What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-12-22 compared with 2021-12-20 · 223 added, 260 removed, 1226 unchanged (28% of the section changed)

1 unchanged sentence

Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm  (PCAOB ID

Consolidated Balance Sheets as of September 30, 2022 and 2021

Consolidated Statements of Operations for the Years Ended September 30, 2021 and 2020

Consolidated Statements of Income for the Years Ended September 30, 2022 and 2021

Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2022 and 2021

9 unchanged sentences

We have audited the accompanying consolidated balance sheets of Magyar Bancorp, Inc.

and Subsidiary (the Company) as of September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive income, changes in stockholders'

and Subsidiary (the Company) as of September 30, 2022 and 2021, the related consolidated statements of income, comprehensive income, changes in stockholders’

equity and cash flows for each of the two years in the period ended September 30, 2022, and the related notes to the consolidated financial statements (collectively referred to as the “financial statements”).

28 unchanged sentences

This analysis establishes historical loss factors based on a five year look back period that are applied to the loan groups adjusted for the following qualitative factors:

delinquency and non-accrual trends, volume and loan term trends, changes in the lending policy, national and local economic trends and conditions, changes in concentrations of credit, changes in risk selection and underwriting standards, the experience, ability and depth of lending management, and charge-off and recovery trends and trends in collateral value.

levels of trends in delinquency and non-accrual loans, volume and loan term trends, changes in the lending policy, national and local economic trends and conditions, changes in concentrations of credit from a loan type, industry and/or geographic standpoint, the experience, ability and depth of lending management, and trends in collateral value.

The evaluation of the qualitative factors requires a significant amount of judgement by management and involves a high degree of subjectivity.

4 unchanged sentences

Evaluating the reasonableness of the qualitative factors established by management as compared to the underlying internal or external information sources.

/s/ RSM US LLP

We have served as the Company's auditor since 2018.

/s/ RSM US LLP

Philadelphia, Pennsylvania

25 unchanged sentences

Preferred stock:

01 Par Value, 500,000 and 1,000,000 shares authorized at September 30, 2021 and 2020, respectively, none issued

01 Par Value, 500,000 shares authorized;

at September 30, 2022 and 2021, none issued

Common stock:

01 Par Value, 14,000,000 and 8,000,000 shares authorized;

7,097,825 and 5,923,742 shares issued;

01 Par Value, 14,000,000 shares authorized;

7,097,825 shares issued;

6,745,128 and 7,097,825 shares

2 unchanged sentences

Treasury stock:

112,996 shares, at cost

465,693 and 112,996 shares at September 30, 2022 and 2021, respectively, at cost

Unearned Employee Stock Ownership Plan shares

6 unchanged sentences

AND SUBSIDIARY

Consolidated Statements of Operations

Consolidated Statements of Income

(In Thousands, Except Share and Per Share Data)

Ended September 30,

September 30,

Interest and dividend income

15 unchanged sentences

Gains on sales of loans

Gains on sales of investment securities

Gains on sale of OREO

Total other income

4 unchanged sentences

Data processing expenses

Marketing and business development

OREO expenses

1 unchanged sentence

Loan servicing expenses

Insurance expense

Other expenses

9 unchanged sentences

(In Thousands)

Ended September 30,

Other comprehensive income

Unrealized (loss) gain on securities available for sale

Reclassification adjustments for security gains included in net income

Defined benefit pension plan gain (loss)

Other comprehensive income (loss), before tax

September 30,

Other comprehensive income (loss)

Unrealized loss on securities available for sale

Defined benefit pension plan gain

Other comprehensive (loss) income, before tax

Deferred income tax effect

Total other comprehensive income (loss)

Total other comprehensive (loss) income

Total comprehensive income

8 unchanged sentences

Other comprehensive income

Purchase of treasury stock

ESOP shares allocated

Balance, September 30, 2020

Other comprehensive income

Common stock acquired by ESOP

ESOP shares allocated

4 unchanged sentences

Balance, September 30, 2021

Dividends paid on common stock ($0.21 per share)

Other comprehensive loss

Common stock acquired by ESOP 

ESOP shares allocated

Purchase of treasury stock

Stock-based compensation expense 

Balance, September 30, 2022

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

13 unchanged sentences

Proceeds from the sales of SBA loans

Gains on sale of loans

Gains on sales of investment securities

Gains on sale of loans receivable

Gains on the sales of other real estate owned

Loss on the sale of premises and equipment

ESOP compensation expense

Deferred income tax benefit

Decrease (increase) in accrued interest receivable

Stock-based compensation expense

Deferred income tax expense (benefit)

Decrease in accrued interest receivable

Increase in surrender value of bank owned life insurance

(Increase) decrease in other assets

Increase in other assets

Decrease in accrued interest payable

Increase (decrease) in accounts payable and other liabilities

Increase in accounts payable and other liabilities

Net cash provided by operating activities

Investing activities

Net decrease (increase) in loans receivable

Net increase in loans receivable

Purchases of loans receivable

2 unchanged sentences

Purchases of investment securities available for sale

Sales of investment securities available for sale

Proceeds from calls of investment securities held to maturity

2 unchanged sentences

Principal repayments on investment securities available for sale

Purchase of bank owned life insurance

Purchases of premises and equipment

Proceeds from the sale of premises and equipment

Investment in other real estate owned

4 unchanged sentences

Net increase in deposits

Net proceeds from issurance of common stock

Net proceeds from issuance of common stock

Purchase of common stock for ESOP

2 unchanged sentences

Repayments of long-term advances

Cash paid on common stock dividends

Purchase of treasury stock

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents, beginning of year

4 unchanged sentences

Real estate acquired in full satisfaction of loans in foreclosure

Initial recognition of lease liability and right-of-use asset

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

6 unchanged sentences

(the “Company”) is a Delaware-chartered bank holding company.

On July 14, 2021, the Company completed a second-step conversion of the Bank from the two-tier mutual holding company structure to the stock holding company structure.

Magyar Bancorp, MHC was the Company’s former mutual holding company parent prior to completion of the second-step conversion.

In conjunction with the second-step conversion, Magyar Bancorp, MHC ceased to exist.

During the second-step conversion, the Company sold, for gross proceeds of $ 39.1 million, a total of 3,910,000 shares of common stock at $ 10.00 per share.

As part of the second-step conversion, each of the existing 5,810,746 outstanding shares of Magyar Bancorp, Inc.

common stock owned by persons other than Magyar Bancorp, MHC was converted into 1.2213 shares of Company common stock.

As a result of the second-step conversion, all share information has been subsequently revised to reflect the 1.2213 exchange ratio, unless otherwise noted.

The Company owns 100 % of the outstanding common stock of Magyar Bank (the “Bank”), a New Jersey-chartered stock savings bank.

17 unchanged sentences

The principal estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses and the deferred tax asset.

The evaluation of the adequacy of the allowance for loan losses includes an analysis of the individual loans and overall risk characteristics and size of the different loan portfolios, and takes into consideration current economic and market conditions, the capability of specific borrowers to pay specific loan obligations,

However, actual losses on specific loans, which also are encompassed in the analysis, may vary from estimated losses.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

as well as current loan collateral values.

However, actual losses on specific loans, which also are encompassed in the analysis, may vary from estimated losses.

The Company records income taxes using the asset and liability method.

83 unchanged sentences

Non-interest income includes earnings on bank-owned life insurance, deposit accounts, merchant services, ATM and debit card fees, mortgage banking activities, commercial loan prepayment penalties and other miscellaneous services and transactions.

The Company’s contracts with customers in the scope of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”

The Company’s contracts with customers in the scope of ASC 606, “Revenue from Contracts with Customers”

are contracts for deposit accounts and contracts for non-deposit investment accounts through a third party service provider.

2 unchanged sentences

The revenue resulting from non-deposit investment accounts is included as a component of other operating income on the consolidated statements of income.

Revenue from contracts with customers included in service charges was $ 1.1 million and $ 901,000 for the years ended September 30, 2021 and 2020, respectively.

Revenue from contracts with customers included in service charges was $ 1.2 million and $ 1.1 million for the years ended September 30, 2022 and 2021, respectively.

Revenue from contracts with customers included in other operating income was $ 87,000 and $ 110,000 for the years ended September 30, 2022 and 2021, respectively.

1 unchanged sentence

For our deposit account revenue, we receive payment on a daily basis as services are rendered and for our non-deposit investment account revenue, we receive payment on a monthly basis from our third party service provider as services are rendered.

During the year ended September 30, 2021, the Bank was awarded a contract to assist a local county with services related to a Small Business Relief Grant (“SBRG”) program from which the Bank recognized $ 777,000 as fees for other customer services.

There was no fee income from other customer services at September 30, 2022.

During the year ended September 30, 2021, the Bank assisted a local county with services related to a Small Business Relief Grant (“SBRG”) program from which the Bank recognized $777,000 as fees for other customer services.

These services included the review of the applications, review of the required supporting documentation, including financial statements and tax returns, and the determination of whether or not the applicant qualified for the SBRG using the County’s eligibility criteria.

6 unchanged sentences

As it pertains to the criteria for determining how a contract should be accounted for under the new guidance, judgment is required in evaluating if:

(a) a commitment on the buyer’s part exists, (b) collection is probable in circumstances where the initial investment is minimal and (c) the

(a) a commitment on the buyer’s part exists, (b) collection is probable in circumstances where the initial investment is minimal and (c) the buyer has obtained control of the asset, including the significant risks and rewards of the ownership.

If there is no commitment on the buyer’s part, collection is not probable or the buyer has not obtained control of the asset, then a gain cannot be recognized under the new guidance.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

buyer has obtained control of the asset, including the significant risks and rewards of the ownership.

If there is no commitment on the buyer’s part, collection is not probable or the buyer has not obtained control of the asset, then a gain cannot be recognized under the new guidance.

Operating expenses of holding real estate, net of related income, are charged against income as incurred.

24 unchanged sentences

At September 30, 2022 and 2021, no significant income tax uncertainties have been included in the Company’s Consolidated Balance Sheets.

The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Operations.

The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income.

No interest and penalties were recorded during the year ended September 30, 2022 and 2021.

13 unchanged sentences

In periods of loss, dilution is not calculated and diluted loss per share is equal to basic loss per share.

As there were no stock options of grants outstanding at September 30, 2021 or September 30, 2020, there is no calculated dilution to the Company’s earnings per share.

The following table presents a calculation of basic and diluted earnings per share for the year ended September 30, 2021 and 2020.

As a result of the second-step conversion, the number of shares for the year ended September 30, 2020 were adjusted to reflect the 1.2213 exchange ratio for comparative purposes.

The following tables illustrate the reconciliation of the numerators and denominators of the basic and diluted earnings per share (“EPS”) calculations.

For the Years Ended September 30,

9 unchanged sentences

Available-for-sale investments

Reclassification adjustments for security gains included in net income (a) (b)

Defined benefit pension plan

Other comprehensive income (loss), net

Realized gains on securities transactions included in gains on sales of investment securities in the accompanying Consolidated Statements of Operations

Tax effect included in income tax expense in the accompanying Consolidated Statements of Operations

MAGYAR BANCORP, INC.

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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

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 (effective 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 likely be able to defer implementation of the new standard for a period of time.

The Company did not early adopt, 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.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

definition, and as a result, will likely be able to defer implementation of the new standard for a period of time.

The Company did not early adopt as of January 1, 2020, but will continue to review factors that might indicate that the full deferral time period should not be used.

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 is effective for public business entities in fiscal years ending after December 15, 2020 (Beginning October 1, 2021 for the Company).

Early adoption is permitted.

The Company is currently evaluating the impact this ASU will have, if any, on its consolidated financial condition or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

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The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this ASU eliminate the accounting guidance for troubled debt restructurings (TDRs) by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinances and restructurings by creditors when a borrower is experiencing financial difficulty.

In addition, for public business entities, the amendments in this ASU require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost.

For entities that have not yet adopted the amendments in Update 2016-13, which is discussed in greater detail above, the effective dates for the amendments in this update are the same as the effective dates in Update 2016-13.

The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position and results of operations.

Subsequent Events

On November 16, 2021 , the Company declared a one-time special dividend of $ 0.12 per common share, payable December 14, 2021 , to common shareholders of record at the close of business on November 30, 2021 .

On October 27, 2022, the Company declared dividend of $0.03 per common share, payable on November 23, 2022, to common shareholders of record at the close of business on November 10, 2022.

On November 15, 2022, the Company declared a special dividend of $0.08 per common share, payable on December 13, 2022, to common shareholders of record at the close of business on November 29, 2022.

NOTE C –

3 unchanged sentences

The cost is measured based on the fair value of the equity or liability instruments issued.

There was no stock option or stock award activity as of or during the years ended September 30, 2021 and 2020.

Accordingly, there were no stock option or stock award expenses included with compensation expense for the years ended September 30, 2021 and 2020.

The Company completed its first stock repurchase program of 130,927 shares in November 2007 and announced in November 2007 a second repurchase program of up to 5 % of its publicly-held outstanding shares of common stock, or 129,924 shares, under which 91,000 shares had been repurchased as of September 30, 2021 at an average price of $ 8.41 .

The Company did not repurchase shares of its common stock during the fiscal year ended September 30, 2021.

The Company repurchased 10,000 shares at an average price of $ 9.03 during the fiscal year ended September 30, 2020.

ASC 718 also requires the Company to realize as a financing cash flow rather than an operating cash flow, as previously required, the benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense.

In accordance with SEC Staff Accounting Bulletin (“SAB”) No.

107, the Company classified share-based compensation for employees and outside directors within “compensation and employee benefits”

in the Consolidated Statements of Income to correspond with the same line item as the cash compensation paid.

Stock options generally vest over a five-year service period and expire ten years from issuance.

Management recognizes compensation expense for all option grants over the awards’

respective requisite service periods.

The fair values of all option grants were estimated using the Black-Scholes option-pricing model.

Since there was limited historical information on the volatility of the Company’s stock, management also considered the average volatilities of similar entities for an appropriate period in determining the assumed volatility rate used in the estimation of fair value.

Management estimated the expected life of the options using the simplified method allowed under SAB No.

The 7-year Treasury yield in effect at the time of the grant provided the risk-free rate for periods within the contractual life of the option.

Management recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards.

Management estimated a 95% retention rate for stock option recipients.

Once vested, these awards are irrevocable.

Shares will be obtained from either the open market or treasury stock upon share option exercise.

Restricted shares generally vest over a five-year service period on the anniversary of the grant date.

Once vested, these awards are irrevocable.

The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted shares under the Company’s restricted stock plans.

Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

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 following is a summary of the status of the Company’s stock option activity and related information for its option plan for the period ended September 30, 2022 and 2021:

Stock Options

Exercise Price

Contractual Life

Balance at September 30, 2021

Balance at September 30, 2022

Exercisable at September 30, 2022

The following is a summary of the status of the Company’s non-vested restricted shares as of September 30, 2022 and 2021, and changes during those years:

Balance at September 30, 2021

Balance at September 30, 2022

Stock option and stock award expenses included with compensation expense were $ 0 and $ 6,000 , respectively, for the year ended September 30, 2022.

There was no stock option or stock award expense for the year ended September 30, 2021.

The Company had no other stock-based compensation plans as of September 30, 2022 except as disclosed below.

On July 21, 2022 the Company announced its third stock repurchase program and authorized the repurchase of up to 5% of its outstanding shares of common stock, or 354,891 shares.

As of September 30, 2022, 352,697 shares had been repurchased at an average price of $12.90.

The Company has an Employee Stock Ownership Plan ("ESOP") for the benefit of employees who meet certain eligibility requirements.

6 unchanged sentences

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.

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2022 and 2021

T he Company’s ESOP (“2006 ESOP”) was established in 2006 as part of the Company’s initial public offering.

The total cost of shares purchased by the 2006 ESOP trust was $ 2.3 million, reflecting an average cost per share of $ 10.58 .

The loan bore a variable interest rate that adjusted annually to Prime Rate (3.25% at January 1, 2021) with principal and interest payable annually in equal installments over thirty years.

The 2006 ESOP loan was fully repaid during the year ended September 30, 2021.

In connection with the second-step conversion offering, and as previously disclosed, the ESOP trustees subscribed for, and intended to purchase, on behalf of the ESOP, 8 % of the shares of the Company common stock 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.

Subsequent to the completion of the second-step conversion on July 14, 2021, the ESOP trustees purchased 304,377 shares of the Company’s common stock in the open market through September 30, 2021 for $ 3.2 million, reflecting an average cost per share of $ 10.75 .

Subsequently, the ESOP trustee purchased the remaining 8,423 shares of Company common stock by October 8, 2021.

The 2006 ESOP loan was fully repaid during the year ended September 30, 2021 and the remaining shares were allocated to participants.

In connection with the Company’s second-step stock offering, the ESOP trustees subscribed for, and intended to purchase, on behalf of the ESOP, 8 % of the shares of the Company common stock sold in the offering, or 312,800 shares (“2021 ESOP”).

The ESOP trustees purchased 312,800 shares of the Company’s common stock in the open market through September 30, 2022 for $ 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 $ 107,000 and $ 126,000 for years ended September 30, 2021 and 2020, respectively.

The following table presents the components of the ESOP shares as of September 30, 2022:

3 unchanged sentences

Unreleased shares at September 30, 2021

Shares released for allocation during the year ended September 30, 2022

Shares purchased by ESOP trustee during the year ended September 30, 2022

Unreleased shares at September 30, 2022

Total released shares

Total ESOP shares

The aggregate fair value of the unreleased shares at September 30, 2021 was approximately $ 3.5 million.

The Company's contribution expense for the ESOP was $177,000 and $107,000 for years ended September 30, 2022 and 2021, respectively.

The aggregate fair value of the unreleased ESOP shares at September 30, 2022 was approximately $3.8 million.

NOTE D - INVESTMENT SECURITIES

The amortized cost, gross unrealized gains or losses and fair value of the Company’s investment securities available-for-sale and held-to-maturity are as follows:

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

September 30, 2022

5 unchanged sentences

Obligations of U.S.

government-sponsored enterprises:

Mortgage-backed securities - residential

14 unchanged sentences

Total investment securities

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2022 and 2021

At September 30, 2021

5 unchanged sentences

Obligations of U.S.

government-sponsored enterprises:

Mortgage-backed securities - residential

Debt securities

Total securities available-for-sale

5 unchanged sentences

Obligations of U.S.

government-sponsored enterprises:

Mortgage backed securities - residential

1 unchanged sentence

Private label mortgage-backed securities - residential

Obligations of state and political subdivisions

Corporate securities

1 unchanged sentence

Total investment securities

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

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 to the mortgage-backed securities available-for-sale at September 30, 2021 are summarized in the following table:

September 30, 2021

(In thousands)

Due within 1 year

Due after 1 but within 5 years

Due after 5 but within 10 years

Due after 10 years

Total debt securities

Mortgage-backed securities:

Residential (1)

Available-for-sale mortgage-backed securities –

residential include an amortized cost of $179,000 and a fair value of $186,000 for obligations of U.S.

At September 30, 2022, the available-for-sale mortgage-backed securities - residential included an amortized cost of $118,000 and a fair value of $107,000 for obligations of U.S.

government agencies issued by the Government National Mortgage Association and obligations of U.S.

government-sponsored enterprises issued by Federal National Mortgage Association and Federal Home Loan Mortgage Corporation which had an amortized cost of $12.9 million and a fair value of $12.7 million.

There were no residential mortgage backed securities issued by non-U.S.

government agencies and government-sponsored enterprises.

government-sponsored enterprises issued by Federal National Mortgage Association and Federal Home Loan Mortgage Corporation with an amortized cost of $11.0 million and a fair value of $9.1 million.

The maturities of the debt securities, municipal bonds and certain information regarding to the mortgage-backed securities held-to-maturity at September 30, 2022 are summarized in the following table:

11 unchanged sentences

Held-to-maturity mortgage-backed securities –

residential include an amortized cost of $574,000 and a fair value of $549,000 for obligations of U.S.

residential include an amortized cost of $5.5million and a fair value of $4.8 million for obligations of U.S.

government agencies issued by the Government National Mortgage Association and obligations of U.S.

5 unchanged sentences

commercial include an amortized cost of $631,000 and a fair value of $631,000 for obligations of U.S.

government agencies issued by the Small Business Administration.

government agencies issued by the United States Small Business Administration.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

There were no sales of securities from the available-for-sale portfolio during the year ended September 30, 2021 and $ 6.1 million in sales during the year ended September 30, 2020.

There were no sales of securities from the held-to-maturity portfolio during the years ended September 30, 2021 and 2020.

The net gain on sales of investment securities totaled $ 0 and $ 68,000 for the year ended September 30, 2021 and 2020, respectively.

There were no sales of securities during the years ended September 30, 2022 and 2021.

As of September 30, 2022 and 2021, securities having an estimated fair value of approximately $ 37.7 million and $ 30.9 million, respectively, were pledged to secure public deposits.

3 unchanged sentences

September 30, 2022

(In thousands)

(Dollars in thousands)

Obligations of U.S.

6 unchanged sentences

Debt securities

Private label mortgage-backed securities residential

Obligations of state and political subdivisions

3 unchanged sentences

September 30, 2021

(In thousands)

(Dollars in thousands)

Obligations of U.S.

6 unchanged sentences

Debt securities

Private label mortgage-backed securities - residential

Obligations of state and political subdivisions

Corporate securities

22 unchanged sentences

Such loans were made in the ordinary course of business at the Bank’s normal credit terms, including interest rate and collateralization, and do not represent more than a normal risk of collection.

Total loans receivable from directors and executive officers, and affiliates thereof, were approximately $ 2.3 million and $ 2.5 million at September 30, 2021 and 2020, respectively.

Total loans receivable from directors and executive officers, and affiliates thereof, were approximately $ 2.3 million at both September 30, 2022 and 2021.

There were $ 738,000 and $ 31,000 in new loans or advances on existing lines of credit during the year ended September 30, 2022 and 2021, respectively.

56 unchanged sentences

The average recorded investment in impaired loans was $ 8.1 million and $ 12.2 million for the years ended September 30, 2022 and 2021, respectively.

The Company’s impaired loans at September 30, 2021 include $ 8.2 million in delinquent loans and $ 2.9 million in performing Troubled Debt Restructurings (“TDRs”), as TDRs remain impaired loans until fully repaid.

During the years ended September 30, 2021 and 2020, interest income of $ 139,000 and $ 142,000 , respectively, was recognized for TDR loans while no interest income was recognized for delinquent non-accrual loans.

During the years ended September 30, 2022 and 2021, interest income of $ 135,000 and $ 139,000 , respectively, was recognized for performing TDR loans while no interest income was recognized for delinquent non-accrual loans.

Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio.

7 unchanged sentences

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

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

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 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.

2 unchanged sentences

Detailed reviews, including plans for resolution, are performed on loans classified as Substandard on a monthly basis.

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2022 and 2021

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 for the periods presented:

50 unchanged sentences

and concentrations of credit from a loan type, industry and/or geographic standpoint.

Management maintained or increased several of these factors during the year ended September 30, 2021 due to the higher risk of credit loss resulting from the COVID-19 pandemic and its ongoing impact on borrowers and economic conditions.

Management maintained or increased several of these factors during the year ended September 30, 2022 due to the higher risk of credit loss resulting from the a higher likelihood of economic recession and its ongoing impact on borrowers.

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.

17 unchanged sentences

Allowance for Loan Losses:

Balance - September 30, 2021

Individually evaluated

for impairment

Collectively evaluated

for impairment

Balance - September 30, 2022 

Individually evaluated for impairment

Collectively evaluated for impairment

Loans receivable:

Balance - September 30, 2021

Individually evaluated

for impairment

Collectively evaluated

for impairment

Balance - September 30, 2022 

Individually evaluated for impairment

Collectively evaluated for impairment

MAGYAR BANCORP, INC.

4 unchanged sentences

Allowance for Loan Losses:

Balance - September 30, 2020

Individually evaluated

for impairment

Collectively evaluated

for impairment

Balance - September 30, 2021 

Individually evaluated for impairment

Collectively evaluated for impairment

Loans receivable:

Balance - September 30, 2020

Individually evaluated

for impairment

Collectively evaluated

for impairment

Balance - September 30, 2021 

Individually evaluated for impairment

Collectively evaluated for impairment

The allowance for loan losses is based on estimates, and actual losses will vary from current estimates.

5 unchanged sentences

There were no defaults of TDRs during the year ended September 30, 2022.

There were two TDR loans during the year ended September 30, 2021 and one TDR loan during the year ended September 30, 2020.

There were no TDR loans during the year ended September 30, 2022, compared with two TDR loans during the year ended September 30, 2021.

All TDR loans were performing in accordance with their restructured terms as September 30, 2022.

1 unchanged sentence

Investment Before

Investment After

TDR Modification

Investment After

TDR Modification

September 30, 2021

September 30, 2022  

(Dollars in thousands)

One-to four-family residential

Investment Before

Investment After

TDR Modification

Investment After

TDR Modification

1 unchanged sentence

(Dollars in thousands)

Commercial business

The Company offered loan payment deferrals to borrowers affected by COVID-19.

Loan payment deferral requests were considered on a case-by-case basis and were approved for up to a six month period for principal and interest payments or for interest only payments, depending on the borrower’s circumstances.

Through September 30, 2021, the Company had modified 284 loans aggregating $150.9 million for the deferral of principal and/or interest payments.

Of these loans, at September 30, 2021, 227 loans aggregating $ 121.4 million had resumed making their contractual loan payments, 56 loans totaling $ 28.1 million repaid their deferred payments, and one loan totaling $ 1.4 million was delinquent more than 90 days and in the process of foreclosure.

Details with respect to those loans that did not pay off or fully pay the deferred payments for the year ended September 30, 2021 and 2020 are as follows:

One-to four-family residential

Total loans pledged as collateral against FHLBNY borrowings were $ 181.2 million and $ 192.6 million as of September 30, 2022 and 2021, respectively.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

September 30, 2021

Number of Loans

Weighted Average Interest Rate

(Dollars in thousands) 

One-to-four family residential real estate (1)

Commercial real estate

Home equity lines of credit

Commercial business

September 30, 2020

One-to-four family residential real estate (1)

Commercial real estate

Home equity lines of credit

Commercial business

Includes home equity loans.

Total loans pledged as collateral against FHLBNY borrowings were $ 192.6 million and $ 184.1 million as of September 30, 2021 and 2020, respectively.

NOTE F - ACCRUED INTEREST RECEIVABLE

5 unchanged sentences

Total accrued interest receivable

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

NOTE G - PREMISES AND EQUIPMENT

9 unchanged sentences

NOTE H - OTHER REAL ESTATE OWNED

The Company held $ 636,000 of real estate owned properties at September 30, 2021 and $2.6 million at September 30, 2020.

The Company incurred write-downs totaling $ 337,000 and $ 371,000 on these properties for the years ended September 30, 2021 and 2020, respectively.

These amounts were carried as valuation allowances, unless the properties were sold.

The Company held $ 281,000 of real estate owned properties at September 30, 2022 and $ 636,000 at September 30, 2021.

The Company did not have any write-downs on these properties at September 30, 2022 compared with $ 337,000 for the years ended September 30, 2021.

The write-down amounts were carried as valuation allowances, unless the properties were sold.

Further declines in real estate values may result in increased foreclosed real estate expense in the future.

11 unchanged sentences

The current FDIC insurance limit on bank deposit accounts is $ 250,000 .

The aggregate amount of deposit accounts with a minimum denomination of $250,000 was approximately $ 378.5 million at September 30, 2021 compared with $ 365.6 million at September 30, 2020.

The aggregate amount of certificate deposits, including individual retirement accounts with balance of $250,000 or more was $ 39.4 million at September 30, 2021 compared with $ 45.6 million at September 30, 2020.

At September 30, 2021, certificates of deposit (including retirement accounts and brokered certificate deposit accounts) have contractual maturities as follows (in thousands):

The aggregate amount of deposit accounts with a denomination of $250,000 or more was approximately $ 399.9 million at September 30, 2022 compared with $ 378.5 million at September 30, 2021.

The aggregate amount of certificate deposits, including individual retirement accounts with balances of $250,000 or more was $ 14.6 million at September 30, 2022 compared with $ 39.4 million at September 30, 2021.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

At September 30, 2022, certificates of deposit (including retirement accounts and brokered certificate deposit accounts) have contractual maturities as follows (in thousands):

Year Ending September 30,

3 unchanged sentences

Long term Federal Home Loan Bank of New York (“FHLBNY”) advances at September 30, 2022 and September 30, 2021 totaled approximately $ 15.6 million and $ 23.4 million, respectively.

The weighted average interest rate on advances outstanding at September 30, 2021 and 2020 were 2.13 % and 2.09 %, respectively.

The weighted average interest rates on advances outstanding at September 30, 2022 and 2021 were 2.48 % and 2.13 %, respectively.

The advances were collateralized by unencumbered qualified assets consisting of one-to-four family residential and commercial real estate mortgage loans.

5 unchanged sentences

At September 30, 2022 and 2021, the Company had available credit from the FHLBNY totaling $ 83.2 million and $ 87.9 million, respectively.

The Company did not utilize its line of credit with the FHLBNY during the years ended September 30 2021 and 2020.

Federal Reserve Bank of New York Advances

The Company borrowed $ 36.9 million in Paycheck Protection Program Liquidity Facility advances from the Federal Reserve Bank of New York (“FRBNY”) during the year ended September 30, 2020.

The interest rate on these advances was fixed at 0.35 % and the advances were collateralized by Paycheck Protection Program loans.

The advances were required to be repaid as PPP loans pledged as collateral were repaid or forgiven by the SBA.

We repaid all $ 36.9 million in PPPLF advances during the year ended September 30, 2021.

Information concerning short-term arrangement with the FHLBNY is summarized as follows:

September 30,

(Dollars in thousands)

Balance at end of year

Weighted average balance during the year

Maximum month-end balance during the year

Average interest rate during the year

Securities Sold Under Reverse Repurchase Agreements

33 unchanged sentences

Loan servicing includes collecting and remitting loan payments, accounting for principal and interest, contacting delinquent mortgagors, supervising foreclosures and property dispositions in the event of unremedied defaults, making certain insurance and tax payments on behalf of the borrowers and generally administering the loans.

NOTE L - INCOME TAXES

The Company’s income tax expense is comprised of the following components for the years ended September 30, 2021 and 2020:

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

NOTE L - INCOME TAXES

The Company’s income tax expense is comprised of the following components for the years ended September 30, 2022 and 2021:

For the Year Ended

1 unchanged sentence

(In thousands)

Income tax expense at the statutory federal tax rate of 21%

for the year ended September 30, 2021 and 2020

State tax expense

Income tax expense

Total income tax expense

A reconciliation of income tax at the statutory tax rate to the effective income tax expense for the years ended September 30, 2022 and 2021 is as follows:

16 unchanged sentences

Gross deferred tax asset

Discount accretion on investments

Employee benefits

1 unchanged sentence

Gross deferred tax liability

Net deferred tax asset, included in other assests

Net deferred tax asset, included in other assets

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

upon the generation of future taxable income during the periods in which temporary differences are deductible and carry forwards are available.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and carry forwards are available.

There were no valuation allowances for the year ended September 30, 2022 and 2021.

8 unchanged sentences

On January 26, 2006, the Plan was frozen and amended to eliminate future benefit accruals after February 15, 2006.

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2022 and 2021

Plan assets are invested in seven diversified investment funds of the Pentegra Retirement Trust, a no load series open-ended mutual fund.

18 unchanged sentences

Fair value of assets, end

Funded status included with other assets

Funded status included with other liabilities

Net pension cost for the years ended September 30, 2021 and 2020 included the following components:

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

Net pension cost for the years ended September 30, 2022 and 2021 included the following components:

September 30,

23 unchanged sentences

Expected Contributions

For the fiscal year ending September 30, 2022, the Company does not expect to contribute to the Plan.

Estimated Future Benefit Payments

The following benefit payments are expected to be paid as follows (in thousands):

For the fiscal year ending September 30, 2023, the Company does not expect to make a contribution to the Plan.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

Estimated Future Benefit Payments

The following benefit payments are expected to be paid as follows (in thousands):

October 1, 2022 through September 30, 2023

6 unchanged sentences

These amounts are included, net of related income tax effects of $ 288,000 and $ 351,000 , respectively, in the accumulated other comprehensive loss component of stockholders’

During the year ending September 30, 2022, approximately $ 85,000 of the actuarial losses is expected to be amortized into net periodic pension expense.

The following table presents the Plan assets that are measured at fair value on a recurring basis by level within the fair value hierarchy under ASC Topic 820.

27 unchanged sentences

Mutual Funds- Fixed Income

Intermediate-Term Core

Intermediate Duration

Short-Duration Corporate

Cash Equivalents

12 unchanged sentences

final annual salary.

Under the Director Supplemental Retirement Income Plan (the “Plan”), directors are entitled to a benefit upon attainment of his/her benefit age.

Under the Director Supplemental Retirement Income Plan (the “Plan”), directors that began service before 2002 are entitled to a benefit upon attainment of his/her benefit age.

The directors will receive an annual amount in monthly installments based on his/her total Board and Committee fees in the twelve months prior to attainment of his/her benefit age.

The amount will be ten percent (10%) plus two and one-half percent (2 1/2%) for each year of service as a Director, with a minimum of fifty percent (50%), provided the Director has served for at least five (5) years, and a maximum of sixty percent (60%).

The maximum benefit increases for any Director serving as Chairman of the Board to seventy-five percent (75%).

The maximum benefit increases for any Director serving as Chairman of the Board for at least five years to seventy-five percent (75%).

The Company funds the plans through modified endowment contracts.

Income recorded for the plans represents life insurance income as recorded based on the projected increases in cash surrender values of life insurance policies.

As of September 30, 2021 and 2020, the Life Insurance Contracts had cash surrender values of approximately $ 14,288,000 and $ 13,971,000 , respectively.

As of September 30, 2022 and 2021, the Company’s life insurance contracts had cash surrender values of approximately $ 17,660,000 and $ 14,288,000 , respectively.

The Company is recording benefit costs so that the cost of each participant’s retirement benefits is being expensed and accrued over the participant’s active employment so as to result in a liability at retirement date equal to the present value of the benefits expected to be provided.

2 unchanged sentences

Employees may contribute to the plan, as defined under the plan document, and the Company can make discretionary contributions.

The Company contributed $ 232,000 and $ 175,000 to the plan for the years ended September 30, 2021 and 2020, and is included in compensation and employee benefits in the accompanying Consolidated Statements of Operations.

NOTE P - COMMITMENTS

Lease Commitments

Approximate future minimum payments under non-cancelable operating leases are due as follows for the years indicated (in thousands):

The Company contributed $ 271,000 and $ 232,000 to the plan for the years ended September 30, 2022 and 2021, and is included in compensation and employee benefits in the accompanying Consolidated Statements of Income.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

NOTE P - COMMITMENTS

Lease Commitments

Approximate future minimum payments under non-cancelable operating leases are due as follows for the years indicated (in thousands):

September 30, 2023

3 unchanged sentences

September 30, 2027

Accounting Standard Update (“ASU”) No.

2016-02, Leases (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.

Accounting Standard Update ASC 842, “Leases”

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 has operating leases for five branch locations.

14 unchanged sentences

September 30,

(In thousands)

22 unchanged sentences

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 September 30, 2021.

The following table presents summary information regarding these derivatives for September 30, 2021.

There were no derivatives as of September 30, 2020.

Weighted Average

The Company had $ 0 and $ 300,000 in cash pledged for collateral on its interest rate swaps with financial institutions at September 30, 2022 and 2021, respectively.

The following table presents summary information regarding these derivatives for September 30, 2022 and 2021.

Weighted Average

6 unchanged sentences

3rd Party interest rate swaps

September 30, 2021

Classified in Other Assets:

Customer interest rate swaps

Classified in Other Liabilities:

3rd Party interest rate swaps

At September 30, 2022 and 2021, the Company had outstanding commitments (substantially all of which expire within one year) to originate one-to four-family residential loans, construction loans, commercial real estate loans, commercial business loans and consumer loans.

These commitments were comprised of fixed and variable rate loans.

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

September 30,

5 unchanged sentences

Variable rate loan commitments

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2022 and 2021

NOTE R - FAIR VALUE DISCLOSURES

20 unchanged sentences

An independent pricing service provides prices which are categorized as Level 2, as quoted prices in active markets for identical assets are generally not available for the securities.

The following table provides the level of valuation assumptions used to determine the carrying value of the Company’s assets measured at fair value on a recurring basis at September 30, 2021 and 2020:

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

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 at September 30, 2022 and 2021:

September 30, 2022

19 unchanged sentences

Mortgage-backed securities-residential

Debt securities

Total securities available for sale

Derivative assets

Derivative liabilities

Total Liabilities

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

15 unchanged sentences

Appraisals of collateral securing impaired loans are conducted by approved, qualified, and independent third-party appraisers.

Such appraisals are ordered via the Bank’s credit administration department, independent from the lender who

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

originated the loan, once the loan is deemed impaired, as described in the previous paragraph.

Such appraisals are ordered via the Bank’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.

4 unchanged sentences

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.

MAGYAR BANCORP, INC.

AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2022 and 2021

Other Real Estate Owned

2 unchanged sentences

As such, other real estate owned is generally classified as Level 3.

Valuation write-downs totaling $ 337,000 were made to two properties held as other real estate owned during the year ended September 30, 2021.

There were no valuation write-downs for the year ended September 30, 2022, and $ 337,000 were made to two properties held as other real estate owned during the year ended September 30, 2021.

The properties were written down based on an updated appraisal of the real estate.

14 unchanged sentences

Impaired loans

collateral (1)

Appraisal ofcollateral (1)

Appraisal adjustments (2)

1 unchanged sentence

Other real estate owned

collateral (1)

Appraisal ofcollateral (1)

Liquidation expenses (2)

10 unchanged sentences

Impaired loans

collateral (1)

Appraisal ofcollateral (1)

Appraisal adjustments (2)

1 unchanged sentence

Other real estate owned

collateral (1)

Appraisal ofcollateral (1)

Liquidation expenses (2)

26 unchanged sentences

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

MAGYAR BANCORP, INC.

2 unchanged sentences

September 30, 2022 and 2021

amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The federal banking agencies substantially amended the regulatory risk-based capital rules applicable to the Bank in 2015.

The amendments implemented the “Basel III”

regulatory capital reforms and changes required by the Dodd-Frank Act.

The rule includes a minimum common equity Tier 1 capital (“CET1”) to risk-weighted assets ratio of 4.5% of risk-weighted assets, a minimum Tier 1 capital to risk-weighted assets of 6.0% and a minimum leverage ratio of 4.0%.

The “Basel III”

regulatory capital reforms and changes required by the Dodd-Frank Act include a minimum common equity Tier 1 capital (“CET1”) to risk-weighted assets ratio of 4.5 % of risk-weighted assets, a minimum Tier 1 capital to risk-weighted assets of 6.0 % and a minimum leverage ratio of 4.0 %.

The required minimum ratio of total capital to risk-weighted assets is 8.0 %.

The amended rules also established a “capital conservation buffer”

of 2.5% above the new regulatory minimum capital ratios, and resulted in the following phased-in minimum ratios:

The regulatory banking rules also require a “capital conservation buffer”

of 2.5% above the new regulatory minimum capital ratios, and resulted in the following minimum ratios:

(i) a common equity Tier 1 capital ratio of 7.0%;

22 unchanged sentences

Tier 1 risk-based capital ratio

8.50 

%(1)

Total risk-based capital ratio

%(1)

(1)

Includes 2.50% capital conservation buffer

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data