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STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM | 12 Months Ended
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Sep. 30, 2021
Share-based Payment Arrangement, Noncash Expense [Abstract] |
STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM | NOTE C – STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM The Company follows FASB Accounting Standards Codification (“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. There was no stock option or stock award activity as of or during the years ended September 30, 2021 and 2020. Accordingly, there were no stock option or stock award expenses included with compensation expense for the years ended September 30, 2021 and 2020. The Company completed its first stock repurchase program of 130,927 shares in November 2007 and announced in November 2007 a second repurchase program of up to 5% of its publicly-held outstanding shares of common stock, or 129,924 shares, under which 91,000 shares had been repurchased as of September 30, 2021 at an average price of $8.41. The Company did not repurchase shares of its common stock during the fiscal year ended September 30, 2021. The Company repurchased 10,000 shares at an average price of $9.03 during the fiscal year ended September 30, 2020. 62 Table of Contents
MAGYAR BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021 and 2020
Under current federal regulations, subject to limited exceptions, the Company may not repurchase shares of our common stock during the first year following the completion of its second-step conversion offering, which was completed on July 14, 2021. The 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. The Company’s ESOP (“2006 ESOP”) was established in 2006 as part of the Company’s initial public offering. The total cost of shares purchased by the 2006 ESOP trust was $2.3 million, reflecting an average cost per share of $10.58. The loan bore a variable interest rate that adjusted annually to Prime Rate (3.25% at January 1, 2021) with principal and interest payable annually in equal installments over thirty years. The 2006 ESOP loan was fully repaid during the year ended September 30, 2021. In connection with the second-step conversion offering, and as previously disclosed, the ESOP trustees subscribed for, and intended to purchase, on behalf of the ESOP, 8% of the shares of the Company common stock sold in the offering, or 312,800 shares (“2021 ESOP”). As a result of the second-step conversion offering being oversubscribed in the first tier of subscription priorities, the ESOP trustees were unable to purchase shares of the Company’s common stock in the second-step conversion offering. Subsequent to the completion of the second-step conversion on July 14, 2021, the ESOP trustees purchased 304,377 shares of the Company’s common stock in the open market through September 30, 2021 for $3.2 million, reflecting an average cost per share of $10.75. Subsequently, the ESOP trustee purchased the remaining 8,423 shares of Company common stock by October 8, 2021. The 2021 ESOP loan bears a variable interest rate that adjusts annually to Prime Rate (3.25% at January 1, 2021) with principal and interest payable annually in equal installments over thirty years. The Company's contribution expense for the ESOP was $107,000 and $126,000 for years ended September 30, 2021 and 2020, respectively. The following table presents the components of the ESOP shares as of September 30, 2021:
Unreleased shares at September 30, 2020 |  |  | 14,757 |
Shares released for allocation during the year ended September 30, 2021 |  |  | (14,757 | )
Shares purchased by ESOP trustee during the year ended September 30, 2021 |  |  | 304,377 |
Unreleased shares at September 30, 2021 |  |  | 304,377 |
Total released shares |  |  | 217,863 |
Total ESOP shares |  |  | 522,240 |
The aggregate fair value of the unreleased shares at September 30, 2021 was approximately $3.5 million.

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