SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the Fiscal Year Ended September
30, 2023

 OR

 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from
______________________ to ______________________

 Commission File Number: 000-51726

 Magyar Bancorp, Inc.

 (Exact Name of Registrant as
Specified in its Charter)

 Delaware
 20-4154978

 (State or Other Jurisdiction of Incorporation or Organization)
 (I.R.S. Employer Identification Number)

 400 Somerset Street, New Brunswick, New Jersey
 08901

 (Address of Principal Executive Office)
 (Zip Code)

 (732) 342-7600

 (Issuer's Telephone Number
including area code)

 Securities Registered
Pursuant to Section 12(b) of the Act:

 Title of Class
 Trading Symbol(s)
 Name of Each Exchange On Which Registered

 Common Stock, par value $0.01 per share
 MGYR
 The NASDAQ Stock Market LLC

 Securities Registered Pursuant
to Section 12(g) of the Act:

 None

 (Title of Class)

 Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 Yes No

 Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act.

 Yes No

the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding
twelve months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

 Yes No

the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 Yes No

the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting
company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.

the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 Yes
No

 The aggregate value of the voting
stock held by non-affiliates of the registrant, computed by reference to the closing price of the Common Stock as of March 31, 2023 was
$ 70.6 million. As of December 15, 2023, there were 6,657,798 outstanding shares of the registrant's Common Stock,

 DOCUMENTS INCORPORATED BY REFERENCE

 1. Proxy
Statement for the Annual Meeting of Stockholders to be held on February 22, 2024 (Part III)

 Magyar Bancorp, Inc.

 Annual Report On Form 10-K

 For The Fiscal Year Ended

 ITEM 1.

 ITEM 1A.

 Risk Factors

 ITEM 1B.

 Unresolved Staff Comments

 ITEM 2.

 Properties

 ITEM 3.

 Legal Proceedings

 ITEM 4.

 Mine Safety Disclosures

 ITEM 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 ITEM 6.

 [Reserved]

 ITEM 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 ITEM 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 ITEM 8.

 Financial Statements and Supplementary Data

 ITEM 9.

 Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

 ITEM 9A.

 Controls and Procedures

 ITEM 9B.

 Other Information

 ITEM 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 ITEM 10.

 Directors, Executive Officers, and Corporate Governance

 ITEM 11.

 Executive Compensation

 ITEM 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 ITEM 13.

 Certain Relationships and Related Transactions, and Director Independence

 ITEM 14.

 Principal Accountant Fees and Services

 ITEM 15.

 Exhibits and Financial Statement Schedules

 ITEM 16.

 Form 10-K Summary

 SIGNATURES

 ITEM 1.

 Forward Looking Statements

 We have included or incorporated
by reference in this Annual Report on Form 10-K, and from time to time our management may make, statements that may constitute "forward-looking
statements" within the meaning of the safe harbour provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking
statements are not historical facts but instead represent only our beliefs regarding future events, many of which, by their nature, are
inherently uncertain and outside our control. These statements include statements other than historical information or statements of current
condition and may relate to our future plans and objectives and results, as well as statements about the objective and effectiveness of
our risk management and liquidity policies, statements about trends in or growth opportunities for our business, statements about our
future status, and activities or reporting under U.S. banking and financial regulation. Forward-looking statements generally are identified
by the words "believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should,"
"will," "would," "will be," "will continue," "will likely result," and similar
expressions. By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results and
financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking
statements. Important factors that could cause our actual results and financial condition to differ from those indicated in the forward-looking
statements include, among others, those discussed below and under "Risk Factors" in Part 1, Item 1A of this Annual Report
on Form 10-K.

 Magyar Bancorp, Inc.

 Magyar Bancorp, Inc. (the "Company")
is a Delaware-chartered corporation which owns 100% of the outstanding shares of common stock of Magyar Bank. Magyar Bancorp, MHC was
the former mutual holding company for Magyar Bancorp, Inc. prior to completion of the second-step conversion. In conjunction with the
second-step conversion, Magyar Bancorp, MHC ceased to exist. The second-step conversion was completed on July 14, 2021, at which time
the Company raised gross proceeds of $39.1 million by selling 3,910,000 shares of common stock at $10.00 per share. Concurrent with the
completion of the stock offering, each share of the Company's common stock owned by public stockholders (stockholders other than
the MHC) was exchanged for 1.2213 new shares of Company common stock.

 At September 30, 2023, Magyar
Bancorp, Inc. had consolidated assets of $907.3 million, total deposits of $755.5 million and stockholders' equity of $104.8 million.
Magyar Bancorp, Inc. has not engaged in any significant business activity other than owning all of the shares of common stock of Magyar
Bank. The executive office of Magyar Bancorp, Inc. is located at 400 Somerset Street, New Brunswick, New Jersey 08901, and its telephone
number is (732) 342-7600. Magyar Bancorp, Inc. is subject to regulation and examination by the Board of Governors of the Federal Reserve
System ("FRB") and the New Jersey Department of Banking and Insurance ("NJDBI").

 Magyar Bank

 Magyar Bank is a New Jersey-chartered
savings bank headquartered in New Brunswick, New Jersey that was originally founded in 1922 as a New Jersey building and loan association.
In 1954, Magyar Bank converted to a New Jersey savings and loan association, before converting to a New Jersey savings bank charter in
1993. We conduct business from our main office located at 400 Somerset Street, New Brunswick, New Jersey, and our seven branch offices
located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey. The telephone number at our
main office is (732) 342-7600 and our website is located at www.magbank.com. Information on our website is not and should not be considered
a part of this Annual Report.

 General

 Our principal business consists
of attracting retail deposits from the general public in the areas surrounding our main office in New Brunswick, New Jersey and our branch
offices located in Middlesex and Somerset Counties, New Jersey, and investing those deposits, together with funds generated from operations
and wholesale funding, in commercial real estate loans, residential mortgage loans, commercial business loans, Small Business Administration
("SBA") loans, home equity loans, home equity lines of credit, construction loans and investment securities. We also originate
consumer loans, which

 consist primarily of secured demand loans. We originate loans primarily for our loan portfolio. However, from time
to time we have sold some of our long-term, fixed-rate residential mortgage loans into the secondary market, while retaining the servicing
rights for such loans. In addition, we sell the SBA-guaranteed portion of SBA loans into the secondary market, while retaining the servicing
rights for such loans. Our revenues are derived principally from interest on loans and securities, our investment securities consist primarily
of mortgage-backed securities and U.S. Government and government-sponsored enterprise obligations. We also generate revenues from fees
and service charges. Our primary sources of funds are deposits, borrowings and principal and interest payments on loans and securities.
We are subject to comprehensive regulation and examination by the NJDBI and the Federal Deposit Insurance Corporation ("FDIC").

 Market Area

 We are headquartered in New Brunswick,
New Jersey, and our primary deposit market area is concentrated in the communities surrounding our headquarters branch and our branch
offices located in Middlesex and Somerset Counties, New Jersey. Our primary lending market area is broader than our deposit market area
and includes all of New Jersey.

 The economy of our primary market
area is largely urban and suburban with a broad economic base that is typical for counties surrounding the New York metropolitan area.
The median household income in Middlesex and Somerset Counties ranks among the highest in the nation.

 Competition

 We face intense competition within
our market area both in making loans and attracting deposits. Our market area has a high concentration of financial institutions including
large money center and regional banks, community banks and credit unions. Some of our competitors offer products and services that we
currently do not offer, such as trust services and private banking. According to the Federal Deposit Insurance Corporation's annual
 Summary of Deposit report, at June 30, 2023, our market share of deposits was 1.26% and 0.38% in Middlesex and Somerset Counties,
respectively. Our market share of deposits was 1.11% and 0.42%, respectively, at June 30, 2022.

 Our competition for loans and
deposits comes principally from commercial banks, savings institutions, mortgage banking firms and credit unions. We face additional competition
for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies. Our primary focus is to build
and develop profitable customer relationships across all lines of business while maintaining our role as a community bank.

 Lending Activities

 We originate residential mortgage
loans to purchase or refinance residential real property. Residential mortgage loans represented $237.7 million, or 34.1% of our total
loans at September 30, 2023. Historically, we have not originated a significant number of loans for the purpose of reselling them in the
secondary market. In the future, however, to help manage interest rate risk and to increase fee income, we may increase our origination
and sale of residential mortgage loans. No loans were held for sale at September 30, 2023. We also originate commercial real estate, commercial
business and construction loans. At September 30, 2023, these loans totaled $389.1 million, or 55.8%, $30.2 million, or 4.3%, and $21.9
million, or 3.1%, respectively, of our total loan portfolio. We also offer consumer loans, which consist primarily of home equity lines
of credit and stock-secured demand loans. At September 30, 2023, home equity lines of credit and stock-secured demand loans totaled $17.0
million, or 2.4% and $2.4 million, or 0.3%, respectively, of our total loan portfolio.

 Loan Portfolio Composition.
 The following table sets forth the composition of our loan portfolio by type of loan, at the dates indicated.

 2023

 2022

 Percent

 Percent

 $

 34.1%

 $

 34.1%

 55.8%

 54.5%

 3.1%

 2.4%

 2.4%

 3.0%

 4.3%

 5.5%

 Other

 2,359

 0.3%

 3,130

 0.5%

 Total loans receivable

 $

 100.0%

 $

 100.0%

 Net deferred loan costs

 (806
)

 (628
)

 Allowance for loan losses

 (8,330
)

 (8,433
)

 Total loans receivable, net

 $
 689,070

 $
 619,843

 Loan Portfolio Maturities
and Yields. The following table summarizes the scheduled repayments of our loan portfolio at September 30, 2023. Demand loans,
loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.

 One-to

 Four-Family

 Lines

 of Credit

 Other

 Total

 One year or less

 $
 1,896

 $
 24,461

 $
 20,152

 $
 3,531

 $
 14,368

 $
 —

 $
 64,408

 After one year through five years

 3,557

 53,570

 7,892

 65,370

 After five years through 15 years

 41,455

 80,508

 1,023

 3,620

 —

 126,626

 After 15 years

 190,775

 230,595

 1,573

 12,315

 4,314

 2,230

 441,802

 Total

 $

 $

 $

 $

 $

 $
 2,359

 $

 The following table sets forth
the scheduled repayments of fixed- and adjustable-rate loans at September 30, 2023 that are contractually due after September 30, 2024.

 Due After September 30, 2024

 Fixed

 Adjustable

 Total

 One-to-four-family residential

 $
 136,258

 $
 99,529

 $
 235,787

 61,416

 303,257

 364,673

 1,594

 1,701

 —

 13,452

 13,452

 7,927

 7,899

 15,826

 Other

 2,223

 2,359

 Total

 $
 205,844

 $
 427,954

 $
 633,798

 One-to Four-Family
Residential Loans. We originate residential mortgage loans, most of which are secured by properties located in our primary market
area and most of which we hold in portfolio. At September 30, 2023, $237.7 million, or 34.1% of our total loan portfolio, consisted of
residential mortgage loans (including home equity loans). Residential mortgage loan originations are generally obtained from our in-house
loan representatives, from existing or past customers, through advertising, and through referrals from attorneys, real estate brokers,
and local builders and are underwritten pursuant to Magyar Bank's policies and standards. Generally, residential mortgage loans
are originated in amounts up to 80% of the lesser of the appraised value or purchase price of the property, with private mortgage insurance
required on loans with a loan-to-value ratio in excess of 80%. We generally will not make residential mortgage loans with a loan-to-value
ratio in excess of 95%, which is the upper limit that has been established by the Board of Directors. Mortgage loans have been primarily

originated for terms of up to 30 years. Magyar Bank does not originate or purchase "sub-prime" (mortgages granted to borrowers
whose credit history is not sufficient to get a conventional mortgage) or option adjustable rate mortgage ("ARM") mortgage
loans. At September 30, 2023, there were $386,000 non-performing residential mortgage loans. During the year ended September 30, 2023,
there were no charge-offs against the allowance for loan loss for impaired residential real estate loans while $4,000 was recovered from
prior year charge-offs.

 We also originate home
equity loans secured by residences located in our market area. The underwriting standards we use for home equity loans include a determination
of the applicant's credit history, an assessment of the applicant's ability to meet existing obligations, the ongoing payments
on the proposed loan and the value of the collateral securing the loan. The maximum combined (first and second mortgage liens) loan-to-value
ratio for home equity loans and home equity lines of credit is 80%. Home equity loans are generally offered with fixed rates of interest
with the loan amount not to exceed $500,000 and with terms of up to 30 years. There were no non-performing home equity loans at September
30, 2023 and there were no charge-offs or recoveries for impaired home equity loans during the year ended September 30, 2023.

 We offer fixed-rate mortgage
loans with terms of either 10, 15, 20 or up to 30 years. While these loans are normally originated with up to 30-year terms, such loans
typically remain outstanding for substantially shorter periods because borrowers often prepay their loans in full upon sale of the property
pledged as security or upon refinancing the original loan. Therefore, average loan maturity is a function of, among other factors, the
level of purchase and sale activity in the real estate market, prevailing interest rates and the interest rates payable on outstanding
loans.

 Generally, all fixed-rate
residential mortgage loans are underwritten according to Federal Home Loan Mortgage Corporation ("Freddie Mac") guidelines,
policies and procedures. Historically, we have not originated a significant number of loans for the purpose of reselling them in the secondary
market. In the future we may increase our origination and sale of fixed-rate residential mortgage loans to help manage interest rate risk
and to increase fee income. There were no fixed-rate mortgage loans sold to Freddie Mac during the year ended September 30, 2023 and there
were no loans held for sale at September 30, 2023.

 We occasionally purchase
residential mortgage loans to augment our internal loan origination efforts. During the year ended September 30, 2023 we purchased fixed-rate
and adjustable-rate residential mortgage loans totaling $13.3 million. We underwrite purchased residential mortgage loans using the same
criteria as if we were originating the loans. At September 30, 2023, we had $17.4 million of one-to four-family residential mortgage loans
that were serviced by other lenders.

we had $137.1 million of fixed-rate residential mortgage loans, which represented 57.7% of our total residential mortgage loan portfolio.
At September 30, 2023, our largest fixed-rate residential mortgage loan was $10.0 million. The loan was performing in accordance with
its contractual repayment terms at September 30, 2023.

 We also offer adjustable-rate
residential mortgage loans with interest rates based on the weekly average yield on U.S. Treasuries or the Secured Overnight Financing
Rate ("SOFR"), which adjust either semi-annually or annually from the outset of the loan or which adjusts annually after a
one-, three-, five-, seven-, and ten-year initial fixed-rate period. Our adjustable-rate mortgage loans generally provide for maximum
rate adjustments of 2% per adjustment, with a lifetime maximum adjustment up to 5%, regardless of the initial rate. We also offer adjustable-rate
mortgage loans with an interest rate based on the prime rate as published in The Wall Street Journal or the Federal Home Loan Bank
of New York advance rates.

 Due to historically low
interest rate levels until recently, borrowers generally have preferred fixed-rate mortgage loans. Adjustable-rate mortgage loans decrease
the risk associated with changes in market interest rates by periodically repricing. However, these loans have other risks because, as
interest rates increase, the underlying payments by the borrower increase, which increases the potential for default by the borrower.
At the same time, the marketability of the underlying collateral may be adversely affected by higher interest rates. The maximum periodic
and lifetime interest rate adjustments also may limit the effectiveness of adjustable-rate mortgage loans during periods of rapidly rising
interest rates.

adjustable-rate residential mortgage loans totaled $100.6 million, or 42.3% of our total residential mortgage loan portfolio. The largest
adjustable-rate residential mortgage loan was for $2.3 million. The loan was performing in accordance with its contractual repayment terms
at September 30, 2023.

 In an effort to provide
financing for low-and moderate-income home buyers, we offer low-to-moderate income residential mortgage loans. These loans are offered
with fixed rates of interest and terms of up to 40 years, and are secured by one-to four-family residential properties. All of these loans
are originated using underwriting guidelines of U.S.

 government-sponsored enterprises such as Freddie Mac. These loans are originated
with maximum loan-to-value ratios of 95%.

 All residential mortgage
loans we originate include "due-on-sale" clauses, which give us the right to declare a loan immediately due and payable if
the borrower sells or otherwise disposes of the real property securing the mortgage loan. All borrowers are required to obtain title insurance,
fire and casualty insurance and, if warranted, flood insurance on properties securing real estate loans.

 Commercial Real Estate
Loans. We also originate commercial real estate loans, most of which are secured by properties located in our primary market area.
At September 30, 2023, $389.1 million, or 55.8%, of our total loan portfolio consisted of these types of loans. Commercial real estate
loans are generally secured by five-or-more-unit apartment buildings, industrial properties and properties used for business purposes
such as small office buildings, warehouses and retail facilities. We generally originate adjustable-rate commercial real estate loans
with a maximum term of 25 years with adjustable-rate periods every five years. The maximum loan-to-value ratio for our commercial real
estate loans is 75%, based on the appraised value of the property.

 We consider a number of
factors when we originate commercial real estate loans. During the underwriting process we evaluate the business qualifications and financial
condition of the borrower, including credit history, profitability of the property being financed, as well as the value and condition
of the mortgaged property securing the loan. When evaluating the business qualifications of the borrower, we consider the financial resources
of the borrower, the borrower's experience in owning or managing similar property and the borrower's payment history with
us and other financial institutions. In evaluating the property securing the loan, we consider the net operating income of the mortgaged
property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt
service coverage ratio (the ratio of net operating income to debt service) to ensure it is at least 120% of the monthly debt service.
We require personal guarantees on all commercial real estate loans made to individuals. Generally, commercial real estate loans made to
corporations, partnerships and other business entities require personal guarantees by the principals. All borrowers are required to obtain
title, fire and casualty insurance and, if warranted, flood insurance.

 Loans secured by commercial
real estate generally are larger than residential mortgage loans and involve greater credit risk. Commercial real estate loans often involve
large loan balances to single borrowers or groups of related borrowers. Repayment of these loans depends to a large degree on the results
of operations and management of the properties securing the loans or the businesses conducted on such property, and may be affected to
a greater extent by adverse conditions in the real estate market or the economy in general. Accordingly, the nature of these loans makes
them more difficult for management to monitor and evaluate.

 The maximum amount of a commercial
real estate loan is limited by our Board-established loans-to-one-borrower limit, which is currently 15% of Magyar Bank's capital,
or $15.8 million. At September 30, 2023, our largest commercial real estate loan was $13.5 million to finance the purchase and operation
of a nursing and rehabilitation home in Edison, New Jersey. The original loan amount was 65% of the purchase price, which was lower than
the appraised value. The loan was performing in accordance with its terms at September 30, 2023.

 There was one non-performing
commercial real estate loan totaling $2.2 million at September 30, 2023 compared with no non-performing commercial real estate loans at
September 30, 2022. During the year ended September 30, 2023, there were no charge-offs against the allowance for loan loss or recoveries
for impaired commercial real estate loans.

 Construction Loans.
 We also originate construction and land acquisition loans for the development of one-to four-family homes, apartment buildings
and commercial properties. Construction loans are generally offered to experienced local developers operating in our primary market area
and to individuals for the construction of their personal residences. At September 30, 2023, our construction loans totaled $21.9 million,
or 3.1% of total loans.

construction loans for the development of one-to four-family residential properties totaled $10.9 million. These construction loans generally
have a maximum term of 24 months. We provide financing for land acquisition, site improvement and construction of individual homes. Land
acquisition loans are limited to 50% to 75% of the sale price of the land. Site improvement loans are limited to 100% of the bonded site
improvement costs. Construction loans are limited to 75% of the lesser of the contract sale price or appraised value of the property (less
funds already advanced for land acquisition and site improvement).

construction loans for the development of commercial properties totaled $7.0 million. These construction loans have a maximum term of
24 months. The maximum loan-to-value ratio limit applicable to these loans is 75% of the appraised value of the property.

construction loans for the development of town homes, condominiums and apartment buildings totaled $4.0 million. The maximum loan-to-value
ratio limit applicable to these loans is 75% of the appraised value of the property. We may retain up to 10% of each loan advance until
the property attains a 90% occupancy level.

 The maximum amount of
a construction loan is limited by our loans-to-one-borrower limit, which is currently 15% of Magyar Bank's capital, or $15.8 million.
At September 30, 2023, our largest outstanding construction loan was a $2.8 million loan to finance the construction of a hotel in New
Jersey. The loan was performing in accordance with its contractual repayment terms at September 30, 2023. There were two non-performing
construction loans totaled $2.5 million at September 30, 2023 compared with one non-performing construction loan totaled $2.8 million
at September 30, 2022. During the year ended September 30, 2023, there were no charge-offs against the allowance for loan loss or recoveries
for impaired construction loans.

 Construction lending is
generally considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate. Risk
of loss on a construction loan depends largely upon the accuracy of the initial estimate of the value of the property at completion of
construction compared to the estimated cost (including interest) of construction and other assumptions. If the estimate of construction
cost is inaccurate, we may be required to advance funds beyond the amount originally committed in order to protect the value of the property.
Additionally, if our estimate of the value of the completed property is inaccurate, our construction loan may exceed the value of the
collateral.

 Commercial Business
Loans. At September 30, 2023, our commercial business loans totaled $30.2 million, or 4.3% of total loans. We make commercial
business loans primarily in our market area to a variety of professionals, sole proprietorships and small and mid-sized businesses. Our
commercial business loans include term loans and revolving lines of credit. The maximum term of a commercial business loan is 25 years.
Such loans are generally used for longer-term working capital purposes such as purchasing equipment or furniture. Commercial business
loans are made with either adjustable or fixed rates of interest. The interest rates for adjustable commercial business loans are typically
based on the prime rate as published in The Wall Street Journal.

 Included in commercial business
loans are SBA 7(a) loans, on which the SBA provides guarantees of up to 75% of the principal balance (85% for loans under $150,000).
These loans are made for the purposes of providing working capital and financing the purchase of equipment, inventory or commercial real
estate, and may be made inside or outside the State of New Jersey. At September 30, 2023, $9.3 million, or 89.2% of the Company's
SBA loan balances, were to businesses located in the State of New Jersey. Generally, an SBA 7(a) loan has a deficiency in its credit
profile that would not allow the borrower to qualify for a traditional commercial loan, which is why the government provides the guarantee.
The deficiency may be a higher loan to value ratio, lower debt service coverage ratio or weak personal financial guarantees. In addition,
many SBA 7(a) loans are for start-up businesses where there is no history of financial information. Finally, many SBA borrowers do not
have an ongoing and continuous banking relationship with the Bank, but merely work with the Bank on a single transaction. We generally
sell the guaranteed portions of these SBA loans in the secondary market.

 Commercial business loans
generally have greater credit risk than residential mortgage loans. Unlike residential mortgage loans, which generally are made on the
basis of the borrower's ability to repay the loan from his or her employment income, and which are secured by real property with
ascertainable value, commercial business loans generally are made on the basis of the borrower's ability to repay the loan from
the cash flow of the borrower's business. As a result, the repayment of commercial business loans may depend substantially on the
success of the borrower's business. As such the performance of these types of loans may be particularly sensitive to local and/or
national economic conditions. Further, any collateral securing commercial business loans may depreciate over time, may be difficult to
appraise and may fluctuate in value. We try to minimize these risks through our underwriting standards.

 The maximum amount of a commercial
business loan is limited by our loans-to-one-borrower limit, which is 15% of Magyar Bank's capital, or $15.8 million. At September
30, 2023, our largest commercial business loan was a $4.8 million, and collateralized with cash deposits held at the Bank. This
loan was performing according to its repayment terms at September 30, 2023. There were no non-performing commercial real estate loans
at September 30, 2023 and 2022. During the year ended September 30, 2023, there were two charge-offs totaling $488,000 against the allowance
for loan loss for impaired commercial business loans and no recoveries.

 Home Equity Lines
of Credit and Other Loans. We originate home equity lines of credit secured by residences located in our market area. At September
30, 2023, these loans totaled $17.0 million, or 2.4% of our total loan portfolio. The underwriting standards we use for home equity lines
of credit include a determination of the applicant's credit history, an assessment of the applicant's ability to meet existing
obligations, the ongoing payments on the proposed loan and the value of the collateral securing the loan. The maximum combined (first
and second mortgage liens) loan-to-value ratio for home equity lines of credit is 80%. Home equity lines of credit have adjustable rates
of interest, indexed to the prime rate, as reported in The Wall Street Journal, with terms of up to 25 years.

 The maximum amount of a
home equity line of credit loan is limited by our loans-to-one-borrower limit, which is 15% of Magyar Bank's capital, or $15.8 million.
At September 30, 2023, our largest home equity line of credit loan was $986,000. The loan was performing according to its terms at September
30, 2023. During the year ended September 30, 2023, there were no charge-offs against the allowance for loan loss or recoveries for impaired
home equity lines of credit or other loans.

 We also originate loans
secured by the common stock of publicly traded companies, provided their shares are listed on the New York Stock Exchange or the NASDAQ
Stock Market, and provided the company is not a banking company. Stock-secured loans are interest-only and are offered for terms up to
twelve months and for adjustable rates of interest indexed to the prime rate, as reported in The Wall Street Journal. The loan
amount is not to exceed 70% of the value of the stock securing the loan at any time.

stock-secured and other loans totaled $2.4 million, or 0.3% of our total net loan portfolio. Generally, we limit the aggregate amount
of loans secured by the common stock of any one corporation to 15% of Magyar Bank's capital, or $15.8 million. At September 30,
2023, loans totaling $2.2 million, or 0.3% of our loan portfolio, were secured by the common stock of Johnson & Johnson, a New York
Stock Exchange company that operates a number of facilities in our market area. Although these loans are underwritten based on the ability
of the individual borrower to repay the loan, the concentration of our portfolio secured by this stock subjects us to the risk of a decline
in the market price of the stock and, therefore, a reduction in the value of the collateral securing these loans. As of September 30,
2023, the aggregate loan-to-value ratio of the stock-secured portfolio was 16.7%.

 Loan Originations,
Purchases, Participations and Servicing of Loans. Lending activities are conducted primarily by our loan personnel operating at
our main and branch office locations. All loans originated by us are underwritten pursuant to our policies and procedures. We originate
both adjustable rate and fixed rate loans. Our ability to originate fixed or adjustable rate loans is dependent upon the relative customer
demand for such loans, which is affected by the current and expected future levels of market interest rates.

 Generally, we retain in
our portfolio substantially all loans that we originate. Historically, we have not originated a significant number of loans for the purpose
of selling them in the secondary market. In the future, however, to help manage our interest rate risk and to increase fee income, we
may increase our origination and sale of fixed-rate residential loans and commercial business loans guaranteed by the SBA. All one-to
four-family residential mortgage loans that we sell in the secondary market are sold with servicing rights retained pursuant to master
commitments negotiated with Freddie Mac. We sell our loans to Freddie Mac without recourse. No loans were held for sale at September 30,
2023.

we were servicing SBA-guaranteed and commercial participation loans sold in the amount of $35.5 million and $10.7 million, respectively.
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.

 From time-to-time, we will
also participate in loans, sometimes as the "lead lender." Whether we are the lead lender or not, we underwrite our participation
portion of the loan according to our own underwriting criteria and procedures. At September 30, 2023, we had $21.2 million of loan participation
interests in which we were the lead lender, and $16.6 million in loan participations in which we were not the lead lender. There were
no commercial real estate loan participations originated during the year ended September 30, 2023. We have entered into certain loan participations
when the aggregate outstanding balance of a particular customer relationship exceeds our loan-to-one-borrower limit. All loan participations
are loans secured by real estate that adhere to our loan policies. At September 30, 2023, all participation loans were performing in accordance
with their terms.

 During the fiscal year
ended September 30, 2023, we originated $94.8 million of fixed-rate and adjustable-rate commercial real estate loans and $46.9 million
of fixed-rate and adjustable-rate one-to four-family residential mortgage loans. The fixed-rate loans are primarily loans with terms
of 30 years or less. We also originated $16.6 million of home equity lines of credit and other loans, $27.1 million of construction loans
and $3.0 million of commercial business loans.

 Asset Quality

 We commence collection
efforts when a loan becomes 15 days past due with system-generated reminder notices. Subsequent late charge and delinquent notices are
issued and the account is monitored on a regular basis thereafter. Personal, direct contact with the borrower is attempted early in the
collection process as a courtesy reminder and later to determine the reason for the delinquency and to safeguard our collateral. When
a loan is more than 60 days past due, the credit file is reviewed and, if deemed necessary, information is updated or confirmed and collateral
re-evaluated. We make every effort to contact the borrower and develop a plan of repayment to cure the delinquency. Loans are placed on
non-accrual status when they are delinquent for more than three months. When loans are placed on non-accrual status, unpaid accrued interest
is fully reversed, and further income is recognized only to the extent received.

 A summary report of all
loans 30 days or more past due is provided to the Board of Directors on a monthly basis. If no repayment plan is in process, the file
is referred to counsel for the commencement of foreclosure or other collection efforts.

 Non-Performing Assets.
 The following table sets forth the amounts and categories of our non-accrual assets at the dates indicated.

 2023

 2022

 Non-accrual loans:

 $

 $
 —

 2,224

 —

 2,474

 2,835

 Total non-accrual loans

 $
 5,084

 $
 2,835

 Allowance for loan losses:

 $
 8,330

 $
 8,433

 Ratios:

 Total non-accrual loans to total loans

 0.73%

 0.45%

 Allowance for loan loss to total non-accrual loans

 163.85%

 297.46%

 Commercial business, commercial
real estate and construction loans generally have more risk than one-to four-family residential mortgage loans. At September 30, 2023,
our portfolio of commercial business, commercial real estate and construction loans totaled $441.2 million, or 63.2% of our total loans,
compared to $392.7 million, or 62.4% of our total loans, at September 30, 2022.

 We account for our impaired loans
in accordance with generally accepted accounting principles, which require that a creditor measure impairment based on the present value
of expected future cash flows discounted at the loan's effective interest rate except that, as a practical expedient, a creditor
may measure impairment based on a loan's observable market price less estimated costs of disposal, or the fair value of the collateral
less estimated costs of disposal if the loan is collateral dependent. Regardless of the measurement method, a creditor may measure impairment
based on the fair value of the collateral when the creditor determines that foreclosure is probable.

 We record cash receipts on impaired
loans that are non-performing as a reduction to principal before applying amounts to interest or late charges unless specifically directed
by the Bankruptcy Court to apply payments otherwise. We generally continue to recognize interest income on impaired loans that are performing.

 Troubled debt restructurings ("TDRs")
occur when a creditor, for economic or legal reasons related to a debtor's financial condition, grants a concession to the debtor
that it would not otherwise consider, such as a below market interest rate, extending the maturity of a loan, or a combination of both. There
was one new TDR loan during the fiscal year ended September 30, 2023. For comparison purposes, there were no new TDR loans during the
fiscal year ended September 30, 2022.

 Delinquent Loans.
The following table sets forth certain information with respect to our loan portfolio delinquencies at the dates indicated. Loans delinquent
more than three months are generally classified as non-accrual loans.

 Loans Delinquent For

 60-89 Days

 90 Days and Over

 Total

 Number

 Number

 Number

 At September 30, 2023

 $

 $

 $

 2,224

 2,340

 —

 —

 2,474

 2,474

 Total

 $

 $
 5,084

 $
 5,768

 At September 30, 2022

 $

 —

 $
 —

 $

 —

 —

 —

 —

 2,835

 2,835

 Total

 $

 $
 2,835

 $
 3,396

 Real Estate Owned.
Real estate we acquire as a result of foreclosure or by deed in lieu of foreclosure is classified as other real estate owned ("OREO")
until sold. When property is acquired it is recorded at fair value less estimated cost to sell at the date of foreclosure, establishing
a new cost basis. Holding costs and declines in fair value result in charges to expense after acquisition.

 We held one OREO property totaling
$328,000 at September 30, 2023, an increase of $47,000, or 16.7% from $281,000 at September 30, 2022.

 Classified Assets.
Federal banking regulations provide that loans and other assets of lesser quality should be classified as "substandard," "doubtful"
or "loss" assets. An asset is considered "substandard" if it is inadequately protected by the current net worth
and paying capacity of the obligor or of the collateral pledged, if any. "Substandard" assets include those characterized
by the "distinct possibility" we will sustain "some loss" if the deficiencies are not corrected. Assets classified
as "doubtful" have all of the weaknesses inherent in those classified "substandard," with the added characteristic
that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions,
and values, "highly questionable and improbable." Assets classified as "loss" are those considered "un-collectible"
and of such little value their continuance as assets without the establishment of a specific loss reserve is not warranted. We classify
an asset as "special mention" if the asset has a potential weakness that warrants management's close attention. While
such assets are not impaired, management has concluded that if the potential weakness in the asset is not addressed, the value of the
asset may deteriorate, adversely affecting the repayment of the asset. On the basis of our review at September 30, 2023, classified assets
consisted of $116,000 in special mention loans, $5.6 million in substandard loans, and $328,000 in substandard OREO.

 We are required to establish
an allowance for loan losses in an amount deemed prudent by management for loans classified substandard or doubtful, as well as for other
problem loans. General allowances represent loss allowances which have been established to recognize the inherent losses associated with
lending activities, but which, unlike impairment allowances, have not been allocated to particular problem assets. When we classify problem
assets, we are required to determine whether or not impairment exists. A loan is impaired when, based on current information and events,
it is probable that Magyar Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. When
it is determined that impairment exists, a specific allowance for loss is established. For collateral-dependent loans, the loan is reduced
by the impairment amount via a reduction to the loan and the allowance for loan loss. Our determination as to the classification of our
assets and the amount of our valuation allowances is subject to review by the NJDBI and the FDIC, which can direct us to establish additional
loss allowances.

 The loan portfolio is reviewed
on a regular basis to determine whether any loans require classification in accordance with applicable regulations. Not all classified
assets constitute non-performing assets.

 Allowance for Loan Losses

 Our allowance for loan
losses is maintained at a level management deems necessary to absorb loan losses that are both probable and reasonably estimable. Management,
in determining the allowance for loan losses, considers the losses in our loan portfolio both probable and reasonably estimable, and changes
in the nature and volume of loan activities. along with the general economic and real estate market conditions. Management further evaluates
risk characteristics of the loan portfolio and considers the borrowers, past and expected loan loss experience and other risk factors
that enable for the management to establish an adequate reserve. The loan portfolio are analyzed on a continuous basis and periodically
by management. The allowance for loan losses as of September 30, 2023 was maintained at a level that represents management's best
estimate of losses in the loan portfolio both probable and reasonably estimable. However, this analysis process is inherently subjective,
as it requires us to make estimates that are susceptible to revisions as more information becomes available. Although we believe we have
established the allowance at levels to absorb probable and estimable losses, future additions may be necessary if economic or other conditions
in the future differ from the current environment.

 In June 2016, the Financial
Accounting Standards Board issued Accounting Standards Update ("ASU") 2016-13. ASU 2016-13 significantly changes how entities
will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.
ASU 2016-13 will replace the incurred loss model under existing guidance with a current expected credit loss ("CECL") model
and require entities to record allowances for loan loss. It does specify the allowance should be based on relevant information about past
events, including historical loss experience, current portfolio and market conditions and reasonable and supportable forecasts for the
duration of each respective loan. Accordingly, the Company expects that the adoption of the CECL model on October 1, 2023 will affect
how it determines the allowance for loan losses.

 In addition, as an integral part
of their examination process, the NJDBI and the FDIC will periodically review our allowance for loan losses. Such agencies may require
us to recognize additions to the allowance based on their judgments of information available to them at the time of their examination.

 The provision for loan losses
increased $77,000, or 25.3%, to $381,000 for the year ended September 30, 2023 compared to $304,000 for the year ended September 30, 2022.
The increase was attributable to a $69.3 million, or 11.2% increase in loan receivable to $698.2 million at September 30, 2023 compared
with $628.9 million at September 30, 2022. In addition, non-performing loans increased $2.2 million, or 79.3%, to $5.1 million at September
30, 2023 compared with $2.8 million at September 30, 2022.

 Allowance for Loan Losses.
 The following table sets forth activity in our allowance for loan losses for the years indicated.

 2023

 2022

 Balance at beginning of year

 $
 8,433

 $
 8,075

 Net charge-offs (recoveries):

 (4
)

 (1
)

 —

 (53
)

 —

 Total net charge-offs (recoveries)

 (54
)

 Provision for loan losses

 Balance at end of year

 $
 8,330

 $
 8,433

 Ratios:

 Net charge-offs (recoveries) to average loans outstanding

 0.07%

 -0.01%

 Allowance for loan losses to total non-accrual assets

 163.8%

 297.5%

 Allowance for loan losses to total loans

 1.19%

 1.34%

 The following table presents the
net charge-offs as a percentage of the average loans outstanding for each loan category during the year ended September 30, 2023 for each
loan category.

 As a Percentage

 of Average Loans

 in Category

 Charge-offs:

 $
 —

 —%

 —

 —%

 —

 —%

 —

 —%

 0.07%

 Total net charge-offs

 $

 0.07%

 Allocation of Allowance
for Loan Losses. The following table sets forth the allowance for loan losses allocated by loan category and the percent of the
allowance to the total allowance at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative
of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.

 % of Loans

 In Category to

 Total Loans

 At September 30, 2023

 $
 1,259

 34.1%

 5,277

 55.8%

 3.1%

 2.4%

 4.3%

 Other

 0.3%

 0.0%

 Total allowance for loan losses

 $
 8,330

 100.0%

 At September 30, 2022

 $
 1,223

 34.1%

 4,612

 54.5%

 2.4%

 3.0%

 1,484

 5.5%

 Other

 0.5%

 0.0%

 Total allowance for loan losses

 $
 8,433

 100.0%

 Investments

 Our Board of Directors
has adopted our Investment Policy. This policy determines the types of securities in which we may invest. The Investment Policy is reviewed
annually by the Board of Directors and changes to the policy are subject to approval by our Board of Directors. While general investment
strategies are developed by the Asset and Liability Committee, the execution of specific actions rests primarily with our President and
our Chief Financial Officer. They are responsible for ensuring the guidelines and requirements included in the Investment Policy are followed.
They are authorized to execute transactions that fall within the scope of the established Investment Policy up to $5.0 million per transaction
individually or $10.0 million per transaction jointly. Investment transactions in excess of $10.0 million must be approved by the Asset
and Liability Committee. Investment transactions are reviewed and ratified by the Board of Directors at their regularly scheduled meetings.

 Our investments portfolio
may include U.S. Treasury obligations, debt and equity securities issued by various government-sponsored enterprises, including Fannie
Mae and Freddie Mac, mortgage-backed securities, certain certificates of deposit of insured financial institutions, overnight and short-term
loans to other banks, investment-grade corporate debt instruments, and municipal debt securities. In addition, we may invest in equity
securities subject to certain limitations and not in excess of Magyar Bank's Tier 1 capital.

 The Investment Policy requires
that securities transactions be conducted in a safe and sound manner, and purchase and sale decisions be based upon a thorough analysis
of each security to determine its quality and inherent risks and fit within our overall asset/liability management objectives. The analysis
must consider the effect of an investment or sale on our risk-based capital and prospects for yield and appreciation.

our securities portfolio totaled $96.0 million, or 10.6% of our total assets. Securities are classified as held-to-maturity or available-for-sale
when purchased. At September 30, 2023, $85.8 million of our investment securities were classified as held-to-maturity and reported at
amortized cost and $10.1 million were classified as available-for-sale at fair value. The Company did not hold any investment securities
classified as held-for-trading at September 30, 2023.

 U.S. Government Agency
and Government-Sponsored Enterprise Obligations. At September 30, 2023, our U.S. Government Agency and Government-Sponsored Enterprise
Obligations totaled $89.3 million, or 93.0% of our total securities portfolio. Of this amount, $65.8 million were mortgage-backed securities
at September 30, 2023, and $23.5 million were debt securities. While these securities generally provide lower yields than other securities
in our securities portfolio. We hold these securities to the extent appropriate, for liquidity purposes and as collateral for certain
deposits or borrowings. We invest in these securities to achieve positive interest rate spreads with minimal administrative expense, and
to lower our credit risk as a result of the guarantees provided by these issuers.

 Mortgage-Backed Securities.
 We purchase mortgage-backed pass through and collateralized mortgage obligation ("CMO") securities insured or guaranteed
by Fannie Mae, Freddie Mac or Ginnie Mae. To a lesser extent, we also invest in mortgage-backed securities issued or sponsored by private
issuers. At September 30, 2023, our mortgage-backed securities, including CMOs, totaled $66.0 million, or 68.8%, of our total securities
portfolio. Included in this balance was a $207,000 mortgage-backed security issued by a private issuer. Our policy is to limit purchases
of privately issued mortgage-backed securities to non-high risk securities rated "A" or higher by a nationally recognized
credit rating agency. High risk securities generally are defined as those exhibiting significantly greater volatility of estimated average
life and price due to changes in interest rates than 30-year fixed rate securities.

 Mortgage-backed pass through
securities are created by pooling mortgages and issuing a security with an interest rate less than the interest rate on the underlying
mortgages. Mortgage-backed pass through securities represent a participation interest in a pool of single-family or multi-family mortgages.
As loan payments are made by the borrowers, the principal and interest portion of the payment is passed through to the investor as received.
CMOs are also backed by mortgages, however they differ from mortgage-backed pass through securities because the principal and interest
payments on the underlying mortgages are structured so that they are paid to the security holders of pre-determined classes or tranches
at a faster or slower pace. The receipt of these principal and interest payments, which depends on the estimated average life for each
class, is contingent on a prepayment speed assumption assigned to the underlying mortgages. Variances between the assumed payment speed
and actual payments can significantly alter the average lives of such securities. Mortgage-backed securities and CMOs generally yield
less than the loans that underlie such securities because of the cost of payment guarantees and credit enhancements. However, mortgage-backed
securities are usually more liquid than individual mortgage loans and may be used to collateralize borrowings and other liabilities.

 Mortgage-backed securities
present a risk that actual prepayments may differ from estimated prepayments over the life of the security, which may require adjustments
to the amortization of any premium or accretion of any discount relating to such instruments that can change the net yield on the securities.
There is also reinvestment risk associated with the cash flows from such securities or if the securities are redeemed by the issuer. In
addition, the market value of such securities may be adversely affected by changes in interest rates.

 Our mortgage-backed securities
portfolio had a weighted average yield of 2.24% at September 30, 2023. The estimated fair value of our mortgage-backed securities portfolio
at September 30, 2023 was $56.6 million, which was $11.3 million less than the amortized cost. Mortgage-backed securities in Magyar Bank's
portfolio do not contain sub-prime mortgage loans.

 State and municipal
bond. At September 30, 2023, the Bank held seven state and political subdivision investments totaling $3.5 million.

 Corporate and Other
Securities. At September 30, 2023, the Bank held one corporate note issued by Wells Fargo Bank totaling $3.0 million. Our Investment
Policy allows for the purchase of such instruments and requires that corporate debt obligations be rated in one of the four highest categories
by a nationally recognized rating service. We may invest up to 25% of Magyar Bank's investment portfolio in corporate debt obligations
and up to 15% of Magyar Bank's capital in any one issuer.

 Equity Securities.
At September 30, 2023, we held no equity securities other than $2.3 million in Federal Home Loan Bank of New York ("FHLBNY")
stock. The investment in FHLBNY stock is classified as a restricted security, carried at cost and evaluated for impairment. Equity securities
are not insured or guaranteed investments and are affected by market interest rates and stock market fluctuations. Such investments other
than the FHLBNY are carried at their fair value and fluctuations in the fair value of such investments, including temporary declines in
value, directly affect our net capital position.

 Portfolio Maturities and
Yields. The maturities and weighted average yields of the investment debt securities portfolio and the mortgage-backed securities
portfolio at September 30, 2023 are summarized in the following table. Maturities are based on the final contractual payment dates, and
do not reflect the impact of prepayments or early redemptions that may occur. The weighted average yield is determined using a yield calculated
from the contractual interest rate adjusted for the amortization/accretion of premium/discount paid to purchase the security, if any,
expected to be recognized during its average life. Yields on tax-exempt obligations have been computed on a tax-equivalent basis.

 More Than One

 More Than Five

 One Year

 Year Through

 Years Through

 More Than

 or Less

 Five Years

 Ten Years

 Ten Years

 —%

 —%

 —%

 2.53%

 Mortgage backed securities - commercial

 —%

 —%

 5.58%

 5.55%

 2.42%

 4.07%

 2.62%

 1.71%

 1.06%

 0.85%

 1.00%

 —%

 Private label mortgage-backed securities-residential

 —%

 —%

 5.05%

 —%

 Obligations of U.S. states and political subdivisions

 —%

 3.40%

 1.90%

 1.91%

 —%

 2.98%

 —%

 —%

 Sources of Funds

 General. Deposits,
including certificates of deposit, demand, savings, NOW and money market accounts, have traditionally been the primary source of funds
used for our lending and investment activities. We obtain certificates of deposit primarily through our branch network and to a lesser
extent via the brokered CD market. We also use borrowings, primarily Federal Home Loan Bank advances, to supplement cash flow needs, to
lengthen the maturities of liabilities for interest rate risk management and to manage our cost of funds. Additional sources of funds
include principal and interest payments from loans and securities, loan and security prepayments and maturities, income on other earning
assets and stockholders' equity. While cash flows from loans and securities payments can be relatively stable sources of funds,
deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

 Deposits.
Our deposits are generated primarily from customers within our primary market area. We offer a selection of deposit accounts, including
demand accounts, NOW accounts, money market accounts, savings accounts, retirement accounts and certificates of deposit. Deposit account
terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and
the interest rate. We also accept brokered deposits when attractive rates and terms are available. At September 30, 2023, we had $13.8
million in brokered deposits.

 Interest rates, maturity
terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current
operating strategies and market rates, liquidity requirements, rates paid by

 competitors and growth goals. Personalized customer service,
long-standing relationships with customers and an active marketing program are relied upon to attract and retain deposits.

 The flow of deposits is
influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition.
The variety of deposit accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based
on experience, we believe that our deposits are relatively stable. However, the ability to attract and maintain deposits, and the rates
paid on these deposits, has been and will continue to be significantly affected by market conditions. At September 30, 2023, $104.7 million,
or 13.9% of our deposit accounts, were certificates of deposit (including individual retirement accounts).

 The following table sets forth
the distribution of total deposit accounts, by account type, at the dates indicated.

 2023

 2022

 Deposit Type

 Percent

 Rate

 Percent

 Rate

 Demand accounts

 $
 188,550

 24.96%

 0.00%

 $
 182,417

 27.32%

 0.00%

 Savings accounts

 62,168

 8.23%

 0.54%

 81,850

 12.26%

 0.33%

 NOW accounts

 115,182

 15.25%

 1.67%

 98,643

 14.77%

 0.93%

 Money market accounts

 284,885

 37.71%

 3.01%

 222,214

 33.28%

 1.27%

 Certificates of deposit

 92,725

 12.27%

 3.03%

 69,929

 10.47%

 0.95%

 Retirement accounts

 11,943

 1.58%

 2.19%

 12,680

 1.90%

 0.81%

 Total deposits

 $
 755,453

 100.00%

 1.84%

 $
 667,733

 100.00%

 0.72%

 At September 30, 2023 and
2022, the aggregate deposits in amounts greater than $250,000, which is the maximum amount for federal deposit insurance, were $429.9
million and $292.4 million, respectively. The estimated amount of deposits that were neither insured nor collateralized was $109.3 million
at September 30, 2023. We had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal
deposit insurance.

 The following table sets forth
the maturity of certificates of deposits with individual account balances exceeding $250,000 at September 30, 2023.

 2023

 Maturity Period:

 Three months or less

 $
 1,576

 Over three through six months

 3,234

 Over six through twelve months

 2,702

 Over twelve months

 8,989

 Total

 $
 16,501

 At September 30, 2023 $43.8 million
of our certificates of deposit had maturities of one year or less. We monitor activity on these accounts and, based on historical experience
and our current pricing strategy, we believe we will retain a large portion of these accounts upon maturity.

 Borrowings. Borrowings
from the Federal Home Loan Bank of New York ("FHLBNY") increased $13.9 million, or 88.9%, to $29.5 million at September 30,
2023 from $15.6 million at September 30, 2022 to fund loan originations. The borrowings represent 3.7% of total liabilities and had a
weighted average interest rate of 3.27% at September 30, 2023. Based on eligible collateral pledged to the FHLBNY at September 30, 2023,
we had an aggregate borrowing capacity of $230.1 million with the FHLBNY.

 Subsidiary Activities

 Magyar Investment Company
is a New Jersey investment corporation subsidiary for the purpose of buying, selling and holding investment securities. The income earned
on Magyar Investment Company's investment securities are subject to a lower state tax than that assessed on income earned on investment
securities maintained at Magyar Bank.

 Hungaria Urban Renewal,
LLC is a Delaware limited-liability corporation established in 2002 as a qualified intermediary operating for the purpose of acquiring
and developing Magyar Bank's main office. In 2006, Magyar Bank acquired a 100% interest in Hungaria Urban Renewal, LLC, which has
no other business other than owning Magyar Bank's main office site. As part of a tax abatement agreement with the City of New Brunswick,
Magyar Bank's main office will remain in Hungaria Urban Renewal, LLC's name.

 Magyar Service Corporation, a
New Jersey corporation, is a wholly owned subsidiary of Magyar Bank. Magyar Service Corporation offers Magyar Bank customers and others
a complete range of non-deposit investment products and financial planning services, including insurance products, fixed and variable
annuities, and retirement planning for individual and commercial customers.

 Employees and Human
Capital Resources

 At September 30, 2023 we employed
89 full-time employees and eight part-time employees. Our employees are not represented by any collective bargaining group. Management
believes that we have good relations with our employees.

 We encourage and support the growth
and development of our employees and, wherever possible, seek to fill positions by promotion and transfer from within the organization.
Continual learning and career development is advanced through annual performance and development conversations with employees, internally
developed training programs, customized corporate training engagements and seminars, conferences, and other training events employees
are encouraged to attend in connection with their job duties.

 The safety, health and wellness
of our employees is a top priority. The COVID-19 pandemic presented a unique challenge with regard to maintaining employee safety while
continuing successful operations. Through teamwork and the adaptability of our management and staff, our branches and operations centers
remained open and in-person during the year ended September 30, 2023. All employees are asked not to come to work when they experience
signs or symptoms of a possible COVID-19 illness and have been provided paid time off to cover compensation during such absences. On an
ongoing basis, we further promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible
work schedules, and keeping the employee portion of health care premiums to a minimum.

 Employee retention helps us operate
efficiently and achieve one of our business objectives, which is being a high-level service provider. We believe our commitment to living
out our core values, actively prioritizing concern for our employees' well-being, supporting our employees' career goals,
offering competitive wages and providing valuable fringe benefits aids in retention of our top-performing employees. In addition, nearly
all of our employees are stockholders of the Company through participation in our Employee Stock Ownership Plan, which aligns associate
and stockholder interests by providing stock ownership on a tax-deferred basis at no investment cost to our associates. At September 30,
2023, 39% of our current staff had been with us for ten years or more.

 FEDERAL AND STATE TAXATION

 Federal Taxation

 General.
 Magyar Bancorp, Inc. and Magyar Bank are subject to federal income taxation in the same general manner as other corporations, with
some exceptions discussed below. The most recent audit of Magyar Bank's federal tax returns by the Internal Revenue Service was
for the period ended September 30, 2015. The audit did not result in any material adjustments to the Company's tax returns or the
Company's financial statements. The following discussion of federal taxation is intended only to summarize certain pertinent federal
income tax matters and is not a comprehensive description of the tax rules applicable to Magyar Bancorp, Inc. or Magyar Bank.

 Method of Accounting.
 For federal income tax purposes, Magyar Bancorp, Inc. reports its income and expenses on the accrual method of accounting and uses
a tax year ending September 30th for filing its federal and state income tax returns.

 Bad Debt Reserves.
 Magyar Bank uses the direct charge off method to account for bad debt deductions for income tax purposes.

 Net Operating Loss Carryovers.
 At September 30, 2023, a financial institution was able to carry back net operating losses to the preceding five taxable years and
forward to the succeeding 20 taxable years. At September 30, 2023, we did not have any federal or state net operating loss carry forwards
available to offset future taxable income for tax reporting purposes.

 Corporate Dividends-Received
Deduction. Magyar Bancorp, Inc. may exclude from its federal taxable income 100% of dividends received from Magyar Bank
as a wholly owned subsidiary. The corporate dividends-received deduction is 65% when the dividend is received from a corporation having
at least 20% of its stock owned by the recipient corporation. A 50% dividends-received deduction is available for dividends received from
corporations owned less than 20% by the recipient corporation.

 State Taxation

 New Jersey State
Taxation. The income of savings institutions in New Jersey, which is calculated based on federal taxable income, subject to certain
adjustments, is subject to New Jersey tax. For the tax years ending after July 31, 2019, New Jersey tax law requires members of an affiliated
group where there is common ownership to calculate their corporation business tax on a combined or consolidated basis. Magyar Bancorp,
Inc., Magyar Bank, Magyar Service Corporation, and Magyar Investment Company have filed a New Jersey tax return on a consolidated basis
for the year ended September 30, 2022 and intend to file on a consolidated basis for the year ended September 30, 2023.

 Magyar Bancorp, Inc., Magyar
Bank, Magyar Service Corporation, and Magyar Investment Company are not currently under audit with respect to their New Jersey income
tax returns. Their respective state tax returns have not been audited within the past three years.

 Delaware and New
Jersey State Taxation. As a Delaware holding company not earning income in Delaware, Magyar Bancorp, Inc. is exempt from Delaware
corporate income tax, but is required to file annual returns and pay annual fees and a franchise tax to the State of Delaware.

 Magyar Bancorp, Inc. is subject
to New Jersey corporate income taxes in the same manner as described above for Magyar Bank.

 SUPERVISION AND REGULATION

 General

 Magyar Bank is a New Jersey-chartered
savings bank, and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation ("FDIC")
under the Deposit Insurance Fund ("DIF"). Magyar Bank is subject to extensive regulation, examination and supervision by the
Commissioner of the New Jersey Department of Banking and Insurance (the "Commissioner") as the issuer of its charter, and
by the FDIC as deposit insurer and its primary federal regulator. Magyar Bank must file reports with the Commissioner and the FDIC concerning
its activities and financial condition, and it must obtain regulatory approval prior to entering into certain transactions, such as mergers
with, or acquisitions of, other depository institutions and opening or acquiring branch offices. The Commissioner and the FDIC conduct
periodic examinations to assess Magyar Bank's compliance with various regulatory requirements. This regulation and supervision establishes
a comprehensive framework of activities in which a savings bank can engage and is intended primarily for the protection of the DIF and
depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and
enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment
of adequate loan loss reserves for regulatory purposes.

 Magyar Bancorp, Inc., as
a bank holding company controlling Magyar Bank, is subject to the Bank Holding Company Act of 1956, as amended ("BHCA"), the
rules and regulations of the FRB under the BHCA the provisions of the New Jersey Banking Act of 1948 (the "New Jersey Banking Act"),
and to the regulations of the Commissioner under the New Jersey Banking Act applicable to bank holding companies. Magyar Bank and Magyar
Bancorp, Inc. are required to file reports with, and otherwise comply with the rules and regulations of the FRB and the Commissioner.
Magyar Bancorp, Inc. is required to file certain reports with, and otherwise comply with, the rules and regulations of the Securities
and Exchange Commission under the federal securities laws.

 Any change in such laws
and regulations, whether by the Commissioner, the FDIC, the Federal Reserve Board or through legislation, could have a material adverse
impact on Magyar Bank and Magyar Bancorp, Inc. and their operations and stockholders.

 Certain of the laws and regulations
applicable to Magyar Bank and Magyar Bancorp, Inc. are summarized below. These summaries do not purport to be complete and are qualified
in their entirety by reference to such laws and regulations.

 New Jersey Banking Regulation

 Activity Powers.
Magyar Bank derives its lending, investment and other activity powers primarily from the applicable provisions of the New Jersey Banking
Act and its related regulations. Under these laws and regulations, savings banks, including Magyar Bank, generally may invest in:

 real estate mortgages;

 consumer and commercial loans;

 specific types of debt securities, including certain corporate debt securities and obligations of federal,
state and local governments and agencies;

 certain types of corporate equity securities; and

 certain other assets.

 A savings bank may also
make other investments pursuant to "leeway" authority that permits investments not otherwise permitted by the New Jersey Banking
Act. "Leeway" investments must comply with a number of limitations on the individual and aggregate amounts of "leeway"
investments. A savings bank may also exercise trust powers upon approval of the Commissioner. New Jersey savings banks may exercise those
powers, rights, benefits or privileges authorized for national banks or out-of-state banks or for federal or out-of-state savings banks
or savings associations, provided that before exercising any such power, right, benefit or privilege, prior approval by the Commissioner
by regulation or by specific authorization is required. The exercise of these lending, investment and activity powers are limited by federal
law and regulations. See "Federal Banking Regulation-Activity Restrictions on State-Chartered Banks" below.

 Loans-to-One-Borrower
Limitations. With certain specified exceptions, a New Jersey-chartered savings bank may not make loans or extend credit to a single
borrower or to entities related to the borrower in an aggregate amount that would exceed 15% of the bank's capital funds. A savings
bank may lend an additional 10% of the bank's capital funds if secured by collateral meeting the requirements of the New Jersey
Banking Act. Magyar Bank currently complies with applicable loans-to-one-borrower limitations.

 Dividends.
Under the New Jersey Banking Act, a stock savings bank may declare and pay a dividend on its capital stock only to the extent that the
payment of the dividend would not impair the capital stock of the savings bank. In addition, a stock savings bank may not pay a dividend
unless the savings bank would, after the payment of the dividend, have a surplus of not less than 50% of its capital stock, or alternatively,
the payment of the dividend would not reduce the surplus. Federal law may also limit the amount of dividends that may be paid by Magyar
Bank. See "Federal Banking Regulation-Prompt Corrective Action" below.

 Minimum Capital Requirements.
Regulations of the Commissioner impose on New Jersey-chartered depository institutions, including Magyar Bank, minimum capital requirements
similar to those imposed by the FDIC on insured state banks. See "Federal Banking Regulation-Capital Requirements."

 Examination and Enforcement.
The NJDBI may examine Magyar Bank whenever it deems an examination advisable. The NJDBI examines Magyar Bank at least every three years.
The Commissioner may order any savings bank to discontinue any violation of law or unsafe or unsound business practice and may direct
any director, officer, attorney or employee of a savings bank engaged in an objectionable activity, after the Commissioner has ordered
the activity to be terminated, to show cause at a hearing before the Commissioner why such person should not be removed. The Commissioner
also has authority to appoint a conservator or receiver for a savings bank under certain circumstances such as insolvency or unsafe or
unsound condition to transact business.

 Federal Banking Regulation

 Capital Requirements.
 Federal regulations require FDIC-insured depository institutions to meet several minimum capital standards: a common equity Tier
1 capital to risk-based assets ratio, a Tier 1 capital to risk-based assets ratio, a total capital to risk-based assets ratio, and a Tier
1 capital to total assets leverage ratio.

 The capital standards require
the maintenance of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%,
6% and 8%, respectively, and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as
common stockholders' equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier
1 capital. Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests
in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier
1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements,
and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred
stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25%
of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive
Income ("AOCI"), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair
market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity Tier 1 capital (including
unrealized gains and losses on available-for-sale-securities). Calculation of all types of regulatory capital is subject to deductions
and adjustments specified in the regulations.

 In determining the amount
of risk-weighted assets for purposes of calculating risk-based capital ratios, all assets, including certain off-balance sheet assets
(e.g., recourse obligations, direct credit substitutes, residual interests) are multiplied by a risk weight factor assigned by the regulations
based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present
greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned
to prudently underwritten first lien one-to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer
loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible
equity interests, depending on certain specified factors.

 In addition to establishing
the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management
if the institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted
asset above the amount necessary to meet its minimum risk-based capital requirements.

 In assessing an institution's
capital adequacy, the FDIC takes into consideration, not only these numeric factors, but qualitative factors as well, and has the authority
to establish higher capital requirements for individual institutions where deemed necessary.

 At September 30, 2023, Magyar
Bank's common equity Tier 1 capital to risk-based assets ratio was 14.97%, total capital to risk-based assets ratio was 16.22%,
and Tier 1 capital to total assets leverage ratio was 11.11%. At September 30, 2022, Magyar Bank's common equity Tier 1 capital
to risk-based assets ratio was 15.22%, total capital to risk-based assets ratio was 16.47%, and Tier 1 capital to total assets leverage
ratio was 11.13%.

 Legislation enacted in 2018 required
the federal banking agencies to establish an optional "community bank leverage ratio" of between 8% to 10% Tier 1 equity/consolidated
assets (the "Community Bank Leverage Ratio"). The Community Bank Leverage Ratio is available to institutions with less than
$10 billion of assets that meet certain other requirements. Institutions with capital meeting or exceeding the specified requirements
and electing to follow the alternative regulatory capital structure will be considered to comply with the applicable regulatory capital
requirements, including the risk-based requirements. The federal banking agencies adopted final regulations that set 9.0% as the minimum
capital for the Community Bank Leverage Ratio, effective January 1, 2020. A qualifying institution may opt in and out of the Community
Bank Leverage Ratio framework on its quarterly call report. An institution that ceases to meet any qualifying criteria is provided with
a two-quarter grace period to either comply with the Community Bank Leverage Ratio requirements or comply with the general capital regulations,
including the risk-based capital requirements. Magyar Bank has not elected to use the Community Bank Leverage Ratio.

 Prompt Corrective
Action. The FDIC Improvement Act established a system of prompt corrective action to resolve the problems of undercapitalized
institutions. The FDIC has adopted regulations to implement the prompt corrective action legislation. The regulations were amended to
incorporate the previously mentioned increased regulatory capital standards that were effective January 1, 2015. An institution is deemed
to be "well capitalized" if it has a total risk-based capital ratio of

 10.0% or greater, a Tier 1 risk-based capital ratio
of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is "adequately
capitalized" if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater,
a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is "undercapitalized"
if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of
less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is deemed to be "significantly undercapitalized"
if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of
less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is considered to be "critically undercapitalized"
if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. Effective March
31, 2020, qualifying community banking organizations that elect to use the Community Bank Leverage Ratio framework and that maintain a
leverage ratio of greater than 9.0% will be considered to have satisfied the risk-based and leverage capital requirements to be deemed
well-capitalized.

 Undercapitalized institutions
are subject to a variety of mandatory supervisory measures including the requirement to file a capital plan for the FDIC's approval
and dividend restrictions as well as other discretionary actions by the regulator.

 The FDIC is required, with
some exceptions, to appoint a receiver or conservator for an insured state bank if that bank is "critically undercapitalized."
The FDIC may also appoint a conservator or receiver for a state bank on the basis of the institution's financial condition or upon
the occurrence of certain events, including:

 insolvency, or when the assets of the bank are less than its liabilities to depositors and others;

 substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices;

 existence of an unsafe or unsound condition to transact business;

 likelihood that the bank will be unable to meet the demands of its depositors or to pay its obligations
in the normal course of business; and

 insufficient capital, or the incurring or likely incurring of losses that will deplete substantially all
of the institution's capital with no reasonable prospect of replenishment of capital without federal assistance.

 Activity Restrictions
on State-Chartered Banks. Federal law and FDIC regulations generally limit the activities and investments of state-chartered FDIC-insured
banks and their subsidiaries to those permissible for national banks and their subsidiaries, unless such activities and investments are
specifically exempted by law or consented to by the FDIC.

 Before making a new investment
or engaging in a new activity that is not permissible for a national bank or otherwise permissible under federal law or the FDIC regulations,
an insured bank must seek approval from the FDIC to make such investment or engage in such activity. The FDIC will not approve the activity
unless the bank meets its minimum capital requirements and the FDIC determines that the activity does not present a significant risk to
the DIF. Certain activities of subsidiaries that are engaged in activities permitted for national banks only through a "financial
subsidiary" are subject to additional restrictions.

 Federal law permits a state-chartered
savings bank to engage, through financial subsidiaries, in any activity in which a national bank may engage through a financial subsidiary
and on substantially the same terms and conditions. In general, the law permits a national bank that is well-capitalized and well-managed
to conduct, through a financial subsidiary, any activity permitted for a financial holding company other than insurance underwriting,
insurance investments, real estate investment or development or merchant banking. The total assets of all such financial subsidiaries
may not exceed the lesser of 45% of the bank's total assets or $50 million. The bank must have policies and procedures to assess
the financial subsidiary's risk and protect the bank from such risk and potential liability, must not consolidate the financial
subsidiary's assets with the bank's and must exclude from its own assets and equity all equity investments, including retained
earnings, in the financial subsidiary. State-chartered savings banks may retain subsidiaries in existence as of March 11, 2000 and may
engage in activities that are not authorized under federal law. Although Magyar Bank meets all conditions necessary to establish and engage
in permitted activities through financial subsidiaries, it has not yet determined to engage in such activities.

 Federal Home Loan
Bank System. Magyar Bank is a member of the Federal Home Loan Bank system, which consists of eleven regional federal home loan
banks, each subject to supervision and regulation by the Federal Housing Finance Agency. The federal home loan banks provide a central
credit facility primarily for member thrift institutions as well as other entities involved in home mortgage lending. Magyar Bank, as
a member of the FHLBNY, is required to purchase and hold shares of capital stock in the FHLBNY in specified amounts.

 As of September 30, 2023,
Magyar Bank was in compliance with these requirements.

 Enforcement.
The FDIC has extensive enforcement authority over insured savings banks, including Magyar Bank. This enforcement authority includes, among
other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and officers. In general,
these enforcement actions may be initiated in response to violations of laws and regulations, unsafe or unsound practices or non-compliance
with agency conditions or agreements.

 Deposit Insurance.
The DIF of the FDIC insures deposits at Federal Deposit Insurance Corporation insured financial institutions such as Magyar Bank generally
up to a maximum of $250,000 per separately insured depositor.

 Under
the FDIC's risk-based assessment system, insured institutions are assigned to one of four risk categories based on supervisory evaluations,
regulatory capital levels and certain other risk factors. Rates are based on each institution's risk category and certain specified
risk adjustments. Institutions deemed to be less risky pay lower rates while institutions deemed riskier pay higher rates. Assessment
rates (inclusive of possible adjustments) currently range from 2.5 to 32 basis points of each institution's total assets less tangible
capital. The FDIC may increase or decrease the scale uniformly, except that no adjustment can deviate more than two basis points from
the base scale without notice and comment rulemaking. The FDIC's current system represents a change, required by the Dodd-Frank
Act, from its prior practice of basing the assessment on an institution's deposits.

 Insurance
of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe
or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
The Bank does not believe that it is taking or is subject to any action, condition or violation that could lead to termination of its
deposit insurance.

 Transactions with
Affiliates of Magyar Bank. Magyar Bank's authority to engage in transactions with its affiliates is limited by Sections
23A and 23B of the Federal Reserve Act and its implementing Regulation W promulgated by the FRB. An affiliate includes, among other things,
a company that controls, is controlled by, or is under common control with an insured depository institution, such as Magyar Bancorp,
Inc. In general, "covered transactions," as defined by these authorities, between an insured depository institution and its
affiliates are subject to certain quantitative and collateral requirements. In this regard, covered transactions between an insured depository
institution and its affiliates are limited to 10% of the institution's capital stock and surplus for transactions with any one affiliate,
and 20% of the institution's capital stock and surplus for transactions in the aggregate with all affiliates. Collateral of specific
types and in specified amounts ranging from 100% to 130% of the amount of the transaction must usually be provided by affiliates for a
savings bank to engage in a credit transaction with them. In addition, "covered transactions" with affiliates must be on terms
and conditions consistent with safe and sound banking practices, and generally may not involve low-quality assets. Transactions with affiliates
must generally be on terms and under circumstances that are substantially the same, or at least as favorable to the institution, as comparable
transactions involving non-affiliates. Magyar Bank is currently in compliance with these requirements.

 Prohibitions Against
Tying Arrangements. Banks are subject to the prohibitions of 12 U.S.C. Section 1972 on certain tying arrangements. A depository
institution is prohibited, subject to some exceptions, from extending credit to or offering any other service, or fixing or varying the
consideration for such extension of credit or service, on the condition that the customer obtain some additional service from the institution
or its affiliates or not obtain services of a competitor of the institution.

 Community Reinvestment
Act. All FDIC-insured institutions have a responsibility under the Community Reinvestment Act ("CRA") and related
regulations to help meet the credit needs of their communities, including low- and moderate-income neighbourhoods. In connection with
its examination of a state chartered savings bank, the FDIC is required to assess the institution's record of compliance with the
CRA. On October 24, 2023, the FDIC, the FRB, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize
the CRA regulations. Under the final rule, banks with assets of at least $600 million as of December 31 in both of the prior two calendar
years and less than $2 billion as of December 31 in either of the prior two calendar years will be an "intermediate bank."
The agencies will evaluate intermediate banks under the Retail Lending Test and either the current community development test, referred
to in the final rule as the Intermediate Bank Community Development Test, or, at the bank's option, the Community Development Financing
Test. The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements
will be applicable on January 1, 2027.

 An institution's
failure to comply with the provisions of the CRA could, at a minimum, result in regulatory restrictions on its activities. We received
an "Outstanding" CRA rating in our most recently completed federal examination, which was conducted by the FDIC in 2022.

 Consumer Protection.
Magyar Bank and Magyar Bancorp are subject to federal and state fair lending laws. The Equal Credit Opportunity Act and the Fair Housing
Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. In addition,
Magyar Bank and Magyar Bancorp are subject to other federal and state laws designed to protect consumers and prohibit unfair, deceptive
or abusive business practices, including the Home Ownership Protection Act, Fair Credit Reporting Act, as amended by the Fair and Accurate
Credit Transactions Act of 2003 (the "FACT Act"), the Gramm-Leach Bliley Act, the Truth in Lending Act ("TILA"),
the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act and various state law counterparts.
These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must interact
with clients when taking deposits, making loans, collecting and servicing loans and providing other services. Further, the Consumer Financial
Protection Bureau has broad authority to prohibit unfair or deceptive acts and practices and is specifically empowered to require certain
disclosures to consumers and draft model disclosure forms. Failure to comply with consumer protection laws and regulations can subject
financial institutions to enforcement actions, fines and other penalties. The failure to comply with these laws could result in enforcement
actions by the federal banking agencies, as well as other federal regulatory agencies and the Department of Justice.

 Mortgage Reform.
The Dodd-Frank Act prescribes certain standards that mortgage lenders must consider before making a residential mortgage loan, including
verifying a borrower's ability to repay such mortgage loan, and allows borrowers to assert violations of certain provisions of TILA
as a defense to foreclosure proceedings. Under the Dodd-Frank Act, prepayment penalties are prohibited for certain mortgage transactions
and creditors are prohibited from financing insurance policies in connection with a residential mortgage loan or home equity line of credit.
In addition, the Dodd-Frank Act prohibits mortgage originators from receiving compensation based on the terms of residential mortgage
loans and generally limits the ability of a mortgage originator to be compensated by others if compensation is received from a consumer.
The Dodd-Frank Act requires mortgage lenders to make additional disclosures prior to the extension of credit, and in each billing statement,
for negative amortization loans and hybrid adjustable-rate mortgages. The Economic Growth Act included provisions that ease certain requirements
related to mortgage transactions for certain institutions with less than $10 billion in total consolidated assets.

 Privacy Regulations.
Federal regulations generally require that Magyar Bank disclose its privacy policy, including identifying with whom it shares a customer's
"non-public personal information," to customers at the time of establishing the customer relationship and annually thereafter.
In addition, Magyar Bank is required to provide its customers with the ability to "opt-out" of having their personal information
shared with unaffiliated third parties and not to disclose account numbers or access codes to non-affiliated third parties for marketing
purposes. Except as otherwise required or permitted by law, Magyar Bank is prohibited from disclosing such information. Magyar Bank currently
has a privacy protection policy in place and believes that such policy is in compliance with the regulations.

 Loans to a Bank's Insiders

 Federal Regulation.
A bank's loans to its executive officers, directors, any owner of 10% or more of its stock (each, an insider) and any entities controlled
by any such person (an insider's related interest) are subject to the conditions and limitations imposed by Section 22(h) of the
Federal Reserve Act and its implementing regulations. Under these restrictions, the aggregate amount of the loans to any insider and the
insider's related interests may not exceed the loans-to-one-borrower limit applicable to member banks, which is comparable to the
loans-to-one-borrower limit applicable to Magyar Bank's loans. See "New Jersey Banking Regulation—Loans-to-One Borrower
Limitations." All loans by a bank to all insiders and insiders' related interests in the aggregate may not exceed the bank's
unimpaired capital and unimpaired surplus. With certain exceptions, loans to an executive officer, other than loans for the education
of the officer's children and certain loans secured by the officer's residence, may not exceed the greater of $25,000 or 2.5%
of the bank's unimpaired capital and surplus, and in no event more than $100,000. Federal regulation also requires that any proposed
loan to an insider or a related interest of that insider be approved in advance by a majority of the Board of Directors of the bank, with
any interested directors not participating in the voting, if such loan, when aggregated with any existing loans to that insider and the
insider's related interests, would exceed the greater of $25,000 or 5% of the bank's unimpaired capital and surplus. Generally,
loans to an insider's related interests must be made on substantially the same terms as, and follow credit underwriting procedures
that are not less stringent than, those that are prevailing at the time for comparable transactions with other persons.

 An exception is made for extensions
of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not
give any preference to insiders of the bank over other employees of the bank.

 In addition, federal law prohibits
extensions of credit to a bank's insiders and their related interests by any other institution that has a correspondent banking
relationship with the bank, unless such extension of credit is on substantially the same terms as those prevailing at the time for comparable
transactions with other persons and does not involve more than the normal risk of repayment or present other unfavourable features.

 New Jersey Regulation.
Provisions of the New Jersey Banking Act impose conditions and limitations on the liabilities to a savings bank of its directors and executive
officers and of corporations and partnerships controlled by such persons, that are comparable in many respects to the conditions and limitations
imposed on the loans and extensions of credit to insiders and their related interests under federal law, as discussed above. The New Jersey
Banking Act also provides that a savings bank that is in compliance with federal law is deemed to be in compliance with such provisions
of the New Jersey Banking Act.

 Federal Reserve System

 FRB regulations require all depository
institutions to maintain reserves at specified levels against their transaction accounts (primarily NOW and regular checking accounts).
At September 30, 2023, Magyar Bank was in compliance with the FRB's reserve requirements. Savings banks, such as Magyar Bank, are
authorized to borrow from the Federal Reserve Bank "discount window." Magyar Bank is deemed by the FRB to be generally sound
and thus is eligible to obtain secondary credit from its FRB. Generally, secondary credit is extended on a very short-term basis to meet
the liquidity needs of the institution. Loans must be secured by acceptable collateral and carry a rate of interest above the Federal
Open Market Committee's federal funds target rate.

 The Bank Secrecy Act and USA
PATRIOT Act

 The Bank Secrecy Act ("BSA")
and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("USA
PATRIOT Act") require Magyar Bank to implement a compliance program to detect and prevent money laundering, terrorist financing,
and illicit crime. Together, the BSA and USA PATRIOT Act require Magyar Bank to implement internal controls, conduct customer due diligence,
maintain records, and file reports. The USA PATRIOT Act also required the federal banking agencies to take into consideration the effectiveness
of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application.
Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part
of the application process. We have established policies, procedures and systems designed to comply with the BSA, USA PATRIOT Act, and
regulations implemented thereunder.

 Sarbanes-Oxley Act of 2002

 The
Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing
improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures
pursuant to the securities laws. We have policies, procedures and systems designed to comply with this Act and its implementing regulations,
and we review and document such policies, procedures and systems to ensure continued compliance.

 Holding Company Regulation

 Federal Regulation.
Magyar Bancorp, Inc. is regulated as a bank holding company. Bank holding companies are subject to examination, regulation and periodic
reporting under the BHCA, as administered by the FRB. Bank holding companies are generally subject to consolidated capital requirements
established by the FRB. Bank holding companies under $3.0 billion in consolidated assets remain exempt from consolidated regulatory capital
requirements, unless the FRB determines otherwise in particular cases.

 Regulations of the FRB provide
that a bank holding company must serve as a source of strength to any of its subsidiary banks and must not conduct its activities in an
unsafe or unsound manner. The Dodd-Frank Act codified the source of strength policy and required the promulgation of implementing regulations.
Under the prompt corrective action provisions

 of the Dodd-Frank Act, a bank holding company parent of an undercapitalized subsidiary bank
would be directed to guarantee, within limitations, the capital restoration plan that is required of such an undercapitalized bank. See
"Federal Banking Regulation—Prompt Corrective Action." If the undercapitalized bank fails to file an acceptable capital
restoration plan or fails to implement an accepted plan, the FRB may prohibit the bank holding company parent of the undercapitalized
bank from paying any dividend or making any other form of capital distribution without the prior approval of the FRB.

 As a bank holding company,
Magyar Bancorp, Inc. is required to obtain the prior approval of the FRB to acquire all, or substantially all, of the assets of any bank
or bank holding company. Prior FRB approval is required for Magyar Bancorp, Inc. to acquire direct or indirect ownership or control of
any voting securities of any bank or bank holding company if, after giving effect to such acquisition, it would, directly or indirectly,
own or control more than 5% of any class of voting shares of such bank or bank holding company.

 A bank holding company is required
to give the FRB prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for
the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12
months, will be equal to 10% or more of the company's consolidated net worth. The FRB may disapprove such a purchase or redemption
if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, FRB order or
directive, or any condition imposed by, or written agreement with, the FRB. Such notice and approval is not required for a bank holding
company that would be treated as "well capitalized" under applicable regulations of the FRB, that has received a composite
"1" or "2" rating, as well as a "satisfactory" rating for management, at its most recent bank holding
company inspection by the FRB, and that is not the subject of any unresolved supervisory issues.

 In addition, a bank holding company
that does not elect to be a financial holding company under federal regulation, is generally prohibited from engaging in, or acquiring
direct or indirect control of any company engaged in non-banking activities. One of the principal exceptions to this prohibition is for
activities found by the FRB to be so closely related to banking or managing or controlling banks as to be permissible. Some of the principal
activities that the FRB has determined by regulation to be so closely related to banking as to be permissible are:

 making or servicing loans;

 performing certain data processing services;

 providing discount brokerage services, or acting as fiduciary, investment or financial advisor;

 leasing personal or real property;

 making investments in corporations or projects designed primarily to promote community welfare; and

 acquiring a savings and loan association.

 Bank holding companies
that elect to be a financial holding company may engage in activities that are financial in nature or incident to activities which are
financial in nature, including investment banking and insurance underwriting. Magyar Bancorp, Inc. has not elected to be a financial holding
company, although it may seek to do so in the future. Bank holding companies may elect to become a financial holding company if:

 each of its depository institution subsidiaries is "well capitalized;"

 each of its depository institution subsidiaries is "well managed;"

 each of its depository institution subsidiaries has at least a "satisfactory" CRA rating at
its most recent examination; and

 the bank holding company has filed a certification with the FRB stating that it elects to become a financial
holding company.

 Under federal law, depository
institutions are liable to the FDIC for losses suffered or anticipated by the FDIC in connection with the default of a commonly controlled
depository institution or any assistance provided by the FDIC to such an institution in danger of default. This law would be applicable
potentially to Magyar Bancorp, Inc. if it ever acquired as a separate subsidiary a depository institution in addition to Magyar Bank.

 New Jersey Regulation.
Under the New Jersey Banking Act, a company owning or controlling a savings bank is regulated as a bank holding company. The New Jersey
Banking Act defines the terms "company" and "bank holding company" as such terms are defined under the BHCA. Each
bank holding company controlling a New Jersey-chartered bank or savings bank must file certain reports with the Commissioner and is subject
to examination by the Commissioner.

 Acquisition of Magyar
Bancorp, Inc. Under federal law and under the New Jersey Banking Act, no person may acquire control of Magyar Bancorp, Inc. without
first obtaining approval of such acquisition of control by the FRB and the Commissioner.

 Federal Securities Laws.
 Magyar Bancorp, Inc. common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended. Magyar Bancorp, Inc. is subject to the information, proxy solicitation, insider trading restrictions and other requirements
under the Securities Exchange Act of 1934.

 ITEM 1A.
 Risk Factors

 In
addition to factors discussed in the description of our business and elsewhere in this report, the following are factors that could adversely
affect our future results of operations and financial condition.

 Economic and Market Area

 Adverse
developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance
by financial institutions or transactional counterparties, could adversely affect our financial condition and results of operations.

 Actual events involving limited
liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or
other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events
of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on
May 1, 2023, First Republic Bank went into receivership and its deposits and substantially all of its assets were acquired by JPMorgan
Chase Bank, National Association. Similarly, on March 10, 2023, Silicon Valley Bank went into receivership, and on March 12,
Signature Bank went into receivership.

 Inflation can have an adverse
impact on our business and on our customers.

 Inflation and rapid increases
in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current
market interest rates. Although the Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25.0 billion of
loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of
potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions
for immediately liquidity may exceed the capacity of such program. There is no guarantee that the Treasury, FDIC and Federal Reserve Board
will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they
would do so in a timely fashion. In addition, inflation generally increases the cost of goods and services we use in our business operations,
such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation
and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability
to repay their loans with us.

 The Company's business,
financial condition, results of operations and the trading price of its securities can be materially and adversely affected by many events
and conditions including the following:

 •
 risks to the capital markets that may impact the performance of the investment securities portfolio of
the Company, as well as limit our access to capital markets and other funding sources;

 •
 effects on key employees, including operational management personnel and those charged with preparing,
monitoring and evaluating the companies' financial reporting and internal controls;

 •
 declines in demand for loans and other banking services and products, as well as a decline in the credit
quality of our loan portfolio in the markets served by the Company;

 •
 if the economy is unable to substantially reopen or reopen in an efficient manner, and high levels of
unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in
increased charges and reduced income;

 •
 collateral for loans, especially real estate, may continue to decline in value, which could cause loan
losses to increase;

 •
 allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely
affect net income;

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

 •
 as the result of the increase in the Federal Reserve Board's target federal funds rate, the cost
on interest-bearing liabilities may greater than the yield on interest-earning assets, or reducing the net interest margin, spread and
reducing net income;

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

 •
 declines in demand resulting from adverse impacts of the disease on
businesses deemed to be "non-essential" by governments in the markets served by the Company; and

 •

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

 A
Worsening of Economic Conditions Could Reduce Demand for Our Products and Services and/or Result in Increases in Our Level of Non-performing
Loans, Which Could Have an Adverse Effect on Our Results of Operations.

 Unlike
larger financial institutions that are more geographically diversified, our profitability depends primarily on the general economic conditions
in New Jersey and the greater New York metropolitan area. Local economic conditions have a significant impact on our commercial real estate
and construction and consumer loans, the ability of the borrowers to repay these loans and the value of the collateral securing these
loans. Almost all of our loans are to borrowers located in or secured by collateral located in New Jersey and the New York metropolitan
area.

 A
deterioration in economic conditions could result in the following consequences, any of which could have a material adverse effect on
our business, financial condition, liquidity and results of operations:

 •
 demand for our products and services may decline;

 •
 loan delinquencies, problem assets and foreclosures may increase;

 •
 collateral for loans, especially real estate, may decline in value,
in turn reducing customers' future borrowing power, and reducing the value of assets and collateral associated with existing loans;

 •
 the value of our securities portfolio may decline; and

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

 Moreover,
a significant decline in general economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or
other international or domestic calamities, unemployment or other factors beyond our control could further impact these local economic
conditions and could further negatively affect the financial results of our banking operations. In addition, deflationary pressures, while
possibly lowering our operating costs, could have a significant negative effect on our borrowers, especially our business borrowers, and
the values of underlying collateral securing loans, which could negatively affect our financial performance.

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

 Competition
in the banking and financial services industry is intense. In our market area, we compete with commercial banks, savings institutions,
mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms
operating locally and elsewhere. Some of our competitors have substantially greater resources and lending limits than we, have greater
name recognition and market presence that benefit them in attracting business, and offer certain services that we do not or cannot provide.
In addition, larger competitors may be able to price loans and deposits more aggressively than we do. Our profitability depends upon our
continued ability to

 successfully compete in our market area. The greater resources and deposit and loan products offered by some of our
competitors may limit our ability to increase our interest-earning assets. For additional information see "Business of Magyar Bank-Competition."

 We Are a Community Bank and Our
Ability to Maintain Our Reputation is Critical to the Success of Our Business. The Failure to do so May Adversely Affect Our Performance.

 We are a community bank and our
reputation is one of the most valuable assets of our business. A key component of our business strategy is to rely on our reputation for
customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective
customers in our market area. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part,
by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering
superior service to our customers and caring about our customers. If our reputation is negatively affected by the actions of our employees,
by our inability to conduct our operations in a manner that is appealing to current or prospective customers or otherwise, our business
and operating results may be materially adversely affected.

 Our small size may make it more
difficult for us to compete.

 Our asset size may make it more
difficult to compete with other financial institutions that are larger and can more easily afford to invest in the marketing and technologies
needed to attract and retain customers. Accordingly, we are not always able to offer new products and services as quickly as our competitors.
Lower earnings may also make it more difficult to offer competitive salaries and benefits. In addition, our smaller customer base may
make it difficult to generate meaningful non-interest income from such activities as securities and insurance brokerage. Finally, as an
institution smaller than many in our market area, we are disproportionately affected by the continually increasing costs of compliance
with new banking and other regulations.

 Interest Rate and Asset Quality

 The reversal of the historically
low interest rate environment may adversely affect our net interest income and profitability.

 The Federal Reserve Board increased
benchmark interest rates significantly in response to control the inflation. In recent periods, market interest rates have risen in response
to the Federal Reserve Board's recent rate increases. As discussed below, the increase in market interest rates could have an adverse
effect on our net interest income and profitability.

 Changes in Interest Rates May
Hurt Our Profits and Asset Values.

 Our earnings largely depend on
our net interest income, which could be negatively affected by changes in interest rates. Net interest income is the difference between:

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

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

 The rates we earn on our assets
and the rates we pay on our liabilities are generally fixed for a contractual period of time. While we have taken steps to attempt to
reduce our exposure to increases in interest rates, historically our liabilities generally have shorter contractual maturities than our
assets. This imbalance can create significant earnings volatility, because market interest rates change over time. In a period of rising
interest rates, the interest income earned on our assets may not increase as rapidly as the interest paid on our liabilities. Likewise,
in a period of falling interest rates, the interest expense paid on our liabilities may not decrease as rapidly as the interest income
received on our assets. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Management
of Market Risk."

 In addition, changes in interest
rates can affect the average life of loans and mortgage-backed securities. A reduction in interest rates causes increased prepayments
of loans and mortgage-backed securities as borrowers tend to refinance their debt to reduce their borrowing costs. This creates reinvestment
risk, which is the risk that we may not be able to reinvest the funds from faster prepayments at rates that are comparable to the rates
we earned on the prepaid loans or securities. Additionally, increases in interest rates may decrease loan demand and/or make it more difficult
for borrowers to repay adjustable-rate loans.

 Changes in interest rates
also affect the current market value of our interest-earning securities portfolio. Generally, the value of securities moves inversely
with changes in interest rates. At September 30, 2023, the fair value of our total securities portfolio was $83.9 million. The unrealized
net loss on securities totaled $14.1 million on a pre-tax basis at September 30, 2023.

 We evaluate interest rate
sensitivity using models that estimate the change in Magyar Bank's net interest income over a range of interest rate scenarios.
At September 30, 2023, in the event of an immediate 200 basis point increase in interest rates, the model projects that we would experience
a $391,000, or 1.3%, increase in net interest income in the first year following the change in interest rates, and a $1.8 million, or
5.3%, increase in net interest income in the second year following the change in interest rates. At September 30, 2023, in the event of
an immediate 200 basis point decrease in interest rates, the model projects that we would experience a $661,000, or 2.1%, decrease in
net interest income in the first year following the change in interest rates, and a $2.3 million, or 6.9%, decrease in net interest income
in the second year following the change in interest rates.

our available-for-sale securities portfolio at fair value totaled $10.1 million, which consisted entirely of mortgage-backed securities.
To the extent interest rates increase and the value of our available-for-sale portfolio increases, our stockholders' equity will
be affected accordingly.

 Because
We Intend to Continue our Emphasis on the Origination of Commercial Business Loans and Commercial Real Estate Loans, Our Lending Risk
Has Increased in Recent Years and May Increase in Future Years.

our portfolio of commercial real estate and commercial business loans totaled $419.3 million, or 60.1% of our total loans, compared to
$377.5 million, or 60.0% of our total loans at September 30, 2022 and $349.6 million, or 58.8% of our total loans at September 30, 2021.
It is our intent to continue to emphasize the origination of commercial business and commercial real estate loans. Commercial business
and commercial real estate loans generally have more risk than one-to four-family residential mortgage loans. At September 30, 2023, there
was one non-performing commercial real estate loan totaling $2.2 million and no non-performing commercial business loans compared with
no non-performing commercial real estate or commercial business loans at September 30, 2022.

 Because the repayment of
commercial business and commercial real estate loans depends on the successful management and operation of the borrower's properties
or related businesses, repayment of these loans has been and may continue to be affected by adverse conditions in the real estate market
or the local economy. Further, these loans typically have larger loan balances, and several of our borrowers have more than one commercial
business and commercial real estate loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit
relationship can expose us to significantly greater risk of loss compared to an adverse development with respect to a one- to four-family
residential mortgage loan. Finally, if we foreclose on a commercial business or commercial real estate loan, our holding period for the
collateral, if any, typically is longer than for one-to four-family residential mortgage loans because there are fewer potential purchasers
of the collateral. Because we plan to continue to emphasize the origination of these loans, it may be necessary to increase our allowance
for loan losses because of the increased credit risk associated with these types of loans. Any increase to our allowance for loan losses
would adversely affect our earnings.

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

 Our allowance for loan
losses may not be sufficient to cover losses inherent in our loan portfolio, requiring additions to our allowance, which could materially
decrease our net income. The allowance for loan losses decreased by $103,000 during the year ended September 30, 2023 to $8.3 million
from $8.4 million for the year ended September 30, 2022. The allowance for loan losses as a percentage of non-performing loans decreased
to 163.9% at September 30, 2023 compared with 297.5% at September 30, 2022. At September 30, 2023 our allowance for loan losses as a percentage
of total loans was 1.19%, compared with 1.34% at September 30, 2022.

 Future increases in the
allowance for loan losses may be necessary based on possible future increases in total loans receivable, increases in non-performing loans
and charge-offs, deterioration of collateral values securing impaired real estate loans, and deterioration of the current economic environment.
We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers
and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the amount
of the allowance for loan losses, we review our loans and our loss and delinquency experience, and we evaluate economic conditions. Based
on this review, we believe our allowance for loan losses is adequate to absorb losses in our loan portfolio as of September 30, 2023.

 Bank regulators periodically
review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs.
Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities will have a material adverse
effect on our financial condition and results of operations.

 The Financial Accounting Standards
Board has adopted a new accounting standard that is referred to as Current Expected Credit Loss, or CECL. The implementation of CECL has
been delayed for smaller reporting companies, such as the Company, until January 2023 (effective October 1, 2023 for the Company). CECL
will require financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected
credit losses as allowances for loan losses. This will change the current method of providing allowances for loan losses that are probable,
which may require us to increase our allowance for loan losses, and to greatly increase the types of data we will need to collect and
review to determine the appropriate level of the allowance for loan losses. Any increase in our allowance for loan losses or expenses
incurred to determine the appropriate level of the allowance for loan losses may have a material adverse effect on our financial condition
and results of operations.

 We are subject to environmental
liability risk associated with lending activities or properties we own.

 A significant portion of our loan
portfolio is secured by real estate, and we could become subject to environmental liabilities with respect to one or more of these properties,
or with respect to properties that we own in operating our business. During the ordinary course of business, we may foreclose on and take
title to properties securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could be found on these
properties. If hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well
as for personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances
first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities
and may materially reduce the affected property's value or limit our ability to use or sell the affected property. In addition,
future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental
liability.

 Regulatory Matters

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

 Magyar Bank is subject to extensive
regulation, supervision and examination by the NJDBI, its chartering authority, and by the Federal Deposit Insurance Corporation, which
insures Magyar Bank's deposits. As a bank holding company, Magyar Bancorp, Inc. is subject to regulation and supervision by the
Federal Reserve Board. Such regulation and supervision govern the activities in which financial institutions and their holding companies
may engage and are intended primarily for the protection of the federal deposit insurance fund and depositors. These regulatory authorities
have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on
the operations of financial institutions, the classification of assets by financial institutions and the adequacy of financial institutions'
allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation,
could have a material impact on Magyar Bank and Magyar Bancorp, Inc.

 Magyar Bank's operations
are also subject to extensive regulation by other federal, state and local governmental authorities, and are subject to various laws and
judicial and administrative decisions that impose requirements and restrictions on operations. These laws, rules and regulations are frequently
changed by legislative and regulatory authorities. There can be no assurance that changes to existing laws, rules and regulations, or
any other new laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or
otherwise adversely affect our business, financial condition or prospects.

 Non-compliance with the USA PATRIOT
Act, Bank Secrecy Act, or Other Laws and Regulations Could Result in Fines or Sanctions.

 The USA PATRIOT and Bank Secrecy
Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist
activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury's
Office of Financial Crimes Enforcement Network. These rules require financial institutions to establish procedures for identifying
and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result
in fines or sanctions, including restrictions on conducting acquisitions or establishing new branches. During the last year, several banking
institutions have received large fines for non-compliance with these laws and regulations. While we have developed policies and procedures

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

 The Federal Reserve Board may
require us to commit capital resources to support Magyar Bank.

 Federal law requires that a holding
company act as a source of financial and managerial strength to its subsidiary bank and to commit resources to support such subsidiary
bank. Under the "source of strength" doctrine, the Federal Reserve Board may require a holding company to make capital injections
into a troubled subsidiary bank and may charge the holding company with engaging in unsafe and unsound practices for failure to commit
resources to a subsidiary bank. A capital injection may be required at times when the holding company may not have the resources to provide
it and therefore may be required to borrow the funds or raise capital. Any loans by a holding company to its subsidiary bank are subordinate
in right of payment to deposits and to certain other indebtedness of such subsidiary bank. In the event of a holding company's bankruptcy,
the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of
a subsidiary bank. Thus, any borrowing that must be done by Magyar Bancorp to make a required capital injection becomes more difficult
and expensive and could have an adverse effect on our business, financial condition and results of operations.

 Security

 System Failure or Breaches of Our Network Security
Could Subject Us to Increased Operating Costs as well as Litigation and Other Liabilities.

 The computer systems and
network infrastructure we and our third-party service providers use could be vulnerable to unforeseen problems. Our operations are dependent
upon our ability to protect our computer equipment against damage from physical theft, fire, power loss, telecommunications failure or
a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms and other disruptive problems
caused by hackers. Any damage or failure that causes an interruption in our operations could have a material adverse effect on our financial
condition and results of operations. Computer break-ins, phishing and other disruptions could also jeopardize the security of information
stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability to us and
may cause existing and potential customers to refrain from doing business with us. Although we, with the help of third-party service providers,
intend to continue to implement security technology and establish operational procedures designed to prevent such damage, our security
measures may not be successful. In addition, advances in computer capabilities, new discoveries in the field of cryptography or other
developments could result in a compromise or breach of the algorithms we and our third-party service providers use to encrypt and protect
customer transaction data. A failure of such security measures could have a material adverse effect on our financial condition and results
of operations.

 It is possible that a significant
amount of time and money may be spent to rectify the harm caused by a breach or hack. While we have general liability insurance, there
are limitations on coverage as well as dollar amount. Furthermore, cyber incidents carry a greater risk of injury to our reputation. Finally,
depending on the type of incident, banking regulators can impose restrictions on our business and consumer laws may require reimbursement
of customer loss.

 Risks Associated with Cyber-Security
Could Negatively Affect Our Earnings.

 The financial services industry
has experienced an increase in both the number and severity of reported cyber-attacks aimed at gaining unauthorized access to bank systems
as a way to misappropriate assets and sensitive information, corrupt and destroy data, or cause operational disruptions. We have established
policies and procedures to prevent or limit the impact of security breaches, but such events may still occur or may not be adequately
addressed if they do occur. Although we rely on security safeguards to secure our data, these safeguards may not fully protect our systems
from compromises or breaches.

 We also rely on the integrity
and security of a variety of third party processors, payment, clearing and settlement systems, as well as the various participants involved
in these systems, many of which have no direct relationship with us. Failure by these participants or their systems to protect our customers'
transaction data may put us at risk for possible losses due to fraud or operational disruption.

 Our customers are also the target
of cyber-attacks and identity theft. Large scale identity theft could result in customers' accounts being compromised and fraudulent activities
being performed in their name. We have implemented certain safeguards against these types of activities but they may not fully protect
us from fraudulent financial losses.

 The occurrence of a breach of
security involving our customers' information, regardless of its origin, could damage our reputation and result in a loss of customers
and business and subject us to additional regulatory scrutiny, and could expose us to litigation and possible financial liability. Any
of these events could have a material adverse effect on our financial condition and results of operations.

 Other Risks Associated with Our

 Our Certificate of Incorporation
Provides That, Subject to Limited Exception, a State or Federal Court in the State of Delaware is the Sole and Exclusive Forum for Certain
Stockholder Litigation Matters, Which Could Limit Our Stockholders' Ability to Obtain a Favorable Judicial Forum for Disputes With
Us or Our Directors, Officers, and Other Employees.

 The Company's certificate
of incorporation provides that, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive
forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary
duty owed by any director, officer or other employee of the Company to the Company or the Company's stockholders, (iii) any action
asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed
by the internal affairs doctrine will be conducted in a state or federal court in the State of Delaware, in all cases subject to the court's
having personal jurisdiction over the indispensable parties named as defendants. This exclusive forum provision does not apply to claims
arising under the federal securities laws. This exclusive forum provision may limit a stockholder's ability to bring a claim in
a judicial forum it finds favorable for disputes with the Company and its directors, officers, and other employees or may cause a stockholder
to incur additional expense by having to bring a claim in a judicial forum that is distant from where the stockholder resides, or both.
In addition, if a court were to find this exclusive forum provision to be inapplicable or unenforceable in a particular action, we may
incur additional costs associated with resolving the action in another jurisdiction, which could have a material adverse effect on our
financial condition and results of operations.

 Our Funding Sources may Prove
Insufficient to Replace Deposits at Maturity and Support Our Future Growth. A Lack of Liquidity Could Adversely Affect Our Financial Condition
and Results of Operations and Result In Regulatory Limits Being Placed on Us.

 We must maintain sufficient funds
to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition
to core deposit growth and repayments and maturities of loans and investments. These sources may include Federal Home Loan Bank advances,
federal funds purchased and brokered certificates of deposit. While we emphasize the generation of low-cost core deposits as a source
of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers
perceive alternative investments as providing a better risk/return tradeoff. Adverse operating results or changes in industry conditions
could lead to difficulty or an inability to access these additional funding sources. Our financial flexibility will be severely constrained
if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable
interest rates.

 Further, if we are required to
rely more heavily on more expensive funding sources to support liquidity and future growth, our revenues may not increase proportionately
to cover our increased costs. In this case, our operating margins and profitability would be adversely affected. Alternatively, we may
need to sell a portion of our investment and/or loan portfolio to raise funds, which, depending upon market conditions, could result in
us realizing a loss on the sale of such assets.

 A lack of liquidity could also
attract increased regulatory scrutiny and potential restraints imposed on us by regulators. Depending on the capitalization status and
regulatory treatment of depository institutions, including whether an institution is subject to a supervisory prompt corrective action
directive, certain additional regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest
rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits.

 We rely on municipal deposits
as a source of funds for our lending and investment activities. If we are unable to retain, or are forced to pay a higher rate on, these
deposits, our net income and liquidity could be adversely affected. Municipal deposits are price sensitive and could result in an increase
in interest expense or funding fluctuations. At September 30, 2023, $246.4 million, or 32.6% of our total deposits, consisted of municipal
deposits from local government entities. Several of our municipal deposits have high average balances. Given our dependence on high-average
balance municipal funds deposits as a source of funds, our inability to retain such funds could significantly and adversely affect our
liquidity. If we are forced to pay higher rates on our municipal accounts to retain those funds, or if we are unable to retain such funds
and we are forced to resort to other sources of funds for our lending and investment activities, the interest expense associated with
these other

 funding sources may be higher than the rates we are currently paying on our municipal deposits, which would adversely affect
our net income.

 ITEM 1B.
 Unresolved Staff Comments

 Not required for smaller reporting
companies.

 ITEM 2.
 Properties

 The following table provides certain
information with respect to our offices as of September 30, 2023:

 Leased or

 Original Year

 Year of

 Location

 Owned

 Leased or Acquired

 Lease Expiration

 Main Office:

 400 Somerset Street

 Owned

 2005

 —

 New Brunswick, New Jersey, 08901

 Full - Service Branches:

 3050 State Route 27

 Owned

 1969

 —

 Kendall Park, New Jersey, 08824

 596 Milltown Road

 2002

 2031

 North Brunswick, New Jersey, 08902

 1000 Route 202 South

 2006

 2031

 Branchburg, New Jersey, 08876

 475 North Bridge Street

 2010

 2025

 Bridgewater, New Jersey, 08807

 1167 Inman Avenue

 2011

 2026

 Edison, New Jersey, 08820

 1199 Amboy Avenue

 2017

 2027

 Edison, New Jersey, 08837

 The net book value of our premises,
land and equipment was approximately $13.3 million and $13.9 million at September 30, 2023 and 2022, respectively.

 For information regarding Magyar
Bancorp, Inc.'s investment in mortgages and mortgage-related securities, see "Item 1. Business" herein.

 ITEM 3.
 Legal Proceedings

 In the ordinary course of business,
we are a party to various legal actions which are incidental to the operation of our business. Although the ultimate outcome and amount
of liability, if any, with respect to these legal actions cannot presently be ascertained with certainty, in the opinion of management,
based upon information currently available to us, any resulting liability as of September 30, 2023 is believed to be immaterial to our
consolidated financial position, results of operations and cash flows.

 ITEM 4.
 Mine Safety Disclosures

 Not applicable.

 ITEM 5.
 Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities

 (a)
 Our shares of common stock are traded on the NASDAQ Stock Market LLC under the symbol "MGYR."
The approximate number of holders of record of Magyar Bancorp, Inc.'s common stock as of September 30, 2023 was 591. Certain shares
of Magyar Bancorp, Inc. are held in "nominee" or "street" name and accordingly, the number of beneficial owners
of such shares is not known or included in the foregoing number.

 The Company declared five
dividends totaling $0.20 per share paid to common shareholders during the year ended September 30, 2023. In the future, the Company intends
to continue to pay a regular cash dividend. In determining whether and in what amount to pay a cash dividend, the Board will continue
to take into account a number of factors, including capital requirements, our consolidated financial condition and results of operations,
tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that cash dividends
will continue to be paid or that, if paid, will not be reduced. For more information on regulatory restrictions regarding the payment
of dividends, see "Item 1- Business- Supervision and Regulation- New Jersey Banking Regulation-Dividends."

 Other than its employee
stock ownership plan, Magyar Bancorp, Inc. does not have any equity compensation plans that were not approved by stockholders. The following
table sets forth information with respect to the Magyar Bancorp's equity compensation plans.

 Number of securities to

 Number of

 be issued upon exercise

 securities remaining

 of outstanding options

 average exercise

 available for

 and rights

 price*

 issuance under plan

 Stock options

 293,200

 $
 12.58

 97,800

 Shares of restricted stock

 124,320

 —

 —

 Total

 417,520

 $
 12.58

 97,800

 * Reflects exercise price of stock options only.

 (b)
 Not applicable.

 (c)

 Share repurchases.

 On December 8, 2022, the
Company announced the completion of its third stock repurchase program, under which 354,891 shares had been repurchased at an average
price of $12.90. The Company announced its fourth authorization of an additional stock repurchase plan pursuant to which the Company intends
to repurchase up to an additional 5% of its outstanding shares, or up to 337,146 shares, under which 100,830 shares had been repurchased
at an average price of $11.80 at September 30, 2023. Under this stock repurchase program, 236,316 shares of the 337,146 shares authorized
remained available for repurchase as of September 30, 2023. The Company's intended use of the repurchased shares is for general
corporate purposes. The Company held treasury stock shares totaling 423,641 at September 30, 2023. The timing of the repurchases will
depend on certain factors, including but not limited to, market conditions and prices, the Company's liquidity requirements and
alternative uses of capital.

 The following table reports
information regarding repurchases of our common stock during the quarter ended September 30, 2023.

 Remaining Number

 Total Number

 of Shares That

 of Shares

 Price Paid

 May be Purchased

 Periods

 Purchased

 Per Share

 Under the Plan

 July 1, 2023 through July 31, 2023

 7,160

 $
 11.99

 254,624

 August 1, 2023 through August 31, 2023

 11,121

 $
 12.15

 243,503

 September 1, 2023 through September 30, 2023

 7,187

 $
 11.48

 236,316

 ITEM 6.
 [Reserved]

 ITEM 7.
 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Overview

 Magyar Bancorp, Inc. (the "Company")
is a Delaware-chartered stock holding company whose most significant business activity is ownership of 100% of the common stock of Magyar
Bank. Magyar Bank's principal business is attracting retail deposits from the general public and investing those deposits, together
with funds generated from operations, principal repayments on loans and securities and borrowed funds, into one-to four-family residential
mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans
and construction loans. Our results of operations depend primarily on our net interest income which is the difference between the interest
we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our net interest income is primarily
affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, the timing of the placement of interest-earning
assets and interest-bearing liabilities, and the prepayment rate on our mortgage-related assets. Other factors that may affect our results
of operations are general and local economic and competitive conditions, government policies and actions of regulatory authorities.

 During the year ended September
30, 2023, the Company's total assets grew $108.7 million, or 13.6%, to $907.3 million compared with $798.5 million at September
30, 2022. The increase was attributable to a $69.2 million increase in net loans receivable and a $41.3 million increase in interest-earning
deposits with banks, offset by a $4.9 million decrease in investment securities.

 Total deposits increased $87.7
million, or 13.1%, to $755.5 million and stockholders' equity increased $6.3 million, or 6.4%, to $104.8 million during the year
ended September 30, 2023

 The Company's net income
decreased $210,000, or 2.7%, to $7.7 million during the year ended September 30, 2023 compared with net income of $7.9 million for the
year ended September 30, 2022.

 Throughout fiscal 2024, we expect
to continue increasing our commercial real estate and commercial business loans while managing non-interest expenses in an effort to increase
profitability of the Company.

 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.
We consider the following to be our critical accounting policies.

 Allowance for Loan
Loss. The allowance for loan losses is the amount estimated by management as necessary to cover credit losses in the loan portfolio
both probable and reasonably estimable at the balance sheet date. The allowance is established through the provision for loan losses which
is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this
policy as one of our most critical. Due to the high degree of judgment involved, the subjectivity of the assumptions utilized and the
potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses,
the methodology for determining the allowance for loan losses is considered a critical accounting policy by management.

 As a substantial amount
of our loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans and discounted cash
flow valuations of properties are critical in determining the amount of the

 allowance required for specific loans. Assumptions for appraisals
and discounted cash flow valuations are instrumental in determining the value of properties. Overly optimistic assumptions or negative
changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance determined. The
assumptions supporting such appraisals and discounted cash flow valuations are carefully reviewed by management to determine that the
resulting values reasonably reflect amounts realizable on the related loans.

 Management performs a quarterly
evaluation of the adequacy of the allowance for loan losses. We consider a variety of factors in establishing this estimate including,
but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying
collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently
subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic
and real estate market conditions.

 The evaluation has a specific
and general component. The specific component relates to loans that are delinquent or otherwise identified as impaired through the application
of our loan review process and our loan grading system. All such loans are evaluated individually, with principal consideration given
to the value of the collateral securing the loan and discounted cash flows. Specific impairment allowances are established as required
by this analysis. However, the Bank's Federal and State regulators generally require that the specific reserve against impaired
collateral-dependent loans be charged-off, reducing the carrying balance of the loan and allowance for loan loss. The general component
is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We analyze historical
loss experience, delinquency trends, general economic conditions and geographic and industry concentrations in establishing the general
portion of the reserve. This analysis establishes factors that are applied to the loan groups to determine the amount of the general component
of the allowance for loan losses.

 Actual loan losses may be significantly
greater than the allowances we have established, which could have a material negative effect on our financial results.

 The Company will adopt
Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial
Instruments on October 1, 2023, using a modified retrospective approach. The Company's implementation process includes scoping,
segmentation and the design of a methodology appropriate for each respective financial instrument. The process also includes the development
of loss forecasting models as well as the incorporation of qualitative adjustments. Evaluation of technical accounting topics, updates
to our allowance policy documentation, model validation, governance and reporting, processes and related internal controls, as well as
overall operational readiness has been completed throughout September 30, 2023 in preparation for adoption.

 Based on analyses performed during
the quarter ending September 30, 2023, as well as an implementation analysis utilizing exposures and forecasts of economic conditions
as of September 30, 2023, the Company recorded a reduction to its allowance for credit losses on October 1, 2023 in the amount of $492,000.
The reduction was comprised of a reduction in the allowance for on-balance sheet exposures, which includes held to maturity debt securities,
totaling $1.0 million and an increase in the allowance for off-balance sheet exposures, which includes unfunded commitments, totaling
$540,000. The impact will be reflected as a cumulative effect adjustment, net of taxes. The change in the allowance for credit losses
upon adoption will not have a material effect on the Company's capital and regulatory capital amounts and ratios.

 Deferred Income Taxes. The
Company records income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities: (i) are recognized
for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected
to be recovered or settled.

 Deferred tax assets are likely
to be realized and therefore do not have a valuation allowance.

 Comparison of Financial Condition
at September 30, 2023 and September 30, 2022

 Total Assets. Total
assets increased $108.7 million, or 13.6%, to $907.3 million during the year ended September 30, 2023 compared with $798.5 million at
September 30, 2022. The change was attributable to a $69.2 million, or 11.2%. increase in loans receivable, net of allowance for loan
loss, to $689.1 million and a $41.3 million, or 147.1%, increase in

 interest-earning deposits with banks to $69.4 million, partially offset
by a $4.9 million, or 4.9%, decrease in investment securities to $96.0 million.

 Loans Receivable. Total
loans receivable increased $69.3 million, or 11.0%, to $698.2 million at September 30, 2023 from $628.9 million at September 30, 2022.
Growth occurred in commercial real estate loans, which increased $46.3 million, or 13.5%, to $389.1 million, in one-to four-family residential
mortgage loans (including home equity lines of credit), which increased $21.6 million, or 9.3%, to $254.7 million, and in construction
loans, which increased $6.6 million, or 43.5%, to $21.9 million. Offsetting these increases were decreases in commercial business loans,
which decreased $4.5 million, or 12.9%, to $30.2 million and in other consumer loans, which decreased $771,000, or 24.6%, to $2.3 million.

 Total loans receivable at September
30, 2023 were comprised of $389.1 million (55.8%) in commercial real estate loans, $237.7 million (34.1%) in one- to four- family residential
mortgage loans, $30.2 million (4.3%) in commercial business loans, $21.9 million (3.1%) in construction loans, and $19.3 million (2.8%)
in home equity lines of credit and other loans. For comparison, total loans receivable at September 30, 2022 were comprised of $342.8
million (54.5%) in commercial real estate loans, $214.4 million (34.1%) in one- to four- family residential mortgage loans, $34.7 million
(5.5%) in commercial business loans, $15.2 million (2.4%) in construction loans, and $21.8 million (3.5%) in home equity lines of credit
and other loans.

 Total non-performing loans increased
$2.2 million, or 79.3%, to $5.1 million at September 30, 2023 from $2.8 million at September 30, 2022. The ratio of non-performing loans
to total loans was 0.7% at September 30, 2023 compared to 0.5% at September 30, 2022.

 There were two non-performing
one-to four-family residential loans totaling $386,000, at September 30, 2023 compared with none at September 30, 2022. The weighted average
loan-to-value of these properties was 35% based on updated appraisals of the real estate securing the loans. During the year ended September
30, 2023, there were no charge-offs against the allowance for loan loss for one-to four-family residential real estate loans while $4,000
was recovered from prior year charge-offs.

 There was one non-performing commercial
real estate loan totaling $2.2 million at September 30, 2023, compared with none at September 30, 2022. The loan-to-value of this property
was 82% based on an updated appraisal of the real estate securing the loan. Magyar Bank had begun foreclosure proceedings on the property
securing this loan and pursuing judgments against the guarantors of the loan at September 30, 2023. During the year ended September 30,
2023 there were no charge-offs against the allowance for loan loss or recoveries for commercial real estate loans.

 There were no non-performing commercial
business loans at September 30, 2023 or 2022. During the year ended September 30, 2023 there were two charge-offs totaling $488,000 against
the allowance for loan loss for commercial business loans and no recoveries from prior year charge-offs.

 There were two non-performing
construction loans totaling $2.5 million at September 30, 2023 compared with $2.8 million at September 30, 2022. The weighted average
loan-to-value of these properties was 54% based on updated appraisals of the real estate securing the loans. Magyar Bank had begun foreclosure
proceedings on the properties securing these loans and pursuing judgments against the guarantors of the loans at September 30, 2023. During
the year ended September 30, 2023, there were no charge-offs against the allowance for loan loss or recoveries for construction loans.

 The ratio of non-performing loans
to total loans receivable increased to 0.73% at September 30, 2023 from 0.45% at September 30, 2022. The allowance for loan losses decreased
$103,000 to $8.3 million, or 163.9% of non-performing loans at September 30, 2023 compared with $8.4 million, or 297.5% of non-performing
loans at September 30, 2022. Provisions for loan loss during the year ended September 30, 2023 were $381,000 while net charge-offs were
$484,000, compared with a provision of $304,000 and a net recovery of $54,000 for the prior year. The allowance for loan losses was 1.19%
and 1.34% of gross loans outstanding at September 30, 2023 and 2022, respectively. The allowance for loan loss decreased in amount and
as a percentage of gross loans during the year from higher balances of lower risk loans and lower balances of higher risk loans in addition
to lower adjustments to the historical loss for all loan categories for improving economic conditions.

 Investment Securities.
Investment securities decreased $4.9 million, or 4.9%, to $96.0 million at September 30, 2023 from $100.9 million at September 30, 2022.
Investment securities at September 30, 2023 consisted of $65.8 million in mortgage-backed securities issued by U.S. government agencies
and U.S. government-sponsored enterprises, $23.5 million in U.S. government-sponsored enterprise debt securities, $3.0 million in corporate
notes, $3.5 million in municipal bonds and

 $207,000 in "private-label" mortgage-backed securities. There were no other-than-temporary-impairment
charges for the Company's investment securities for the year ended September 30, 2023.

 Securities available-for-sale
increased $896,000, or 9.7%, to $10.1 million at September 30, 2023 from $9.2 million at September 30, 2022. The increase was attributable
to purchases totaling $2.0 million, partially offset by principal repayments totaling $970,000, premium amortization of $51,000 and unrealized
losses of $47,000.

 Securities held-to-maturity decreased
$5.8 million, or 6.3%, to $85.8 million at September 30, 2023 from $91.6 million at September 30, 2022. The decrease was the attributable
to principal repayments and maturities totaling $10.3 million and premium amortization of $85,000, partially offset by purchases totaling
$4.6 million.

 Bank-Owned Life Insurance.
The cash surrender value of life insurance held for directors and officers of Magyar Bank increased $370,000, or 2.7%, to $18.0 million
at September 30, 2023 from $17.7 million at September 30, 2022. The change was due to an increase in the cash surrender value of the policies.
The Company did not purchase any new life insurance policies during the year ended September 30, 2023.

 Other Real Estate Owned.
 OREO increased $47,000, or 16.7%, to $328,000 at September 30, 2023 from $281,000 at September 30, 2022. The change was due to
the capital improvements to the one OREO property held by the Bank, which was under contract for sale at September 30, 2023.

 Deposits. Deposits,
which include noninterest-bearing demand deposits, interest-bearing demand deposits, money market deposits, savings deposits and time
deposits, are the primary source of the Company's funds. The Company offers a variety of products designed to attract and retain
customers, with primary focus on building and expanding relationships. The Company continues to focus on establishing relationships
with businesses, seeking deposits as well as lending relationships.

 Total deposits increased $87.7
million, or 13.1%, to $755.5 million at September 30, 2023 from $667.7 million at September 30, 2022. The increase in deposits during
the year ended September 30, 2023 occurred in money market account balances, which increased $62.7 million, or 28.2%, to $284.9 million,
in certificates of deposit (including individual retirement accounts) which increased $22.1 million, or 26.7%, to $104.7 million, in interest-bearing
checking account balances, which increased $16.5 million, or 16.8% to $115.2 million, and in non-interest checking account balances, which
increased $6.1 million, or 3.4%, to $188.5 million. Offsetting these increases was a decline in savings account balances, which decreased
$19.7 million, or 24.1%, to $62.2 million. Included in the Company's total deposits were $13.8 million in brokered certificates
of deposits.

 The Company held $246.4 million
in municipal depositor deposits at September 30, 2023, which represents 32.6% of total deposits. Under State of New Jersey legislation,
municipal deposits exceeding 70% of the Bank's capital must be collateralized. Magyar Bank was in compliance with the State's
requirements at September 30, 2023.

 The FDIC provides $250,000 of
deposit insurance per depositor for each account ownership category. Depositors may qualify for coverage over $250,000 if they have funds
in different ownership categories and all FDIC requirements are met. Included in the Company's total deposits at September 30, 2023
was an estimated $109.3 million that was not collateralized and exceeded the FDIC's insurance coverage limit.

 The Company's deposit strategy
in 2023 focused on growing its non-interest checking account balances and managing the overall cost of its interest-bearing liabilities
during a period of rapidly rising market interest rates.

 Borrowed Funds. Borrowings
increased $13.9 million, or 88.9%, to $29.5 million at September 30, 2023 compared with $15.6 million at September 30, 2022. The Company
borrowed several long-term advances from the FHLBNY during the year ended September 30, 2023 to fund its loan originations.

 Stockholders' Equity.
 Stockholders' equity increased $6.3 million, or 6.4%, to $104.8 million at September 30, 2023 from $98.5 million at September
30, 2022. The increase was attributable to the Company's net income from operations totaling $7.7 million, partially offset by $1.3
million in dividends paid to shareholders and $1.2 million in treasury share repurchases. The Company's book value per share increased
to $15.70, based on total equity of $104.8 million and 6,674,184 shares outstanding at September 30, 2023 from $14.60, based on total
equity of $98.5 million and 6,745,128 shares outstanding.at September 30, 2022.

 Comparison of Operating Results
for the Years Ended September 30, 2023 and 2022

 Net Income. The
Company's net income decreased $210,000, or 2.7%, to $7.7 million during the year ended September 30, 2023 compared with $7.9 million
for the year ended September 30, 2022 due to higher non-interest expenses, partially offset by higher net interest and dividend income.

 Net Interest and Dividend
Income. The primary source of the Company's operating income is net interest and dividend income, which is the difference
between interest and dividends earned on earning assets and fees earned on loans, and interest paid on interest-bearing liabilities. The
Company's net interest and dividend income is affected by regulatory, economic and competitive factors that influence interest rates,
loan demand, deposit flows and levels of nonperforming assets.

 During the year ended September
30, 2023, net interest and dividend income increased $715,000, or 2.6%, to $27.7 million compared to $27.0 million for the year ended
September 30, 2022. Interest and dividend income increased $8.6 million, or 29.0%, to $38.1 million at September 30, 2023 from $29.5 million
at September 30, 2022, while interest expense increased $7.6 million, or 316.0%, to $10.3 million at September 30, 2023 from $2.5 million
at September 30, 2022. The Company's net interest margin decreased 11 basis points to 3.50% for the year ended September 30, 2023
from 3.61% for the year ended September 30, 2022.

 Average Balance Sheet. The
following table presents certain information regarding our financial condition and net interest income for the years ended September 30,
2023 and 2022. The table presents the average yield on interest-earning assets and the average cost of interest-bearing liabilities. We
derived the yields and costs by dividing 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 periods indicated. Interest income includes
fees that we consider adjustments to yields. Interest income on loans includes loan fees, but such amounts were not material for the years
ended September 30, 2023 or 2022.

 Year Ended September 30,

 2023

 2022

 Interest

 Income/

Expense

 Yield/Cost

 (Annualized)

 Interest

Income/

Expense

 Yield/Cost

 (Annualized)

 (Dollars In Thousands)

 Interest-earning assets:

 Interest-earning deposits

 $
 22,616

 $
 1,040

 4.60%

 $
 53,714

 $

 0.49%

 Loans receivable, net (1)

 668,870

 35,229

 5.27%

 600,630

 27,841

 4.64%

 Securities

 Taxable

 94,519

 1,602

 1.69%

 89,001

 1,279

 1.44%

 Tax-exempt (2)

 3,370

 2.17%

 2,769

 1.89%

 FHLBNY stock

 2,020

 6.89%

 1,547

 5.02%

 Total interest-earning assets

 791,395

 38,083

 4.81%

 747,661

 29,514

 3.95%

 Noninterest-earning assets

 48,514

 45,960

 Total assets

 $
 839,909

 $
 793,621

 Interest-bearing liabilities:

 Savings accounts (3)

 $
 71,148

 $

 0.48%

 $
 85,834

 $

 0.18%

 NOW accounts (4)

 340,126

 7,332

 2.16%

 288,222

 1,007

 0.35%

 Time deposits (5)

 90,385

 1,814

 2.01%

 96,442

 0.94%

 Total interest-bearing deposits

 501,659

 9,488

 1.89%

 470,498

 2,070

 0.44%

 25,604

 3.31%

 18,399

 2.25%

 Total interest-bearing liabilities

 527,263

 10,334

 1.96%

 488,897

 2,484

 0.51%

 Noninterest-bearing liabilities

 207,255

 200,702

 Total liabilities

 734,518

 689,599

 Retained earnings

 105,391

 104,022

 Total liabilities and retained earnings

 $
 839,909

 $
 793,621

 Tax-equivalent basis adjustment

 (15
)

 (11
)

 Net interest and dividend income

 $
 27,734

 $
 27,019

 Interest rate spread

 2.85%

 3.44%

 Net interest-earning assets

 $
 264,132

 $
 258,764

 Net interest margin (6)

 3.50%

 3.61%

 Average interest-earning assets to average
 interest-bearing liabilities

 150.09%

 152.93%

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

 (2) 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.

 Rate/Volume Analysis.
The following table presents the effects of changing rates and volumes on our net interest income for the years indicated. The rate column
shows the effects attributable to changes in rate (changes in rate multiplied by average volume). The volume column shows the effects
attributable to changes in volume (changes in average volume multiplied by prior rate). The net column represents the sum of the prior
columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately,
based on the changes due to rate and the changes due to volume. There were no out-of-period adjustments excluded from the table below

 2023 vs. 2022

 Increase (decrease) due to

 Volume

 Rate

 Net

 Interest-earning assets:

 Interest-earning deposits

 $
 (235
)

 $
 1,011

 $

 Loans

 3,366

 4,022

 7,388

 Securities

 Taxable

 Tax-exempt (1)

 FHLBNY stock

 Total interest-earning assets

 3,256

 5,313

 8,569

 Interest-bearing liabilities:

 Savings accounts (2)

 (31
)

 NOW accounts (3)

 6,112

 6,325

 Time deposits (4)

 (60
)

 Total interest-bearing deposits

 7,296

 7,418

 Total interest-bearing liabilities

 7,532

 7,850

 Increase (decrease) in tax equivalent net interest
 income

 $
 2,938

 $
 (2,219
)

 $

 Change in tax-equivalent basis adjustment

 (4
)

 Increase in net interest income

 $

 (1) Calculated using the Company's 21% federal tax rate.

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

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

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

 Interest and Dividend Income.
Interest and dividend income increased $8.6 million, or 29.0%, to $38.1 million for the year ended September 30, 2023 from $29.5 million
for the year ended September 30, 2022. The average balance of interest-earnings assets between the two periods increased $43.7 million,
or 5.8%, to $791.4 million from $747.7 million, while the yield on such assets increased 86 basis point to 4.81% for the year ended September
30, 2023 from 3.95% for the year ended September 30, 2022.

 Interest income on loans increased
$7.4 million, or 26.5%, to $35.2 million for the year ended September 30, 2023 from $27.8 million for the year ended September 30, 2022,
while the average balance of loans increased $68.2 million, or 11.4%, to $668.9 million from $600.6 million. The average yield on such
loans increased 63 basis points to 5.27% at September 30, 2023 from 4.64% for the year ended September 30, 2022 from higher market interest
rates.

 Interest earned on investment
securities, including interest earned on deposits but excluding FHLBNY stock, increased $1.1 million, or 70.5%, to $2.7 million for the
year ended September 30, 2023 from $1.6 million for fiscal 2022. The increase was attributable to a 115 basis point increase in the average
yield on investment securities and interest earned

 on deposits to 2.25% from 1.10%, partially offset by a $25.0 million, or 17.2%, decrease
in the average balance of investment securities and interest earning deposits to $120.5 million from $145.5 million during the year ended
September 30, 2022.

 Interest Expense. Interest
expense increased $7.9 million, or 316.0%, to $10.3 million for the year ended September 30, 2023 from $2.5 million for the year ended
September 30, 2022. The average balance of interest-bearing liabilities increased $38.4 million, or 7.8%, to $527.3 million from $488.9
million between the two periods while the average cost on such interest-bearing liabilities increased 145 basis points to 1.96% for the
year ended September 30, 2023 from 0.51% for the year ended September 30, 2022. Higher market interest rates were primarily responsible
for the increase in the cost of the Company's interest-bearing liabilities for the year ended September 30, 2023.

 The average balance of interest-bearing
deposits increased $31.2 million, or 6.6%, to $501.7 million for the year ended September 30, 2023 from $470.5 million for the year ended
September 30, 2022 while the average cost on such interest-bearing deposits increased 145 basis points to 1.89% from 0.44%. Average expense
on interest-bearing deposits increased $7.4 million, or 358.4%, to 9.5 million at September 30, 2023 compared with $2.1 million at September
30, 2022.

 Interest expense on advances increased
$432,000, or 104.3%, to $846,000 for the year ended September 30, 2023 from $414,000 for the year ended September 30, 2022. The average
cost of borrowings increased 106 basis points to 3.31% for the year ended September 30, 2023 from 2.25% for the year ended September 30,
2022 while the average balance of those borrowings increased $7.2 million to $25.6 million for the year ended September 30, 2023 from
$18.4 million the prior year.

 Provision for Loan Losses.
We establish provisions for loan losses, which are charged to earnings, at a level necessary to absorb known and inherent losses that
are both probable and reasonably estimable at the date of the financial statements. In evaluating the level of the allowance for loan
losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations
that may affect the borrower's ability to repay, the estimated value of any underlying collateral, peer group information and prevailing
economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as
more information becomes available or as future events occur.

 The provision for loan losses
increased $77,000, or 25.3%, to $381,000 for the year ended September 30, 2023 compared to $304,000 for the year ended September 30, 2022.
There were $488,000 in loan charge-offs and $4,000 in loan recoveries for the year ended September 30, 2023 compared with no loan charge-offs
and $54,000 in loan recoveries for the year ended September 30, 2022.

 Other Income. Other
income decreased $33,000, or 1.2%, to $2.7 million during the year ended September 30, 2023 compared with the year ended September 30,
2022 from lower gains on the sale of SBA loans, partially offset by higher service charge income between periods.

 The Bank sells the guaranteed
portion of the SBA 7(a) program loans it originates in the secondary market. Gains from the sale of SBA loans were $565,000 during the
year ended September 30, 2023 compared with $925,000 during the year ended September 30, 2022 due to a reduction in the volume of loans
sold.

 Service charge income increased
$404,000, or 34.0%, to $1.6 million compared with $1.2 million for the prior year from higher commercial loan prepayment fees received
during the current year. The Company received $423,000 in prepayment penalties during the year ended September 30, 2023, compared with
$130,000 during the year ended September 30, 2022.

 Other Expenses. Other
expenses increased $1.0 million, or 5.7%, to $19.3 million compared to $18.3 million for the year ended September 30, 2022 due primarily
to higher compensation, benefit, FDIC insurance premium and occupancy expenses, partially offset by lower professional fees.

 Compensation and benefit expense
increased $650,000, or 6.2%, to $11.1 million for the year ended September 30, 2023 from $10.5 million for the year ended September 30,
2022. Stock award and stock option expenses related to the Company's 2022 Equity Incentive Plan accounted for a $658,000 increase
in compensation expense. In addition, the Company incurred higher director fees, which increased $149,000 during the year ended September
30, 2023 from the prior year due to the addition of three new directors.

 Deposit insurance premiums increased
$125,000, or 58.1%, to $340,000 for the year ended September 30, 2023 from $215,000 for the year ended September 30, 2022 from higher
insurance assessment rates implemented by the FDIC for all insured institutions effective January 1, 2023.

 Occupancy expenses increased $171,000,
or 5.7%, to $3.2 million for the year ended September 30, 2023 from $3.0 million for the year ended September 30, 2022. The increase was
attributable to additional maintenance and repairs to the Bank's branch locations, the elimination of off-site records previously
held in storage and inflationary increases in computer processing and communications.

 Professional fees decreased $307,000,
or 28.9%, to $755,000 for the year ended September 30, 2023 from $1.1 million for the year ended September 30, 2022 from lower legal and
consulting fees related to the collection and foreclosure of non-performing assets.

 Income Tax Expense.
The Company recorded tax expense of $3.0 million on income of $10.7 million for the year ended September 30, 2023 compared with tax expense
of $3.3 million on income of $11.2 million for the year ended September 30, 2022. The lower income tax expense resulted from a $428,000,
or 3.8%, decrease in the Company's results from operations.

 The Company's effective
tax rate for the year ended September 30, 2023 was 28.2% compared with 29.1% for the year ended September 30, 2022.

 Management of Market Risk

 General. The majority
of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our
assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result,
a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes
in market interest rates. Accordingly, our Board of Directors has established an Asset and Liability Management Committee which is responsible
for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate, given
our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with
the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on a regular basis and the
Asset and Liability Committee meets at least on a quarterly basis to review our asset/liability policies and interest rate risk position.

 We have sought to manage
our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. As part of our ongoing
asset-liability management, we seek to manage our exposure to interest rate risk by originating and retaining adjustable-rate loans in
the residential, construction and commercial real estate loan portfolios, by using alternative funding sources, such as advances from
the FHLBNY, to "match fund" longer-term residential and commercial mortgage loans, and by originating and retaining variable-rate
home equity and short-term and medium-term fixed-rate commercial business loans. We also offer a commercial loan swap product that allows
the Bank to receive floating-rate interest loan payments while its borrowers pay a fixed rate of interest on their loans. We have also
increased money market account deposits as a percentage of our total deposits. Money market accounts offer a variable rate based on market
indications. By following these strategies, we believe that we are well-positioned to react to changes in market interest rates.

 Net Interest Income Analysis.
The table below sets forth, as of September 30, 2023, the estimated changes in our Net Interest Income ("NII") for each of
the next two years that would result from the designated instantaneous changes in interest rates. These estimates require making certain
assumptions including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates.
These assumptions are inherently uncertain and, as a result, we cannot precisely predict the impact of changes in interest rates on net
interest income. Actual results may differ significantly due to timing, magnitude and frequency of interest rate changes and changes in
market conditions. Further, certain shortcomings are inherent in the methodology used in the interest rate risk measurement. Modeling
changes in net interest income require making certain assumptions that may or may not reflect the manner in which actual yields and costs
respond to changes in market interest rates.

 Change in

 Estimated Increase

 Estimated Increase

 Interest rates

 Estimated

 (Decrease) in NII Year 1

 Estimated

 (Decrease) in NII Year 2

 (Basis Points) (1)

 NII Year 1

 Percentage

 NII Year 2

 Percentage

 +200

 $
 31,325

 $

 1.26%

 $
 35,685

 $
 1,789

 5.28%

 Unchanged

 30,934

 —

 —

 33,896

 —

 —

 -200

 30,273

 (661
)

 -2.14%

 31,547

 (2,349
)

 -6.93%

 (1) Assumes an instantaneous uniform change in interest rates at all maturities.

 Liquidity and Capital Resources

 Liquidity is the ability
to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan
repayments, FHLBNY borrowings and maturities and sales of investment securities. While maturities and scheduled amortization of loans
and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates,
economic conditions and competition. Our Asset/Liability Management Committee is responsible for establishing and monitoring our liquidity
targets and strategies in order to ensure that sufficient liquidity exists for meeting the borrowing needs of our customers as well as
unanticipated contingencies. We seek to maintain a liquidity ratio of 5.0% of assets or greater. The liquidity ratio is calculated by
determining the sum of the difference between liquid assets (cash and unpledged investment securities) and short-term liabilities (estimated
30-day deposit outflows), plus our borrowing capacity from the FHLBNY and dividing the sum by total assets. At September 30, 2023, our
liquidity ratio was 9.7% of assets.

 We regularly adjust our
investments in liquid assets based upon our assessment of expected loan demand, expected deposit flows, yields available on interest-earning
deposits and securities, and the objectives of our asset/liability management program. Excess liquid assets are invested generally in
interest-earning deposits and short-and intermediate-term securities.

 Our most liquid assets
are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities
during any given period. At September 30, 2023, cash and cash equivalents totaled $72.5 million compared with $30.9 million at September
30, 2022. Securities classified as available-for-sale, which provide additional sources of liquidity from sales, totaled $10.1 million
at September 30, 2023 compared with $9.2 million at September 30, 2022. At September 30, 2023, we also had the ability to borrow $230.1 million
from the FHLBNY compared with $138.9 million at September 30 2022. On that date, we had an aggregate of $29.5 million in advances outstanding
and $80.0 million in municipal letters of credit outstanding with the FHLBNY. Our cash flows are derived from operating activities, investing
activities and financing activities as reported in our consolidated Statements of Cash Flows included in our consolidated Financial Statements.

we had $30.1 million in loan origination commitments outstanding. In addition to commitments to originate loans, we had $89.9 million
in unused lines of credit to borrowers. Certificates of deposit due within one year of September 30, 2023 totaled $43.8 million, or 5.8%
of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other deposits
and FHLBNY advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than
we currently pay on the certificates of deposit (including individual retirement accounts and brokered certificate deposit accounts) due
on or before September 30, 2024. We believe, however, that based on past experience a significant portion of our certificates of deposit
(including individual retirement accounts and brokered certificate deposit accounts) will remain with us. We have the ability to attract
and retain deposits by adjusting the interest rates offered.

 Our primary investing activities
are the origination of loans and the purchase of investment securities. We originated $188.5 million in loans and purchased $6.6 million
of investment securities during the year ended September 30, 2023. Comparatively, we originated $159.2 million in loans and purchased
$41.1 million of investment securities during the year ended September 30, 2022.

 Financing activities consist
primarily of activity in deposit accounts and FHLBNY advances. We experienced a net increase in total deposits of $87.7 million, or 13.1%,
to $755.5 million for the year ended September 30, 2023 compared with a net decrease in total deposits of $27.9 million, or 4.4%, to $667.7
million for the year ended September 30, 2022. Deposit flows are affected by the overall level of interest rates, the interest rates and
products offered by us and our local competitors and other factors.

 Liquidity management is
both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing
agreements exist with the FHLBNY, which provide an additional source of funds. FHLBNY advances totaled $29.5 million and $15.6 million
at September 30, 202 and 2022, respectively. FHLBNY advances have primarily been used to fund loan demand.

 In addition to borrowings,
the Bank has the ability to raise deposits on the brokered market or through deposit listing services. At September 30, 2023, the Bank
held $13.8 million in brokered deposits and $14.0 million from deposit listing services.

 Magyar Bank is subject
to various regulatory capital requirements, (see "Supervision and Regulation-Federal Banking Regulation-Capital Requirements").
As of September 30, 2023, Magyar Bank's Tier 1 capital as a percentage of the Bank's average assets was 11.11% and the total
qualifying capital as a percentage of risk-weighted assets was 16.22%.

 Bank-owned life insurance is a
tax-advantaged financing transaction that is used to offset employee benefit plan costs. Policies are purchased insuring directors and
officers of Magyar Bank using a single premium method of payment. Magyar Bank is the owner and beneficiary of the policies and records
tax-free income through cash surrender value accumulation. We have minimized our credit exposure by choosing carriers that are highly
rated and limiting the concentration of any one carrier. The investment in bank-owned life insurance has no significant impact on our
capital and liquidity.

 Off-Balance Sheet Arrangements
and Aggregate Contractual Obligations

 Commitments. As
a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments
to extend credit, standby letters of credit and unused lines of credit. While these contractual obligations represent our future cash
requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject
to the same credit policies and approval process accorded to loans made by us. For additional information, see Note P, "Commitments,"
and Note Q "Financial Instruments with Off-Balance-Sheet Risk" to our consolidated financial statements.

 Contractual Obligations.
In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include operating leases for
premises and equipment.

 ITEM 7A.
 Quantitative and Qualitative Disclosures About Market Risk

 Not
required for smaller reporting companies.

 ITEM 8.
 Financial Statements and Supplementary Data

 Table
of Contents

 Consolidated Financial Statements:

 Report of Independent Registered Public Accounting Firms (PCAOB IDs 74 and 49)

 Consolidated Balance Sheets as of September 30, 2023 and 2022

 Consolidated Statements of Income for the Years Ended September 30, 2023 and 2022

 Consolidated Statements of Comprehensive Income for the Years Ended September 30, 2023 and 2022

 Consolidated Statements of Changes in Stockholders' Equity for the Years Ended September 30, 2023 and 2022

 Consolidated Statements of Cash Flows for the Years Ended September 30, 2023 and 2022

 REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

 To the Stockholders and the Board
of Directors of Magyar Bancorp, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying
consolidated balance sheet of Magyar Bancorp, Inc. and subsidiary (the "Company") as of September 30, 2023; the related consolidated
statements of income, comprehensive income, changes in stockholders' equity, and cash flows for the year then ended; and the related
notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of September 30, 2023, and the results of its operations and
its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion

 These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent, with respect to the Company, in accordance with U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matters communicated
below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated
to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements; and (2) involve
our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter, in any way,
our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 Allowance for Loan Losses (ALL)
– Qualitative Factors

 Description of the Matter

 The Company's loan
portfolio totaled $697.4 million as of September 30, 2023, and the associated ALL was $8.3 million. As discussed in Notes B and E to the
consolidated financial statements, determining the amount of the ALL requires significant judgment about the collectability of loans,
which includes an assessment of quantitative factors such as historical loss experience within each risk category of loans and testing
of certain commercial loans for impairment. Management applies additional qualitative adjustments to reflect the inherent losses that
exist in the loan portfolio at the balance sheet date that are not reflected in the historical loss experience. Qualitative adjustments
are made based upon changes in policy and staff, economic and business conditions, nature and volume of portfolio, trends in underperforming
loans, trends in collateral value, concentrations of credit, legal and regulatory landscape, and other factors.

 We identified these qualitative
adjustments within the ALL as critical audit matters because they involve a high degree of subjectivity. In turn, auditing management's
judgments regarding the qualitative factors applied in the ALL calculation involved a high degree of subjectivity.

 How We Addressed the Matter in
Our Audit

 We gained an understanding of the
Company's process for establishing the ALL, including the qualitative adjustments made to the ALL. We evaluated the design and tested
the operating effectiveness of controls over the Company's ALL process, which included, among others, management's review
and approval controls designed to assess the need and level of qualitative adjustments to the ALL, as well as the reliability of the data
utilized to support management's assessment.

 Regarding the measurement
of the qualitative adjustments, we evaluated the completeness, accuracy, and relevance of the data and inputs utilized in management's
estimate. We evaluated the reasonableness of the conclusions reached by management for both directional consistency and magnitude related
to the underlying data.

 We also utilized internal credit
review specialists with knowledge to evaluate the appropriateness of management's risk-rating processes, to ensure that the risk
ratings applied to the commercial loan portfolio were reasonable.

 We have served as the Company's auditor since 2023.

 /s/ S.R. Snodgrass, P.C.

 Cranberry Township, Pennsylvania

 Report of Independent Registered Public Accounting
Firm

 Board of Directors and Stockholders

 Magyar Bancorp, Inc. and Subsidiary

 Opinion on the Financial Statements

 We have audited the accompanying consolidated balance
sheet of Magyar Bancorp, Inc. and Subsidiary (the Company) as of September 30, 2022, the related consolidated statements of income, comprehensive
income, changes in stockholders' equity and cash flows, for the year then ended, and the related notes (collectively, the financial
statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of September 30, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
( PCAOB) and are required to be independent with respect to the Company in accordance with U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 Critical Audit Matters

 The critical audit matter communicated below is a
matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion
on the critical audit matter or on the accounts or disclosures to which it relates.

 Allowance for Loan Losses –
Qualitative Factors

 The allowance for loan losses as of September 30,
2022 was $8.4 million. As described in Notes B and E to the consolidated financial statements, the allowance for loan losses is established
through a provision for loan losses and represents an amount which, in management's judgement, will be adequate to absorb losses
on existing loans. The allowance consists of specific and general components in the amounts of $0.1 million and $8.3 million, respectively.
The specific component relates to loans that are delinquent or otherwise identified as impaired by management. All such loans are evaluated
individually, with principal consideration given to the value of the collateral securing the loan and discounted cash flows. Specific
impairment allowances are established as required by this analysis. The general loan loss allocation component is determined by segregating
the remaining loans by type of loan, risk weighting, and payment history. 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: levels of and trends in
delinquency rates 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.

 We identified the qualitative factor component of
the allowance for loan losses as a critical audit matter as auditing the underlying qualitative factors required significant auditor judgment
as amounts determined by management rely on analysis that is often subjective in nature and the estimate is highly sensitive to changes
in significant assumptions.

 Our audit procedures related to the qualitative factors
of the allowance for loan losses included the following, among others:

 We obtained an understanding of how management
developed the estimates and related assumptions, including:

 -
 Testing completeness and accuracy of key data inputs used in forming assumptions or calculations and testing
the reliability of the underlying data on which these factors are based by comparing information to source documents and external information
sources.

 -
 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 served as the Company's auditor from 2018 to 2023.

 Blue Bell, Pennsylvania

 December 22, 2022

 Consolidated Balance Sheets

 (In Thousands, Except Share
and Per Share Data)

 2023

 2022

 Assets

 Cash

 $
 3,179

 $
 2,869

 Interest earning deposits with banks

 69,353

 28,067

 Total cash and cash equivalents

 72,532

 30,936

 Investment securities - available-for-sale, at fair value

 10,125

 9,229

 Investment securities - held-to-maturity, at amortized cost (fair value of $ 73,728 and $ 79,914 at September 30, 2023 and 2022, respectively)

 85,835

 91,646

 Federal Home Loan Bank of New York stock, at cost

 2,286

 1,447

 Loans receivable, net of allowance for loan losses of $ 8,330 and $ 8,433 at September 30, 2023 and 2022, respectively

 689,070

 619,843

 Bank owned life insurance

 18,030

 17,660

 Accrued interest receivable

 4,337

 3,478

 Premises and equipment, net

 13,339

 13,880

 Other real estate owned ("OREO")

 Other assets

 11,410

 10,143

 Total assets

 $
 907,292

 $
 798,543

 Liabilities and Stockholders' Equity

 Liabilities

 Deposits

 $
 755,453

 $
 667,733

 Escrowed funds

 3,494

 3,407

 29,515

 15,625

 Accrued interest payable

 Accounts payable and other liabilities

 13,597

 13,191

 Total liabilities

 802,502

 700,041

 Stockholders' equity

 Preferred stock: $.01 Par Value, 500,000 shares authorized; at September 30, 2023 and 2022, none issued

 —

 —

 Common stock: $.01 Par Value, 14,000,000 shares authorized; 7,097,825 shares issued; 6,674,184 and 6,745,128 shares outstanding at September 30, 2023 and 2022, respectively, at cost

 Additional paid-in capital

 62,801

 63,734

 Treasury stock: 423,641 and 465,693 shares at September 30, 2023 and 2022, respectively, at cost

 ( 5,362
)

 ( 5,793
)

 Unearned Employee Stock Ownership Plan shares

 ( 3,097
)

 ( 3,169
)

 Retained earnings

 52,166

 45,773

 Accumulated other comprehensive loss

 ( 1,789
)

 ( 2,114
)

 Total stockholders' equity

 104,790

 98,502

 Total liabilities and stockholders' equity

 $
 907,292

 $
 798,543

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

 Consolidated Statements of Income

 (In Thousands, Except Share
and Per Share Data)

 Years Ended

 2023

 2022

 Interest and dividend income

 Loans, including fees

 $
 35,229

 $
 27,841

 Investment securities

 Taxable

 2,642

 1,543

 Tax-exempt

 Federal Home Loan Bank of New York stock

 Total interest and dividend income

 38,068

 29,503

 Interest expense

 Deposits

 9,488

 2,070

 Total interest expense

 10,334

 2,484

 Net interest and dividend income

 27,734

 27,019

 Provision for loan losses

 Net interest and dividend income after provision for loan
 losses

 27,353

 26,715

 Other income

 Service charges

 1,592

 1,188

 Income on bank owned life insurance

 Interest rate swap fees

 Other operating income

 Gains on sales of loans

 Gains on sale of OREO

 —

 Total other income

 2,682

 2,715

 Other expenses

 Compensation and employee benefits

 11,134

 10,484

 Occupancy expenses

 3,187

 3,016

 Professional fees

 1,062

 Data processing expenses

 Director fees and benefits

 Marketing and business development

 FDIC deposit insurance premiums

 Other expenses

 2,149

 1,935

 Total other expenses

 19,294

 18,261

 Income before income tax expense

 10,741

 11,169

 Income tax expense

 3,032

 3,250

 $
 7,709

 $
 7,919

 Earnings per share - basic

 $
 1.20

 $
 1.17

 Earnings per share - diluted

 $
 1.20

 $
 1.17

 Weighted average shares outstanding - basic

 6,424,796

 6,781,659

 Weighted average shares outstanding - diluted

 6,424,796

 6,781,659

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

 Consolidated Statements of Comprehensive Income

 (In Thousands)

 Years Ended

 September 30

 2023

 2022

 $
 7,709

 $
 7,919

 Other comprehensive income (loss)

 Unrealized loss on securities available for sale

 ( 47
)

 ( 1,744
)

 Defined benefit pension plan gain

 Other comprehensive income (loss), before tax

 ( 1,533
)

 Deferred income tax effect

 ( 144
)

 Total other comprehensive income (loss)

 $

 $
 ( 1,167
)

 Total comprehensive income

 $
 8,034

 $
 6,752

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

 Consolidated Statements of Changes in Stockholders' Equity

 For the Years Ended September 30, 2023 and 2022

 (In Thousands, Except for Share and Per-Share Amounts)

 Accumulated

 Common Stock

 Additional

 Unearned

 Other

 Shares

 Par

 Paid-In

 Treasury

 ESOP

 Retained

 Comprehensive

 Outstanding

 Value

 Capital

 Stock

 Shares

 Earnings

 Loss

 Total

 Balance, September 30, 2021

 7,097,825

 $

 $
 63,713

 $
 ( 1,242
)

 $
 ( 3,235
)

 $
 39,281

 $
 ( 947
)

 $
 97,641

 —

 —

 —

 —

 —

 7,919

 —

 7,919

 Dividends paid on common stock ($ 0.21 per share)

 —

 —

 —

 —

 —

 ( 1,427
)

 —

 ( 1,427
)

 Other comprehensive loss

 —

 —

 —

 —

 —

 —

 ( 1,167
)

 ( 1,167
)

 Common stock acquired by ESOP

 —

 —

 —

 —

 ( 98
)

 —

 —

 ( 98
)

 ESOP shares allocated

 —

 —

 —

 —

 —

 Purchase of treasury stock

 ( 352,697
)

 —

 —

 ( 4,551
)

 —

 —

 —

 ( 4,551
)

 Stock-based compensation expense

 —

 —

 —

 —

 —

 —

 Balance, September 30, 2022

 6,745,128

 $

 $
 63,734

 $
 ( 5,793
)

 $
 ( 3,169
)

 $
 45,773

 $
 ( 2,114
)

 $
 98,502

 —

 —

 —

 —

 —

 7,709

 —

 7,709

 Dividends paid on common stock ($ 0.20 per share)

 —

 —

 —

 —

 —

 ( 1,315
)

 —

 ( 1,315
)

 Other comprehensive income

 —

 —

 —

 —

 —

 —

 Treasury stock used for restricted stock plan

 32,080

 —

 ( 405
)

 —

 ( 1
)

 —

 —

 ESOP shares allocated

 —

 —

 —

 —

 —

 Retirement of 112,996 treasury shares

 —

 —

 ( 1,242
)

 1,242

 —

 —

 —

 —

 Purchase of treasury stock

 ( 103,024
)

 —

 —

 ( 1,217
)

 —

 —

 —

 ( 1,217
)

 Stock-based compensation expense

 —

 —

 —

 —

 —

 —

 Balance, September 30, 2023

 6,674,184

 $

 $
 62,801

 $
 ( 5,362
)

 $
 ( 3,097
)

 $
 52,166

 $
 ( 1,789
)

 $
 104,790

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

 Consolidated Statements of Cash Flows

 (In Thousands)

 For the Years Ended

 2023

 2022

 Operating activities

 $
 7,709

 $
 7,919

 Adjustments to reconcile net income to net cash provided by operating activities:

 Depreciation expense

 Premium amortization on investment securities, net

 Provision for loan losses

 Originations of SBA loans held for sale

 ( 6,494
)

 ( 9,533
)

 Proceeds from the sales of SBA loans

 7,059

 10,457

 Gains on sale of loans

 ( 565
)

 ( 925
)

 Gains on the sales of other real estate owned

 —

 ( 67
)

 Gains on the sale of premises and equipment

 ( 9
)

 —

 ESOP compensation expense

 Stock-based compensation expense

 Deferred income tax (benefit) expense

 ( 615
)

 (Increase) decrease in accrued interest receivable

 ( 859
)

 Increase in surrender value of bank owned life insurance

 ( 370
)

 ( 372
)

 Increase in other assets

 ( 280
)

 ( 1,555
)

 Increase in accrued interest payable

 —

 (Decrease) increase in accounts payable and other liabilities

 3,551

 Net cash provided by operating activities

 8,484

 11,201

 Investing activities

 Net increase in loans receivable

 ( 56,258
)

 ( 37,235
)

 Purchases of loans receivable

 ( 13,350
)

 —

 Proceeds from the sale of loans receivable

 —

 2,389

 Purchases of investment securities held-to-maturity

 ( 4,587
)

 ( 41,138
)

 Purchases of investment securities available-for-sale

 ( 1,965
)

 —

 Principal repayments on investment securities held-to-maturity

 10,313

 7,040

 Principal repayments on investment securities available-for-sale

 1,875

 Purchases of bank owned life insurance

 —

 ( 3,000
)

 Purchases of premises and equipment

 ( 309
)

 ( 387
)

 Proceeds from the sale of premises and equipment

 —

 Investment in other real estate owned

 ( 47
)

 ( 12
)

 Proceeds from other real estate owned

 —

 Purchase of Federal Home Loan Bank stock

 ( 5,820
)

 ( 466
)

 Redemption of Federal Home Loan Bank stock

 4,981

 Net cash used in investing activities

 ( 66,053
)

 ( 69,743
)

 Financing activities

 Net increase in deposits

 87,720

 27,919

 Purchase of common stock for ESOP

 —

 ( 98
)

 Net increase in escrowed funds

 Proceeds from long-term advances

 18,631

 3,000

 Repayments of long-term advances

 ( 4,741
)

 ( 10,731
)

 Cash dividends paid on common stock

 ( 1,315
)

 ( 1,427
)

 Purchase of treasury stock

 ( 1,217
)

 ( 4,551
)

 Net cash provided by financing activities

 99,165

 14,277

 Net increase (decrease) in cash and cash equivalents

 41,596

 ( 44,265
)

 Cash and cash equivalents, beginning of year

 30,936

 75,201

 Cash and cash equivalents, end of year

 $
 72,532

 $
 30,936

 Supplemental disclosures of cash flow information

 Cash paid for

 Interest

 $
 9,977

 $
 2,485

 Income taxes

 $
 3,255

 $
 3,140

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

 NOTE A - ORGANIZATION

 Magyar Bancorp, Inc. (the "Company")
is a Delaware-chartered bank holding company. The Company owns 100 % of the outstanding common stock of Magyar Bank (the "Bank"),
a New Jersey-chartered stock savings bank. The Bank offers consumer and commercial banking services to individuals, businesses, and nonprofit
organizations throughout the central New Jersey area through its administrative office in New Brunswick, New Jersey and seven full-service
branch offices in Middlesex and Somerset Counties in New Jersey. The Company is subject to regulation and supervision by the Board of
Governors of the Federal Reserve System. The Bank is supervised and regulated by the Federal Deposit Insurance Corporation (the "FDIC")
and the New Jersey Department of Banking and Insurance.

 Magyar Investment Company,
a New Jersey investment corporation subsidiary of the Bank, was formed on August 15, 2006 for the purpose of buying, selling and holding
investment securities.

 Magyar Service Corporation, a New
Jersey corporation, is a wholly owned, non-bank subsidiary of the Bank. Magyar Service Corporation, which also operates under the name
Magyar Financial Services, receives commissions from annuity and life insurance sales referred to a licensed, non-bank financial planner.

 Hungaria Urban Renewal, LLC
is a Delaware limited-liability corporation established in 2002 as a qualified intermediary operating for the purpose of acquiring and
developing the Bank's new main office. The Bank owns a 100 % interest in Hungaria Urban Renewal, LLC, which has no other business
other than owning the Bank's main office site.

 NOTE B - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

 1. Basis of Financial Statement
Presentation

 The accounting and reporting policies
of the Company conform to accounting principles generally accepted in the United States of America ("US GAAP") and predominant
practices within the banking industry. The consolidated financial statements include the accounts of the Company and its wholly owned
subsidiary, the Bank, and its wholly-owned subsidiaries Magyar Investment Company, Magyar Service Corporation, and Hungaria Urban Renewal,
LLC. All intercompany balances and transactions have been eliminated in the consolidated financial statements.

 The Company has evaluated subsequent
events and transactions occurring subsequent to the consolidated balance sheet date of September 30, 2023, for items that should potentially
be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated
financial statements were available to be issued.

 In preparing financial statements
in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.

 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, 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. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future
tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are
measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled.

 Where applicable, deferred tax
assets are reduced by a valuation allowance for any portions determined not likely to be realized. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income tax expense in the period of enactment. The valuation allowance is adjusted,
by a charge or credit to income tax expense, as changes in facts and circumstances warrant.

 2. Cash and Cash Equivalents

 For purposes of reporting cash
flows, cash and cash equivalents include cash on hand, amounts due from banks, time deposits with original maturities less than three
months and overnight deposits.

 3. Investment Securities

 The Company classifies its investment
securities into one of two portfolios: held to maturity or available for sale. Investments in debt securities that the Company has the
positive intent and ability to hold to maturity are classified as held to maturity securities and reported at amortized cost. Debt securities
not classified as held to maturity securities are classified as available for sale securities and reported at fair value, with unrealized
holding gains or losses, net of deferred income taxes, reported in the accumulated other comprehensive income ("AOCI") component
of stockholders' equity. Equity securities, with certain exceptions, are measured at fair value with changes in fair value recognized
in net income.

 If the fair value of a security
is less than its amortized cost, the security is deemed to be impaired. Management evaluates all securities with unrealized losses quarterly
to determine if such impairments are "temporary" or "other-than-temporary" in accordance with applicable accounting
guidance. The Company accounts for temporary impairments based upon security classification as either available for sale or held to maturity.
Temporary impairments on "available for sale" securities are recognized, on a tax-effected basis, through AOCI with offsetting
entries adjusting the carrying value of the security and the balance of deferred taxes. Conversely, the Company does not adjust the carrying
value of "held to maturity" securities for temporary impairments, although information concerning the amount and duration
of impairments on held to maturity securities is generally disclosed in periodic consolidated financial statements.

 The Company accounts for other-than-temporary
impairments based upon several considerations. First, other-than-temporary impairments on securities that the Company has decided to sell
as of the close of a fiscal period, or will, more likely than not, be required to sell prior to the full recovery of their fair value
to a level equal to their amortized cost, are recognized in operations. If neither of these criteria apply, then the other-than-temporary
impairment is separated into credit-related and noncredit-related components. The credit-related impairment generally represents the amount
by which the present value of the cash flows that are expected to be collected on an other-than-temporarily impaired security fall below
its amortized cost while the noncredit-related component represents the remaining portion of the impairment not otherwise designated as
credit-related. The Company recognizes credit-related, other-than-temporary impairments in earnings, while noncredit-related, other-than-temporary
impairments on debt securities are recognized, net of deferred taxes, in AOCI.

 Premiums and discounts on all securities
are amortized or accreted to maturity by use of the level-yield method considering the impact of principal amortization and prepayments
on mortgage-backed securities. Gain or loss on sales of securities is recognized on the specific identification method.

 4. Regulatory Stock, at Cost

 Federal law requires a
member institution of the Federal Home Loan Bank ("FHLB") system to purchase and hold restricted stock of its district FHLB
according to a predetermined formula. The Company invests in Federal Home Loan Bank of New York stock as required to support borrowing
activities, as detailed in Note J to these consolidated financial statements. Although FHLB stock is an equity interest in a FHLB, it
does not have a readily determinable fair value because its ownership is restricted and it lacks a market. FHLB stock can be sold back
only at its par value of $ 100 per share and only to the FHLBs or to another member institution. Accordingly, the FHLB restricted stock
is carried at cost, less any applicable impairment charges.
 5. Loans and Allowance for Loan

 Loans that management has the intent
and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal, adjusted for
net deferred loan fees and costs, and reduced by an allowance for loan losses. Interest on loans is accrued and credited to operations
based upon the principal amounts outstanding. The allowance for loan losses is established through a provision for possible loan losses
charged to operations. Loans are charged against the allowance for loan losses when management believes that the collectability of the
principal is unlikely.

 Income recognition of interest
is discontinued when, in the opinion of management, the collectability of such interest becomes doubtful. A loan is generally classified
as non-accrual when the scheduled payment(s) due on the loan is delinquent for more than 90 days. When a loan is placed on non-accrual,
all previously accrued and unpaid interest is reversed. Loan origination fees and certain direct origination costs are deferred and amortized
over the life of the related loans as an adjustment to the yield on loans receivable using the effective interest method.

 The allowance for loan losses is
maintained at an amount management deems adequate to cover estimated losses. In determining the level to be maintained, management evaluates
many factors, including current economic trends, industry experience, historical loss experience, industry loan concentrations, the borrowers'
ability to repay and repayment performance, and estimated collateral values. In the opinion of management, the present allowance is adequate
to absorb reasonable, foreseeable loan losses. While management uses the best information available to make such evaluations, future adjustments
to the allowance may be necessary based on changes in economic conditions or any of the other factors used in management's determination.
In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance
for losses on loans. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information
available to them at the time of their examination. Charge-offs to the allowance are made when the loan is transferred to other real estate
owned or other determination of a confirmed loss. Recoveries on loans previously charged off are also recorded through the allowance.

 A loan is considered impaired
when, based upon current information and events, it is probable that a creditor will be unable to collect all amounts due including principal
and interest, according to the contractual terms of the loan agreement. The Company measures impaired loans based on the present value
of expected future cash flows discounted at the loan's effective interest rate or as a practical expedient, at the loan's
current observable market price, or the fair value of the collateral if the loan is collateral dependent. The amount by which the recorded
investment of an impaired loan exceeds the measurement value is recognized by creating a valuation allowance through a charge to the provision
for loan losses. Impairment criteria generally do not apply to those smaller-balance homogeneous loans that are collectively evaluated
for impairment which, for the Company, includes one- to four-family first mortgage loans and consumer loans, other than those modified
in a troubled debt restructuring.
 The Company records cash receipts
on impaired loans that are non-performing as a reduction to principal before applying amounts to interest or late charges unless specifically
directed by the Bankruptcy Court to apply payments otherwise. The Company may continue to recognize interest income on impaired loans
where there is no confirmed loss.

 6. Premises and Equipment

 Premises and equipment are carried
at cost less accumulated depreciation, and include capitalized expenditures for new facilities, major betterments and renewals. Expenditures
for maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method based upon the
estimated useful lives of the related assets for financial reporting purposes and using the mandated methods by asset type for income
tax purposes. Leasehold improvements are depreciated using the straight-line method based upon the initial term of the lease.

 The Company accounts for the impairment
of long-lived assets in accordance with US GAAP, which requires recognition and measurement for the impairment of long-lived assets to
be held and used or to be disposed of by sale. The Company had no impaired long-lived assets at September 30, 2023 and 2022.

 7. Revenue Recognition

 The Company recognizes revenue
in the consolidated statements of income as it is earned and when collectability is reasonably assured. The primary source of revenue
is interest income from interest earning assets, which is recognized on the accrual basis of accounting using the effective interest method.
The recognition of revenues from interest earning assets is based upon formulas from underlying loan agreements, securities contracts,
or other similar contracts. Non-interest income is recognized on the accrual basis of accounting as services are provided or as transactions
occur. 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 Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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. Both types of contracts result in non-interest income being recognized. The
revenue resulting from deposit accounts, which includes fees such as insufficient funds fees, wire transfer fees and out-of-network ATM
transaction fees, is included as a component of service charges on the Consolidated Statements of Income. 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 $ 1.6 million and $ 1.2 million for the years ended September 30, 2023 and 2022, respectively.
Revenue from contracts with customers included in other operating income was $ 98,000 and $ 87,000 for the years ended September 30, 2023
and 2022, respectively.

 For our contracts with customers,
we satisfy our performance obligations each day as services are rendered. 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.

 8. Other Real Estate Owned

 Real estate acquired through
foreclosure, or a deed-in-lieu of foreclosure, is recorded at fair value less estimated selling costs at the date of acquisition or transfer,
and subsequently at the lower of its net cost or fair value less estimated selling costs. Adjustments to the carrying value at the date
of acquisition or transfer are charged to the allowance for loan losses. The carrying value of the individual properties is subsequently
adjusted to the extent it exceeds estimated fair value less estimated selling costs, at which time a provision for losses on such real
estate is charged to operations.
 The Company accounts for gains
on sales of other real estate owned under ASC Topic 606 Revenue from Contracts with Customers, which uses a principles based methodology.
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 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. Losses on the disposition of real estate, including expenses
incurred in connection with the disposition, are charged to operations.
 9. Pension and Postretirement Plans

 The Company sponsors qualified
defined benefit pension plan and supplemental executive retirement plan ("SERP"). The qualified defined benefit pension plan
is funded with trust assets invested in a diversified portfolio of debt and equity securities. Accounting for pensions and other postretirement
benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each
employee works. This involves extensive use of assumptions about inflation, investment returns, mortality, turnover, and discount rates.
Among other factors, changes in interest rates, investment returns and the market value of plan assets can (i) affect the level of plan
funding; (ii) cause volatility in the net periodic pension cost; and (iii) increase our future contribution requirements. A significant
decrease in investment returns or the market value of plan assets or a significant decrease in interest rates could increase our net periodic
pension costs and adversely affect our results of operations. A significant increase in our contribution requirements with respect to
our qualified defined benefit pension plan could have an adverse impact on our cash flow. Changes in the key actuarial assumptions would
impact net periodic benefit expense and the projected benefit obligation for our defined benefit and other postretirement benefit plan.
See Note L, "Pension Plan," and Note M, "Non-Qualified Compensation Plan" for information on these plans and the
assumptions used.

 10. Income Taxes

 The Company and its subsidiaries
file consolidated federal and state income tax returns. Income taxes are allocated based on the contribution of their respective income
or loss to the consolidated income tax returns.
 The Company records income
taxes on the basis of reported income using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax basis. To the extent that current available evidence about the future raises doubt about the realization of a
deferred tax asset, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
 The Company follows the provisions
of FASB ASC Topic 740, which provides clarification on accounting for uncertainty in income taxes recognized in an enterprise's
financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition
and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure and transition.

 At September 30, 2023 and 2022,
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 Income. No
interest and penalties were recorded during the year ended September 30, 2023 and 2022. The tax years subject to examination by the
taxing authorities are the years ended September 30, 2018 and forward.

 11. Advertising Costs

 The Company expenses advertising
costs as incurred.

 12. Earnings Per Share

 Basic income per share is calculated
by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding for the period.
The weighted average common shares outstanding include shares allocated to the Employee Stock Ownership Plan.

 Diluted income per share is calculated
by adjusting the weighted average common shares outstanding to reflect the potential dilution that could occur using the treasury stock
method if securities or other contracts to issue common stock, such as stock options and unvested restricted stock, were exercised and
converted into common stock. The resulting shares issued would share in the earnings of the Company. Shares issued and shares reacquired
during the period are weighted for the portion of the period that they were outstanding. In periods of loss, dilution is not calculated
and diluted loss per share is equal to basic loss per share.

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

 Years Ended

 2023

 2022

 (Dollars in thousands, except

 share and per share data)

 Income applicable to common shares

 $
 7,709

 $
 7,919

 Weighted average shares outstanding - basic

 6,424,796

 6,781,659

 Potential diliutive common stock equivalents

 —

 —

 Weighted average shares outstanding - diluted

 6,424,796

 6,781,659

 Earnings per share - basic

 $
 1.20

 $
 1.17

 Earnings per share - diluted

 $
 1.20

 $
 1.17

 All options were anti-dilutive at
September 30, 2023 and 2022.

 13. Comprehensive Income (Loss) and Accumulated
Other Comprehensive Income (Loss)

 Comprehensive income (loss) includes
net income as well as certain other items which result in a change to equity during the period. The other items allocated to comprehensive
income (loss), as well as the related income tax effects, for the years ended September 30, 2023 and 2022 were as follows:

 2023

 2022

 Tax

 Net of

 Tax

 Net of

 Before Tax

 (Benefit)

 Tax

 Before Tax

 (Benefit)

 Tax

 Expense

 Expense

 Unrealized holding gain (loss) arising during period on:

 Available-for-sale investments

 $
 ( 47
)

 $

 $
 ( 35
)

 $
 ( 1,744
)

 $

 $
 ( 1,315
)

 Defined benefit pension plan

 ( 122
)

 ( 22
)

 Total unrealized holding gain (loss) arising during period

 ( 110
)

 ( 1,679
)

 ( 1,272
)

 Reclassification of pension costs

 ( 34
)

 ( 41
)

 Other comprehensive income (loss), net

 $

 $
 ( 144
)

 $

 $
 ( 1,533
)

 $

 $
 ( 1,167
)

 (a) All amounts are net
of tax. Related income tax expense or benefit calculated using an income tax rate approximating 25 % for available-for-sale
investments and 28 % for pension plan.

 Details about the reclassification
of accumulated other comprehensive income (loss) components and the affected line item in the Consolidated Statement of Income for the
years ended September 30, 2023 and 2022 were as follows:

 Amount Reclassified From

Accumulated Other Comprehensive

Loss For the Year Ended September 30,

 Affected Line Item in the

Consolidated Statement of Income

 2023

 2022

 Defined benefit pension plan (1)

 Amortization of net gain (loss) and prior service costs

 $

 $

 Compensation and employee benefits

 Related income tax expense

 ( 34
)

 ( 41
)

 Income taxes

 Net effect on accumulated other comprehensive loss

 Total reclassification

 $

 $

 (1) For additional details
related to the defined benefit pension plan see Note L - Pension Plan

 The components of accumulated
other comprehensive loss at September 30, 2023 and 2022 were as follows:

 2023

 2022

 Available-for-sale investments, net of tax

 $
 ( 1,481
)

 $
 ( 1,446
)

 Defined benefit pension plan, net of tax

 ( 308
)

 ( 668
)

 Total accumulated other comprehensive loss

 $
 ( 1,789
)

 $
 ( 2,114
)

 (a) Related income tax benefit calculated using an income tax rate approximating 25% for available-for-sale investments and 28% for pension plan.

 14. Bank-Owned Life Insurance

 The Company has purchased Bank-Owned
Life Insurance policies ("BOLI"). BOLI involves the purchasing of life insurance by the Company on directors and officers
of the Bank. The proceeds are used to help defray the costs of non-qualified compensation plans. The Company is the owner and beneficiary
of the policies. BOLI is recorded on the Consolidated Balance Sheets at its cash surrender value and changes in the cash surrender value
are recorded in other income in the Consolidated Statements of Income.

 15. Off-Balance Sheet Credit
Related Financial Instruments

 In the ordinary course of business,
the Company has entered into commitments to extend credit, including commitments under commercial lines of credit. Such financial instruments
are recorded when they are funded. The Company does not engage in the use of derivative financial instruments. See Note Q, "Financial
Instruments With Off-Balance Risk."

 16. Segment Reporting

 The Company acts as an independent,
community, financial services provider, and offers traditional banking and related financial services to individual, business and government
customers. The Company offers a full array of commercial and retail financial services, including the taking of time, savings and demand
deposits; the making of commercial, consumer and home equity loans; and the provision of other financial services.

 Management does not separately
allocate expenses, including the cost of funding loan demand, between the commercial and retail operations of the Company. As such, discrete
financial information is not available and segment reporting would not be meaningful.

 17. New Accounting Pronouncements

 In connection with the preparation
of quarterly and annual reports in accordance with the Securities and Exchange Commission's ("SEC") Securities Exchange
Act of 1934, SEC Staff Accounting Bulletin Topic 11.M requires the disclosure of the impact that recently issued accounting standards
will have on financial statements when they are adopted in the future.
 In June 2016,
the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments.
ASU 2016-13 requires entities to report "expected" credit losses on financial instruments and other commitments to extend
credit rather than the current "incurred loss" model. These expected credit losses for financial assets held at the reporting
date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require
enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used
in estimating credit losses, as well as the credit quality and underwriting standards of an entity's portfolio. These disclosures
include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements.
 With certain
exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening retained earnings as of the beginning
of the first reporting period in which the guidance is adopted. This update is effective for SEC filers that are eligible to be smaller
reporting companies, non-SEC filers, and all other companies, to fiscal years beginning after December 15, 2022, including interim periods
within those fiscal years. Accordingly, the Company will adopt this guidance effective October 1, 2023 using the modified retrospective
approach for all financial assets measured at amortized cost, including loans, available-for-sale debt securities and unfunded commitments.
The Company expects to record a cumulative effect increase to retained earnings related to on-balance sheet exposures (loans receivable)
and a decrease to retained earnings related to off-balance sheet exposures (unfunded loan commitments). The Company determined that there
was no impact to retained earnings related to available-for-sale or held-to-maturity debt securities as a result of adopting this guidance.
 In January 2020, the FASB issued
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March
2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting
to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative
reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements
to contracts affected by what the guidance calls "reference rate reform" if certain criteria are met. An entity that makes
this election would not have to re-measure the contracts at the modification date or reassess a previous accounting determination. Also,
entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected
by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt
securities that reference an interest rate affected by reference rate reform. The sunset provision included in Topic 848 was based on
the expectations of when LIBOR would cease being published. In March 2021, the UK Financial Conduct Authority announced that the intended
cessation date of LIBOR would be June 30, 2023, which is beyond the established sunset date of Topic 848. In December 2022, the FASB issued
ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendments in this ASU provide temporary
relief by deferring the sunset date provision included in Topic 848. The amendments in ASU 2022-06 defer the effective date for all entities
upon issuance through December 31, 2024. These updates are not expected to have a significant impact on the Company's financial
statements.

 In March 2022, the FASB issued
ASU 2022-02, F inancial 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. These updates are not expected to have a significant impact on the Company's
financial statements, other than enhanced disclosure.

 18. Subsequent Events

 On October 30, 2023, the Company
announced that its Board of Directors has approved a quarterly cash dividend of $ 0.04 per common share to shareholders of record at the
close of business on November 9, 2023, payable on November 24, 2023.

 On November 15, 2023, the Company
declared a special dividend of $ 0.07 per common share, payable on December 12, 2023, to shareholders of record at the close of business
on November 28, 2023.

 NOTE C – STOCK-BASED COMPENSATION AND STOCK REPURCHASE
PROGRAM

 The Company follows FASB ASC Section
718, Compensation-Stock Compensation, which covers a wide range of share-based compensation arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. ASC 718 requires that
compensation cost relating to share-based payment transactions be recognized in financial statements. The cost is measured based on the
fair value of the equity or liability instruments issued.

 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. 107. The seven-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.

 On August 25, 2022, the Company
adopted the 2022 Equity Compensation Plan which provided for grants of up to 547,400 shares to be allocated between incentive and non-qualified
stock options and restricted stock awards to officers, employees and directors of the Company and Magyar Bank. At September 30, 2023,
 293,200 options and 156,400 shares of restricted stock had been awarded from the plan.

 The following is a summary of the
status of the Company's stock option activity and related information for its option plan for the year ended September 30, 2023:

 Shares

Exercise Price

Remaining

Contractual Life

in Years

 Aggregate

Intrinsic

 Value

 Balance at September 30, 2022

 293,200

 $
 12.58

 9.98

 $
 —

 Granted

 —

 —

 —

 —

 Exercised

 —

 —

 —

 —

 Forfeited

 —

 —

 —

 —

 Expired

 —

 —

 —

 —

 Balance at September 30, 2023

 293,200

 $
 12.58

 8.98

 $
 —

 Exercisable at September 30, 2023

 58,640

 $
 12.58

 8.98

 $
 —

 The following is a summary of the
status of the Company's non-vested restricted shares as of September 30, 2023 and 2022, and changes during those years:

 Shares

Average Grant

 Date Fair Value

 Balance at September 30, 2022

 156,400

 $
 12.63

 Granted

 —

 —

 Vested

 ( 32,080
)

 12.63

 Forfeited

 —

 —

 Balance at September 30, 2023

 124,320

 $
 12.63

 Stock option and stock award
expenses included with compensation expense were $ 259,000 and $ 405,000, respectively, for the year ended September 30, 2023. Stock option
and stock award expenses included with compensation expense were $ 0 and $ 6,000, respectively, for the year ended September 30, 2022. The
Company had no other stock-based compensation plans as of September 30, 2023 except as disclosed below.

 The Company has an Employee Stock
Ownership Plan ("ESOP") for the benefit of employees who meet certain eligibility requirements. The ESOP trust purchases shares
of common stock in the open market using proceeds of a loan from the Company. The loan is secured by shares of the Company's stock.
The Bank makes cash contributions to the ESOP on an annual basis sufficient to enable the ESOP to make the required loan payments to the
Company. As the debt is repaid, shares are released as collateral and allocated to qualified employees. Accordingly, the shares pledged
as collateral are reported as unearned ESOP shares in the Consolidated Balance Sheets. The Company accounts for its ESOP in accordance
with FASB ASC Topic 718, " Employer's Accounting for Employee Stock Ownership Plans." 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.

 In connection with the Company's
second-step stock offering, the ESOP trustees purchased, 8 % of the shares of the Company common stock sold in the offering, or 312,800
shares, in the open market for $ 3.4 million, reflecting an average cost per share of $ 10.77. The ESOP loan bears a variable interest rate
that adjusts annually to Prime Rate ( 7.50 % at January 1, 2023) with principal and interest payable annually in equal installments over
 30 years.

 The following table presents the components of the ESOP
shares for the years ended September 30, 2023 and 2022:

 Unreleased shares at September 30, 2021

 304,377

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

 ( 10,427
)

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

 8,423

 Unreleased shares at September 30, 2022

 302,373

 Shares released for allocation during the year ended September 30, 2023

 ( 12,060
)

 Shares purchased by ESOP trustee during the year ended September 30, 2023

 —

 Unreleased shares at September 30, 2023

 290,313

 Total released shares

 182,485

 Total ESOP shares

 472,798

 The Company's contribution expense
for the ESOP was $ 122,000 and $ 179,000 for years ended September 30, 2023 and 2022, respectively. The aggregate fair value of the unreleased
ESOP shares at September 30, 2023 was approximately $ 3.0 million.

 On December 8, 2022, the Company
announced the completion of its third stock repurchase program, under which 354,891 shares had been repurchased at an average price of
$ 12.90. The Company announced its fourth authorization of an additional stock repurchase plan pursuant to which the Company intends to
repurchase up to an additional 5 % of its outstanding shares, or up to 337,146 shares, under which 100,830 shares had been repurchased
at an average price of $ 11.80. Under this stock repurchase program, 236,316 shares of the 337,146 shares authorized remained available
for repurchase as of September 30, 2023. The Company's intended use of the repurchased shares is for general corporate purposes.
The Company held treasury stock shares totaling 423,641 at September 30, 2023. The timing of the repurchases will depend on certain factors,
including but not limited to, market conditions and prices, the Company's liquidity requirements and alternative uses of capital.

 NOTE D - INVESTMENT SECURITIES

 The following table summarizes
the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, 2023:

 Gross

 Gross

 Amortized

 Fair

 Cost

 Gains

 Value

 Securities available-for-sale:

 $

 $
 —

 $
 ( 14
)

 $

 11,984

 —

 ( 1,951
)

 10,033

 Total securities available-for-sale

 $
 12,090

 $
 —

 $
 ( 1,965
)

 $
 10,125

 Securities held-to-maturity:

 $
 5,070

 $
 —

 $
 ( 850
)

 $
 4,220

 Mortgage-backed securities - commercial

 2,509

 —

 ( 16
)

 2,493

 48,086

 —

 ( 8,480
)

 39,606

 23,497

 —

 ( 1,947
)

 21,550

 Private label mortgage-backed securities - residential

 —

 ( 12
)

 Obligations of state and political subdivisions

 3,466

 —

 ( 605
)

 2,861

 3,000

 —

 ( 197
)

 2,803

 Total securities held-to-maturity

 $
 85,835

 $
 —

 $
 ( 12,107
)

 $
 73,728

 Total investment securities

 $
 97,925

 $
 —

 $
 ( 14,072
)

 $
 83,853

 The following table summarizes
the amortized cost and fair values of securities classified as available-for-sale and held-to-maturity at September 30, 2022:

 Gross

 Gross

 Amortized

 Fair

 Cost

 Gains

 Value

 Securities available-for-sale:

 $

 $
 —

 $
 ( 11
)

 $

 11,029

 —

 ( 1,907
)

 9,122

 Total securities available-for-sale

 $
 11,147

 $
 —

 $
 ( 1,918
)

 $
 9,229

 Securities held-to-maturity:

 $
 5,525

 $
 —

 $
 ( 717
)

 $
 4,808

 Mortgage-backed securities - commercial

 —

 —

 48,961

 ( 7,548
)

 41,425

 24,821

 —

 ( 2,395
)

 22,426

 Private label mortgage-backed securities - residential

 —

 ( 10
)

 Obligations of state and political subdivisions

 3,484

 —

 ( 638
)

 2,846

 8,000

 —

 ( 436
)

 7,564

 Total securities held-to-maturity

 $
 91,646

 $

 $
 ( 11,744
)

 $
 79,914

 Total investment securities

 $
 102,793

 $

 $
 ( 13,662
)

 $
 89,143

 The contractual maturities of
mortgage-backed securities generally exceed 10 years, however, the effective lives are expected to be shorter due to anticipated
prepayments. At September 30, 2023, the available-for-sale mortgage-backed securities-residential included obligations of U.S. government
agencies issued by the Government National Mortgage Association with an amortized cost of $ 106,000 and a fair value of $ 92,000 and obligations
of U.S. government-sponsored enterprises issued by Federal National Mortgage Association and Federal Home Loan Mortgage Corporation with
an amortized cost of $ 12.0 million and a fair value of $ 10.0 million. At September 30, 2023, the held-to-maturity mortgage-backed securities–residential
included obligations of U.S. government agencies issued by the Government National Mortgage Association with an amortized cost of $ 5.1
million and a fair value of $ 4.2 million and obligations of U.S. government-sponsored enterprises issued by Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation with an amortized cost of $ 48.1 million and a fair value of $ 39.6 million.

 The maturities of debt securities,
municipal bonds and certain information regarding mortgage-backed securities held-to-maturity at September 30, 2023 are summarized in
the following table:

 Amortized

 Fair

 Cost

 Value

 Due within 1 year

 $
 6,498

 $
 6,393

 Due after 1 but within 5 years

 18,526

 16,900

 Due after 5 but within 10 years

 4,939

 3,921

 Due after 10 years

 —

 —

 Total debt securities

 29,963

 27,214

 Mortgage backed securities:

 53,363

 44,021

 2,509

 2,493

 Total

 $
 85,835

 $
 73,728

 There were no sales of securities
during the years ended September 30, 2023 and 2022.

 As of September 30, 2023 and 2022,
investment securities having an estimated fair value of approximately $ 12.0 million and $ 37.7 million, respectively, were pledged to secure
public deposits.

 Details of securities with unrealized
losses at September 30, 2023 and 2022 are as follows:

 Less Than 12 Months

 12 Months Or Greater

 Total

 Number of

 Fair

 Fair

 Fair

 Securities

 Value

 Value

 Value

 $
 —

 $
 —

 $
 4,312

 $
 ( 864
)

 $
 4,312

 $
 ( 864
)

 Mortgage-backed securities - commercial

 1,926

 ( 14
)

 ( 2
)

 2,493

 ( 16
)

 Obligations of U.S. government-sponsored enterprises

 4,938

 ( 49
)

 44,485

 ( 10,382
)

 49,423

 ( 10,431
)

 —

 —

 21,550

 ( 1,947
)

 21,550

 ( 1,947
)

 Private label mortgage-backed securities residential

 —

 —

 ( 12
)

 ( 12
)

 Obligations of state and political subdivisions

 ( 43
)

 2,072

 ( 562
)

 2,861

 ( 605
)

 —

 —

 2,803

 ( 197
)

 2,803

 ( 197
)

 Total

 $
 7,653

 $
 ( 106
)

 $
 75,984

 $
 ( 13,966
)

 $
 83,637

 $
 ( 14,072
)

 Mortgage-backed securities- residential

 $
 2,364

 $
 ( 140
)

 $
 2,551

 $
 ( 588
)

 $
 4,915

 $
 ( 728
)

 Mortgage-backed securities - commercial

 —

 —

 —

 —

 Obligations of U.S. government-sponsored enterprises

 Mortgage backed securities- residential

 21,180

 ( 2,795
)

 29,088

 ( 6,660
)

 50,268

 ( 9,455
)

 11,664

 ( 660
)

 10,763

 ( 1,735
)

 22,427

 ( 2,395
)

 Private label mortgage-backed securities- residential

 ( 10
)

 —

 —

 ( 10
)

 Obligations of state and political subdivisions

 1,268

 ( 181
)

 1,577

 ( 457
)

 2,845

 ( 638
)

 2,646

 ( 353
)

 4,917

 ( 83
)

 7,563

 ( 436
)

 Total

 $
 39,968

 $
 ( 4,139
)

 $
 48,896

 $
 ( 9,523
)

 $
 88,864

 $
 ( 13,662
)

 The investment securities listed
above currently have fair values less than amortized cost and therefore contain unrealized losses. The Company evaluated these securities
and determined that the decline in value was primarily related to fluctuations in the interest rate environment and were not related to
any company or industry specific event.

 The Company anticipates full recovery
of amortized costs with respect to these securities. The Company does not intend to sell these securities and has determined that it is
not more likely than not that the Company would be required to sell these securities prior to maturity or market price recovery. Management
has considered factors regarding other than temporarily impaired securities and determined that there are no securities with impairment
that is other than temporary as of September 30, 2023 and 2022.

 NOTE E - LOANS RECEIVABLE, NET

 Loans receivable are comprised
of the following:

 2023

 2022

 $

 $

 Other

 2,359

 3,130

 Total loans receivable

 Net deferred loan costs

 ( 806
)

 ( 628
)

 Allowance for loan losses

 ( 8,330
)

 ( 8,433
)

 Total loans receivable, net

 $
 689,070

 $
 619,843

 Certain directors and executive
officers of the Company have loans with the Bank. 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 $ 5.1 million at September 30, 2023 and $ 2.3 million
at September 30, 2022. There were $ 2.9 million and $ 738,000 in new loans or advances on existing lines of credit during the year ended
September 30, 2023 and 2022, respectively. Total principal repayments were approximately $ 142,000 and $ 731,000 for the year ended September
30, 2023 and 2022, respectively.

 At September 30, 2023 and 2022,
the Company was servicing loans for others amounting to approximately $ 48.1 million and $ 43.6 million, respectively. The Company held
mortgage servicing rights in the amount of $ 28,000 and $ 0 at September 30, 2023 and 2022, respectively. Servicing loans for others generally
consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors, and foreclosure processing. Loan
servicing income is recorded on the cash basis and includes servicing fees from investors and certain charges collected from borrowers,
such as late payment fees. In connection with loans serviced for others, the Company held borrowers' escrow balances of approximately
$ 27,000 at September 30, 2023 and 2022.

 The segments of the Bank's
loan portfolio are disaggregated to a level that allows management to monitor risk and performance. The residential mortgage loan
segment is further disaggregated into two classes: first lien, amortizing term loans, and the combination of second lien amortizing term
loans and home equity lines of credit. The commercial loan segment is further disaggregated into three classes: loans secured by
multifamily structures, loans secured by owner-occupied commercial structures, and loans secured by non-owner occupied nonresidential
properties. The construction loan segment consists primarily of developers or investors for the purpose of acquiring, developing
and constructing residential or commercial structures and to a lesser extent one-to-four family residential construction loans made to
individuals for the acquisition of and/or construction on a lot or lots on which a residential dwelling is to be built. Construction
loans to developers and investors have a higher risk profile because the ultimate buyer, once development is completed, is generally not
known at the time of the loan. The commercial business loan segment consists of loans made for the purpose of financing the activities
of commercial customers and consists primarily of revolving lines of credit. The consumer loan segment consists primarily of stock-secured
installment loans, but also includes unsecured personal loans and overdraft lines of credit connected with customer deposit accounts.

 Management evaluates individual
loans in all segments for possible impairment if the loan either is in nonaccrual status, or is risk rated Substandard and is 90 days
or more past due. Loans are considered to be impaired when, based on current information and events, it is probable that the
Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in evaluating impairment include payment status, collateral value, and the probability
of collecting scheduled principal and interest payments when due. Management determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including
the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation
to the principal and interest owed.

 Once the determination has been
made that a loan is impaired, the recorded investment in the loan is compared to the fair value of the loan using one of three methods: (a)
the present value of expected future cash flows discounted at the loan's effective interest rate; (b) the loan's current observable
market price; or (c) the fair value of the collateral securing the loan, less anticipated selling and disposition costs. The method
is selected on a loan-by loan basis, with management primarily utilizing the fair value of collateral method. If there is a shortfall
between the fair value of the loan and the recorded investment in the loan, the Company charges the difference to the allowance for loan
loss as a charge-off and carries the impaired loan on its books at fair value. It is the Company's policy to evaluate impaired loans
on an annual basis to ensure the recorded investment in a loan does not exceed its fair value.

 The following table presents impaired
loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not necessary
for the periods presented:

 Impaired Loans

 Impaired Loans with

 with No Specific

 Specific Allowance

 Allowance

 Total Impaired Loans

 Unpaid

 At and for the year ended

 Recorded

 Related

 Recorded

 Recorded

 Principal

 Investment

 Allowance

 Investment

 Investment

 $
 —

 $
 —

 $
 2,031

 $
 2,031

 $
 2,031

 —

 —

 2,969

 2,969

 2,969

 —

 —

 2,474

 2,474

 2,539

 —

 —

 Total impaired loans

 $
 —

 $
 —

 $
 7,621

 $
 7,621

 $
 7,686

 At and for the year ended

 $
 —

 $
 —

 $
 1,512

 $
 1,512

 $
 1,512

 —

 —

 1,159

 1,159

 1,159

 2,835

 —

 2,835

 2,900

 —

 —

 Total impaired loans

 $
 2,835

 $

 $
 2,824

 $
 5,659

 $
 5,724

 The average recorded investment
in impaired loans was $ 5.9 million and $ 8.1 million for the years ended September 30, 2023 and 2022, respectively. During the years ended
September 30, 2023 and 2022, interest income of $ 96,000 and $ 135,000, 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. The first six categories are considered not criticized,
and are aggregated as "Pass" rated. The criticized rating categories utilized by management generally follow bank regulatory
definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue
and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined
weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses
are not corrected. All loans greater than three months past due are considered Substandard. Any portion of a loan that has been charged
off is placed in the Loss category.

 To help ensure that risk ratings
are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating
process with several layers of internal and external oversight. 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 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. Confirmation of the appropriate risk grade is performed by an external loan review
company that semi-annually reviews and assesses loans within the portfolio. Generally, the external consultant reviews commercial relationships
greater than $500,000 and/or criticized relationships greater than $250,000. Detailed reviews, including plans for resolution, are performed
on loans classified as Substandard on a monthly basis.

 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:

 Special

 Pass

 Mention

 Substandard

 Doubtful

 Total

 $
 236,876

 $
 —

 $

 $
 —

 $

 386,794

 2,224

 —

 19,379

 —

 2,474

 —

 —

 —

 —

 —

 —

 —

 Other

 2,359

 —

 —

 —

 2,359

 Total

 $
 692,585

 $

 $
 5,505

 $
 —

 $

 $
 213,173

 $

 $

 $
 —

 $

 342,593

 —

 —

 10,652

 —

 4,578

 —

 —

 —

 —

 —

 —

 —

 Other

 3,130

 —

 —

 —

 3,130

 Total

 $
 622,924

 $
 1,178

 $
 4,802

 $
 —

 $

 Management further monitors the
performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded
payment is past due. The following tables present the classes of the loan portfolio summarized by the aging categories of performing
loans and nonaccrual loans for the periods presented:

 30-59

 60-89

 Days

 Days

 90 Days +

 Total

 Non-

 Total

 Current

 Accrual

 Loans

 $
 236,729

 $
 —

 $

 $

 $

 $

 $

 386,794

 —

 2,224

 2,340

 2,224

 19,379

 —

 —

 2,474

 2,474

 2,474

 —

 —

 —

 —

 —

 30,047

 —

 —

 —

 Other

 2,359

 —

 —

 —

 —

 —

 2,359

 Total

 $
 692,291

 $

 $

 $
 5,084

 $
 5,915

 $
 5,084

 $

 30-59

 60-89

 Days

 Days

 90 Days +

 Total

 Non-

 Total

 Current

 Accrual

 Loans

 $
 213,903

 $

 $

 $
 —

 $

 $
 —

 $

 342,404

 —

 —

 —

 12,395

 —

 —

 2,835

 2,835

 2,835

 —

 —

 —

 —

 —

 —

 —

 —

 —

 —

 Other

 3,130

 —

 —

 —

 —

 —

 3,130

 Total

 $
 625,208

 $

 $

 $
 2,835

 $
 3,696

 $
 2,835

 $

 The amount of interest income not
recognized on non-accrual loans was approximately $ 309,000 and $ 220,000 for the years ended September 30, 2023 and 2022, respectively.
At September 30, 2023 and September 30, 2022, there were no commitments to lend additional funds to borrowers whose loans are classified
as non-accrual.

 An allowance for loan losses ("ALL")
is maintained to absorb losses from the loan portfolio. The ALL is based on management's continuing evaluation of the
risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of
the portfolio, adequacy of collateral, past and anticipated loss experience, and the amount of non-performing loans.

 The Bank's methodology for
determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (discussed above)
and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance
for Loan and Lease Losses and other bank regulatory guidance.

 Loans that are collectively evaluated
for impairment are analyzed with general allowances being made as appropriate. For general allowances, historical loss trends are
used in the estimation of losses in the current portfolio. These historical loss amounts are modified by other qualitative and economic
factors.

 The loans are segmented into classes
based on their inherent varying degrees of risk, as described above. Management tracks the historical net charge-off activity by
segment and utilizes this figure, as a percentage of the segment, as the general reserve percentage for pooled, homogenous loans that
have not been deemed impaired. Typically, an average of losses incurred over five historical years is used.

 Non-impaired credits are segregated
for the application of qualitative factors. Management has identified a number of additional qualitative factors which it uses to supplement
the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools
to differ from historical loss experience. The additional factors that are evaluated quarterly and updated using information obtained
from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency
rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth
of lending staff; value of underlying collateral; 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, 2023 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. When
information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL. Since
loans individually evaluated for impairment are promptly written down to their fair value, typically there is no portion of the ALL for
loans individually evaluated for impairment.

 The following tables summarize
the activity in the allowance for loan losses by loan category for the years ended September 30, 2023 and 2022:

 One-to Four-

 Family

 Lines of

 Credit

 Other

 Total

 Balance-September 30, 2022

 $
 1,223

 $
 4,612

 $

 $

 $
 1,484

 $

 $

 $
 8,433

 Charge-offs

 —

 —

 —

 —

 ( 488
)

 —

 —

 ( 488
)

 Recoveries

 —

 —

 —

 —

 —

 —

 Provision (credit)

 ( 56
)

 ( 57
)

 ( 215
)

 Balance-September 30, 2023

 $
 1,259

 $
 5,277

 $

 $

 $

 $

 $

 $
 8,330

 One-to Four-

 Family

 Lines of

 Credit

 Other

 Total

 Balance-September 30, 2021

 $
 1,136

 $
 3,744

 $

 $

 $
 2,046

 $

 $

 $
 8,075

 Charge-offs

 —

 —

 —

 —

 —

 —

 —

 —

 Recoveries

 —

 —

 —

 —

 —

 Provision (credit)

 ( 133
)

 ( 562
)

 ( 14
)

 Balance-September 30, 2022

 $
 1,223

 $
 4,612

 $

 $

 $
 1,484

 $

 $

 $
 8,433

 The following tables summarize
the allowance for loan loss by loan category, segregated into the amount required for loans individually evaluated for impairment and
the amount required for loans collectively evaluated for impairment as of September 30, 2023 and September 30, 2022:

 One-to-Four

 Family

 Lines of

 Credit

 Other

 Total

 Balance - September 30, 2023

 $
 1,259

 $
 5,277

 $

 $

 $

 $

 $

 $
 8,330

 Individually evaluated

 —

 —

 —

 —

 —

 —

 —

 —

 Collectively evaluated

 1,259

 5,277

 8,330

 Loans receivable:

 Balance - September 30, 2023

 $

 $

 $

 $

 $

 $
 2,359

 $
 —

 $

 Individually evaluated

 2,031

 2,969

 2,474

 —

 —

 —

 7,621

 Collectively evaluated

 235,652

 386,165

 19,379

 30,047

 2,359

 —

 690,585

 One-to- Four

 Family

 Lines of

 Credit

 Other

 Total

 Balance - September 30, 2022

 $
 1,223

 $
 4,612

 $

 $

 $
 1,484

 $

 $

 $
 8,433

 Individually evaluated

 —

 —

 —

 —

 —

 —

 Collectively evaluated

 1,223

 4,612

 1,484

 8,319

 Loans receivable:

 Balance - September 30, 2022

 $

 $

 $

 $

 $

 $
 3,130

 $
 —

 $

 Individually evaluated

 1,512

 1,159

 2,835

 —

 —

 —

 5,659

 Collectively evaluated

 212,865

 341,632

 12,395

 34,519

 3,130

 —

 623,245

 The allowance for loan losses is
based on estimates, and actual losses will vary from current estimates. Management believes that the segmentation of the loan portfolio
into homogeneous pools and the related historical loss ratios and other qualitative factors, as well as the consistency in the application
of assumptions, result in an ALL that is representative of the risk found in the components of the portfolio at any given date.

 A TDR
is a loan that has been modified whereby the Bank has agreed to make certain concessions to a borrower
to meet the needs of both the borrower and the Bank to maximize the ultimate recovery of a loan. TDR occurs when a borrower is experiencing,
or is expected to experience, financial difficulties and the loan is modified using a modification that would otherwise not be granted
to the borrower. The types of concessions granted generally included, but are not limited to interest rate reductions, limitations on
the accrued interest charged, term extensions, and deferment of principal.

 A default
on a troubled debt restructured loan for purposes of this disclosure occurs when a borrower is 90 days past due or a foreclosure or repossession
of the applicable collateral has occurred. There was one TDR totaling $ 106,000 during the year ended September 30, 2023, compared with
no TDR loans during the year ended September 30, 2022. All TDR loans were performing in accordance with their restructured terms as September
30, 2023. The following tables summarizes the TDRs during the years ended September 30,
2023 and 2022:

 Number of

 Investment Before

 Investment After

 Loans

 TDR Modification

 TDR Modification

 $

 $

 Total

 $

 $

 Total

 —

 $
 —

 $
 —

 Total loans pledged as collateral
against Federal Home Loan Bank of New York ("FHLBNY") borrowings were $ 341.6 million and $ 181.2 million as of September 30,
2023 and 2022, respectively.

 NOTE F - PREMISES AND EQUIPMENT

 Premises and equipment consist
of the following:

 Estimated

 Useful Lives

 2023

 2022

 Land

 Indefinite

 $
 3,811

 $
 3,811

 Buildings and improvements

 10 - 40 years

 21,923

 21,866

 Furniture, fixtures and equipment

 5 - 10 years

 3,860

 3,762

 29,594

 29,439

 Less accumulated depreciation

 ( 16,255
)

 ( 15,559
)

 Premises and equipment, net

 $
 13,339

 $
 13,880

 For the years ended September 30,
2023 and 2022, depreciation expense included in occupancy expense amounted to approximately $ 840,000 and $ 839,000, respectively.

 NOTE G - OTHER REAL ESTATE OWNED

 The Company held $ 328,000 of real
estate owned properties at September 30, 2023 and $ 281,000 at September 30, 2022. The Company did not have any write-downs on these properties
for the year ended September 30, 2023 and 2022. Further declines in real estate values may result in increased foreclosed real estate
expense in the future. Routine holding costs are charged to expense as incurred and improvements to real estate owned that enhance the
value of the real estate are capitalized.

 NOTE H - DEPOSITS

 A summary of deposits by type of
account follows:

 2023

 2022

 Demand accounts

 $
 188,550

 $
 182,417

 Savings accounts

 62,168

 81,850

 NOW accounts

 115,182

 98,643

 Money market accounts

 284,885

 222,214

 Certificate of deposit

 92,725

 69,929

 Retirement accounts

 11,943

 12,680

 Total deposits

 $
 755,453

 $
 667,733

 The current FDIC insurance limit
on bank deposit accounts is $ 250,000. The aggregate amount of deposit accounts with a denomination of $250,000 or more was approximately
$ 429.9 million at September 30, 2023 compared with $ 292.4 million at September 30, 2022. The aggregate amount of certificate deposits,
including individual retirement accounts with balances of $250,000 or more was $ 5.3 million at September 30, 2023 compared with $ 3.6 million
at September 30, 2022.

 At September 30, 2023, certificates
of deposit (including retirement accounts and brokered certificate deposit accounts) have contractual maturities as follows (in thousands):

 Year Ending September 30,

 2024

 $
 43,776

 2025

 34,328

 2026

 6,290

 2027

 1,687

 2028

 14,923

 2029 and after

 3,664

 Total

 $
 104,668

 Included with the certificates
of deposit were $ 13.8 million and $ 6.0 million in brokered certificates of deposit at September 30, 2023 and 2022, respectively.

 NOTE I - BORROWINGS

 1. Federal Home Loan Bank of New York Advances

 Long term FHLBNY advances at September
30, 2023 and September 30, 2022 totaled approximately $ 29.5 million and $ 15.6 million, respectively. The weighted average interest rates
on advances outstanding at September 30, 2023 and 2022 were 3.27 % and 2.48 %, respectively. The advances were collateralized by unencumbered
qualified assets consisting of one-to-four family residential and commercial real estate mortgage loans. Advances are made pursuant to
several different credit programs offered from time to time by the FHLBNY.

 Long term FHLBNY advances as of
September 30, 2023 mature as follows (in thousands):

 Year Ending September 30,

 2024

 $
 4,384

 2025

 3,500

 2026

 1,631

 2027

 6,000

 2028

 14,000

 Thereafter

 —

 Total

 $
 29,515

 Additionally, the Company has
established an Overnight Line of Credit arrangement with the FHLBNY. The total amount available under the line of credit is based on the
amount of eligible collateral pledged to the FHLBNY. At September 30, 2023 and 2022, the Company had available credit from the FHLBNY
totaling $ 122.2 million and $ 83.2 million, respectively. Information concerning short-term arrangement with the FHLBNY is summarized as
follows:

 2023

 2022

 Balance at end of year

 $
 —

 $
 —

 Weighted average balance during the year

 $
 1,283

 $

 Maximum month-end balance during the year

 $
 16,450

 $
 2,450

 Average interest rate during the year

 4.65 %

 2.67 %

 2. Securities Sold Under Reverse
Repurchase Agreements

 Qualifying repurchase agreements
are treated as financings and are reflected as a liability in the Consolidated Balance Sheets. The Company did not have repurchase agreements
outstanding at September 30, 2023 and September 30, 2022.

 NOTE J – SERVICING POLICY

 The Company originates and sells
loans receivable secured by one-to four-family residential properties and commercial business loans guaranteed by the Small Business Administration
(the "SBA"). The Company has sold loans on a servicing retained basis and on a servicing released basis. Loans sold
with servicing retained and servicing released during the year ended September 30, 2023 were $ 6.5 million and $ 0, respectively. Loans
sold with servicing retained and servicing released during the year ended September 30, 2022 were $ 10.5 million and $ 0, respectively.
The Company accounts for sales in accordance with ASC 860, Transfers and Servicing. Upon sale, the receivables are removed from the
balance sheet, mortgage servicing rights are recorded as an asset for servicing rights retained, and a gain on sale, if applicable, is
recognized for the difference between the carrying value of the receivables and the sales proceeds, net of origination costs.

 Gains on sales of loans, representing
the difference between the total sales price received for the loans and the allocated cost of the loans, are recognized when loans are
sold and delivered to the purchasers. Loans are accounted for as sold when control of the loan is surrendered. Control over the loans
is deemed surrendered when (1) the loans have been isolated from the Company, (2) the buyer has the right (free of conditions that constrain
it from taking advantage of that right) to pledge or exchange the loans and (3) the Company does not maintain effective control over the
loans through either (a) an agreement that entitles and obligates the Company to repurchase or redeem the loans before maturity, or (b)
the ability to unilaterally cause the buyer to return specific loans.

 The Company services one-to-four
family residential mortgage loans and SBA 7(a) loans for investors in the secondary market, which are not included in the Consolidated
Balance Sheets. The Company's fee is a percentage of the principal balance and is recognized as income when received. At
September 30, 2023 and 2022, the Company was servicing mortgage loans sold in the amount of $ 1.9 million and $ 2.1 million, respectively,
and SBA loans sold in the amount of $ 35.5 million and $ 32.0 million, respectively. 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. Mortgage servicing rights are amortized in proportion to, and over the period of, estimated net servicing revenues and are
included in other assets on the Consolidated Balance Sheets. Activity in loan servicing rights during the years ended September 30,
2023 and 2022 are summarized as follows:

 2023

 2022

 Beginning balance

 $
 —

 $

 Origination of mortgage servicing rights

 —

 Amortization

 —

 ( 4
)

 Ending balance

 $

 $
 —

 Loan servicing rights are carried
at the lower of amortized cost or fair value. Fair values are estimated using discounted cash flows based on a current market interest
rate.

 NOTE K - INCOME TAXES

 The Company's income tax
expense is comprised of the following components for the years ended September 30, 2023 and 2022:

 2023

 2022

 Current

 $
 3,647

 $
 3,163

 Deferred

 ( 615
)

 Total income tax expense

 $
 3,032

 $
 3,250

 A reconciliation of income tax
at the statutory tax rate to the effective income tax expense for the years ended September 30, 2023 and 2022 is as follows:

 2023

 2022

 Income tax expense at statutory rate

 $
 2,256

 $
 2,339

 Increase (decrease) resulting from:

 State income taxes, net of federal income tax benefit

 Tax-exempt income, net

 ( 90
)

 ( 87
)

 Nondeductible expenses

 Share based compensation

 —

 Employee stock ownership plan

 Other, net

 ( 188
)

 Total income tax expense

 $
 3,032

 $
 3,250

 The major sources of temporary
differences and their deferred tax effect at September 30, 2023 and 2022 are as follows:

 2023

 2022

 Allowance for loan losses

 $
 2,342

 $
 2,369

 Net unrealized loss, investment securities available-for-sale

 Deferred loan fees

 Unrealized loss, minimum pension liability

 Employee benefits

 —

 Allowance for transaction expense

 —

 Straight line rent

 Gross deferred tax asset

 3,592

 3,461

 Depreciation

 ( 588
)

 ( 816
)

 Employee benefits

 —

 ( 122
)

 Mortgage servicing rights

 ( 8
)

 —

 Gross deferred tax liability

 ( 596
)

 ( 938
)

 Net deferred tax asset, included in other assets

 $
 2,996

 $
 2,523

 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 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, 2023 and 2022. The Company has considered future market growth, forecasted earnings, future taxable income,
feasible and permissible tax planning strategies in determining the realizability of deferred tax assets. If the Company was to determine
that it would not be able to realize a portion of its net deferred tax asset in the future for which there is currently no valuation allowance,
an adjustment to the net deferred tax asset would be charged to earnings in the period such determination was made.

 The Bank's statutory income
tax rate in the State of New Jersey was 9.0 % for the years ending September 30, 2023 and 2022. The State of New Jersey has imposed a temporary
surtax on corporations earning New Jersey allocated income in excess of $ 1 million. The surtax is set at a rate of 2.5 % and it currently
effective through December 31, 2023. Accordingly, the Company used an 11.5 % State tax rate for the calculation of its State income tax
expense the years ended September 30, 2023 and 2022.

 NOTE L - PENSION PLAN

 The Company had a noncontributory
defined benefit pension plan (the "Plan") covering all eligible employees. On January 26, 2006, the Plan was frozen and amended
to eliminate future benefit accruals after February 15, 2006.

 Plan assets are invested in seven
diversified investment funds of the Pentegra Retirement Trust, a no load series open-ended mutual fund. The long-term investment objective
is to be invested 65 % in equity securities (equity mutual funds) and 35 % in debt securities (bond mutual funds). Asset rebalancing is
performed at least annually, with interim adjustments made when the investment mix varies more than 5% from the target (i.e., a 10% target
range). Risk/volatility is further managed by the distinct investment objectives of each of the funds and the diversification within each
fund.

 The following table sets forth
the Plan's funded status and amounts recognized in the Company's Consolidated Balance Sheets at September 30, 2023 and September
30, 2022.

 2023

 2022

 Actuarial present value of benefit obligations

 $
 3,495

 $
 3,735

 Change in benefit obligations

 Projected benefit obligation, beginning

 $
 3,735

 $
 4,926

 Interest cost

 Actuarial (gain) loss

 ( 181
)

 ( 1,071
)

 Annuity payments and lump sum distributions

 ( 249
)

 ( 264
)

 Projected benefit obligation, end

 $
 3,495

 $
 3,735

 Change in plan assets

 Fair value of assets, beginning

 $
 3,886

 $
 4,871

 Actual return on plan assets

 ( 721
)

 Annuity payments and lump sum distributions

 ( 249
)

 ( 264
)

 Fair value of assets, end

 $
 4,075

 $
 3,886

 Funded status included with other assets

 $

 $

 Net pension cost for the years
ended September 30, 2023 and 2022 included the following components:

 2023

 2022

 Service cost benefits earned during the year

 $
 —

 $
 —

 Interest cost on projected benefit obligation

 Expected return on plan assets

 ( 226
)

 ( 285
)

 Amortization of unrecognized net loss

 Net pension cost

 $

 $

 For the year ended September 30,
2023 and 2022, the weighted average discount rate used in determining the actuarial net periodic pension cost was 5.25 % and 3.00 %, respectively.
For the year ended September 30, 2023 and 2022, the weighted average discount rate used in determining the actuarial present value of
the projected benefit obligation was 5.75 % and 5.25 %, respectively.

 The long-term rate-of-return-on-assets
assumption was set based on historical returns earned by equities and fixed income securities, adjusted to reflect expectations of future
returns as applied to the plan's target allocation of asset classes. Equities and fixed income securities were assumed to earn rates
of return in the ranges of 6 - 8 % and 3 - 5 %, respectively, with an assumed long-term inflation rate of 2.5 % reflected within these ranges
for the year ended September 30, 2023. When these overall return expectations are applied to the plan's target allocation, the result
is an expected rate of return of 5.0 % to 7.0 %. Accordingly, the expected long-term rates of return on assets were 6.00 % for 2024 and 6.00 %
for 2023.

 Current Asset Allocation

 The Plan's weighted-average
asset allocations at September 30, 2023 and 2022, by asset category are as follows:

 2023

 2022

 Equity securities

 63 %

 68 %

 Debt securities (bond mutual funds)

 36 %

 31 %

 Other (money market fund)

 2 %

 1 %

 Total

 100 %

 100 %

 The target asset allocation set
for the assets of the Plan are in equity securities ranging from 50 % to 75 % and in debt securities ranging from 25 % to 50 %. In general,
the Plan assets are investment securities that are well-diversified in terms of industry, capitalization and asset class. The Plan assets
are mostly a mix of mutual funds indexed to the performance of Fortune 500 U.S. companies, debt securities held in bond funds, domestic
and foreign common equity funds, and a money market fund. The Plan's exposure to a concentration of credit risk is limited by the
diversification of the investments into various investment options with multiple asset managers.

 Expected Contributions

 For the fiscal year ending September
30, 2024, the Company does not expect to make a contribution to the Plan.

 Estimated Future Benefit Payments

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

 October 1, 2023 through September 30, 2024

 $

 October 1, 2024 through September 30, 2025

 October 1, 2025 through September 30, 2030

 October 1, 2026 through September 30, 2031

 October 1, 2027 through September 30, 2032

 October 1, 2028 through September 30, 2033

 1,258

 Total

 $
 2,616

 Included in the funded status of
the Plan at September 30, 2023 and 2022, are actuarial losses of $ 440,000 and $ 956,000, respectively. These amounts are included, net
of related income tax effects of $ 132,000 and $ 288,000, respectively, in the accumulated other comprehensive loss component of stockholders'
equity.

 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. Financial
assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note
Q for further detail regarding fair value hierarchy.

 Fair Value Measurements at Reporting Date Using:

 Quoted Prices

 Significant

 in Active Markets

 Other

 Significant

 for Identical

 Observable

 Unobservable

 Total

 Assets (Level 1)

 Inputs (Level 2)

 Inputs (Level 3)

 At September 30, 2023

 Investment Type

 Mutual Funds - Equity

 Large - Cap Value

 $

 $

 $
 —

 $
 —

 Large - Cap Core

 —

 —

 Mid - Cap Core

 —

 —

 Small - Cap Core

 —

 —

 Non - U.S. Core

 —

 —

 Mutual Funds - Fixed Income

 Intermediate Duration

 —

 —

 Short - Duration Corporate

 Cash Equivalents

 Money Market

 —

 —

 Total Investment

 $
 4,075

 $
 4,075

 $
 —

 $
 —

 At September 30, 2022

 Investment Type

 Mutual Funds - Equity

 Large - Cap Value

 $

 $

 $
 —

 $
 —

 Large - Cap Core

 —

 —

 Mid - Cap Core

 —

 —

 Small - Cap Core

 —

 —

 Non - U.S. Core

 —

 —

 Mutual Funds - Fixed Income

 Intermediate Duration

 —

 —

 Short - Duration Corporate

 Cash Equivalents

 Money Market

 —

 —

 Total Investment

 $
 3,886

 $
 3,886

 $
 —

 $
 —

 Equity and debt securities are
reported at fair value in the table above utilizing exchange quoted prices in active markets for identical instruments (Level 1 inputs).

 NOTE M - NONQUALIFIED COMPENSATION
PLAN

 The Company maintains a Supplemental
Executive Retirement Plan ("SERP") for the benefit of its senior officers. In addition, the Company also adopted voluntary
Deferred Income and Retirement Plans on behalf of its directors. The SERP provides the Company with the opportunity to supplement the
retirement income of selected officers to achieve equitable wage replacement at retirement while the Deferred Income Plan provides participating
directors with an opportunity to defer all or a portion of their fees into a tax deferred accumulation account for future retirement.
The Director Retirement Plan enables the Company to reward its directors for longevity of service in consideration of their availability
and consultation. The SERP is based upon achieving a total retirement benefit equal to a percentage of the participants' final annual
salary.

 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 10% plus 2 1/2% for each year of service as a Director,
with a minimum of 50%, provided the Director has served for at least five years, and a maximum of 60%. The maximum benefit increases for
any Director serving as Chairman of the Board for at least five years to 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, 2023 and 2022, the Company's life insurance contracts had
cash surrender values of approximately $ 18 million and $ 17.7 million, 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. The total
expense for nonqualified retirement benefits recorded during the year ended September 30, 2023 and 2022 was $ 375,000 and $ 424,000, respectively.
Included in accounts payable and other liabilities at September 30, 2023 and 2022 were accrued retirement benefits totaling $ 828,000 and
$ 630,000, respectively, for these plans.

 NOTE N - 401(K) EMPLOYEE CONTRIBUTION
PLAN

 The Company has a defined contribution
401(k) plan covering all employees, as defined under the plan document. Employees may contribute to the plan, as defined under the plan
document, and the Company can make discretionary contributions. The Company contributed $ 257,000 and $ 271,000 to the plan for the years
ended September 30, 2023 and 2022, and is included in compensation and employee benefits in the accompanying Consolidated Statements of
Income.

 NOTE O - COMMITMENTS

 1. Lease
Commitments

 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. Our leases have remaining lease terms of up to 10 years, some of which include options to extend the leases
for up to 10 additional years. Operating leases are recorded as ROU assets and lease liabilities and are included within Other assets
and Accounts payable and other liabilities, respectively, on our Consolidated Balance Sheets.

 Operating lease ROU assets represent
our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments
arising from the lease. ROU assets and lease liabilities are recognized at lease commencement base on the present value of the remaining
lease payments using a discount rate that represents our incremental borrowing rate. The incremental borrowing rate used by the Company
to value its operating leases is based on the interpolated term advance rate available from the FHLBNY, based on the remaining lease term.

 The following table presents the
balance sheet information related to our leases:

 2023

 2022

 Operating lease right-of-use asset

 $
 2,687

 $
 3,292

 Operating lease liabilities

 $
 2,944

 $
 3,605

 Weighted average remaining lease term in years

 6.4

 7.0

 Weighted average discount rate

 2.2 %

 2.2 %

 The following table summarizes the
maturity of our remaining lease liabilities by year:

 2023

 For the Year Ending:

 2024

 $

 2025

 2026

 2027

 2028

 2029 and thereafter

 Total lease payments

 3,258

 Less imputed interest

 ( 314
)

 Present value of lease liabilities

 $
 2,944

 Total rental expense, included
in occupancy expense, was approximately $ 809,000 and $ 807,000 for the years ended September 30, 2023 and 2022, respectively.

 2. Contingencies

 The Company and its subsidiaries,
from time to time, are a party to routine litigation that arises in the normal course of business. In the opinion of management, the resolution
of this litigation, if any, would not have a material adverse effect on the Company's consolidated financial position or results
of operations.

 NOTE P - FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK

 The Company may use derivative
financial instruments, such as interest rate floors and collars, as part of its interest rate risk management. Interest rate caps
and floors are agreements whereby one party agrees to pay or receive a floating rate of interest on a notional principal amount for a
predetermined period of time if certain market interest rate thresholds are met. The Company considers the credit risk inherent in these
contracts to be negligible. As of September 30, 2023 and 2022, the Company did not hold any interest rate floors or collars.

 The Company is a party to interest
rate derivatives that are not designated as hedging instruments. Under a program, the Company executes interest rate swaps with commercial
lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously
offset by interest rate swaps that the Bank executes with a third-party financial institution, such that the Bank minimizes its net risk
exposure resulting from such transactions. Because the interest rate swaps associated with this program do not meet the strict hedge accounting
requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. 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 $0 in cash pledged
for collateral on its interest rate swaps with financial institutions at September 30, 2023 and 2022.

 The following table presents summary
information regarding these derivatives for September 30, 2023 and 2022.

 Notional

Maturiy

(Years)

 Fixed

Rate

 Weighted Average

 Variable Rate

 Fair Value

 Classified in Other Assets:

 Customer interest rate swaps

 $
 36,020

 4.2

 4.96 %

 1 Mo. BSBY + 2.44

 $
 2,579

 Total

 $
 36,020

 4.2

 4.96 %

 $
 2,579

 Classified in Other Liabilities:

 3rd Party interest rate swaps

 $
 36,020

 4.2

 4.96 %

 1 Mo. BSBY + 2.44

 $
 2,579

 Total

 $
 36,020

 4.2

 4.96 %

 $
 2,579

 Classified in Other Assets:

 Customer interest rate swaps (1)

 $
 19,512

 5.9

 3.63 %

 1 Mo. LIBOR + 2.50

 $
 2,275

 6,940

 4.6

 6.13 %

 1 Mo. BSBY + 3.00

 Total

 $
 26,452

 5.2

 4.88 %

 $
 2,487

 Classified in Other Liabilities:

 3rd Party interest rate swaps

 $
 19,512

 5.9

 3.63 %

 1 Mo. LIBOR + 2.50

 $
 2,275

 6,940

 4.6

 6.13 %

 1 Mo. BSBY + 3.00

 Total

 $
 26,452

 5.2

 4.88 %

 $
 2,487

 (1) Derivative
assets were incorrectly shown as a negative balance within the Company's Annual Report on Form 10-K for the year-ended September 30, 2022.
The derivative asset balances have been corrected within the table above. The correction did not have an impact on the Company's consolidated
balance sheet.

 At September 30, 2023 and 2022,
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.

 2023

 2022

 Financial instruments whose contract amounts represent credit risk

 Letters of credit

 $
 1,073

 $

 Unused lines of credit

 89,933

 73,825

 Fixed rate loan commitments

 3,578

 2,550

 Variable rate loan commitments

 26,472

 49,913

 Total

 $
 121,056

 $
 127,028

 NOTE Q - FAIR VALUE DISCLOSURES

 The Company uses fair value measurements
to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The Company's securities
available-for-sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record
at fair value other assets or liabilities on a non-recurring basis, such as held-to-maturity securities, mortgage servicing rights, loans
receivable and other real estate owned, or OREO. These non-recurring fair value adjustments involve the application of lower-of-cost-or-market
accounting or write-downs of individual assets.

 In accordance with ASC 820, Fair
Value Measurements and Disclosures ("ASC 820"), the Company groups its assets and liabilities at fair value in three levels,
based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels
are:

 Level 1-

 Valuation is based upon quoted prices for identical instruments traded in active markets.

 Level 2-

 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

 Level 3-

 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect our own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques. The results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability.

 The Company bases its fair values
on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs
when measuring fair value.

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

 Securities available-for-sale

 The Company's available-for-sale
portfolio is carried at estimated fair value on a recurring basis, with any unrealized gains and losses, net of taxes, reported as accumulated
other comprehensive income (loss) in stockholders' equity. The securities available-for-sale portfolio consists of U.S. government
and government-sponsored enterprise obligations and mortgage-backed securities. The fair values of these securities are obtained from
an independent nationally recognized pricing service. 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 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, 2023 and 2022:

 Total

 Level 1

 Level 2

 Level 3

 Assets:

 Securities available-for-sale:

 $

 $
 —

 $

 $
 —

 10,033

 —

 10,033

 —

 Total securities available for sale

 $
 10,125

 $
 —

 $
 10,125

 $
 —

 Derivative assets

 2,579

 —

 2,579

 —

 Total assets

 $
 12,704

 $
 —

 $
 12,704

 $
 —

 Liabilities:

 Derivative liabilities

 $
 2,579

 $
 —

 $
 2,579

 $
 —

 Total Liabilities

 $
 2,579

 $
 —

 $
 2,579

 $
 —

 Assets:

 Securities available-for-sale:

 $

 $
 —

 $

 $
 —

 9,122

 —

 9,122

 —

 Total securities available for sale

 $
 9,229

 $
 —

 $
 9,229

 $
 —

 Derivative assets (1)

 2,487

 —

 2,487

 —

 Total assets

 $
 11,716

 $
 —

 $
 11,716

 $
 —

 Liabilities:

 Derivative liabilities

 $
 2,487

 $
 —

 $
 2,487

 $
 —

 Total Liabilities

 $
 2,487

 $
 —

 $
 2,487

 $
 —

 (1) Derivative
assets were incorrectly shown as a negative balance within the Company's Annual Report on Form 10-K for the year-ended September 30, 2022.
The derivative asset balances and corresponding totals have been corrected within the table above. The correction did not have an impact
on the Company's consolidated balance sheet.

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

 Impaired Loans

 Loans which meet certain criteria
are evaluated individually for impairment. A loan is impaired when, based on current information and events, it is probable that the Company
will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual
terms means that both the contractual interest and principal payments of a loan will be collected as scheduled in the loan agreement.
Three impairment measurement methods are used, depending upon the collateral securing the asset: 1) the present value of expected future
cash flows discounted at the loan's effective interest rate; 2) the asset's observable market price; or 3) the fair value
of the collateral if the asset is collateral dependent. The regulatory agencies require this method for loans from which repayment is
expected to be provided solely by the underlying collateral. The Company's impaired loans are generally collateral dependent and,
as such, are carried at the estimated fair value of the collateral less estimated selling and disposition costs. Fair value is estimated
through current appraisals, and adjusted as necessary, by management, to reflect current market conditions and, as such, are generally
classified as Level 3.

 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 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.
However, the Company also obtains updated appraisals on performing construction loans that are approaching their maturity date to determine
whether or not the fair value of the collateral securing the loan remains sufficient to cover the loan amount prior to considering an
extension. The Company discounts the appraised "as is" value of the collateral for estimated selling and disposition costs
and compares the resulting fair value of collateral to the outstanding loan amount. If the outstanding loan amount is greater than the
discounted fair value, the Company requires a reduction in the outstanding loan balance or additional collateral before considering an
extension to the loan. 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.

 Other Real Estate Owned

 Other real estate owned is carried
at lower of cost or estimated fair value less disposal costs. The estimated fair value of the real estate is determined through current
appraisals, and adjusted as necessary, by management, to reflect current market conditions. As such, other real estate owned is generally
classified as Level 3. There were no valuation write-downs for the years ended September 30, 2023 and 2022.

 The following tables provide the
level of valuation assumptions used to determine the carrying value of our assets measured at fair value on a non-recurring basis at September 30,
2023 and 2022:

 Total

 Level 1

 Level 2

 Level 3

 Impaired loans

 $

 $
 —

 $
 —

 $

 Total

 $

 $
 —

 $
 —

 $

 Impaired loans

 $
 5,659

 $
 —

 $
 —

 $
 5,659

 Total

 $
 5,659

 $
 —

 $
 —

 $
 5,659

 The following tables present additional
quantitative information about assets measured at fair value on a nonrecurring basis and for which Company has utilized Level 3 inputs
to determine fair value:

 Quantitative Information about Level 3 Fair Value Measurements

 Fair Value

 Valuation

 Estimate

 Techniques

 Unobservable Input

 Range (Weighted Average)

 Impaired loans

 $

 Appraisal of collateral (1)

 Appraisal adjustments (2)

 -50% to -8.0% (-19.4%)

 Fair Value

 Valuation

 Estimate

 Techniques

 Unobservable Input

 Range (Weighted Average)

 Impaired loans

 $
 5,659

 Appraisal of collateral (1)

 Appraisal adjustments (2)

 0% to -31.7% (-9.9%)

 (1)
 Fair value is generally determined through independent appraisals for the underlying collateral, which
generally include various level 3 inputs which are not identifiable.

 (2)
 Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated
liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent
of the appraisal.

 The following presents the carrying
amount, fair value, and placement in the fair value hierarchy of the Company's financial instruments carried at cost or amortized
cost as of September 30, 2023 and September 30, 2022. This table excludes financial instruments for which the carrying amount approximates
fair value, which includes cash and cash equivalents, FHLBNY stock, bank owned life insurance, accrued interest receivable, interest and
non-interest bearing demand, savings deposits, and accrued interest payable. For short-term financial assets such as cash and cash equivalents,
the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument
and its expected realization. For financial liabilities such as interest-bearing demand, NOW, and money market savings deposits,
the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

 Carrying

 Fair

 Fair Value Measurement Placement

 Value

 (Level 1)

 (Level 2)

 (Level 3)

 Financial instruments - assets

 Investment securities held-to-maturity

 $
 85,835

 $
 73,728

 $
 —

 $
 73,728

 $
 —

 Loans

 689,070

 664,331

 —

 —

 664,331

 Financial instruments - liabilities

 Certificates of deposit

 104,668

 101,216

 —

 101,216

 —

 29,515

 28,177

 —

 28,177

 —

 Financial instruments - assets

 Investment securities held-to-maturity

 $
 91,646

 $
 79,914

 $
 —

 $
 79,914

 $
 —

 Loans

 619,843

 592,804

 —

 —

 592,804

 Financial instruments - liabilities

 Certificates of deposit

 82,609

 81,289

 —

 81,289

 —

 15,625

 14,762

 —

 14,762

 —

 NOTE R - REGULATORY CAPITAL

 The Company and Bank are required
to maintain minimum amounts of capital to total "risk-weighted" assets, as defined by the banking regulators. Failure to meet
minimum capital requirements can initiate certain mandatory and possibly discretionary actions by regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. 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.

 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 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%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. An institution
will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level
falls below the buffer amount. These limitations established a maximum percentage of eligible retained income that could be utilized for
such actions.

 As of September 30, 2023, the most
recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework
for prompt corrective action. There are no conditions or events since that notification that management believes have changed
the Bank's category.

 The following tables set forth
the Company's and the Bank's actual and required capital levels under those measures:

 To be well-

 capitalized under

 Required for capital

 prompt corrective

 At September 30, 2023

 Company

 Bank

 adequacy purposes

 action provisions

 Tier 1 leverage ratio

 12.12 %

 11.11 %

 4.00 %

 5.00 %

 CET1

 16.33 %

 14.97 %

 7.00 % (1)

 6.50 %

 Tier 1 risk-based capital ratio

 16.33 %

 14.97 %

 8.50 % (1)

 8.00 %

 Total risk-based capital ratio

 17.58 %

 16.22 %

 10.50 % (1)

 10.00 %

 At September 30, 2022

 Tier 1 leverage ratio

 12.57 %

 11.13 %

 4.00 %

 5.00 %

 CET1

 17.16 %

 15.22 %

 7.00 % (1)

 6.50 %

 Tier 1 risk-based capital ratio

 17.16 %

 15.22 %

 8.50 % (1)

 8.00 %

 Total risk-based capital ratio

 18.41 %

 16.47 %

 10.50 % (1)

 10.00 %

 (1)
 Includes
2.50% capital conservation buffer

 ITEM 9.
 Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

 ITEM 9A.
 Controls and Procedures

 Disclosure Controls and Procedures

 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.

 Changes in Internal Control over
Financial Reporting

 There has been no change in Magyar
Bancorp, Inc.'s internal control over financial reporting during Magyar Bancorp, Inc.'s fourth quarter of fiscal year 2023 that has materially
affected, or is reasonably likely to materially affect, Magyar Bancorp, Inc.'s internal control over financial reporting.

 Report by Management on Internal
Control over Financial Reporting

 The management of Magyar Bancorp,
Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Magyar Bancorp Inc.'s internal
control system was designed to provide reasonable assurance to the Magyar Bancorp, Inc.'s management and board of directors regarding
the preparation and fair presentation of published financial statements.

 All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and presentation.

 Magyar Bancorp, Inc.'s management
assessed the effectiveness of the Company's internal control over financial reporting as of September 30, 2023. In making this assessment,
it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013 in Internal Control-Integrated
Framework. Based on our assessment, we believe that, as of September 30, 2023, the Company's internal control over financial reporting
was effective based on those criteria.

 The Annual Report on Form 10-K
does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to exemption rules of the
Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

 ITEM 9B.
 Other Information

 None.

 ITEM 9C.
 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 None.

 ITEM 10.
 Directors, Executive Officers, and Corporate Governance

 Magyar Bancorp, Inc. has adopted
a Code of Ethics that applies to Magyar Bancorp, Inc.'s principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions. The Code of Ethics, and any amendments to and waivers from the Code of
Ethics, will be posted on the Company's website located at www.magbank.com. A copy of the Code will be furnished without charge
upon written request to the Secretary, Magyar Bancorp, Inc., 400 Somerset Street, New Brunswick, New Jersey.

 Information concerning directors
and executive officers of Magyar Bancorp, Inc. is incorporated herein by reference from our definitive Proxy Statement related to our
2023 Annual Meeting of Stockholders (the "Proxy Statement"), specifically the section captioned "Proposal I - Election
of Directors."

 ITEM 11.
 Executive Compensation

 Information concerning executive
compensation is incorporated herein by reference from our Proxy Statement, specifically the section captioned "Proposal I - Election
of Directors."

 ITEM 12.
 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Information concerning security
ownership of certain owners and management is incorporated herein by reference from our Proxy Statement, specifically the sections captioned
"Security Ownership of Certain Beneficial Owners and Management" and "Proposal I - Election of Directors."

 ITEM 13.
 Certain Relationships and Related Transactions, and Director Independence

 Information concerning relationships
and transactions is incorporated herein by reference from our Proxy Statement, specifically the section captioned "Proposal I -
Election of Directors - Transactions with Certain Related Persons."

 ITEM 14.
 Principal Accountant Fees and Services

 Information concerning principal
accountant fees and services is incorporated herein by reference from our Proxy Statement, specifically the section captioned "Proposal
II - Ratification of the Appointment of Independent Registered Public Accountants."

 ITEM 15.

 Exhibits and Financial Statement Schedules

 3.1

 Certificate of Incorporation of Magyar Bancorp, Inc. (1)

 3.2

 Bylaws of Magyar Bancorp, Inc. (2)

 3.3

 Amendment to Certificate of Incorporation of Magyar Bancorp, Inc. (8)

 4.1

 Form of Common Stock Certificate of Magyar Bancorp, Inc. (2)

 4.2

 Description of the Capital Stock of Magyar Bancorp, Inc. (3)

 10.1

 Form of Employee Stock Ownership Plan (2)

 10.2

 Restated Director Supplemental Retirement Income and Deferred Compensation Agreement for Joseph A. Yelencsics (4)

 10.3

 Restated Director Supplemental Retirement Income and Deferred Compensation Agreement for Edward C. Stokes, III (4)

 10.4

 Restated Director Supplemental Retirement Income and Deferred Compensation Agreement for Thomas Lankey (4)

 10.5

 Restated Director Supplemental Retirement Income and Deferred Compensation Agreement for Andrew G. Hodulik (4)

 10.6

 Form of Change in Control Agreement for Executive Officers (2)

 10.7

 Executive Supplemental Retirement Income Agreement for John Fitzgerald (4)

 10.8

 Executive Supplemental Retirement Income Agreement for Jon Ansari (4)

 10.9

 Employment Agreement for John Fitzgerald (5)

 10.10

 Employment Agreement for Jon Ansari (9)

 10.11

 Change in Control Agreement for Peter Brown (5)

 10.12

 Supplemental Executive Retirement Plan for John Fitzgerald (6)

 10.13

 Supplemental Executive Retirement Plan for Jon Ansari (6)

 10.14

 Magyar Bancorp, Inc. 2022 Equity Incentive Plan (7)

 Subsidiaries of Registrant (2)

 Consent of S.R. Snodgrass, P.C.

 23.2

 Consent of RSM US LLP

 31.1

 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2

 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 (1)
 Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form SB-2 of Magyar Bancorp,
Inc. (file no. 333-128392), originally filed with the Securities and Exchange Commission on September 16, 2005, as amended.

 (2)
 Incorporated by reference to the Registration Statement on Form SB-2 of Magyar Bancorp, Inc. (file no.
333-128392), originally filed with the Securities and Exchange Commission on September 16, 2005, as amended.

 (3)
 Incorporated by reference to the Annual Report on Form 10-K of Magyar Bancorp, Inc. (file no. 000-51726),
filed with the Securities and Exchange Commission on December 20, 2021.

 (4)
 Incorporated by reference to the Annual Report on Form 10-KSB of Magyar Bancorp, Inc. (file no. 000-51726),
originally filed with the Securities and Exchange Commission on December 29, 2006.

 (5)
 Incorporated by reference to the Company's Registration Statement on Form S-1 (File No. 333-254282),
filed with the Securities and Exchange Commission on March 15, 2021.

 (6)
 Incorporated by reference to the Current Report on Form 8-K of Magyar Bancorp, Inc. (file no 000-51726),
originally filed with the Securities and Exchange Commission on May 29, 2019.

 (7)
 Incorporated by reference to Appendix A to the Company's definitive Proxy Statement (file no. 000-51726)
filed with the SEC on July 18, 2022.

 (8)
 Incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on July 12, 2021.

 (9)
 Incorporated by reference to the Annual Report on Form 10-K of Magyar Bancorp, Inc. (file no. 000-51726),
filed with the Securities and Exchange Commission on December 22, 2022.

 ITEM 16.
 Form 10-K Summary

 None

 SIGNATURES

 Pursuant to the requirements
of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

 MAGYAR BANCORP, INC.

 By:

 /s/ John S. Fitzgerald

 Date

 John S. Fitzgerald

 President and Chief Executive Officer

 (Duly Authorized Representative)

 Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

 Signatures

 Title

 Date

 /s/ John S. Fitzgerald

 President and Chief Executive Officer

 John S. Fitzgerald

 (Principal Executive Officer)

 /s/ Jon R. Ansari

 Executive Vice President and Chief Financial Officer

 Jon R. Ansari

 (Principal Financial and Accounting Officer)

 /s/ Thomas Lankey

 Chairman of the Board

 Thomas Lankey

 /s/ Andrew Hodulik

 Vice Chairman of the Board

 Andrew Hodulik

 /s/ Joseph A. Yelencsics

 Joseph A. Yelencsics

 /s/ Edward C. Stokes

 Edward C. Stokes, III

 /s/ Susan Eisenhauer

 Susan Eisenhauer

 /s/ Michael Lombardi

 Michael Lombardi

 /s/ Maureen Ruane

 Maureen Ruane

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