XML 32 R21.htm IDEA: XBRL DOCUMENT v3.21.4
PENSION PLAN
 12 Months Ended
Sep. 30, 2021
Retirement Benefits [Abstract]  
PENSION PLAN

NOTE M - 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, 2021 and September 30, 2020.

September 30,

2021

2020

(In thousands)

 

Actuarial present value of benefit obligations

$

4,926

$

5,227

 

Change in benefit obligations

Projected benefit obligation, beginning

$

5,227

$

4,990

Interest cost

140

158

Actuarial (gain) loss

(242

)

278

Annuity payments and lump sum distributions

(199

)

(199

)

 

Projected benefit obligation, end

$

4,926

$

5,227

 

Change in plan assets

Fair value of assets, beginning

$

3,579

$

3,581

Actual return on plan assets

661

172

Employer contributions

830

25

Annuity payments and lump sum distributions

(199

)

(199

)

 

Fair value of assets, end

$

4,871

$

3,579

 

Funded status included with other liabilities

$

(55

)

$

(1,648

)

Net pension cost for the years ended September 30, 2021 and 2020 included the following components:

78

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

 

September 30,

2021

2020

(In thousands)

 

Service cost benefits earned during the year

$

—

$

—

Interest cost on projected benefit obligation

140

158

Expected return on plan assets

(217

)

(225

)

Amortization of unrecognized net loss

206

181

Net pension cost

$

129

$

114

For the year ended September 30, 2021 and 2020, the weighted average discount rate used in determining the actuarial net periodic pension cost was 2.75% and 3.25%, respectively. For the year ended September 30, 2021 and 2020, the weighted average discount rate used in determining the actuarial present value of the projected benefit obligation was 3.00% and 2.75%, 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, 2021. 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 rate of return on assets were 6.00% for 2022 and 6.25% for 2021.

Current Asset Allocation

The Plan’s weighted-average asset allocations at September 30, 2021 and 2020, by asset category are as follows:

September 30,

2021

2020

 

Equity securities

68%

64%

Debt securities (bond mutual funds)

31%

35%

Other (money market fund)

1%

1%

Total

100%

100%

The target asset allocation set for the assets of the Plan are in equity securities ranging from 50 percent to 75 percent and in debt securities ranging from 25 percent to 50 percent. 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, 2022, the Company does not expect to contribute to the Plan.

Estimated Future Benefit Payments

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

79

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

 

October 1, 2021 through September 30, 2022

$

234

October 1, 2022 through September 30, 2023

235

October 1, 2023 through September 30, 2024

247

October 1, 2024 through September 30, 2025

246

October 1, 2025 through September 30, 2030

260

October 1, 2026 through September 30, 2031

1,276

Total

$

2,498

Included in the funded status of the Plan at September 30, 2021 and 2020, are actuarial losses of $1,167,000 and $2,060,000, respectively. These amounts are included, net of related income tax effects of $351,000 and $620,000, respectively, in the accumulated other comprehensive loss component of stockholders’ equity. During the year ending September 30, 2022, approximately $85,000 of the actuarial losses is expected to be amortized into net periodic pension expense.

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 R 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)

(In thousands)

At September 30, 2021

Investment Type

Mutual Funds- Equity

Large-Cap Value

$

749

$

749

$

—

$

—

Large-Cap Core

749

749

—

—

Mid-Cap Core

506

506

—

—

Small-Cap Core

481

481

—

—

Non-U.S. Core

838

838

—

—

Mutual Funds- Fixed Income

Intermediate Duration

665

665

Short-Duration Corporate

853

853

—

—

Cash Equivalents

Money Market

30

30

—

—

Total Investment

$

4,871

$

4,871

$

—

$

—

 

At September 30, 2020

Investment Type

Mutual Funds- Equity

Large-Cap Value

$

468

$

468

$

—

$

—

Large-Cap Core

576

576

—

—

Mid-Cap Core

220

220

—

—

Small-Cap Core

196

196

—

—

Non-U.S. Core

833

833

—

—

Mutual Funds- Fixed Income

Intermediate-Term Core

1,241

1,241

—

—

Cash Equivalents

Money Market

45

45

—

—

Total Investment

$

3,579

$

3,579

$

—

$

—

80

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

 

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).