Magyar Bancorp: A Profitable Option for Investors

Magyar Bancorp (NASDAQ:MGYR) has reported a 7.5% annual EPS growth over three years, with revenue increasing 18% to $36m in the previous year. The company's EBIT margins are similar to last year, but revenue growth is seen as progress. With a market capitalization of $112m, it's essential to check the company's balance sheet strength. Insider interest in the company has sparked interest, but small purchases may not always be indicative of conviction.

New York, NY - Magyar Bancorp (NASDAQ:MGYR), a New Jersey-based bank, has reported a robust 7.5% annual EPS growth over the past three years, with revenue increasing 18% to $36 million in the previous year. The company's EBIT margins remained consistent with last year, indicating steady performance. However, with a market capitalization of $112 million, investors are closely examining Magyar Bancorp's balance sheet strength, particularly in light of recent insider interest in the company.

Balance Sheet Analysis

Magyar Bancorp's balance sheet reveals a concentration of commercial real estate (CRE) loans, which account for 60% of its loan portfolio as of 3Q25 Magyar Trades At A More Reasonable Multiple, But Also Has Significant Exposure To CRE^[1]. While the bank has shown significant growth in this sector, the high risk associated with CRE loans is a concern. The bank's history of large lending losses, particularly during the GFC, when non-performing loans (NPLs) reached 8.12% of assets, underscores the potential for future credit losses Magyar Trades At A More Reasonable Multiple, But Also Has Significant Exposure To CRE^[1].

Insider Interest

Recent insider interest in Magyar Bancorp has sparked investor curiosity. However, small purchases by insiders may not always indicate strong conviction. While these transactions can be a positive sign, they should be viewed with caution and in conjunction with other indicators of the company's health.

Future Outlook

With interest rates continuing to fall, Magyar Bancorp is expected to benefit from a positive net interest margin (NIM) expansion trend. The bank's average yield on assets has increased from 4.3% to 5.75% between 2018 and 2025, while the average yield on liabilities has fallen from 1.8% to 3.02% Magyar Trades At A More Reasonable Multiple, But Also Has Significant Exposure To CRE^[1]. This suggests that the bank's NIM could expand to approximately 3.5% or even 4%, potentially boosting earnings to $2 per share and reducing the P/E ratio to 8/9x Magyar Trades At A More Reasonable Multiple, But Also Has Significant Exposure To CRE^[1].

However, the company's expansion into the high-risk CRE sector and its history of significant NPLs during the GFC raise concerns. While the current NPL levels are low, they are climbing again, with past-due loans increasing from $1.2 million in September 2024 to $2.3 million in June 2025 Magyar Trades At A More Reasonable Multiple, But Also Has Significant Exposure To CRE^[1]. This trend suggests that the bank may face challenges with loan quality in the future.

Conclusion

While Magyar Bancorp has reported strong EPS growth and revenue increases, its balance sheet concerns, particularly its high exposure to CRE loans and history of large lending losses, warrant caution. The company's share price appears fair, but not particularly opportunistic, given the higher risk ahead. Investors should closely monitor the bank's performance and the broader economic conditions that could impact its loan quality.