MAGYAR BANCORP NEWS
400 Somerset St., New Brunswick, NJ 08901
732.342.7600
MAGYAR BANCORP ANNOUNCES THIRD QUARTER EARNINGS
New Brunswick, New Jersey, July 29, 2008 - Magyar Bancorp (NASDAQ: MGYR) (the
"Company"), parent company of Magyar Bank, reported today net income of $252,000
for the three months ended June 30, 2008, compared to net income of $194,000 for
the three months ended June 30, 2007. The Company's net income for the nine
months ended June 30, 2008 was $96,000 compared to net income of $625,000 for
the nine months ended June 30, 2007.
The Company reported basic and diluted earnings per share of $0.04 for the three
months ended June 30, 2008 and $0.02 for the nine months ended June 30, 2008.
For the three and nine months ended June 30, 2007, basic and diluted earnings
per share were $0.03 and $0.11, respectively. The Company's book value per share
increased to $8.51 at June 30, 2008 from $8.04 at June 30, 2007.
Net income increased $58,000 during the three months ended June 30, 2008
compared with the prior year period due, in part, to a $39.4 million increase in
the average balance of assets to $508.8 million and a 5 basis point increase in
the interest margin to 3.25%. These factors were partially offset by a larger
provision for loan loss, which was $310,000 during the three months ended June
30, 2008 compared to $75,000 for the three months ended June 30, 2007.
Non-interest expenses increased $222,000, or 6.3%, to $3.7 million for the three
months ended June 30, 2008 from $3.5 million for the three months ended June 30,
2007. The increase in non-interest expense was primarily due to normal merit
increases and increases in employee benefit costs, as well as increased
consulting fees related to the Company's compliance with the Sarbanes-Oxley Act.
Finally, the Company recorded a tax benefit of $171,000 during the current
three-month period compared with tax expense of $82,000 for the prior year
period due in part to the reversal of a $90,000 tax liability on which the
statute of limitations expired in the current quarter.
Net interest and dividend income for the three months ended June 30, 2008
increased $341,000 to $3.8 million from $3.4 million for the three months ended
June 30, 2007. The Bank's interest rate spread and net interest margin increased
to 3.05% and 3.25%, respectively, for the three-month period ended June 30, 2008
from 2.88% and 3.20% for the three months ended June 30, 2007. The increase in
spread and margin was attributable to a substantial reduction in short-term
interest rates, which had a greater impact on interest bearing liabilities than
interest earning assets during the periods under comparison. The yield on
interest-earning assets decreased 91 basis points to 6.10% for the three months
ended June 30, 2008 from 7.01% for the prior year period, while the cost of
interest-bearing liabilities decreased 108 basis points to 3.05% from 4.13%
during the same periods.
Total assets increased $36.9 million, or 7.8%, to $510.1 million, during the
nine months ended June 30, 2008. Loans receivable increased $18.1 million to
$403.5 million. Loan growth occurred primarily in commercial real estate and
commercial business loans, which increased $16.1 million, or 14.9%, and in
residential mortgage loans, which increased $2.4 million, or 2.1%. Investment
securities increased $15.3 million, or 33.6%, to $60.8 million during the nine
months ended June 30, 2008.
Total deposits decreased $6.2 million to $362.6 million and borrowings increased
$42.4 million to $92.4 million during the nine months ended June 30, 2008. Time
deposits decreased $16.1 million to $184.5 million reflecting the Company's
decision to replace high cost, single service time deposits with substantially
cheaper borrowings from the Federal Home Loan Bank of New York. The Company's
efforts to reduce its dependence on maturity deposits while increasing its
lower-cost core deposits resulted in a $4.2 million, or 19.4%, increase in
non-interest checking balances and a $4.8 million, or 14.8%, increase in
interest-bearing checking balances in the nine months ended June 30, 2008.
Non-performing loans totaled $5.3 million at June 30, 2008, compared with $9.0
million at June 30, 2007. The $3.7 million decrease was primarily due to a $4.2
million loan made by the Bank to Solomon Dwek, whose real estate holdings were
forced into bankruptcy in February 2007, and was subsequently foreclosed upon
and transferred at fair market value to other real estate owned. The
non-performing loans during both three-month periods included a $1.9 million
loan secured by a catering facility. The Bank remains in the process of
foreclosure on the property securing the loan. Non-performing loans at June 30,
2008 also included two construction loans totaling $1.0 million, two commercial
real estate loans totaling $1.8 million and one non-performing residential
mortgage loan in the amount of $480,000. The Bank has not and does not intend to
originate or purchase sub-prime loans or option-ARM loans.
Other real estate owned increased $467,000 during the quarter to $5.6 million at
June 30, 2008. The increase reflected site improvements for the six approved
lots located in Rumson, NJ that were obtained through the foreclosure of loans
to Solomon Dwek. Contracts of sale on two of the properties have been executed.
In addition to the Rumson property, nine substantially vacant lots in Little Egg
Harbor, NJ, carried in the amount of $955,000, are under contract of sale and
are expected to be sold by September 30, 2008 for a price equal to the Bank's
recorded value.
The Company completed its first stock repurchase of 130,927 shares during the
quarter ended December 31, 2007. On November 16, 2007, the Company's Board of
Directors approved a second stock repurchase plan that allows for the repurchase
of an additional 5% of its outstanding shares (excluding shares held by Magyar
Bancorp, MHC, the Company's mutual holding company), or up to 129,924 shares.
The Company repurchased 41,770 shares at an average price of $10.16 pursuant to
the second stock repurchase plan at June 30, 2008, reducing outstanding shares
to 5,771,741.
About Magyar Bancorp
Magyar Bancorp is the parent company of Magyar Bank, a community bank
headquartered in New Brunswick, New Jersey. Magyar Bank has been serving
families and businesses in Central New Jersey for over 85 years with a complete
line of financial products and services. Today, Magyar Bank operates five branch
locations throughout Middlesex and Somerset Counties including New Brunswick
(2), North Brunswick, South Brunswick and Branchburg. Please visit us online at
www.magbank.com.
Forward Looking Statements
This press release contains statements about future events that constitute
forward-looking statements within the meaning of the Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Such forward-looking statements may be identified by reference to a future
period or periods, or by the use of forward-looking terminology, such as "may,"
"will," "believe," "expect," or similar terms or variations on those terms, or
the negative of those terms. Forward-looking statements are subject to numerous
risks and uncertainties, including, but not limited to, those risks previously
disclosed in the Company's filings 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 Bank 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. 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. The Company does not undertake and
specifically declines any obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to reflect events
or circumstances after the date of such statements or to reflect the occurrence
of anticipated or unanticipated events.
Contact: John Reissner, 732.214.2083
MAGYAR BANCORP, INC. AND SUBSIDIARY
Selected Financial Data
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
June 30, June 30,
2008 2007 2008 2007
-------- -------- --------- ---------
(Unaudited) (Unaudited)
Income Statement Data:
- ----------------------
Interest and dividend income $ 7,021 $ 7,459 $ 21,808 $ 21,663
Interest expense 3,271 4,050 11,025 11,398
-------- -------- --------- ---------
Net interest and dividend income 3,750 3,409 10,783 10,265
Provision for loan losses 310 75 924 352
-------- -------- --------- ---------
Net interest and dividend income after
provision for loan losses 3,440 3,334 9,859 9,913
Non-interest income 387 466 1,048 1,119
Non-interest expense 3,746 3,524 11,010 10,176
-------- -------- --------- ---------
Income (loss) before income tax expense (benefit) 81 276 (103) 856
Income tax (benefit) expense (171) 82 (199) 231
-------- -------- --------- ---------
Net income $ 252 $ 194 $ 96 $ 625
======== ======== ========= =========
Per Share Data:
- ---------------
Basic earnings per share $ 0.04 $ 0.03 $ 0.02 $ 0.11
Diluted earnings per share $ 0.04 $ 0.03 $ 0.02 $ 0.11
Book value per share $ 8.51 $ 8.04 $ 8.51 $ 8.04
Selected Ratios:
- ----------------
Return on average assets 0.20% 0.17% 0.03% 0.18%
Return on average equity 2.03% 1.60% 0.26% 1.71%
Net interest margin 3.25% 3.20% 3.20% 3.31%
At or For the Period Ended
June 30, 2008 September 30, 2007
------------------- -------------------
(Unaudited)
Balance Sheet Data:
- -------------------
Assets $ 510,056 $ 473,177
Loans receivable 403,510 385,368
Allowance for loan losses 4,377 3,754
Investment securities - available for sale, at fair value 50,619 27,373
Investment securities - held to maturity, at cost 10,166 18,116
Deposits 362,586 368,777
Borrowings 92,394 49,985
Shareholders' Equity 49,130 48,193
Asset Quality Data:
- -------------------
Non-performing loans $ 5,288 $ 8,033
REO property 5,568 2,238
Allowance for loan losses to non-performing loans 82.77% 46.73%
Allowance for loan losses to total loans receivable 1.08% 0.97%
Non-performing loans to total loans receivable 1.31% 2.08%
Non-performing assets to total assets 2.13% 2.17%
Non-performing assets to total equity 22.10% 21.31%