (MGYR) and asking the right question: can this regional bank sustain its recent momentum? The short answer is yes, because their growth is grounded in smart, old-school banking fundamentals, not just market froth. They closed the 2025 fiscal year with a record net income of $9.8 million, a solid 25% increase over the prior year's $7.8 million, showing their strategy is working.

This isn't a one-off win. The core driver is a disciplined approach to managing the loan book and interest rate risk, which is critical in this environment. Here's the quick math on their key growth levers:

• Loan Portfolio Growth: The company achieved a strong 10% growth in its loan portfolio for the fiscal year ended September 30, 2025.
• Net Interest Margin (NIM) Expansion: Their NIM, a key profitability metric for banks, increased by 20 basis points to 3.34% for the full year 2025, up from 3.14% in 2024.
• Earnings Per Share (EPS): Basic EPS jumped to $1.57 for the year, compared to $1.23 a year earlier.

Honestly, a 20 basis point NIM increase in a challenging rate cycle is defintely a sign of superior asset-liability management. That's a competitive edge.

Strategic Levers and Future Projections

Magyar Bancorp, Inc.'s future growth isn't reliant on a single, risky bet; it's a combination of prudent balance sheet management and a deepening commitment to their core market. The increase in NIM, for example, came from a higher yield on earning assets, specifically due to new loan originations and the repricing of adjustable-rate commercial term loans. This shows they are effectively translating the current interest rate environment into higher revenue.

Their strategic initiatives also focus on shareholder returns and community stability, which indirectly supports their local market position:

• Capital Management: The company is actively managing its share count through a stock repurchase plan, buying back 20,000 shares at an average price of $15.42 per share during fiscal year 2025.
• Community Investment: They invested $250,000 in New Jersey's Neighborhood Revitalization Tax Credit Program in 2025, plus awarded grants totaling over $70,000 to Central New Jersey non-profits.

This community focus is the bedrock of a successful regional bank. You can see their guiding principles here: Mission Statement, Vision, & Core Values of Magyar Bancorp, Inc. (MGYR).

Competitive Positioning

In the crowded regional banking space, Magyar Bancorp, Inc. stands out by consistently delivering on profitability. For the second consecutive year, the bank was named to the 2025 KBW Bank Honor Roll, a recognition reserved for a small group of high-performing banks that have demonstrated the strongest and most consistent earnings growth over the past decade. That's a powerful signal to the market about their long-term stability and execution.

Looking at the full fiscal year 2025 results, the bank's total equity grew by 7.5% to $118.8 million from $110.5 million, providing a strong capital base to support future lending and growth. This table summarizes the financial lift they achieved in FY2025:

These numbers show a company that is not just surviving, but thriving by effectively managing its interest-earning assets and costs. The next step for you is to monitor their Q1 2026 loan origination volume to see if the 10% loan growth momentum is holding up.