Approximate future minimum payments under non-cancelable operating leases are due as follows for the years indicated (in thousands):

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

September 30, 2022	$	728
September 30, 2023		738
September 30, 2024		747
September 30, 2025		523
September 30, 2026		455
Thereafter		1,533
Total	$	4,724

Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842) 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:

	September 30,		September 30,
	2021		2020
	(Dollars in thousands)

Operating lease right-of-use asset	$	3,894	$	3,240
Operating lease liabilities	$	4,254	$	3,631
Weighted average remaining lease term in years		7.7		7.5
Weighted average discount rate		2.2%		2.2%

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

	September 30,				September 30,
	2021				2020
	(In thousands)
For the Year Ending:
2022	$	728		$	705
2023		738			595
2024		747			602
2025		523			602
2026		455			378
2027 and thereafter		1,533			1,150
Total lease payments		4,724			4,032
Less imputed interest		(470	)		(401	)
Present value of lease liabilities	$	4,254		$	3,631

Table of Contents

MAGYAR BANCORP, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

September 30, 2021 and 2020

Total rental expense, included in occupancy expense, was approximately $811,000 and $802,000 for the years ended September 30, 2021 and 2020, 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.