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INCOME TAXES | 12 Months Ended
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Sep. 30, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE L - INCOME TAXES The Company’s income tax expense is comprised of the following components for the years ended September 30, 2021 and 2020: 76 Table of Contents
MAGYAR BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021 and 2020
|  | For the Year Ended |
|  | September 30, |
|  | 2021 |  |  | 2020 |
|  | (In thousands) |
Income tax expense at the statutory federal tax rate of 21% |  |  |  |  |  |  |  |
for the year ended September 30, 2021 and 2020 |  | $ | 1,832 |  |  | $ | 653 |
State tax expense |  |  | 772 |  |  |  | 323 |
Other |  |  | 1 |  |  |  | (55 | )
Income tax expense |  | $ | 2,605 |  |  | $ | 921 |
A reconciliation of income tax at the statutory tax rate to the effective income tax expense for the years ended September 30, 2021 and 2020 is as follows:
|  | September 30, |
|  | 2021 |  |  | 2020 |
|  | (In thousands) |
Income tax expense at statutory rate |  | $ | 1,832 |  |  | $ | 653 |
Increase (decrease) resulting from: |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  |  | 772 |  |  |  | 323 |
Tax-exempt income, net |  |  | (68 | ) |  |  | (68 | )
Nondeductible expenses |  |  | 26 |  |  |  | 18 |
Employee stock ownership plan |  |  | 1 |  |  |  | (5 | )
Other, net |  |  | 42 |  |  |  | — |
Total income tax expense |  | $ | 2,605 |  |  | $ | 921 |
The major sources of temporary differences and their deferred tax effect at September 30, 2021 and 2020 are as follows:
|  | September 30, |
|  | 2021 |  |  | 2020 |
|  | (In thousands) |
Allowance for loan losses |  | $ | 2,270 |  |  | $ | 1,799 |
Deferred loan fees |  |  | 416 |  |  |  | 731 |
Unrealized loss, minimum pension liability |  |  | 351 |  |  |  | 620 |
OREO |  |  | 123 |  |  |  | 73 |
Straight line rent |  |  | 101 |  |  |  | 110 |
Gross deferred tax asset |  |  | 3,261 |  |  |  | 3,333 |
Depreciation |  |  | (874 | ) |  |  | (872 | )
Discount accretion on investments |  |  | — |  |  |  | (61 | )
Employee benefits |  |  | (183 | ) |  |  | (37 | )
Mortgage servicing rights |  |  | (1 | ) |  |  | (3 | )
Gross deferred tax liability |  |  | (1,058 | ) |  |  | (973 | )
Net deferred tax asset, included in other assests |  | $ | 2,203 |  |  | $ | 2,360 |
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 77 Table of Contents
MAGYAR BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021 and 2020
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, 2021 and 2020. 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, 2021 and 2020. The State of New Jersey 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, 2021 and 2020.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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