UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE,
SAVINGS AND SIMILAR PLANS PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2007
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _______________
Commission file number 000-51726
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A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
MAGYAR BANK 401 (k) PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
Magyar Bancorp, Inc.
400 Somerset Street
New Brunswick, NJ 08901
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1
REQUIRED INFORMATION
The Magyar Bank 401 (k) Profit Sharing Plan (the "Plan") is subject to the
Employee Retirement Income Security Act of 1974 ("ERISA"). Therefore, in lieu of
the requirements of Items 1-3 of Form 11-K, the following financial statements
and schedules have been prepared in accordance with the financial reporting
requirements of ERISA.
The following financial statements, schedules and exhibits are filed as a part
of this Annual Report on Form 11-K.
Page
Number
------
(a) Financial Statements of the Plan
Report of Independent Registered Public Accounting Firm 3
Statements of Net Assets Available for Plan Benefits as of
December 31, 2007 and 2006 4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 2007 5
Notes to Financial Statements 6
(b) Schedule *
Schedule of Assets (Held at End of Year) - Schedule H, Line 4i
as of December 31, 2007 14
* Other schedules required by Section 2520.103-10 of the Department of
Labor Rules and Regulations for Reporting and Disclosure under ERISA
have been omitted because they are not applicable.
(c) Exhibits
Index to Exhibits Required by Item 601, Regulation S-K 16
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2
WSB
WithumSmith+Brown
A Professional Corporation
Certified Public Accountants and Consultants
3040 Route 22 West, Suite 110
Somerville, New Jersey 08876 USA
908 526 6363 . fax 908 526 9944
www.withum.com
Additional Offices in New Jersey,
New York and Pennsylania
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
The Plan Administrator and Participants
Magyar Bank 401 (k) Profit Sharing Plan
We have audited the accompanying statements of net assets available for plan
benefits of Magyar Bank 401(k) Profit Sharing Plan as of December 31, 2007 and
2006, and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 2007. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of Magyar Bank
401(k) Profit Sharing Plan as of December 31, 2007 and 2006, and the changes in
its net assets available for plan benefits for the year ended December 31, 2007,
in conformity with accounting principles generally accepted in the United States
of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets (Held
at End of Year) is presented only for the purpose of additional analysis and is
not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ WithumSmith+Brown, P.C.
WithumSmith+Brown, PC
Somerville, New Jersey
June 24, 2008
3
Magyar Bank 401(k) Profit Sharing Plan
Statements of Net Assets Available for Plan Benefits
December 31, 2007 and 2006
Assets 2007 2006
------ ---- ----
Investments at fair value:
Interest-bearing cash $ 2 $ 10,706
Value of funds held in insurance co. general account 214,850 183,726
Value of interest in registered investment companies 2,197,407 1,648,615
Employer-related securities 574,310 490,068
Participant loans 96,397 19,489
----------- -----------
Total investments 3,082,966 2,352,604
----------- -----------
Receivables:
Employee contributions 13,879 -
Employer contributions 6,463 115,956
----------- -----------
Total receivables 20,342 115,956
----------- -----------
Total assets 3,103,308 2,468,560
----------- -----------
Net assets available for plan benefits $ 3,103,308 $ 2,468,560
============ ============
See Accompanying Notes to Financial Statements
4
Magyar Bank 401(k) Profit Sharing Plan
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 2007
Additions:
Investment Income:
Interest on interest-bearing cash $ 53
Interest on participant loans 3,102
Other interest 8,307
Dividend income 53,120
Net depreciation in fair value of investments (59,644)
----------
Total investment income 4,938
Contributions:
Employee 496,951
Employer 171,056
----------
Total contributions 668,007
----------
Total additions 672,945
----------
Deductions:
Distributions to participants 35,655
Administrative expenses 2,542
----------
Total deductions 38,197
----------
Net increase for the year 634,748
Net assets available for plan benefits, beginning of year 2,468,560
----------
Net assets available for plan benefits, end of year $3,103,308
==========
See Accompanying Notes to Financial Statements
5
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1 - General description of the plan:
The following brief description of the Magyar Bank 401(k) Profit Sharing
Plan (the "Plan") is provided for purposes of general information only.
Participants should refer to the Plan document for more complete
information.
General:
The Plan was established effective March 1, 1994. The Plan is a
participant-directed defined contribution plan covering substantially
all employees, as defined, with Magyar Bank and its subsidiaries (the
"Bank"), which elect to participate in the Plan. The Bank is a
wholly-owned subsidiary of Magyar Bancorp, Incorporated. The Plan is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
Eligibility:
The Plan covers all eligible employees of the Bank who have attained
18 years of age upon their first day of employment.
Contributions:
As of April 2, 2007, participants may contribute up to 80% (60% prior
to April 2, 2007) of the first $225,000 of their gross earnings, as
defined. Contributions of gross earnings may be either before-tax or
after-tax dollars. Such contributions are limited to the maximum
amount permitted for Federal income tax purposes.
Participating employees age 50 and above may elect to make "Catch Up"
pre-tax contributions to the Plan above the Plan's maximum. The
maximum additional Catch Up contribution during the 2007 and 2006
Plan years was $5,000. Effective January 1, 2007, Plan provisions
allow for the automatic enrollment of all eligible participants upon
entry into the plan of 3% of the participants' eligible compensation,
which will be invested into a default investment option determined by
the Plan sponsor. Additionally, participants who are currently making
an elective contribution to the Plan will automatically have that
contribution percentage increased 1% every January 1st to a maximum
of 6%.
The Company makes discretionary matching contributions of 100% of the
first 3% of employees' elective contributions and 50% of the next 2%
employees' elective contributions up to a maximum of 4% of gross
earnings.
6
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1 - General description of the plan (continued):
Participant loans:
Participants may borrow from their individual participant accounts up
to a maximum of the lesser of $50,000 or 50% of the market value of
their vested balance. The interest rate used in calculating
repayments is the prime rate plus one percentage point at the time of
the loan and rates range from 5.25% to 9.25% as of December 31, 2007.
The interest rate is fixed at the time of loan origination and
remains unchanged for the life of the loan. The interest paid by the
participant is credited to the participant's retirement savings
account. The loans have maturities up to five years or up to thirty
years for the purchase of a principal residence. Loan repayments for
principal and interest are made ratably as individual payroll
deductions during each regularly scheduled pay period. Loan
transactions are treated as a transfer to (from) the respective fund
from (to) the participants' loans receivable fund. The loans are
secured by the balance in the participant's account.
Investments:
Employees may elect to have their contributions and the applicable
matching Company contributions invested one of the various funds
offered by the Plan.
Participant accounts:
Each participant's account is credited with the participant's pre-tax
and after-tax contributions, the Bank's matching contributions and an
allocation of Plan earnings. Plan earnings are allocated to
participants based on each participant's share balance as a
percentage of the Plan's total share balances. The benefit to which a
participant is entitled is the benefit provided from the
participant's vested account.
Vesting:
The employees are always 100% vested with respect to their own
contributions. The Company contributions, together with the earnings
or losses on these contributions, will be available to the employees
at time of withdrawal only to the extent they are vested. All Company
contributions will become fully vested in the event of a
participant's death, early retirement at age 55, total and permanent
disability, or the attainment of age 65 (normal retirement date).
Effective January 1, 2007, Company matching contributions for each
year will vest at the rate of 20% per year of service for the first
five years of service and employer non-matching contributions will
vest 100% immediately. After an employee has attained five years of
service, all current and future contributions are immediately vested.
7
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1 - General description of the plan (continued):
Payments of benefits:
Once reaching the age of 59-1/2, a participant can withdraw all
pre-tax contributions including earnings for any reason. A partial or
total withdrawal (including vested Company contributions) of a
participant's after-tax contributions may be made on any valuation
date or as soon as administratively feasible thereafter. In addition,
participants may withdraw pre-tax contributions in the event of a
financial hardship in the amount equal to their immediate financial
need. Hardship withdrawals will be processed as soon as
administratively feasible and in most cases the withdrawal will be
subject to Federal income taxes.
Administrative expenses:
Expenses incurred in the administration of the Plan and the trust are
generally charged to and paid by the plan sponsor and are not
included in the accompanying financial statements. Fees pertaining to
specific participant transactions are paid by the Plan through
participant deductions and are reflected as administrative expenses.
Plan administration:
The Plan is administered by the 401 (k) Investment Committee
appointed by the Bank's Board of Directors.
Forfeitures:
Forfeitures of non-vested participants' accounts are retained in the
Plan and used to reduce future employer contributions. During 2007,
forfeited non-vested accounts amounted to $0. The employer used
previous forfeited amounts of $10,758 to fund employer contributions.
Plan termination:
The Company anticipates and believes that the Plan will continue
without interruption, but reserves the right to continue or amend the
Plan, revise the rate of Company contributions or terminate the Plan
at any time. If terminated, the assets of the Plan will be
distributed to the participants and beneficiaries in the order and
manner prescribed in ERISA.
8
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 2 - Summary of significant accounting policies:
Basis of accounting:
The accompanying financial statements are prepared on the accrual
basis of accounting. Under this method of accounting, contributions
and investment income are recorded when earned and expenses are
recorded when incurred.
Use of estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities and changes therein, and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
Investment valuation and income recognition:
Investments in securities are valued at the fair market value on the
last business day of the year based on quoted market rates from
national stock exchanges. Participant loans receivable are valued at
cost, which approximates fair value. With respect to pooled funds,
the Plan shares in the gains or losses according to the percent of
the Plan's assets to the total assets of the fund. Purchases and
sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
Distributions:
Distributions to Plan participants are recorded when paid. The
benefit distribution to which a participant is entitled is that
benefit which can be provided from the participant's vested account
balance.
9
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 3 - Investments:
The following table presents all investments that represented 5% or more of
the Plan's net assets at respective year ends:
December 31,
---------------------------------
2007 2006
--------------- ---------------
Employer-related securities
Magyar Stock Fund $574,310 $490,068
Transamerica Life Insurance Co.
Insurance Company/General Account 214,850 $183,726
Fidelity Mid Cap Fund 212,879 157,187
Fidelity Small Cap Fund 241,328 189,807
Transamerica Premier Diversified Equity Fund 290,650 247,006
Diversified Investment Advisors
Core Bond Fund 244,253 201,533
International Fund 199,473 *
Intermediate Horizon Strategic Allocation Fund 197,577 217,465
Value & Income Fund 281,989 259,733
* Does not represent 5% or more of the Plan's 2006 net assets
During 2007, the Plan recognized interest income of $11,462, which includes
interest on participant loans of $3,102 and other interest of $8,207 on the
insurance company general account. During 2007, the Plan's investments
(including gains and losses on investments bought and sold, as well as held
during the year) resulted in a net depreciation in value as follows:
Net appreciation in fair value of registered investment companies $ 90,060
Net depreciation in fair value of employer-related securities (149,704)
---------
Total $ (59,644)
=========
10
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 4 - Investment contract with Insurance Company:
The Plan holds a benefit-responsive investment contract with Transamerica
Life Insurance Company ("Transamerica"). Transamerica maintains the
contributions in a general account. As described in Financial Accounting
Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of
Fully Benefit-Responsive Investment Contracts held by Certain Investment
Companies Subject to the AICPA Investment Company Guide and
Defined-Contribution Health and Welfare and Pension Plans (the FSP),
investment contracts held by a defined-contribution plan are required to be
reported at fair value. However, contract value is the relevant measurement
attribute for that portion of the net assets available for benefits of a
defined-contribution plan attributable to fully benefit-responsive
investment contracts because contract value is the amount participants
would receive if they were to initiate permitted transactions under the
terms of the plan. As required by the FSP, the Statement of Net Assets
Available for Plan Benefits presents the fair value of the investment
contracts at contract value. The contract values are determined daily based
on fair value for all separate accounts under group annuity contracts and
all mutual funds under net asset value (NAV) custodian agreements. The
group annuity contracts held by the Plan meet the five conditions to be
considered fully benefit-responsive. The investment custodian has
determined that the fair value of the insurance company general account
approximates its contract value.
All of Transamerica's separate account funds are valued daily using
publicly available quoted market prices, and participants bear the
investment risks. The separate account funds must be reported at the fair
market value in the defined contribution plan's financial statements.
Accordingly, the disclosure requirements are not applicable to the separate
account funds.
The average yield on the insurance company general account was 3.87% and
3.74% in years 2007 and 2006, respectively.
Note 5 - Related party transactions:
Included with the Plan's investment alternatives are shares of stock of
Magyar Bancorp, Inc. and transactions of these shares qualify as
party-in-interest transactions. As of December 31, 2007 and 2006, the Plan
held fair values of Magyar Bancorp, Inc. employer stock of $574,310 and
$490,068, respectively.
Certain Plan investments are shares of mutual funds managed by Transamerica
Life Insurance Co. and Diversified Investment Advisors, the custodian and
record keeper, respectively, as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions.
11
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 6 - Tax status of the plan:
The Plan has received a favorable determination letter from the Internal
Revenue Service dated September 8, 2003, which stated the Plan and the
related trust are designed in accordance with the applicable sections of
the Internal Revenue Code (IRC) and are tax exempt. The Plan has been
amended since receiving the determination letter. However, the Plan
administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable provisions of the IRC.
Note 7 - Concentration of risks and uncertainties:
The assets of the Plan are primarily financial instruments which are
monetary in nature and concentrated in investment securities. As a result,
interest rates have a more significant impact on the Plan's performance
than the effects of general levels of inflation. Interest rates do not
necessarily move in the same direction or in the same magnitude as the
prices of goods and services as measured by the Consumer Price Index.
Investments in funds are subject to risk conditions of the individual
investment or fund objectives, stock market fluctuations, interest rates,
economic conditions and world affairs. Due to uncertainties inherent in the
estimations and assumptions process, it is at least reasonably possible
that changes in these estimates and assumptions in the near term would be
material to the financial statements.
Note 8 - Plan termination:
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of a
Plan termination, participants would become 100% vested in their accounts.
Note 9 - Financial instruments:
The fair values of the receivable for investment income and securities
sold, and the payable for securities purchased approximated the carrying
values at December 31, 2007 and 2006 due to the short maturities of the
instruments. The Plan's investments are recorded at fair value.
Note 10 - New accounting standards not yet adopted:
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements."
This Statement defines fair value, establishes a framework for measuring
fair value in accordance with generally accepted accounting principles, and
expands disclosures about fair value measurements. This Statement applies
to other accounting pronouncements that require or permit fair value
measurements, but does not require any new fair value measurements. The
Statement is effective for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years (as of January 1, 2008 for
the Plan). The Plan is evaluating the effect of SFAS No. 157 on its
financial statements.
12
MAGYAR BANK
401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
Note 10 - New accounting standards not yet adopted (continued):
In February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for
Financial Assets and Financial Liabilities" which included an amendment of
FASB Statement No. 115. Statement 159 permits entities to choose to measure
many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex
hedge accounting provisions. Statement 159 is effective as of the beginning
of an entity's first fiscal year that begins after November 15, 2007, (as
of January 1, 2008 for the Plan). Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007,
provided the entity also elects to apply the provisions of FASB Statement
No. 157, Fair Value Measurements. The Plan has not made an early adoption
election and SFAS No. 159 is currently under evaluation to determine the
impact on the Plan's financial statements.
Note 11 - Reconciliation of financial statements to Form 5500:
The following is a reconciliation of net assets available for plan benefits
from the statement of net assets available for plan benefits to the filed
form 5500 at December 31, 2006:
Net assets available for plan benefits per the
statement of net assets available for plan benefits $ 2,468,560
Employer contributions receivable per the statement
of net assets available for plan benefits (115,956)
------------
Net assets available for plan benefits
per form 5500 $ 2,352,604
============
The following is a reconciliation of employer contributions for 2007 from
the statement of changes in net assets available for plan benefits to the
filed form 5500:
Employer contributions per the statement of changes
in net assets available for plan benefits $ 171,056
Employer contribution receivable as of December 31,
2006 per the statement of net assets available
for plan benefits 115,956
-------------
Employer contributions per the form 5500 for 2007 $ 287,012
=============
13
Magyar Bank 401(k) Profit Sharing Plan
EIN No.: 22-1085787, Plan No. 002
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
Plan Year Ending: 12/31/2007
(b) (c) (e)
Identity of Issue, Borrower, Description of Investment, Including Maturity Date, CURRENT
(a) Lessor or Similar Party Rate of Interest, Par or Maturity Value VALUE
Transamerica Life Insurance Co. American Funds New Perspective Fund $ 22,585
* Diversified Investment Advisors Core Bond Fund 244,253
* Diversified Investment Advisors International Fund 199,473
* Diversified Investment Advisors Intermediate Horizon Strategic Allocation Fund 197,577
* Diversified Investment Advisors Long Horizon Strategic Allocation Fund 64,148
* Diversified Investment Advisors Short Horizon Strategic Allocation Fund 36,169
* Diversified Investment Advisors Stock Index Fund 144,284
* Diversified Investment Advisors Value & Income Fund 281,989
Transamerica Life Insurance Co. Fidelity Mid Cap Fund 212,879
Transamerica Life Insurance Co. Fidelity Small Cap Fund 241,328
Transamerica Life Insurance Co. Franklin Small Mid Cap Fund 3,188
Transamerica Life Insurance Co. Franklin Small Cap Value Fund 5,143
Transamerica Life Insurance Co. Loomis Sayles Bond Fund 21,434
Transamerica Life Insurance Co. Mutual Qualified Fund 118,507
Transamerica Life Insurance Co. Pimco Total Return Fund 869
* Transamerica Life Insurance Co. Transamerica Premier Balanced Fund 22,151
* Transamerica Life Insurance Co. Transamerica Premier Diversified Equity Fund 290,650
Transamerica Life Insurance Co. Vanguard Target Retirement 2005 Fund 284
Transamerica Life Insurance Co. Vanguard Target Retirement 2015 Fund 281
Transamerica Life Insurance Co. Vanguard Target Retirement 2025 Fund 74,625
Transamerica Life Insurance Co. Vanguard Target Retirement 2035 Fund 4,912
Transamerica Life Insurance Co. Vanguard Target Retirement 2045 Fund 10,678
------------------------------------------------------------------------------------------------------------------------------------
Mutual Fund Total 2,197,407
* Transamerica Life Insurance Co. Cash Reserve Account 2
* Transamerica Life Insurance Co. Insurance Company/General Account 214,850
* Magyar Stock Employer Stock Fund 574,310
* Participants Notes Receivable with interest rates of 5.25% to 9.25% 96,397
-----------------------------------------------------------------------------------
Total Plan Assets $ 3,082,966
===================================================================================
*indicates party-in-interest
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons that administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Magyar Bank 401 (k) Profit Sharing Plan
/s/ Elizabeth E. Hance
Date: June 24, 2008 ______________________________
Elizabeth E. Hance
President and Chief Executive Officer,
Magyar Bancorp, Inc.
--------------------------------------------------------------------------------
15
EXHIBIT INDEX
Exhibit Number Exhibit
-------------- --------------------------------------------------------
23 Consent of Independent Registered Public Accounting Firm
16
WSB
WithumSmith+Brown
A Professional Corporation
Certified Public Accountants and Consultants
3040 Route 22 West, Suite 110
Somerville, New Jersey 08876 USA
908 526 6363 . fax 908 526 9944
www.withum.com
Additional Offices in New Jersey,
New York and Pennsylania
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (333-128392) of Magyar Bancorp, Inc. of our report
dated June 24, 2008 relating to the financial statements of the Magyar Bank 401
(K) Profit Sharing Plan, which appears in this Form 11-K.
/s/ WithumSmith+Brown, P.C.
WithumSmith+Brown, PC
Somerville, New Jersey
June 24, 2008