Magyar Bancorp, Inc.: Form 10-Q for the period ended Jun 30, 2024

Forward-Looking Statements

When used in this filing and in future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases, “anticipate,” “would be,” “will allow,” “intends to,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “projected,” “believes”, or similar expressions are intended to identify “forward looking statements.” Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those risks previously disclosed by the Company in Item 1A of its Annual Report on Form 10-K as may be supplemented by Quarterly Reports on Form 10-Q filed with the SEC, general economic conditions, changes in interest rates, regulatory considerations, competition, technological developments, retention and recruitment of qualified personnel, and market acceptance of the Company’s pricing, products and services, levels of uninsured deposits, and with respect to the loans extended by the Company and real estate owned, the following: risks related to the economic environment in the market areas in which the Bank operates, particularly with respect to the real estate market in New Jersey; the risk that the value of the real estate securing these loans may decline in value; and the risk that significant expense may be incurred by the Company in connection with the resolution of these loans.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and advises readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investing activities, and competitive and regulatory factors, could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from those anticipated or projected.

The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. Critical accounting policies may involve complex subjective decisions or assessments. Please refer to the Company’s Form 10-K for the Company’s critical accounting policies. There were no significant changes to the Company’s critical accounting policies, other than a change to the methodology for calculating the allowance for credit losses during the nine months ended June 30, 2024.

The Company adopted ASU 2016-13 on October 1, 2023 using the modified retrospective approach for all financial assets measured at amortized cost, including loans, held-to-maturity debt securities, not measured at amortized cost and unfunded commitments. The Company recorded a cumulative effect increase to retained earnings of $492 thousand ($354 thousand net of taxes), which was comprised of a $1.0 million ($725 thousand net of tax) increase related to loans and $540 thousand ($379 thousand net of tax) decrease related to unfunded commitments. The Company determined that there was no impact to retained earnings related to held-to-maturity securities as a result of adopting this guidance. The results reported for periods beginning on or after October 1, 2023 are presented under Accounting Standards Codification 326, while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

Comparison of Financial Condition at June 30, 2024 and September 30, 2023

Total Assets. Total assets increased $37.1 million, or 4.1%, to $944.4 million at June 30, 2024 from $907.3 million at September 30, 2023. The increase was attributable to higher balances of loans receivable, partially offset by lower interest-earning deposits with banks.

Interest Earning Deposits. Interest-earning deposits with banks decreased $23.6 million, or 34.0%, to $45.8 million at June 30, 2024 from $69.4 million at September 30, 2023 resulting primarily from deployment of these fund into loans receivable during the nine months ended June 30, 2024.

Loans Receivable. Total loans receivable increased $62.2 million, or 8.9%, to $760.4 million at June 30, 2024 from $698.2 million at September 30, 2023. The increase in total loans receivable during the nine months ended June 30, 2024 occurred in commercial real estate loans, which increased $57.9 million, one-to four-family residential real estate loans (including home equity lines of credit), which increased $8.0 million, and construction and land loans, which increased $2.2 million. Partially offsetting these increases were commercial business loans, which decreased $5.8 million and other loans, which decreased $114 thousand.

Given the significance of commercial real estate (“CRE”) loans to our total loan portfolio, the following table further disaggregates these loans by occupied status and by collateral type as of June 30, 2024:

(In thousands)

The Company obtains an appraisal of the real estate collateral securing a CRE loan prior to originating the loan. The appraised value is used to calculate the ratio of the outstanding loan balance to the value of the real estate collateral, or loan-to-value ratio ("LTV"). The original appraisal is used to monitor the LTVs within the CRE portfolio unless an updated appraisal is received, which may happen for a variety of reasons, including but not limited to payment delinquency, additional loan requests using the same collateral, and loan modifications. The following table presents the ranges in the LTVs of our CRE loans at June 30, 2024:

(Dollars in thousands)

As of June 30, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 262%. Management believes that Magyar Bank has implemented appropriate risk management practices, including risk assessments, board-approved underwriting policies and related procedures, which include monitoring loan portfolio performance and stressing of the commercial real estate portfolio under adverse economic conditions.

Our asset quality with respect to commercial real estate loans has remained strong despite recent economic and market conditions. As of June 30, 2024 and September 30, 2023, we had $2.8 million and $2.2 million of non-performing commercial real estate loans, respectively. Such amounts totaled 0.6% of total commercial real estate loans as of June 30, 2024 and September 30, 2023.

Total non-performing loans decreased $532 thousand, or 10.5%, to $4.6 million at June 30, 2024 from $5.1 million at September 30, 2023. The decline was attributable to the foreclosure of a residential property previously securing a $777 thousand construction loan and payments totaling $386 thousand, partially offset by a $631 thousand increase from new non-performing loans secured by three commercial real estate properties and one single family residential property. The ratio of non-performing loans to total loans decreased to 0.60% at June 30, 2024 from 0.73% at September 30, 2023.

The allowance for credit losses increased $16 thousand to $8.3 million during the nine months ended June 30, 2024. Upon adoption of ASU 2016-13 on October 1, 2023, the Company’s allowance for credit losses decreased $492 thousand. Growth in loans receivable and loan commitments during the nine months ended June 30, 2024 resulted in additional provisions for credit loss totaling $441 thousand and there were $67 thousand in loan recoveries. The allowance for on-balance sheet credit losses decreased to $7.7 million at June 30, 2024 from $8.3 million at September 30, 2023 while its reserve for off-balance sheet commitments increased to $602 thousand at June 30, 2024 from $0 at September 30, 2023.

The allowance for on-balance sheet loan losses as a percentage of non-performing loans increased to 170.1% at June 30, 2024 from 163.9% at September 30, 2023. The allowance for on-balance sheet loan losses as a percentage of total loans was 1.02% at June 30, 2024 compared with 1.19% at September 30, 2023. Future increases in the allowance for credit losses may be necessary based on possible future increases in non-performing loans and charge-offs, the possible deterioration of collateral values, and the possible deterioration of the current economic environment.

Investment Securities. At June 30, 2024, investment securities totaled $94.5 million, reflecting a decrease of $1.5 million, or 1.5%, from $96.0 at September 30, 2023. The decrease resulted from matured bonds totaling $6.5 million and payments from mortgage-backed securities totaling $5.4 million during the nine months ended June 30, 2024. Offsetting these decreases were purchases totaling $10.0 million and a $400 thousand increase in the market value of the Company’s available-for-sale investment securities. There were no credit losses recorded for the Company’s investment securities during the nine months ended June 30, 2024.

Investment security purchases during the nine months ended June 30, 2024 consisted of a $4.0 million corporate note issued by Provident Financial Services, Inc., a $2.0 million bond issued by the Federal Home Loan Bank of New York, a $2.0 million mortgage-backed security issued by the Federal National Mortgage Association and a $2.0 million participation certificate issued by the U.S. Small Business Administration.

Investment securities at June 30, 2024 consisted of $64.8 million in mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises, $19.0 million in U.S. government-sponsored enterprise debt securities, $7.0 million in corporate notes, $3.5 million in municipal bonds, and $195 thousand in “private-label” mortgage-backed securities. There was no allowance for credit losses for the Company’s investment securities for the nine months ended June 30, 2024.

Deposits. Total deposits increased $33.7 million, or 4.5%, to $789.2 million at June 30, 2024 from $755.4 million at September 30, 2023.

The inflow in deposits occurred in certificates of deposit (including individual retirement accounts), which increased $38.9 million, or 37.2%, to $143.6 million, in interest-bearing checking accounts (NOW), which increased $35.2 million, or 30.6%, to $150.4 million and in money market accounts, which increased $18.7 million, or 6.6%, to $303.6 million. Partially offsetting these increases were decreases in non-interest bearing checking accounts, which decreased $51.6 million, or 27.4%, to $136.9 million and in savings accounts, which decreased $7.5 million, or 12.1%, to $54.7 million. Brokered deposits, which are included in certificates of deposit within total deposits, increased $7.8 million to $21.6 million at June 30, 2024 from $13.8 million at September 30, 2023. The Company utilized brokered deposits to extend the duration of its liabilities as part of its interest rate risk management.

Borrowed Funds. Borrowings decreased $947 thousand, or 3.2%, to $28.6 million at June 30, 2024 from $29.5 million at September 30, 2023. The Company repaid a matured long term advance totaling $4.4 million and utilized a new $3.4 million long term advance from the Federal Home Loan Bank of New York during the nine months ended June 30, 2024.

Stockholders’ Equity. Stockholders’ equity increased $4.2 million, or 4.1%, to $109.0 million at June 30, 2024 from $104.8 million at September 30, 2023. The increase was primarily due to net income of $5.2 million, followed by a $367 thousand reduction in other accumulated comprehensive loss, a $354 thousand increase for the Company’s adoption of ASU 2016-13, a $484 thousand increase from stock-based compensation and an $118 thousand increase for ESOP shares allocated for the nine months ended June 30, 2024. Partially offsetting these increases were $1.4 million in dividends ($0.21 per share) paid and 85,628 shares repurchased during the period totaling $953 thousand. As a result, the Company’s book value per share increased to $16.55 at June 30, 2024 from $15.70 at September 30, 2023.

Average Balance Sheets for the Three and Nine Months Ended June 30, 2024 and 2023

The following tables present certain information regarding the Company’s financial condition and net interest income for the three and nine months ended June 30, 2024 and 2023. The tables present the annualized average yield on interest-earning assets and the annualized average cost of interest-bearing liabilities. We derived the yields and costs by dividing annualized income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. We derived average balances from daily balances over the period indicated. Interest income includes fees that we consider adjustments to yields.

(Dollars in thousands)

(1) The average balance of loans receivable, net includes non-accrual loans.

(2) Interest income and yield are calculated using the Company's 21% federal tax rate.

(3) Includes passbook savings, money market passbook and club accounts.

(4) Includes interest-bearing checking and money market accounts.

(5) Includes certificates of deposits and individual retirement accounts.

(6) Calculated as annualized net interest income divided by average total interest-earning assets.

(Dollars In Thousands)

(1) The average balance of loans receivable, net includes non-accrual loans.

(2) Interest income and yield are calculated using the Company's 21% federal tax rate.

(3) Includes passbook savings, money market passbook and club accounts.

(4) Includes interest-bearing checking and money market accounts.

(5) Includes certificates of deposits and individual retirement accounts.

(6) Calculated as annualized net interest income divided by average total interest-earning assets.

Comparison of Operating Results for the Three Months Ended June 30, 2024 and 2023

Net Income. Net income decreased $227 thousand, or 11.8%, to $1.7 million for the three-month period ended June 30, 2024 compared with net income of $1.9 million for the three months ended June 30, 2023. The decrease was due to lower net interest and dividend income, lower other income and higher other expenses.

Net Interest and Dividend Income. Net interest and dividend income decreased $106 thousand, or 1.5%, to $6.8 million for the three months ended June 30, 2024 from $6.9 million for the three months ended June 30, 2023. The decrease was attributable to a 44-basis point decrease in the Company’s net interest margin to 3.02% for the three months ended June 30, 2024 from 3.46% for the three months ended June 30, 2023, partially offset by a $100.5 million increase in the average balance of interest-earning assets between the periods.

Interest and Dividend Income. Interest and dividend income increased $2.5 million, or 26.1%, to $12.3 million for the three months ended June 30, 2024 compared with $9.8 million for the three months ended June 30, 2023. The increase was attributable to a 59-basis point increase in the yield on interest-earning assets to 5.50% for the three months ended June 30, 2024 from 4.91% for the three months ended June 30, 2023, which was attributable to higher market interest rates between periods. Also contributing to the higher interest and dividend income were higher average balances of loans and interest-earning deposits, which increased $69.9 million and $32.2 million, respectively.

The average balance of loans receivable, net of allowance for credit loss, increased $69.9 million to $744.9 million during the three months ended June 30, 2024 from $675.0 million during the three months ended June 30, 2023 while the yield on loans receivable increased 53 basis points to 5.90% for the three months ended June 30, 2024 from 5.37% for the three months ended June 30, 2023 due to higher market interest rates. The higher average balance and yield accounted for a $1.9 million, or 21.4%, increase in loan interest income between periods.

Interest earned on investment securities, including interest-earning deposits and excluding FHLB stock, increased $606 thousand, or 85.8%, to $1.3 million for the three months ended June 30, 2024 from $706 thousand for the three months ended June 30, 2023. The average yield on such assets increased 113 basis points to 3.46% for the three months ended June 30, 2024 from 2.33% for the three months ended June 30, 2023, and the average balance of investment securities and interest-earning deposits increased by $30.4 million, or 24.8%, to $152.8 million for the three months ended June 30, 2024 from $122.4 million for the three months ended June 30, 2023.

Interest Expense. Interest expense increased $2.6 million, or 92.0%, to $5.5 million for the three months ended June 30, 2024 from $2.9 million for the three months ended June 30, 2023. The cost of interest-bearing liabilities increased 105 basis points to 3.24% for the three months ended June 30, 2024 compared with 2.19% for the three months ended June 30, 2023 resulting primarily from higher market interest rates. In addition, the average balance of interest-bearing liabilities increased $157.4 million, or 29.7%, to $686.7 million from higher money market and time deposit account balances.

The average balance of interest-bearing deposits increased $156.9 million, or 31.3%, to $658.2 million for the three months ended June 30, 2024 from $501.3 million for the three months ended June 30, 2023, while the average cost of such deposits increased 113 basis points to 3.25% from 2.12%. As a result, interest paid on interest-bearing deposits increased $2.7 million to $5.3 million for the three months ended June 30, 2024 compared with $2.6 million for the three months ended June 30, 2023. The increase in the cost of deposits due to higher market interest rate environment.

Interest paid on borrowings decreased $33 thousand, or 13.8%, to $206 thousand for the three months ended June 30, 2024 from $239 thousand for the three months ended June 30, 2023, while a 53-basis point decrease in the cost of borrowings to 2.90% for the three months ended June 30, 2024 from 3.43% for the three months ended June 30, 2023. The average balance of borrowings increased $543 thousand to $28.5 million for the three months ended June 30, 2024 compared to $28.0 million for the three months ended June 30, 2023.

Provision for Credit Losses. The Company recorded a net reduction of $54 thousand in its provision for credit losses for the three months ended June 30, 2024 compared with a net reduction of $81 thousand for the three months ended June 30, 2023. The net reduction in provisions resulted from lower balances (including commitments) of construction loans and commercial lines of credit, which require higher provisions for credit loss. The Company recorded $1 thousand in net loan recoveries during the three months ended June 30, 2024 compared with $385 thousand in net loan charge-offs during the three months ended June 30, 2023.

Other Income. Other income decreased $212 thousand, or 34.1%, to $409 thousand during the three months ended June 30, 2024 compared to $621 thousand for the three months ended June 30, 2023. The decrease was due to lower loan prepayment fees, which caused service charges to decline by $110 thousand to $282 thousand from $392 thousand and lower gains from the sale of Small Business Administration 7(a) loans, which decreased by $103 thousand between the two periods.

Other Expenses. Other expenses increased $169 thousand, or 3.5%, to $5.1 million during the three months ended June 30, 2024 compared with $4.9 million for the three months ended June 30, 2023. The increase was primarily attributable to higher compensation and benefit expense, which increased $91 thousand, or 3.2%, to $2.9 million, due to the additions of a commercial lender and a commercial credit analyst, as well as annual merit increases.

Also contributing to the higher other expenses were occupancy, professional and FDIC insurance premiums. Occupancy expenses increased $22 thousand, or 2.7%, from higher rental expense related to a new lease executed April 1, 2024 for a new branch office in Martinsville, NJ. Professional fees increased $12,000, or 6.4%, from higher legal and foreclosure expenses incurred by the Company compared with the prior year period. FDIC insurance premiums increased $10,000, or 10.4%, from deposit growth.

Income Tax Expense. The Company recorded tax expense of $501 thousand on pre-tax income of $2.2 million for the three months ended June 30, 2024, compared with $788 thousand on pre-tax income of $2.7 million for the three months ended June 30, 2023. The Company’s effective tax rate for the three months ended June 30, 2024 was 22.9% compared with 29.1% for the three months ended June 30, 2023. The decrease in income tax expense was driven by changes in deferred tax items between the periods as well as changes in the State of New Jersey’s entity consolidation rule.

Comparison of Operating Results for the Nine Months Ended June 30, 2024 and 2023

Net Income. Net income decreased $284 thousand, or 5.1%, to $5.2 million during the nine months ended June 30, 2024 compared with $5.5 million for the nine months ended June 30, 2023. The decrease was due to lower other income and higher other expenses, partially offset by higher net interest and dividend income.

Net Interest and Dividend Income. Net interest and dividend income increased $226 thousand, or 1.1%, to $21.0 million for the nine months ended June 30, 2024 from $20.7 million for the nine months ended June 30, 2023. The increase was attributable to a $106.7 million, or 13.7%, increase in the average balance of interest-earning assets between the periods, partially offset by a 39-basis point decrease in the Company’s net interest margin to 3.16% for the nine months ended June 30, 2024 from 3.55% for the nine months ended June 30, 2023.

Interest and Dividend Income. Interest and dividend income increased $8.3 million, or 30.4%, to $35.8 million for the nine months ended June 30, 2024 from $27.5 million for the nine months ended June 30, 2023. The increase was attributable to a 69-basis point increase in the yield on interest-earning assets to 5.40% from 4.71%, as well as a $63.5 million increase in the average balance of net loans receivable and a $46.1 million increase in the average balance of interest-earning deposits. The increase in yield on the Company’s assets was attributable to higher market interest rates between periods.

The average balance of loans receivable, net of allowance for credit losses, increased $63.5 million to $724.8 million during the nine months ended June 30, 2024 from $661.3 million during the nine months ended June 30, 2023. The average interest earned on loans receivable, net of allowance for credit losses, increased $6.0 million, or 23.3%, to $31.6 million for the nine months ended June 30, 2024 from $25.6 million for the same period prior year. The increase was due to higher market interest rates, which resulted in a 65-basis point increase in the yield on the average balance of loans receivable, net of allowance for credit losses to 5.83% for the nine months ended June 30, 2024 from 5.18% for the nine months ended June 30, 2023.

Interest earned on investment securities, including interest-earning deposits and excluding FHLBNY stock, increased $2.3 million, or 131.8%, to $4.1 million for the nine months ended June 30, 2024 from $1.8 million for the nine months ended June 30, 2023. The increase was attributable to a 138-basis point increase in the yield to 3.41 for the nine months ended June 30, 2024 from 2.03% for the nine months ended June 30, 2023, and the average balance of investment securities and interest-earning deposits increased by $42.9 million, or 36.9%, to $159.2 million for the nine months ended June 30, 2024 from $116.3 million for the nine months ended June 30, 2023.

Interest Expense. Interest expense increased $8.1 million, or 120.8%, to $14.9 million for the nine months ended June 30, 2024 from $6.7 million for the nine months ended June 30, 2023. The cost of interest-bearing liabilities increased 133-basis points to 3.07% for the nine months ended June 30, 2024 compared with 1.74% for the nine months ended June 30, 2023 resulting primarily from higher market interest rates between periods. In addition, the average balance of interest-bearing liabilities increased $130.6 million, or 25.3%, to $646.6 million from $516.0 million primarily due to the higher money market account and time deposit account balances.

The average balance of interest-bearing deposits increased $126.2 million, or 25.7%, to $617.7 million for the nine months ended June 30, 2024 from $491.5 million for the nine months ended March 31, 2023, while the average interest paid on the interest-bearing deposits increased 140 basis points to 3.07% for the nine months ended June 30, 2024 from 1.67% for the nine months ended June 30, 2023 due to the higher market interest rate environment. As a result, interest paid on interest-bearing deposits increased $8.1 million to $14.2 million for the nine months ended June 30, 2024 from $6.1 million for the nine months ended June 30, 2023.

Interest expense on borrowings increased $69 thousand, or 11.6%, to $663 thousand for the nine months ended June 30, 2024 from $594 thousand for the nine months ended June 30, 2023, partially offset by an 18-basis point decrease in the cost of borrowings to 3.06% for the nine months ended June 30, 2024 from 3.24% for the nine months ended June 30, 2023. The average balance of borrowings increased $4.4 million to $28.9 million for the nine months ended June 30, 2024 from $24.5 million for the nine months ended June 30, 2023 to partially fund the growth in the Company’s loans receivable. The Company was able to lower the cost of borrowings while increasing the balance of its borrowings with zero-cost advances from the Federal Home Loan Bank of New York;

Provision for Credit Losses. The Company’s provision for credit losses was $441 thousand for the nine months ended June 30, 2024 compared with $432 thousand for the nine months ended June 30, 2023. Provisions for credit losses resulted from growth in the Company’s loan portfolio, particularly commercial real estate loans, during the nine months ended June 30, 2024. The Company recorded $67 thousand in net loan recoveries during the nine months ended June 30, 2024 compared with $487 thousand in net loan charge-offs during the nine months ended June 30, 2023.

Other Income. Other income decreased $213 thousand, or 11.5%, to $1.6 million during the nine months ended June 30, 2024 compared with $1.9 million for the nine months ended June 30, 2023. The decrease was due to lower loan prepayment fees, which declined by $79 thousand to $878 thousand from $957 thousand, and lower gains from the sale of Small Business Administration 7(a) loans, which decreased by $143 thousand between the two periods.

Other Expenses. Other expenses increased $920 thousand, or 6.4%, to $15.2 million during the nine months ended June 30, 2024 from $14.3 million during the nine months ended June 30, 2023. The increase was primarily attributable to higher compensation and benefit expense, which increased $549 thousand, or 6.7%, to $8.7 million, due to fewer open positions between periods and the additions of a commercial lender and a commercial credit analyst, as well as annual merit increases.

Also contributing to the increase were higher occupancy expenses, professional expenses, FDIC deposit insurance premiums and other expenses. Occupancy expenses increased $63 thousand, or 2.7%, from higher rental expense, furniture and equipment related to a new lease executed April 1, 2024 for a new branch office in Martinsville, NJ. Professional fees increased $33,000, or 5.8%, from higher legal and foreclosure expenses incurred by the Company compared with the prior year period. Deposit insurance premiums increased $71,000, or 29.2%, from deposit growth and higher insurance assessment rates implemented by the FDIC for all insured institutions effective January 1, 2023. Other expenses increased $237,000, or 15.4%, from higher loan origination and servicing costs, higher losses on fraudulent checks, higher recruitment costs and higher data communication costs.

Income Tax Expense. The Company recorded tax expense of $1.7 million on pre-tax income of $7.0 million for the nine months ended June 30, 2024, compared with $2.4 million on pre-tax income of $7.9 million for the nine months ended June 30, 2023. The Company’s effective tax rate for the nine months ended June 30, 2024 was 24.8% compared with 29.9% for the nine months ended June 30, 2023. The decrease in income tax expense was driven by changes in deferred tax items between the periods as well as changes in the State of New Jersey’s entity consolidation rule.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

The Company’s liquidity is a measure of its ability to fund loans, pay withdrawals of deposits, and other cash outflows in an efficient, cost-effective manner. The Company’s short-term sources of liquidity include maturity, repayment and sales of assets, excess cash and cash equivalents, new deposits, other borrowings, and new advances from the FHLBNY. Based on eligible loan collateral pledged to the FHLBNY at June 30, 2024, we had an aggregate borrowing capacity of $114.9 million. There has been no material adverse change during the nine months ended June 30, 2024 in the ability of the Company and its subsidiaries to fund their operations.

At June 30, 2024, the Company had commitments outstanding under letters of credit totaling $690 thousand, commitments to originate loans totaling $38.5 million, and commitments to fund undisbursed balances of closed loans and unused lines of credit totaling $93.1 million. There has been no material change during the current quarter ended June 30, 2024 in any of the Company’s other contractual obligations or commitments to make future payments.

Capital Requirements

At June 30, 2024, the Bank’s Tier 1 capital as a percentage of the Bank’s total assets was 10.92%, and total qualifying capital as a percentage of risk-weighted assets was 15.93%.

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

There has been no change in the Company's internal control over financial reporting during the quarter ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

There were no material changes to the risk factors relevant to the Company’s operations as described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed on December 15, 2023.