What changed in this filing

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Item 1A. Risk Factors

2021-12-20 compared with 2020-12-18 · 273 added, 280 removed, 28 unchanged (95% of the section changed)

addition to factors discussed in the description of our business and elsewhere in this report, the following are factors that could

adversely affect our future results of operations and financial condition.

Economic and Market

addition to factors discussed in the description of our business and elsewhere in this report, the following are factors that could adversely

affect our future results of operations and financial condition.

Economic and Market Area

COVID-19 Pandemic Has and Will Continue to Pose Risks and Could Harm Our Business, Results of Operations and Prospects.

COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves.

Given its ongoing and

dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the business of the Company, its customers,

employees and third-party service providers.

The extent of such impact will depend on future developments, which are highly uncertain,

including when the coronavirus can be controlled and abated and when and how the economy may be reopened in an efficient manner.

Additionally, the responses of various governmental and

nongovernmental authorities to curtail business and consumer activities

in an effort to mitigate the pandemic will have material long-term effects on the Company and its customers which are difficult

to quantify in the near-term or long-term.

the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company is subject to

the following risks, any of which could have a material, adverse effect on the business, financial condition, liquidity, and results

of operations of the Company:

risks to the capital markets that may impact the performance

of the investment securities portfolio of the Company, as well as limit our access to capital markets and other funding sources;

effects on key employees, including operational management personnel

and those charged with preparing, monitoring and evaluating the companies’

financial reporting and internal controls;

declines in demand for loans and other banking services and products,

as well as a decline in the credit quality of our loan portfolio, owing to the effects of COVID-19 in the markets served by the

if the economy is unable to substantially reopen or reopen in

an efficient manner, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets,

and foreclosures may increase, resulting in increased charges and reduced income;

collateral for loans, especially real estate, may continue to

decline in value, which could cause loan losses to increase;

allowance for loan losses may increase if borrowers experience

financial difficulties, which will adversely affect net income;

the net worth and liquidity of loan guarantors may decline, impairing their ability to honor

as the result of the decline in the Federal Reserve Board’s

target federal funds rate to near 0%, the yield on assets may decline to a greater extent than the decline in cost of interest-bearing

liabilities, reducing net interest margin and spread and reducing net income;

cyber security risks are increased as the result of an increase in the number of employees working

declines in demand resulting from adverse impacts of the disease

on businesses deemed to be “non-essential”

by governments in the markets served by the Company;

increasing or protracted volatility in the price of the Company’s common stock.

Given its ongoing and dynamic

nature, it is difficult to predict the full impact of the COVID-19 outbreak on the business of the Company, its customers, employees and

third-party service providers.

The extent of such impact will depend on future developments, which are highly uncertain, including when

the coronavirus can be controlled and abated and when and how the economy may be reopened in an efficient manner.

Additionally, the responses

of various governmental and

nongovernmental

authorities to curtail business and consumer activities in an effort to mitigate the pandemic will have material long-term effects on

the Company and its customers which are difficult to quantify in the near-term or long-term.

the result of the COVID-19 pandemic and the related adverse local and national economic consequences, the Company is subject to the following

risks, any of which could have a material, adverse effect on the business, financial condition, liquidity, and results of operations of

risks to the capital markets that may impact the performance of the investment

securities portfolio of the Company, as well as limit our access to capital markets and other funding sources;

effects on key employees, including operational management personnel and

those charged with preparing, monitoring and evaluating the companies’ financial reporting and internal controls;

declines in demand for loans and other banking services and products, as

well as a decline in the credit quality of our loan portfolio, owing to the effects of COVID-19 in the markets served by the Company;

if the economy is unable to substantially reopen or reopen in an efficient

manner, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures

may increase, resulting in increased charges and reduced income;

collateral for loans, especially real estate, may continue to decline in

value, which could cause loan losses to increase;

allowance for loan losses may increase if borrowers experience financial

difficulties, which will adversely affect net income;

the net worth and liquidity of loan guarantors may decline, impairing their

ability to honor commitments;

as the result of the decline in the Federal Reserve Board’s target

federal funds rate to near 0%, the yield on assets may decline to a greater extent than the decline in cost of interest-bearing liabilities,

reducing net interest margin and spread and reducing net income;

cyber security risks are increased as the result of an increase in the number

of employees working remotely;

declines in demand resulting from adverse impacts of the disease on businesses

deemed to be “non-essential” by governments in the markets served by the Company;

increasing or protracted volatility in the price of the Company’s

common stock.

Worsening of Economic Conditions Could Reduce Demand for Our Products and Services and/or Result in Increases in Our Level of Non-performing

Loans, Which Could Have an Adverse Effect on Our Results of Operations.

larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic

conditions in New Jersey and the greater New York metropolitan area.

Local economic conditions have a significant impact on our

commercial real estate and construction and consumer loans, the ability of the borrowers to repay these loans and the value of

the collateral securing these loans.

Almost all of our loans are to borrowers located in or secured by collateral located in New

Jersey and the New York metropolitan area.

larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions

in New Jersey and the greater New York metropolitan area.

Local economic conditions have a significant impact on our commercial real estate

and construction and consumer loans, the ability of the borrowers to repay these loans and the value of the collateral securing these

Almost all of our loans are to borrowers located in or secured by collateral located in New Jersey and the New York metropolitan

addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves.

effect of the COVID-19 pandemic on the Company, its customers and the communities where it operates may adversely affect the Company’s

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.

deterioration in economic conditions could result in the following consequences, any of which could have a material adverse effect

on our business, financial condition, liquidity and results of operations:

deterioration in economic conditions could result in the following consequences, any of which could have a material adverse effect on

our business, financial condition, liquidity and results of operations:

demand for our products and services may decline;

loan delinquencies, problem assets and foreclosures may increase;

collateral for loans, especially real estate, may decline in

value, in turn reducing customers’

future borrowing power, and reducing the value of assets and collateral associated with

existing loans;

collateral for loans, especially real estate, may decline in value, in turn

reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans;

the value of our securities portfolio may decline;

the net worth and liquidity of loan guarantors may decline, impairing

their ability to honor commitments to us.

a significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities

or other international or domestic calamities, unemployment or other factors beyond our control could further impact these local

economic conditions and could further negatively affect the financial results of our banking operations.

In addition, deflationary

pressures, while possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our

business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance.

the net worth and liquidity of loan guarantors may decline, impairing their

ability to honor commitments to us.

a significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or

other international or domestic calamities, unemployment or other factors beyond our control could further impact these local economic

conditions and could further negatively affect the financial results of our banking operations.

In addition, deflationary pressures, while

possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and

the values of underlying collateral securing loans, which could negatively affect our financial performance.

Competition Within Our Market Area May Limit Our Growth and Profitability.

1 unchanged sentence

In our market area, we compete with commercial banks, savings institutions,

mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking

firms operating locally and elsewhere.

Some of our competitors have substantially greater resources and lending limits than we,

have greater name recognition and market presence that benefit them in attracting business, and offer certain services that we

do not or cannot provide.

mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms

operating locally and elsewhere.

Some of our competitors have substantially greater resources and lending limits than we, have greater

name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide.

In addition, larger competitors may be able to price loans and deposits more aggressively than we do.

Our profitability depends upon our continued ability to successfully compete in our market area.

The greater resources and deposit

and loan products offered by some of our competitors may limit our ability to increase our interest-earning assets.

For additional

information see “Business of Magyar Bank-Competition.”

Interest Rate

and Asset Quality

Interest Rates May Hurt our Profits and Asset Values.

Our earnings largely depend

on our net interest income, which could be negatively affected by changes in interest rates.

Net interest income is the difference

Our profitability depends upon our

continued ability to successfully compete in our market area.

The greater resources and deposit and loan products offered by some of our

competitors may limit our ability to increase our interest-earning assets.

For additional information see “Business of Magyar Bank-Competition.”

We Are a Community Bank and Our

Ability to Maintain Our Reputation is Critical to the Success of Our Business.

The Failure to do so May Adversely Affect Our Performance.

We are a community bank and our

reputation is one of the most valuable assets of our business.

A key component of our business strategy is to rely on our reputation for

customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective

customers in our market area.

As such, we strive to conduct our business in a manner that enhances our reputation.

This is done, in part,

by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering

superior service to our customers and caring about our customers.

If our reputation is negatively affected by the actions of our employees,

by our inability to conduct our operations in a manner that is appealing to current or prospective customers or otherwise, our business

and operating results may be materially adversely affected.

Interest Rate and Asset Quality

Changes in Interest Rates May

Hurt Our Profits and Asset Values.

Our earnings largely depend on

our net interest income, which could be negatively affected by changes in interest rates.

Net interest income is the difference between:

the interest income we earn on our interest-earning assets, such as loans and securities;

the interest expense we pay on our interest-bearing liabilities, such as deposits and borrowings.

The rates we earn on our

assets and the rates we pay on our liabilities are generally fixed for a contractual period of time.

While we have taken steps

to attempt to reduce our exposure to increases in interest rates, historically our liabilities generally have shorter contractual

maturities than our assets.

This imbalance can create significant earnings volatility, because market interest rates change over

In a period of rising interest rates, the interest income earned on our assets may not increase as rapidly as the interest

paid on our liabilities.

Likewise, in a period of falling interest rates, the interest expense paid on our liabilities may not

decrease as rapidly as the interest income received on our assets.

See “Management’s Discussion and Analysis of Financial

Condition and Results of Operations-Management of Market Risk.”

In addition, changes in

interest rates can affect the average life of loans and mortgage-backed securities.

A reduction in interest rates causes increased

prepayments of loans and mortgage-backed securities as borrowers tend to refinance their debt to reduce their borrowing costs.

This creates reinvestment risk, which is the risk that we may not be able to reinvest the funds from faster prepayments at rates

that are comparable to the rates we earned on the prepaid loans or securities.

Additionally, increases in interest rates may decrease

loan demand and/or make it more difficult for borrowers to repay adjustable-rate loans.

Changes in interest

rates also affect the current market value of our interest-earning securities portfolio.

Generally, the value of securities moves

inversely with changes in interest rates.

The rates we earn on our assets

and the rates we pay on our liabilities are generally fixed for a contractual period of time.

While we have taken steps to attempt to

reduce our exposure to increases in interest rates, historically our liabilities generally have shorter contractual maturities than our

This imbalance can create significant earnings volatility, because market interest rates change over time.

In a period of rising

interest rates, the interest income earned on our assets may not increase as rapidly as the interest paid on our liabilities.

in a period of falling interest rates, the interest expense

paid on our liabilities may not decrease as rapidly

as the interest income received on our assets.

See “Management’s Discussion and Analysis of Financial Condition and Results

of Operations-Management of Market Risk.”

In addition, changes in interest

rates can affect the average life of loans and mortgage-backed securities.

A reduction in interest rates causes increased prepayments

of loans and mortgage-backed securities as borrowers tend to refinance their debt to reduce their borrowing costs.

This creates reinvestment

risk, which is the risk that we may not be able to reinvest the funds from faster prepayments at rates that are comparable to the rates

we earned on the prepaid loans or securities.

Additionally, increases in interest rates may decrease loan demand and/or make it more difficult

for borrowers to repay adjustable-rate loans.

Changes in interest rates

also affect the current market value of our interest-earning securities portfolio.

Generally, the value of securities moves inversely

with changes in interest rates.

At September 30, 2021, the fair value of our total securities portfolio was $70.2 million.

The unrealized net loss on securities totaled $259,000 on a pre-tax basis at September 30, 2020.

We evaluate interest

rate sensitivity using models that estimate the change in Magyar Bank’s net interest income over a range of interest rate

At September 30, 2020, in the event of an immediate 200 basis point increase in interest

rates, the model projects that

we would experience a $890,000, or 4.37%, decrease in net interest income in the first year following the change in interest rates,

and a $306,000, or 1.32%, decrease in net interest income in the second year following the change in interest rates.

30, 2020, in the event of an immediate 100 basis point decrease in interest rates, the model projects that we would experience

a $446,000, or 1.89%, decrease in net interest income in the first year following the change in interest rates, and a $873,000,

or 3.76%, decrease in net interest income in the second year following the change in interest rates.

At September 30,

2020, our available-for-sale securities portfolio totaled $14.6 million, which included $10.0 million mortgage-backed securities.

To the extent interest rates increase and the value of our available-for-sale portfolio decreases, our stockholders’

will be adversely affected.

We Intend to Continue our Emphasis on the Origination of Commercial Business Loans and Commercial Real Estate Loans, Our Lending

Risk Has Increased in Recent Years and May Increase in Future Years.

The unrealized

net loss on securities totaled $1.0 million on a pre-tax basis at September 30, 2021.

We evaluate interest rate

sensitivity using models that estimate the change in Magyar Bank’s net interest income over a range of interest rate scenarios.

At September 30, 2021, in the event of an immediate 200 basis point increase in interest rates, the model projects that we would experience

a $895,000, or 3.5%, increase in net interest income in the first year following the change in interest rates, and a $1.8 million, or

7.2%, increase in net interest income in the second year following the change in interest rates.

At September 30, 2021, in the event of

an immediate 100 basis point decrease in interest rates, the model projects that we would experience a $1.1 million, or 4.5%, decrease

in net interest income in the first year following the change in interest rates, and a $1.7 million, or 7.0%, decrease in net interest

income in the second year following the change in interest rates.

At September 30, 2021,

2020, our portfolio of commercial business and commercial real estate loans totaled $349.1 million (including $56.0 in PPP loans),

or 57.1% of our total loans, compared to $281.3 million, or 53.8% of our total loans at September 30, 2019 and $272.7 million,

or 53.2% of our total loans at September 30, 2018.

It is our intent to continue to emphasize the origination of commercial business

and commercial real estate loans.

Commercial business and commercial real estate loans generally have more risk than one-to four-family

residential mortgage loans.

At September 30, 2020, our non-performing loans increased $2.8 million to $9.7 million from $6.9 million

our available-for-sale securities portfolio at fair value totaled $12.9 million, which consisted entirely of mortgage-backed securities.

To the extent interest rates decrease and the value of our available-for-sale portfolio increases, our stockholders’ equity will

be affected accordingly.

We Intend to Continue our Emphasis on the Origination of Commercial Business Loans and Commercial Real Estate Loans, Our Lending Risk

Has Increased in Recent Years and May Increase in Future Years.

At September 30, 2021,

Because the repayment of these loans depends on the successful management and operation of the borrower’s

properties or related businesses, repayment of these loans has been and may continue to be affected by adverse conditions in the

real estate market or the local economy.

Further, these loans typically have larger loan balances, and several of our borrowers

have more than one commercial business and commercial real estate loan outstanding with us.

Consequently, an adverse development

with respect to one loan or one credit relationship can expose us to significantly greater risk of loss compared to an adverse

development with respect to a one- to four-family residential mortgage loan.

Finally, if we foreclose on a commercial business

or commercial real estate loan, our holding period for the collateral, if any, typically is longer than for one- to four-family

residential mortgage loans because there are fewer potential purchasers of the collateral.

Because we plan to continue to emphasize

the origination of these loans, it may be necessary to increase our allowance for loan losses because of the increased credit risk

associated with these types of loans.

Any increase to our allowance for loan losses would adversely affect our earnings.

our portfolio of commercial business and commercial real estate loans totaled $349.6 million (including $25.1 million in PPP loans), or

58.8% of our total loans, compared to $349.1 million (including $56.0 million in PPP loans), or 57.1% of our total loans at September

30, 2020 and $281.3 million, or 53.8% of our total loans at September 30, 2019.

It is our intent to continue to emphasize the origination

of commercial business and commercial real estate loans.

Commercial business and commercial real estate loans generally have more risk

than one-to four-family residential mortgage loans.

At September 30, 2021, our non-performing commercial business and commercial real

estate loans were $2.4 million and $3.7 million, respectively, at September 30, 2021 and 2020.

Because the repayment of

commercial business and commercial real estate loans depends on the successful management and operation of the borrower’s properties

or related businesses, repayment of these loans has been and may continue to be affected by adverse conditions in the real estate market

or the local economy.

Further, these loans typically have larger loan balances, and several of our borrowers have more than one commercial

business and commercial real estate loan outstanding with us.

Consequently, an adverse development with respect to one loan or one credit

relationship can expose us to significantly greater risk of loss compared to an adverse development with respect to a one- to four-family

residential mortgage loan.

Finally, if we foreclose on a commercial business or commercial real estate loan, our holding period for the

collateral, if any, typically is longer than for one- to four-family residential mortgage loans because there are fewer potential purchasers

of the collateral.

Because we plan to continue to emphasize the origination of these loans, it may be necessary to increase our allowance

for loan losses because of the increased credit risk associated with these types of loans.

Any increase to our allowance for loan losses

would adversely affect our earnings.

Our Allowance for Loan Losses is Not Sufficient to Cover Actual Loan Losses, Our Earnings Could Decrease.

Our allowance for

loan losses may not be sufficient to cover losses inherent in our loan portfolio, requiring additions to our allowance, which could

materially decrease our net income.

The allowance for loan losses increased by $1.5 million during the year ended September 30,

2020 to $6.4 million.

The increases were attributable to growth in total loans receivable and higher adjustments to the historical

loss factors for economic conditions relating to the COVID-19 pandemic.

Our allowance for loan losses was 1.05% of total loans

and 65.8% of total non-performing loans at September 30, 2020.

We make various assumptions and judgments about the collectability

of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving

as collateral for the repayment of many of our loans.

In determining the amount of the allowance for loan losses, we review our

loans and our loss and delinquency experience, and we evaluate economic conditions.

Based on this review, we believe our allowance

for loan losses is adequate to absorb losses in our loan portfolio as of September 30, 2020.

Bank regulators

periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further

loan charge-offs.

Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities

will have a material adverse effect on our financial condition and results of operations.

The Financial Accounting

Standards Board has adopted a new accounting standard that is referred to as Current Expected Credit Loss, or CECL.

The implementation

of CECL has been delayed for smaller reporting companies, such as the Company, until January 2023.

CECL will require financial

institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses

as allowances for loan losses.

This will change the current method of providing allowances for loan losses that are probable, which

may require us to increase our allowance for loan losses, and to greatly increase the types of data we will need to collect and

review to determine the appropriate level of the allowance for loan losses.

Any increase in our allowance for loan losses or expenses

incurred to determine the appropriate level of the allowance for loan losses may have a material adverse effect on our financial

condition and results of operations.

Our allowance for loan

losses may not be sufficient to cover losses inherent in our loan portfolio, requiring additions to our allowance, which could materially

decrease our net income.

The allowance for loan losses increased by $1.7 million during the year ended September 30, 2021 to $8.1 million

from $6.4 million for the year ended September 30, 2020.

The increases were attributable to net growth in non-PPP loans and higher adjustments

to the historical loss factors for economic conditions relating to the COVID-19 pandemic.

The allowance for loan losses as a percentage

of non-performing loans increased to 99.0% at September 30, 2021 compared with 65.8% at September 30, 2020.

At September 30, 2021 our

allowance for loan losses as a percentage of total loans was 1.36%, compared with 1.05% at September 30, 2020.

Future increases in the

allowance for loan losses may be necessary based on possible future increases in total loans receivable, increases in non-performing loans

and charge-offs, deterioration of collateral values securing impaired real estate loans, and deterioration of the current economic environment.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers

and the value of the real estate and other assets serving as collateral for the repayment of many of our loans.

In determining the amount

of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions.

on this review, we believe our allowance for loan losses is adequate to absorb losses in our loan portfolio as of September 30, 2021.

Bank regulators periodically

review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs.

Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities will have a material adverse

effect on our financial condition and results of operations.

The Financial Accounting Standards

Board has adopted a new accounting standard that is referred to as Current Expected Credit Loss, or CECL.

The implementation of CECL has

been delayed for smaller reporting companies, such as the Company, until January 2023.

CECL will require financial institutions to determine

periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses as allowances for loan losses.

This will change the current method of providing allowances for loan losses that are probable, which may require us to increase our allowance

for loan losses, and to greatly increase the types of data we will need to collect and review to determine the appropriate level of the

allowance for loan losses.

Any increase in our allowance for loan losses or expenses incurred to determine the appropriate level of the

allowance for loan losses may have a material adverse effect on our financial condition and results of operations.

Regulatory Matters

We Declare Dividends on Our Common Stock, Magyar Bancorp, MHC Will Be Prohibited from Waiving the Receipt of Dividends by Current

Federal Reserve Board Policy, Which May Result in Lower Dividends for All Other Stockholders.

The Board of Directors

of Magyar Bancorp, Inc.

has the authority to declare dividends on its common stock, subject to statutory and regulatory requirements.

So long as Magyar Bancorp, MHC is regulated by the FRB, if Magyar Bancorp, Inc.

pays dividends to its stockholders, it also will

be required to pay dividends to Magyar Bancorp, MHC, unless Magyar Bancorp, MHC is permitted by the FRB to waive the receipt of

The FRB’s current position is to not permit a mutual holding company to waive dividends declared by its subsidiary.

Accordingly, because dividends will be required to be paid to Magyar Bancorp, MHC along with all other stockholders, the amount

of dividends available for all other shareholders will be less than if Magyar Bancorp, MHC were permitted to waive the receipt

of dividends.

Bancorp, MHC Exercises Voting Control Over Magyar Bancorp, Inc.;

Public Stockholders Own a Minority Interest.

Magyar Bancorp, MHC owns

a majority of Magyar Bancorp, Inc.’s common stock and, through its Board of Directors, exercises voting control over the

outcome of all matters put to a vote of stock holders (including the election of directors), except for matters that require a

vote greater than a majority.

Public stockholders own a minority of the outstanding shares of Magyar Bancorp, Inc.’s common

The same directors and officers who manage Magyar Bancorp, Inc.

and Magyar Bank also manage Magyar Bancorp, MHC.

regulatory restrictions applicable to Magyar Bancorp, MHC prohibit the sale of Magyar Bancorp, Inc.

unless the mutual holding company

first undertakes a second-step conversion.

Operate in a Highly Regulated Environment and May Be Adversely Affected by Changes in Laws and Regulations.

Magyar Bank is subject

to extensive regulation, supervision and examination by the NJDBI, its chartering authority, and by the Federal Deposit Insurance

Corporation, which insures Magyar Bank’s deposits.

Magyar Bank is subject to extensive

regulation, supervision and examination by the NJDBI, its chartering authority, and by the Federal Deposit Insurance Corporation, which

insures Magyar Bank’s deposits.

As a bank holding company, Magyar Bancorp, Inc.

is subject to regulation

and supervision by the Federal Reserve Board.

Such regulation and supervision govern the activities in which financial institutions

and their holding companies may engage and are intended primarily for the protection of the federal deposit insurance fund and

These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities,

including the imposition of restrictions on the operations of financial institutions, the classification of assets by financial

institutions and the adequacy of financial institutions’

is subject to regulation and supervision by the

Federal Reserve Board.

Such regulation and supervision govern the activities in which financial institutions and their holding companies

may engage and are intended primarily for the protection of the federal deposit insurance fund and depositors.

These regulatory authorities

have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on

the operations of financial institutions, the classification of assets by financial institutions and the adequacy of financial institutions’

allowance for loan losses.

Any change in such regulation and oversight,

whether in the form of regulatory policy, regulations, or legislation, could have a material impact on Magyar Bank and Magyar Bancorp,

Magyar Bank’s operations

are also subject to extensive regulation by other federal, state and local governmental authorities, and are subject to various

laws and judicial and administrative decisions that impose requirements and restrictions on operations.

These laws, rules and regulations

are frequently changed by legislative and regulatory authorities.

There can be no assurance that changes to existing laws, rules

and regulations, or any other new laws, rules or regulations, will not be adopted in the future, which could make compliance more

difficult or expensive or otherwise adversely affect our business, financial condition or prospects.

Non-compliance with the

USA PATRIOT Act, Bank Secrecy Act, or Other Laws and Regulations Could Result in Fines or Sanctions.

The USA PATRIOT and Bank

Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering

and terrorist activities.

If such activities are detected, financial institutions are obligated to file suspicious activity reports

with the U.S.

Treasury’s Office of Financial Crimes Enforcement Network.

These rules require financial institutions

to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts.

to comply with these regulations could result in fines or sanctions, including restrictions on conducting acquisitions or establishing

new branches.

During the last year, several banking institutions have received large fines for non-compliance with these laws and

While we have developed policies and procedures designed to assist in compliance with these laws and regulations,

these policies and procedures may not be effective in preventing violations of these laws and regulations.

System Failure or Breaches of Our Network

Security Could Subject Us to Increased Operating Costs as well as Litigation and Other Liabilities.

The computer systems

and network infrastructure we and our third-party service providers use could be vulnerable to unforeseen problems.

Our operations

are dependent upon our ability to protect our computer equipment against damage from physical theft, fire, power loss, telecommunications

failure or a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms and other

disruptive problems caused by hackers.

Any damage or failure that causes an interruption in our operations could have a material

adverse effect on our financial condition and results of operations.

Computer break-ins, phishing and other disruptions could also

jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which

may result in significant liability to us and may cause existing and potential customers to refrain from doing business with us.

Although we, with the help of third-party service providers, intend to continue to implement security technology and establish

operational procedures designed to prevent such damage, our security measures may not be successful.

In addition, advances in computer

capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the

algorithms we and our third-party service providers use to encrypt and protect customer transaction data.

A failure of such security

measures could have a material adverse effect on our financial condition and results of operations.

Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation,

could have a material impact on Magyar Bank and Magyar Bancorp, Inc.

Magyar Bank’s operations

are also subject to extensive regulation by other federal, state and local governmental authorities, and are subject to various laws and

judicial and administrative decisions that impose requirements and restrictions on operations.

These laws, rules and regulations are frequently

changed by legislative and regulatory authorities.

There can be no assurance that changes to existing laws, rules and regulations, or

any other new laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or

otherwise adversely affect our business, financial condition or prospects.

Non-compliance with the USA PATRIOT

Act, Bank Secrecy Act, or Other Laws and Regulations Could Result in Fines or Sanctions.

The USA PATRIOT and Bank Secrecy

Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist

If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S.

Office of Financial Crimes Enforcement Network.

These rules require financial institutions to establish procedures for identifying

and verifying the identity of customers seeking to open new financial accounts.

Failure to comply with these regulations could result

in fines or sanctions, including restrictions on conducting acquisitions or establishing new branches.

During the last year, several banking

institutions have received large fines for non-compliance with these laws and regulations.

While we have developed policies and procedures

designed to assist in compliance with these laws and regulations, these policies and procedures may not be effective in preventing violations

of these laws and regulations.

System Failure or Breaches of Our Network Security

Could Subject Us to Increased Operating Costs as well as Litigation and Other Liabilities.

The computer systems and

network infrastructure we and our third-party service providers use could be vulnerable to unforeseen problems.

Our operations are dependent

upon our ability to protect our computer equipment against damage from physical theft, fire, power loss, telecommunications failure or

a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms and other disruptive problems

caused by hackers.

Any damage or failure that causes an interruption in our operations could have a material adverse effect on our financial

condition and results of operations.

Computer break-ins, phishing and other disruptions could also jeopardize the security of information

stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability to us and

may cause existing and potential customers to refrain from doing business with us.

Although we, with the help of third-party service providers,

intend to continue to implement security technology and establish operational procedures designed to prevent such damage, our security

measures may not be successful.

In addition, advances in computer capabilities, new discoveries in the field of cryptography or other

developments could result in a compromise or breach of the algorithms we and our third-party service providers use to encrypt and protect

customer transaction data.

A failure of such security measures could have a material adverse effect on our financial condition and results

of operations.

It is possible that a significant

amount of time and money may be spent to rectify the harm caused by a breach or hack.

While we have general liability insurance,

there are limitations on coverage as well as dollar amount.

Furthermore, cyber incidents carry a greater risk of injury to our

Finally, depending on the type of incident, banking regulators can impose restrictions on our business and consumer

laws may require reimbursement of customer loss.

Risks Associated with

Cyber-Security Could Negatively Affect Our Earnings.

The financial services

industry has experienced an increase in both the number and severity of reported cyber attacks aimed at gaining unauthorized access

to bank systems as a way to misappropriate assets and sensitive information, corrupt and destroy data, or cause operational disruptions.

We have established policies and procedures to prevent or limit the impact of security breaches, but such events may still occur

or may not be adequately addressed if they do occur.

Although we rely on security safeguards to secure our data, these safeguards

may not fully protect our systems from compromises or breaches.

While we have general liability insurance, there

are limitations on coverage as well as dollar amount.

Furthermore, cyber incidents carry a greater risk of injury to our reputation.

depending on the type of incident, banking regulators can impose restrictions on our business and consumer laws may require reimbursement

of customer loss.

Risks Associated with Cyber-Security

Could Negatively Affect Our Earnings.

The financial services industry

has experienced an increase in both the number and severity of reported cyber-attacks aimed at gaining unauthorized access to bank systems

as a way to misappropriate assets and sensitive information, corrupt and destroy data, or cause operational disruptions.

We have established

policies and procedures to prevent or limit the impact of security breaches, but such events may still occur or may not be adequately

addressed if they do occur.

Although we rely on security safeguards to secure our data, these safeguards may not fully protect our systems

from compromises or breaches.

We also rely on the integrity

and security of a variety of third party processors, payment, clearing and settlement systems, as well as the various participants

involved in these systems, many of which have no direct relationship with us.

Failure by these participants or their systems to

protect our customers' transaction data may put us at risk for possible losses due to fraud or operational disruption.

Our customers are also

the target of cyber-attacks and identity theft.

Large scale identity theft could result in customers' accounts being compromised

and fraudulent activities being performed in their name.

We have implemented certain safeguards against these types of activities

but they may not fully protect us from fraudulent financial losses.

The occurrence of a breach

of security involving our customers' information, regardless of its origin, could damage our reputation and result in a loss of

customers and business and subject us to additional regulatory scrutiny, and could expose us to litigation and possible financial

Any of these events could have a material adverse effect on our financial condition and results of operations.

and security of a variety of third party processors, payment, clearing and settlement systems, as well as the various participants involved

in these systems, many of which have no direct relationship with us.

Failure by these participants or their systems to protect our customers'

transaction data may put us at risk for possible losses due to fraud or operational disruption.

Our customers are also the target

of cyber-attacks and identity theft.

Large scale identity theft could result in customers' accounts being compromised and fraudulent activities

being performed in their name.

We have implemented certain safeguards against these types of activities but they may not fully protect

us from fraudulent financial losses.

The occurrence of a breach of

security involving our customers' information, regardless of its origin, could damage our reputation and result in a loss of customers

and business and subject us to additional regulatory scrutiny, and could expose us to litigation and possible financial liability.

of these events could have a material adverse effect on our financial condition and results of operations.

Unresolved Staff Comments

1 unchanged sentence

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What changed 10-K

Item 1A. Risk Factors