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STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

12 Months Ended

Sep. 30, 2025

Stock-Based Compensation and Stock Repurchase Program [Abstract]

STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

NOTE C – STOCK-BASED COMPENSATION AND STOCK REPURCHASE PROGRAM

The Company follows FASB ASC Section 718, Compensation-Stock Compensation (“ASC 718”), 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.

ASC 718 also requires the Company to realize as a financing cash flow rather than an operating cash flow, as previously required, the benefits of realized tax deductions in excess of previously recognized tax benefits on compensation expense. In accordance with SEC Staff Accounting Bulletin (“SAB”) No. 107, the Company classified share-based compensation for employees and outside directors within “compensation and employee benefits” in the Consolidated Statements of Income to correspond with the same line item as the cash compensation paid.

Stock options generally vest over a five-year service period and expire ten years from issuance. Management recognizes compensation expense for all option grants over the awards’ respective requisite service periods. The fair values of all option grants were estimated using the Black-Scholes option-pricing model. Management recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards.

Restricted shares generally vest over a five-year service period on the anniversary of the grant date. Once vested, these awards are irrevocable. The product of the number of shares granted and the grant date market price of the Company’s common stock determine the fair value of restricted shares under the Company’s restricted stock plans. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.

The Company’s 2022 Equity Compensation Plan provided for grants of up to 391,000 shares to be allocated between incentive and non-qualified stock options and 156,400 of restricted stock awards to officers, employees and directors of the Company and Magyar Bank. At September 30, 2025, 293,200 options and 124,320 shares of restricted stock had been awarded from the plan.

The following is a summary of the status of the Company’s stock option activity and related information for the year ended September 30, 2025:

		Shares				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life in Years				Aggregate Intrinsic Value

Balance at September 30, 2024			293,200			$	12.58				7.98			$	-
Granted			-				-				-				-
Exercised			(2,000	)			12.25				-				-
Forfeited			(6,000	)			12.70				-				-
Expired			-				-				-				-
Balance at September 30, 2025			285,200			$	12.58				6.98			$	1,337,588
Exercisable at September 30, 2025			171,120			$	12.58				6.98			$	802,592

The following is a summary of the status and changes of the Company’s non-vested restricted shares as of September 30, 2025 and during the year then ended:

		Shares				Weighted Average Grant Date Fair Value
Balance at September 30, 2024			93,240			$	12.63
Granted			-				-
Vested			(29,080	)			12.62
Forfeited			(6,000	)			12.70
Balance at September30, 2025			58,160			$	12.62

Stock option and stock award expenses included with compensation expense were $253 thousand and $367 thousand, respectively, for the year ended September 30, 2025. Stock option and stock award expenses included with compensation expense were $254 thousand and $392 thousand, respectively, for the year ended September 30, 2024.

At September 30, 2025, total compensation cost not yet recognized for the Company’s unvested stock options and stock awards was $1.2 million. The Company had no other stock-based compensation plans as of September 30, 2025 except as disclosed below.

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 bears a fixed interest rate of 3.25% with principal and interest payable annually in equal installments over 30 years and 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 ASC 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 following table presents the components of the ESOP shares for the years ended September 30, 2025 and 2024:

Unreleased shares at September 30, 2023			290,313
Shares released for allocation during the year ended September 30, 2024			(12,150	)
Unreleased shares at September 30, 2024			278,163
Shares released for allocation during the year ended September 30, 2025			(12,238	)
Unreleased shares at September 30, 2025			265,925
Total released shares			179,375
Total ESOP shares			445,300

At September 30, 2025, ESOP shares allocated to participants totaled 179,375. Unallocated ESOP shares held in suspense totaled 265,925 with an aggregate fair value of $4.6 million. The Company’s contribution expense for the ESOP was $187 thousand and $155 thousand for years ended September 30, 2025 and 2024, respectively.

On May 22, 2025 the Company announced the authorization of its fifth stock repurchase program pursuant to which the Company intends to repurchase up to an additional 5% of its outstanding shares, or up to 323,547 shares. The Company’s intended use of the repurchased shares is for general corporate purposes. The timing of the repurchases will depend on certain factors, including but not limited to, market conditions and prices, the Company’s liquidity requirements and alternative uses of capital. The Company repurchased 20,000 shares of its common stock under this plan during the year ended September 30, 2025. At September 30, 2025, the Company held 617,797 shares in treasury that were repurchased at an average price of $12.69.