<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>form8k_exh991-101006.txt
<TEXT>
                                  Exhibit 99.1

MAGYAR BANCORP

400 Somerset St., New Brunswick, NJ 08901
732.342.7600


                     Magyar Bancorp Statement on Kara Homes

New Brunswick,  NJ--October 10,  2006--Magyar Bank, the principal  subsidiary of
Magyar  Bancorp,  is releasing  the following  statement to clarify  information
regarding  loans made by the Bank to East  Brunswick  builder  Kara Homes  Inc.,
which recently filed for Chapter 11 bankruptcy.

Kara Homes'  lending  relationship  with the Bank consists of four  construction
loans with total outstanding balances of $7,575,000.  Two of the four loans were
participated with other banks, limiting Magyar's total lending relationship with
Kara Homes to $5,135,000.

These  loans  were  originated  within  the  Bank's  guidelines,  including  the
requirement that the maximum  loan-to-value  ratio is 75% of the appraised value
of the  property.  The Bank is in a first lien position with respect to the Real
Estate securing the loans. Details of the four loans are provided as follows:

     o    The Bank holds a  Construction  Mortgage  Loan to  Hartley  Estates by
          Kara, LLC, a company principally owned by Zuhdi Karagjozi.,  President
          of Kara Homes. The purpose of this loan is acquisition and development
          of approved  residential  building  lots  located in Little Egg Harbor
          Township,  New Jersey.  The total  mortgage loan is $4,085,000 and the
          outstanding   principal   balance   is   $1,214,000.   This   loan  is
          collateralized  by improved  and/or  approved  real estate  located in
          Little Egg Harbor Township, New Jersey.

     o    The Bank holds a  Construction  Mortgage  Loan to Kara at Dayna Court,
          LLC, a company principally owned by Zuhdi Karagjozi, President of Kara
          Homes.  The purpose of this loan is  acquisition  and  development  of
          approved  residential  building lots located in Dover Township,  Ocean
          County,  New Jersey.  The total  mortgage loan is  $2,946,000  and the
          outstanding   principal   balance   is   $1,480,000.   This   loan  is
          collateralized  by improved  and/or  approved  real estate  located in
          Dover Township, Ocean County, New Jersey

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     o    The Bank  holds a  Construction  Mortgage  Loan to Kara at Park  Ridge
          Estates,   LLC,  a  company  principally  owned  by  Zuhdi  Karagjozi,
          President of Kara Homes.  The purpose of this loan is acquisition  and
          development   of  approved   residential   building  lots  located  in
          Manahawkin,  Stafford Township, New Jersey. The total mortgage loan is
          $5,283,000.   This  is  a  participation  loan,  and  the  outstanding
          principal balance of the Bank's participation interest in this loan is
          $1,359,000.  This loan is  collateralized  by improved and/or approved
          real estate located in Manahawkin, Stafford Township, New Jersey.

     o    In addition,  the Bank holds a Construction  Mortgage Loan to Sterling
          Acres at Monroe,  LLC, a company principally owned by Zuhdi Karagjozi,
          President of Kara Homes.  The purpose of this loan is acquisition  and
          development  of approved  residential  building lots located in Monroe
          Township, New Jersey. The total mortgage loan is $2,752,000. This is a
          participation  loan,  and the  outstanding  principal  balance  of the
          Bank's participation interest in this loan is $1,082,000. This loan is
          collateralized  by improved  and/or  approved  real estate  located in
          Monroe Township, New Jersey.

Although  the Bank  believes  that it will  receive full payment on these loans,
there can be no assurance  that losses will not be incurred or that  significant
additional expenses will not be incurred in the process of the resolution of the
Kara Homes situation.

Magyar  Bancorp  (NASDAQ:  MGYR) is the parent  company of Magyar  Bank,  a $410
million asset community bank headquartered in New Brunswick,  New Jersey. Magyar
Bank has been serving  families and businesses in Central New Jersey for over 80
years with a complete line of financial products and services,  and today Magyar
operates branch locations in New Brunswick, North Brunswick, South Brunswick and
Branchburg. Visit Magyar online at www.magbank.com.
                                   ---------------

Forward   Looking   Statements:   Certain   statements   contained   herein  are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933  and  Section  21E of the  Securities  Exchange  Act of  1934.  Such
forward-looking  statements may be identified by reference to a future period or
periods, or by the use of forward- looking  terminology,  such as "may," "will,"
"believe,"  "expect," or similar  terms or  variations  on those  terms,  or the
negative  of those  terms.  Forward-looking  statements  are subject to numerous
risks and uncertainties,  including,  but not limited to, those risks previously
disclosed in the  Company's  filings with the SEC, and with respect to the loans
extended by the Bank to Kara Homes, the following: risks related to the economic
environment  in the market areas in which the Bank operates,  particularly  with
respect to the real estate market in New Jersey;  the risk that the value of the
real  estate  securing  the loans to Kara  Homes may  decline  in value  pending
resolution of the bankruptcy  proceeding;  and the risk that significant expense
may be incurred in connection  with and pending the resolution of the bankruptcy
proceeding. The Company wishes to caution readers not to place undue reliance on
any such forward-looking  statements,  which speak only as of the date made. The
Company does not undertake and specifically  declines any obligation to publicly

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release  the  result of any  revisions  that may be made to any  forward-looking
statements to reflect events or circumstances  after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events.


Contact: John Reissner, Vice President, Marketing Director, 732.214.2083


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