**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C.  20549**

**FORM      10-KSB**

**For      the Fiscal Year Ended September 30, 2007**

**Magyar      Bancorp, Inc.**

| **Delaware**                                                                  |   | **20-4154978**                                         |
|-------------------------------------------------------------------------------|--------|--------------------------------------------------------|
| (State                or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S.                Employer Identification Number) |
|                                                                          |   |                                                   |
| **400                Somerset Street, New Brunswick, New Jersey**             |   | **08901**                                              |
| (Address                of Principal Executive Office)                        |   | (Zip                Code)                              |

|   | ** (732)                342-7600**                                    |   |
|--------|----------------------------------------------------------------------------|--------|
|   |  (Issuer’s                Telephone Number including area code) |   |

|                                                       |   | **Name                of Each Exchange**        |
|------------------------------------------------------------|--------|-------------------------------------------------|
| **Title                of Class**                          |   | **On                Which Registered**          |
|                                                       |   |                                            |
| **Common                Stock, par value $0.01 per share** |   | **The                NASDAQ Stock Market, LLC** |

**None**

**DOCUMENTS      INCORPORATED BY REFERENCE**

| 1. | Proxy                Statement for the 2007 Annual Meeting of Stockholders (Part                III) |
|----|------------------------------------------------------------------------------------------------------|

----

**Magyar      Bancorp, Inc.**

**Annual      Report On Form 10-KSB**

**For      The Fiscal Year Ended**

**September      30, 2007**

**Table      Of Contents**

| **PART                I**   |                                                                                                                                                                                |   |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                        |                                                                                                                                                                                |   |
| ITEM                1.      | Description                of Business                                                                                                                                              | 1      |
| ITEM                2.      | Description                of Property                                                                                                                                              | 39     |
| ITEM                3.      | Legal                Proceedings                                                                                                                                                    | 39     |
| ITEM                4.      | Submission                of Matters to a Vote of Security                Holders                                                                                                   | 39     |
|                        |                                                                                                                                                                                |   |
| **PART                II**  |                                                                                                                                                                                |   |
|                        |                                                                                                                                                                                |   |
| ITEM                5.      | Market                for Common Equity, Related Stockholder Matters and Small                Business Issuer Purchases of Equity Securities                                        | 39     |
| ITEM                6.      | Management’s                Discussion and Analysis or Plan of                Operation                                                                                       | 41     |
| ITEM                7.      | Financial                Statements                                                                                                                                                 | 54     |
| ITEM                8.      | Changes                In and Disagreements With Accountants on Accounting                and Financial Disclosure                                                                  | 90     |
| ITEM                8A.     | Controls                and Procedures                                                                                                                                              | 90     |
| ITEM                8B.     | Other                Information                                                                                                                                                    | 90     |
|                        |                                                                                                                                                                                |   |
| **PART                III** |                                                                                                                                                                                |   |
|                        |                                                                                                                                                                                |   |
| ITEM                9.      | Directors,                Executive Officers, Promoters, Control Persons, and                Corporate Governance; Compliance with Section 16(a) of the Exchange                Act | 90     |
| ITEM                10.     | Executive                Compensation                                                                                                                                               | 90     |
| ITEM                11.     | Security                Ownership of Certain Beneficial Owners and Management                and Related Stockholder Matters                                                        | 90     |
| ITEM                12.     | Certain                Relationships and Related Transactions, and Director                Independence                                                                             | 91     |
| ITEM                13.     | Exhibits                                                                                                                                                                            | 91     |
| ITEM                14.     | Principal                Accountant Fees and Services                                                                                                                               | 91     |
|                        | SIGNATURES                                                                                                                                                                          | 92     |

----

*Table            of Contents*

**PART      I**

| **ITEM                1.** | **Description                of Business** |
|----------------------------|--------------------------------------------|

**Forward      Looking Statements**

**Magyar      Bancorp, MHC**

**Magyar      Bancorp, Inc.**

**Magyar      Bank**

----

*Table            of Contents*

**General**

**Market      Area**

**Competition**

*Summary of Deposit*

**Lending      Activities**

----

*Table            of Contents*

***Loan      Portfolio Composition.***

|                                            |   | **At                  September 30,**                                                       |         |
|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------------|
|                                            |   | **2007**                                                                                    |         |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|                                            |   | **Amount**                                                                                  |    | **Percent** |   |   | **Amount** |    | **Percent** |   |   | **Amount** |    | **Percent** |   |   | **Amount** |    | **Percent** |   |   | **Amount** |    | **Percent** |   |
|                                            |   | **(Dollars                  in thousands)**         |         |
|                                            |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-to                  four-family residential |   | $                                                                                           | 152,474      |   |   |   | 39.54 | % |   | $ | 143,245 |   |   |   | 40.65 | % |   | $ | 126,269 |   |   |   | 46.64 | % |   | $ | 108,722 |   |   |   | 55.50 | % |   | $ | 107,531 |   |   |   | 61.08 | % |
| Commercial                  real estate         |   |                                                                                        | 81,275       |   |   |   | 21.08 | % |   |   | 68,567 |   |   |   | 19.46 | % |   |   | 57,366 |   |   |   | 21.19 | % |   |   | 19,935 |   |   |   | 10.18 | % |   |   | 19,354 |   |   |   | 10.99 | % |
| Construction                                    |   |                                                                                        | 97,150       |   |   |   | 25.20 | % |   |   | 90,342 |   |   |   | 25.64 | % |   |   | 44,418 |   |   |   | 16.41 | % |   |   | 5,526 |   |   |   | 2.82 | % |   |   | 5,188 |   |   |   | 2.95 | % |
| Home                  equity lines of credit    |   |                                                                                        | 12,894       |   |   |   | 3.34 | % |   |   | 10,843 |   |   |   | 3.08 | % |   |   | 10,398 |   |   |   | 3.84 | % |   |   | 9,065 |   |   |   | 4.63 | % |   |   | 7,301 |   |   |   | 4.15 | % |
| Commercial                  business            |   |                                                                                        | 26,630       |   |   |   | 6.91 | % |   |   | 24,510 |   |   |   | 6.96 | % |   |   | 17,413 |   |   |   | 6.43 | % |   |   | 27,698 |   |   |   | 14.14 | % |   |   | 9,630 |   |   |   | 5.47 | % |
| Other                                           |   |                                                                                        | 15,159       |   |   |   | 3.93 | % |   |   | 14,846 |   |   |   | 4.21 | % |   |   | 14,862 |   |   |   | 5.49 | % |   |   | 24,964 |   |   |   | 12.74 | % |   |   | 27,042 |   |   |   | 15.36 | % |
|                                            |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  loans receivable         |   | $                                                                                           | 385,582      |   |   |   | 100.00 | % |   | $ | 352,353 |   |   |   | 100.00 | % |   | $ | 270,726 |   |   |   | 100.00 | % |   | $ | 195,910 |   |   |   | 100.00 | % |   | $ | 176,046 |   |   |   | 100.00 | % |
|                                            |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  deferred loan fees         |   |                                                                                        | (214         | ) |   |   |   |   |   |   | (492 | ) |   |   |   |   |   |   | (280 | ) |   |   |   |   |   |   | (19 | ) |   |   |   |   |   |   | (128 | ) |   |   |   |   |
| Allowance                  for loan losses      |   |                                                                                        | (3,754       | ) |   |   |   |   |   |   | (3,892 | ) |   |   |   |   |   |   | (3,129 | ) |   |   |   |   |   |   | (2,341 | ) |   |   |   |   |   |   | (2,150 | ) |   |   |   |   |
|                                            |   |                                                                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  loans receivable, net    |   | $                                                                                           | 381,614      |   |   |   |   |   |   | $ | 347,969 |   |   |   |   |   |   | $ | 267,317 |   |   |   |   |   |   | $ | 193,550 |   |   |   |   |   |   | $ | 173,768 |   |   |   |   |   |

***Loan      Portfolio Maturities and Yields.***

|                                                              |   | **One-to-Four                  Family**     |         |     | **Commercial**                   |   |       |             |     |   |                                 |       |         | **Home                  Equity** |   |
|-------------------------------------------------------------------|--------|---------------------------------------------|--------------|----------|----------------------------------|--------|------------|------------------|----------|--------|--------------------------------------|------------|--------------|----------------------------------|--------|
|                                                              |   | **Residential**                             |         |     | **Real                  Estate** |   |       | **Construction** |     |   | **Lines                  of Credit** |       |
| **Due                  During**                                   |   |                                        |         |     | **Weighted**                     |   |       |             |     |   | **Weighted**                         |       |         |                             |   |   | **Weighted** |   |   |   |   |   | **Weighted** |   |
| **The                  Fiscal Years**                             |   |                                        |         |     | **Average**                      |   |       |             |     |   | **Average**                          |       |         |                             |   |   | **Average** |   |   |   |   |   | **Average** |   |
| **Ending                  September 30,**                         |   | **Amount**                                  |    | **Rate** |                             |   | **Amount** |        | **Rate** |   |                                 | **Amount** |    | **Rate**                         |   |   | **Amount** |    | **Rate** |   |
|                                                              |   | **(Dollars                  in thousands)** |         |
|                                                              |   |                                        |         |     |                             |   |       |             |     |   |                                 |       |         |                             |   |   |   |   |   |   |   |   |   |   |
| 2008                                                              |   | $                                           | 2,660        |     |                             |   | 7.89       | %                |     | $      | 19,024                               |       |         |                             | 8.41   | % |   | $ | 80,895 |   |   |   | 8.85 | % |   | $ | 3,292 |   |   |   | 8.57 | % |
| 2009                                                              |   |                                        | 578          |     |                             |   | 5.31       | %                |     |   | 371                                  |       |         |                             | 7.57   | % |   |   | 14,203 |   |   |   | 8.32 | % |   |   | 1 |   |   |   | 9.75 | % |
| 2010                                                              |   |                                        | 674          |     |                             |   | 5.26       | %                |     |   | 638                                  |       |         |                             | 6.08   | % |   |   | 2,052 |   |   |   | 8.55 | % |   |   | 15 |   |   |   | 9.75 | % |
| 2011                  to 2012                                     |   |                                        | 3,022        |     |                             |   | 6.53       | %                |     |   | 895                                  |       |         |                             | 8.05   | % |   |   | - |   |   |   | - |   |   |   | 79 |   |   |   | 9.75 | % |
| 2013                  to 2017                                     |   |                                        | 15,419       |     |                             |   | 5.66       | %                |     |   | 4,366                                |       |         |                             | 7.25   | % |   |   | - |   |   |   | - |   |   |   | 1,010 |   |   |   | 6.18 | % |
| 2018                  to 2021                                     |   |                                        | 21,412       |     |                             |   | 5.24       | %                |     |   | 4,490                                |       |         |                             | 6.51   | % |   |   | - |   |   |   | - |   |   |   | 221 |   |   |   | 8.25 | % |
| 2022                  and beyond                                  |   |                                        | 108,709      |     |                             |   | 5.75       | %                |     |   | 51,491                               |       |         |                             | 7.14   | % |   |   | - |   |   |   | - |   |   |   | 8,276 |   |   |   | 7.77 | % |
|                                                              |   |                                        |         |     |                             |   |       |             |     |   |                                 |       |         |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total |   | $                                           | 152,474      |     |                             |   | 5.72       | %                |     | $      | 81,275                               |       |         |                             | 7.41   | % |   | $ | 97,150 |   |   |   | 8.77 | % |   | $ | 12,894 |   |   |   | 7.87 | % |

----

*Table            of Contents*

|                                                              |   | **Commercial                  Business**    |         |     | **Other**    |   |       | **Total**    |     |
|-------------------------------------------------------------------|--------|---------------------------------------------|--------------|----------|--------------|--------|------------|--------------|----------|
| **Due                  During**                                   |   |                                        |         |     | **Weighted** |   |       |         |     |   | **Weighted** |   |   |   |   |   | **Weighted** |   |
| **The                  Fiscal Years**                             |   |                                        |         |     | **Average**  |   |       |         |     |   | **Average** |   |   |   |   |   | **Average** |   |
| **Ending                  September 30,**                         |   | **Amount**                                  |    | **Rate** |         |   | **Amount** |    | **Rate** |   |   | **Amount** |    | **Rate** |   |
|                                                              |   | **(Dollars                  in thousands)** |         |
|                                                              |   |                                        |         |     |         |   |       |         |     |   |   |   |   |   |   |   |   |   |
| 2008                                                              |   | $                                           | 16,710       |     |         |   | 8.09       | %            |     | $ | 14,440 |   |   |   | 6.73 | % |   | $ | 137,021 |   |   |   | 8.75 | % |
| 2009                                                              |   |                                        | 207          |     |         |   | 8.10       | %            |     |   | 19 |   |   |   | 8.28 | % |   |   | 15,379 |   |   |   | 8.64 | % |
| 2010                                                              |   |                                        | 706          |     |         |   | 7.97       | %            |     |   | 39 |   |   |   | 12.56 | % |   |   | 4,124 |   |   |   | 7.54 | % |
| 2011                  to 2012                                     |   |                                        | 2,036        |     |         |   | 7.05       | %            |     |   | 132 |   |   |   | 8.15 | % |   |   | 6,164 |   |   |   | 6.82 | % |
| 2013                  to 2017                                     |   |                                        | 4,794        |     |         |   | 7.40       | %            |     |   | 88 |   |   |   | 4.63 | % |   |   | 25,677 |   |   |   | 6.30 | % |
| 2018                  to 2021                                     |   |                                        | 387          |     |         |   | 8.25       | %            |     |   | 2 |   |   |   | 13.00 | % |   |   | 26,512 |   |   |   | 5.40 | % |
| 2022                  and beyond                                  |   |                                        | 1,790        |     |         |   | 7.71       | %            |     |   | 439 |   |   |   | 5.78 | % |   |   | 170,705 |   |   |   | 6.16 | % |
|                                                              |   |                                        |         |     |         |   |       |         |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total |   | $                                           | 26,630       |     |         |   | 7.86       | %            |     | $ | 15,159 |   |   |   | 6.72 | % |   | $ | 385,582 |   |   |   | 7.16 | % |

|                                                              |   | **Due                  After September 30, 2008** |    |
|-------------------------------------------------------------------|--------|---------------------------------------------------|---------|
|                                                              |   | **Fixed**                                         |    |   | **Adjustable** |   |   | **Total** |   |
|                                                              |   | **(Dollars                  in thousands)**  |    |
|                                                              |   |                                              |    |   |   |   |   |   |   |
| One-to                  four-family residential                   |   | $                                                 | 96,750  |   |   | $ | 53,064 |   |   | $ | 149,814 |   |
| Commercial                  real estate                           |   |                                              | 8,409   |   |   |   | 53,842 |   |   |   | 62,251 |   |
| Construction                                                      |   |                                              | -       |   |   |   | 16,255 |   |   |   | 16,255 |   |
| Home                  equity lines of credit                      |   |                                              | 985     |   |   |   | 8,617 |   |   |   | 9,602 |   |
| Commercial                  Business                              |   |                                              | 2,684   |   |   |   | 7,236 |   |   |   | 9,920 |   |
| Other                                                             |   |                                              | 135     |   |   |   | 584 |   |   |   | 719 |   |
|                                                              |   |                                              |    |   |   |   |   |   |   |   |   |   |
|           Total |   | $                                                 | 108,963 |   |   | $ | 139,598 |   |   | $ | 248,561 |   |

***Residential      Mortgage Loans.***

----

*Table            of Contents*

*The Wall Street Journal*

----

*Table            of Contents*

***Commercial      Real Estate Loans.***
* *

***Construction      Loans.***

----

*Table            of Contents*

***Commercial      Business Loans.***
*The Wall Street Journal*

----

*Table            of Contents*

***Home      Equity Lines of Credit and Other Loans.***
** **
*The Wall Street Journal*

*The Wall Street Journal. *

***Loan      Originations, Purchases, Participations and Servicing of Loans.***

----

*Table            of Contents*

***Loan      Approval Procedures and Authority***

----

*Table            of Contents*

**Asset      Quality**

***Non-Performing      Assets.***

----

*Table            of Contents*

|                                                                                                                                                                |   | **At                  September 30,**       |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                                                                                |   | **2007**                                    |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|                                                                                                                                                                |   | **(Dollars                  in thousands)** |   |
| Non-accrual                  loans:                                                                                                                                 |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential                                                                                       |   | $                                           | 65     |   |   | $ | 56 |   |   | $ | 188 |   |   | $ | 153 |   |   | $ | 178 |   |
|      Commercial                  real estate                                                                                               |   |                                        | 1,936  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Construction                                                                                                                          |   |                                        | 6,008  |   |   |   | 5,135 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit                                                                                          |   |                                        | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  Business                                                                                                  |   |                                        | 21     |   |   |   | 188 |   |   |   | 387 |   |   |   | 94 |   |   |   | - |   |
|      Other                                                                                                                                 |   |                                        | 3      |   |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total                                                                                                   |   |                                        | 8,033  |   |   |   | 5,379 |   |   |   | 577 |   |   |   | 247 |   |   |   | 178 |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accruing                  loans three months or more past due:                                                                                                      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential                                                                                       |   |                                        | -      |   |   |   | 88 |   |   |   | 205 |   |   |   | - |   |   |   | - |   |
|      Commercial                  real estate                                                                                               |   |                                        | -      |   |   |   | 1,933 |   |   |   | 257 |   |   |   | - |   |   |   | - |   |
|      Construction                                                                                                                          |   |                                        | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit                                                                                          |   |                                        | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  Business                                                                                                  |   |                                        | 15     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Other                                                                                                                                 |   |                                        | -      |   |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 3 |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total                  loans three months or more past due                                              |   |                                        | 15     |   |   |   | 2,021 |   |   |   | 463 |   |   |   | - |   |   |   | 3 |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     Total                  non-performing loans |   | $                                           | 8,048  |   |   | $ | 7,400 |   |   | $ | 1,040 |   |   | $ | 247 |   |   | $ | 181 |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  real estate owned                                                                                                                            |   |                                        | 2,238  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Other                  non-performing assets                                                                                                                        |   |                                        | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  non-performing assets                                                                                                                        |   | $                                           | 10,286 |   |   | $ | 7,400 |   |   | $ | 1,040 |   |   | $ | 247 |   |   | $ | 181 |   |
|                                                                                                                                                                |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                                                                                                                             |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total                  non-performing loans to total loans                                                                            |   |                                        | 2.09   | % |   |   | 2.10 | % |   |   | 0.38 | % |   |   | 0.13 | % |   |   | 0.10 | % |
|      Total                  non-performing loans to total assets                                                                           |   |                                        | 1.70   | % |   |   | 1.70 | % |   |   | 0.29 | % |   |   | 0.09 | % |   |   | 0.07 | % |
|      Total                  non-performing assets to total assets                                                                          |   |                                        | 2.17   | % |   |   | 1.70 | % |   |   | 0.29 | % |   |   | 0.09 | % |   |   | 0.07 | % |

----

*Table            of Contents*

***Delinquent      Loans***

----

*Table            of Contents*

|                                                                          |   | **Loans                  Delinquent For**   |         |       |                                       |   |       |         |       |
|-------------------------------------------------------------------------------|--------|---------------------------------------------|--------------|------------|--------------------------------------------|--------|------------|--------------|------------|
|                                                                          |   | **60-89                  Days**             |         |       | **90 Days                  and Over** |   |       | **Total**    |       |
|                                                                          |   | **Number**                                  |    | **Amount** |                                       |   | **Number** |    | **Amount** |   |   | **Number** |    | **Amount** |   |
|                                                                          |   | **(Dollars                  in thousands)** |         |
| **At                  September 30, 2007**                                    |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential |   |                                        | -            |       |                                       | $      | -          |         |       |   | 2 |   |   | $ | 65 |   |   |   | 2 |   |   | $ | 65 |   |
|      Commercial                  real estate         |   |                                        | 3            |       |                                       |   | 2,214      |         |       |   | 1 |   |   |   | 1,936 |   |   |   | 4 |   |   |   | 4,150 |   |
|      Construction                                    |   |                                        | -            |       |                                       |   | -          |         |       |   | 4 |   |   |   | 6,008 |   |   |   | 4 |   |   |   | 6,008 |   |
|      Home                  equity lines of credit    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business            |   |                                        | -            |       |                                       |   | -          |         |       |   | 3 |   |   |   | 36 |   |   |   | 3 |   |   |   | 36 |   |
|      Other                                           |   |                                        | -            |       |                                       |   | -          |         |       |   | 2 |   |   |   | 3 |   |   |   | 2 |   |   |   | 3 |   |
|           Total             |   |                                        | 3            |       |                                       | $      | 2,214      |         |       |   | 12 |   |   | $ | 8,048 |   |   |   | 15 |   |   | $ | 10,262 |   |
|                                                                          |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                  September 30, 2006**                                    |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential |   |                                        | -            |       |                                       | $      | -          |         |       |   | 3 |   |   | $ | 144 |   |   |   | 3 |   |   | $ | 144 |   |
|      Commercial                  real estate         |   |                                        | -            |       |                                       |   | -          |         |       |   | 1 |   |   |   | 1,933 |   |   |   | 1 |   |   |   | 1,933 |   |
|      Construction                                    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business            |   |                                        | -            |       |                                       |   | -          |         |       |   | 3 |   |   |   | 188 |   |   |   | 3 |   |   |   | 188 |   |
|      Other                                           |   |                                        | -            |       |                                       |   | -          |         |       |   | 1 |   |   |   | - |   |   |   | 1 |   |   |   | - |   |
|           Total             |   |                                        | -            |       |                                       | $      | -          |         |       |   | 8 |   |   | $ | 2,265 |   |   |   | 8 |   |   | $ | 2,265 |   |
|                                                                          |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                  September 30, 2005**                                    |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential |   |                                        | 2            |       |                                       | $      | 50         |         |       |   | 6 |   |   | $ | 393 |   |   |   | 8 |   |   | $ | 443 |   |
|      Commercial                  real estate         |   |                                        | -            |       |                                       |   | -          |         |       |   | 1 |   |   | $ | 257 |   |   |   | 1 |   |   |   | 257 |   |
|      Construction                                    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business            |   |                                        | -            |       |                                       |   | -          |         |       |   | 4 |   |   |   | 387 |   |   |   | 4 |   |   |   | 387 |   |
|      Other                                           |   |                                        | 1            |       |                                       |   | 220        |         |       |   | 4 |   |   |   | 3 |   |   |   | 5 |   |   |   | 223 |   |
|           Total             |   |                                        | 3            |       |                                       | $      | 270        |         |       |   | 15 |   |   | $ | 1,040 |   |   |   | 18 |   |   | $ | 1,310 |   |
|                                                                          |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                  September 30, 2004**                                    |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential |   |                                        | 5            |       |                                       | $      | 586        |         |       |   | 3 |   |   | $ | 153 |   |   |   | 8 |   |   | $ | 739 |   |
|      Commercial                  real estate         |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Construction                                    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit    |   |                                        | -            |       |                                       |   | -          |         |       |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business            |   |                                        | 3            |       |                                       |   | 1,628      |         |       |   | 1 |   |   |   | 94 |   |   |   | 4 |   |   |   | 1,722 |   |
|      Other                                           |   |                                        | 3            |       |                                       |   | 70         |         |       |   | - |   |   |   | - |   |   |   | 3 |   |   |   | 70 |   |
|           Total             |   |                                        | 11           |       |                                       | $      | 2,284      |         |       |   | 4 |   |   | $ | 247 |   |   |   | 15 |   |   | $ | 2,531 |   |
|                                                                          |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                  September 30, 2003**                                    |   |                                        |         |       |                                       |   |       |         |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential |   |                                        | 2            |       |                                       | $      | 466        |         |       |   | 3 |   |   | $ | 178 |   |   |   | 5 |   |   | $ | 644 |   |
|      Commercial                  real estate         |   |                                        | -            |       |                                       |   | -          |         |       |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Construction                                    |   |                                        | -            |       |                                       |   | -          |         |       |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit    |   |                                        | -            |       |                                       |   | -          |         |       |   |   |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business            |   |                                        | 1            |       |                                       |   | 106        |         |       |   |   |   |   |   | - |   |   |   | 1 |   |   |   | 106 |   |
|      Other                                           |   |                                        | 1            |       |                                       |   | 5          |         |       |   | 1 |   |   |   | 3 |   |   |   | 2 |   |   |   | 8 |   |
|           Total             |   |                                        | 4            |       |                                       | $      | 577        |         |       |   | 4 |   |   | $ | 181 |   |   |   | 8 |   |   | $ | 758 |   |

----

*Table            of Contents*

***Real      Estate Owned***

***Classified      Assets.***
* *

**Allowance      for Loan Losses**

----

*Table            of Contents*

***Allowance      for Loan Losses.  ***

|                                                                                           |   |                                                   |   |   |     |   |
|------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|--------|--------|----------|--------|
|                                                                                           |   | **For                  the Years Ended September 30,** |   |
|                                                                                           |   | **2007**                                               |   |   | **2006** |   |   | **2005** |   |   | **2004** |   |   | **2003** |   |
|                                                                                           |   | **(Dollars                  in thousands)**            |   |
|                                                                                           |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at beginning of period**                                            |   | $                                                      | 3,892  |   |     | $      | 3,129 |   |   | $ | 2,341 |   |   | $ | 2,150 |   |   | $ | 1,926 |   |
|                                                                                           |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-offs:                                                                                   |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential                  |   |                                                   | -      |   |     |   | 13 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  real estate                          |   |                                                   | -      |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Construction                                                     |   |                                                   | 652    |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit                     |   |                                                   | -      |   |     |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business                             |   |                                                   | -      |   |     |   | 180 |   |   |   | 94 |   |   |   | - |   |   |   | - |   |
|      Other                                                            |   |                                                   | 4      |   |     |   | 3 |   |   |   | 9 |   |   |   | 11 |   |   |   | 6 |   |
|           Total                  charge-offs |   |                                                   | 656    |   |     |   | 198 |   |   |   | 103 |   |   |   | 11 |   |   |   | 6 |   |
|                                                                                           |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                                                    |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      One-to                  four-family residential                  |   |                                                   | -      |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  real estate                          |   |                                                   | -      |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Construction                                                     |   |                                                   | -      |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Home                  equity lines of credit                     |   |                                                   | -      |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Commercial                  business                             |   |                                                   | 120    |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|      Other                                                            |   |                                                   | -      |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|           Total                  recoveries  |   |                                                   | 120    |   |     |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                           |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs                                                               |   |                                                   | 536    |   |     |   | 198 |   |   |   | 103 |   |   |   | 11 |   |   |   | 6 |   |
| Provision                  for loan losses                                                     |   |                                                   | 398    |   |     |   | 961 |   |   |   | 891 |   |   |   | 202 |   |   |   | 230 |   |
|                                                                                           |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at end of period**                                                  |   | $                                                      | 3,754  |   |     | $      | 3,892 |   |   | $ | 3,129 |   |   | $ | 2,341 |   |   | $ | 2,150 |   |
|                                                                                           |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                                                        |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  charge-offs to average loans outstanding                                  |   |                                                   | 0.14   | %      |     |   | 0.06 | % |   |   | 0.05 | % |   |   | 0.01 | % |   |   | 0.00 | % |
| Allowance                  for loan losses to                                                  |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| non-performing                  loans at end of period (1)                                     |   |                                                   | 46.64  | %      |     |   | 52.59 | % |   | NM |   |   | NM |   |   | NM |   |
| Allowance                  for loan losses to                                                  |   |                                                   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  total                  loans at end of period                                            |   |                                                   | 0.97   | %      |     |   | 1.11 | % |   |   | 1.16 | % |   |   | 1.20 | % |   |   | 1.22 | % |

|   | (1) | “NM”                indicates ratio is not meaningful. |
|--------|-----|--------------------------------------------------------------------|

----

*Table            of Contents*

***Allocation      of Allowance for Loan Losses.***

|                                                                                                         |   |                                        |   |   | **Percent                  of**  |   |
|--------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|----------------------------------|--------|
|                                                                                                         |   |                                        |   |   | **Loans                  in**    |   |
|                                                                                                         |   |                                        |   |   | **Category                  to** |   |
|                                                                                                         |   | **Amount**                                  |   |   | **Total                  Loans** |   |
|                                                                                                         |   | **(Dollars                  in thousands)** |   |
| **At                  September 30, 2007**                                                                   |   |                                        |   |   |                             |   |
|      One-to                  four-family residential                                |   | $                                           | 473    |   |                             |   | 39.54 | % |
|      Commercial                  real estate                                        |   |                                        | 576    |   |                             |   | 21.08 | % |
|      Construction                                                                   |   |                                        | 1,982  |   |                             |   | 25.20 | % |
|      Home                  equity lines of credit                                   |   |                                        | 40     |   |                             |   | 3.34 | % |
|      Commercial                  business                                           |   |                                        | 675    |   |                             |   | 6.91 | % |
|      Other                                                                          |   |                                        | 8      |   |                             |   | 3.93 | % |
|      Unallocated                                                                    |   |                                        | -      |   |                             |   | 0.00 | % |
|           Total                  allowance for loan losses |   | $                                           | 3,754  |   |                             |   | 100 | % |
|                                                                                                         |   |                                        |   |   |                             |   |   |   |
| **At                  September 30, 2006**                                                                   |   |                                        |   |   |                             |   |   |   |
|      One-to                  four-family residential                                |   | $                                           | 327    |   |                             |   | 40.65 | % |
|      Commercial                  real estate                                        |   |                                        | 601    |   |                             |   | 19.46 | % |
|      Construction                                                                   |   |                                        | 1,519  |   |                             |   | 25.64 | % |
|      Home                  equity lines of credit                                   |   |                                        | 82     |   |                             |   | 3.08 | % |
|      Commercial                  business                                           |   |                                        | 1,153  |   |                             |   | 6.96 | % |
|      Other                                                                          |   |                                        | 210    |   |                             |   | 4.21 | % |
|      Unallocated                                                                    |   |                                        | -      |   |                             |   | 0.00 | % |
|           Total                  allowance for loan losses |   | $                                           | 3,892  |   |                             |   | 100 | % |
|                                                                                                         |   |                                        |   |   |                             |   |   |   |
| **At                  September 30, 2005**                                                                   |   |                                        |   |   |                             |   |   |   |
|      One-to                  four-family residential                                |   | $                                           | 312    |   |                             |   | 46.64 | % |
|      Commercial                  real estate                                        |   |                                        | 615    |   |                             |   | 21.19 | % |
|      Construction                                                                   |   |                                        | 845    |   |                             |   | 16.41 | % |
|      Home                  equity lines of credit                                   |   |                                        | 82     |   |                             |   | 3.84 | % |
|      Commercial                  business                                           |   |                                        | 815    |   |                             |   | 6.43 | % |
|      Other                                                                          |   |                                        | 193    |   |                             |   | 5.49 | % |
|      Unallocated                                                                    |   |                                        | 267    |   |                             |   | 0.00 | % |
|           Total                  allowance for loan losses |   | $                                           | 3,129  |   |                             |   | 100 | % |
|                                                                                                         |   |                                        |   |   |                             |   |   |   |
| **At                  September 30, 2004**                                                                   |   |                                        |   |   |                             |   |   |   |
|      One-to                  four-family residential                                |   | $                                           | 281    |   |                             |   | 55.50 | % |
|      Commercial                  real estate                                        |   |                                        | 857    |   |                             |   | 10.17 | % |
|      Construction                                                                   |   |                                        | 56     |   |                             |   | 2.82 | % |
|      Home                  equity lines of credit                                   |   |                                        | 222    |   |                             |   | 4.63 | % |
|      Commercial                  business                                           |   |                                        | 721    |   |                             |   | 14.14 | % |
|      Other                                                                          |   |                                        | 170    |   |                             |   | 12.74 | % |
|      Unallocated                                                                    |   |                                        | 34     |   |                             |   | 0.00 | % |
|           Total                  allowance for loan losses |   | $                                           | 2,341  |   |                             |   | 100 | % |
|                                                                                                         |   |                                        |   |   |                             |   |   |   |
| **At                  September 30, 2003**                                                                   |   |                                        |   |   |                             |   |   |   |
|      One-to                  four-family residential                                |   | $                                           | 196    |   |                             |   | 61.08 | % |
|      Commercial                  real estate                                        |   |                                        | 822    |   |                             |   | 10.99 | % |
|      Construction                                                                   |   |                                        | 301    |   |                             |   | 2.95 | % |
|      Home                  equity lines of credit                                   |   |                                        | 190    |   |                             |   | 4.15 | % |
|      Commercial                  business                                           |   |                                        | 426    |   |                             |   | 5.47 | % |
|      Other                                                                          |   |                                        | 164    |   |                             |   | 15.36 | % |
|      Unallocated                                                                    |   |                                        | 51     |   |                             |   | 0.00 | % |
|           Total                  allowance for loan losses |   | $                                           | 2,150  |   |                             |   | 100 | % |

----

*Table            of Contents*

**Investments**

***U.S.***
***Government and Federal Agency Obligations.***

***Mortgage-Backed      Securities.  ***

----

*Table            of Contents*

***Corporate      Notes***

***Equity      Securities.***

***Municipal      Securities.***

***Securities      Portfolios.  ***

----

*Table            of Contents*

|                                                    |   | **At                  September 30,** |   |
|---------------------------------------------------------|--------|---------------------------------------|--------|
|                                                    |   | **2007**                              |   |   | **2006** |   |   | **2005** |   |
|                                                    |   | **Amortized**                         |   |   | **Fair** |   |   | **Amortized** |   |   | **Fair** |   |   | **Amortized** |   |   | **Fair** |   |
|                                                    |   | **Cost**                              |   |   | **Value** |   |   | **Cost** |    | **Value** |   |   | **Cost** |    | **Value** |   |
|                                                    |   | **(In                  thousands)**   |   |
| **Securities                  available for sale:**     |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  government and agency obligations |   | $                                     | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 4,000 |   |   | $ | 3,894 |   |
| Municipal                  bonds                        |   |                                  | 3,214  |   |   |   | 3,216 |   |   |   | 2,049 |   |   |   | 2,066 |   |   |   | - |   |   |   | - |   |
| Equity                  Securities                      |   |                                  | -      |   |   |   | - |   |   |   | 142 |   |   |   | 142 |   |   |   | 142 |   |   |   | 142 |   |
| Mortgage-backed                  securities             |   |                                  | 24,217 |   |   |   | 24,157 |   |   |   | 16,258 |   |   |   | 15,961 |   |   |   | 17,047 |   |   |   | 16,566 |   |
|                                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  securities available for sale    |   | $                                     | 27,431 |   |   | $ | 27,373 |   |   | $ | 18,449 |   |   | $ | 18,169 |   |   | $ | 21,189 |   |   | $ | 20,602 |   |
|                                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Securities                  held to maturity:**       |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  government and agency obligations |   | $                                     | 2,133  |   |   | $ | 2,119 |   |   | $ | 2,157 |   |   | $ | 2,105 |   |   | $ | 4,313 |   |   | $ | 4,266 |   |
| Municipal                  bonds                        |   |                                  | 137    |   |   |   | 143 |   |   |   | 137 |   |   |   | 145 |   |   |   | - |   |   |   | - |   |
| Corporate                  notes                        |   |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,001 |   |   |   | 2,015 |   |
| Mortgage-backed                  securities             |   |                                  | 15,846 |   |   |   | 15,695 |   |   |   | 21,601 |   |   |   | 21,108 |   |   |   | 27,955 |   |   |   | 27,572 |   |
|                                                    |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  securities held to maturity      |   | $                                     | 18,116 |   |   | $ | 17,957 |   |   | $ | 23,895 |   |   | $ | 23,358 |   |   | $ | 34,269 |   |   | $ | 33,853 |   |

***Portfolio      Maturities and Yields.***

|                                                       |   |                                              |   |   |                            |   |   | **More                  Than One** |   |   | **More                  Than Five** |   |   |                                  |   |   |         |   |   |          |   |   |         |   |
|------------------------------------------------------------|--------|---------------------------------------------------|--------|--------|---------------------------------|--------|--------|------------------------------------|--------|--------|-------------------------------------|--------|--------|---------------------------------------|--------|--------|--------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                                       |   |                                              |   |   |                            |   |   | **Year                  Through**  |   |   | **Years                  Through**  |   |   | **More                  Than**        |   |   |         |   |   |          |   |
|                                                       |   | **One                  Year or Less**             |   |   | **Five                  Years** |   |   | **Ten                  Years**     |   |   | **Ten                  Years**      |   |   | **Total                  Securities** |   |
|                                                       |   |                                              |   |   | **Weighted**                    |   |   |                               |   |   | **Weighted**                        |   |   |                                  |   |   | **Weighted** |   |   |          |   |   | **Weighted** |   |   |   |   |   | **Weighted** |   |
|                                                       |   | **Amortized**                                     |   |   | **Average**                     |   |   | **Amortized**                      |   |   | **Average**                         |   |   | **Amortized**                         |   |   | **Average**  |   |   | **Amortized** |   |   | **Average**  |   |   | **Amortized** |   |   | **Average** |   |
|                                                       |   | **Cost**                                          |   |   | **Yield**                       |   |   | **Cost**                           |   |   | **Yield**                           |   |   | **Cost**                              |   |   | **Yield**    |   |   | **Cost**      |   |   | **Yield**    |   |   | **Cost** |   |   | **Yield** |   |
|                                                       |   | **(Dollars                  in thousands)**  |   |
| **Securities                  available for sale:**        |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |
| Municipal                  Bonds                           |   |                                              | -      |   |                            |   | -      | %                                  |   |   | -                                   |   |   |                                  | -      | %      |         |   | 2,048  |          |   |   | 5.85         | %      |   |   | 1,166 |   |   |   | 6.13 | % |   |   | 3,214 |   |   |   | 3.93 | % |
| Mortgage-backed                  securities                |   |                                              | -      |   |                            |   | -      | %                                  |   |   | -                                   |   |   |                                  | -      | %      |         |   | 6,349  |          |   |   | 4.92         | %      |   |   | 17,868 |   |   |   | 5.57 | % |   |   | 24,217 |   |   |   | 5.40 | % |
|                                                       |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  securities available for sale  | $      | -                                                 |   |   |                            | -      | %      |                               | $      | -      |                                |   |   | -                                     | %      |   | $            | 8,397  |   |          |   | 4.66   | %            |   | $ | 19,034 |   |   |   | 5.48 | % |   | $ | 27,431 |   |   |   | 5.23 | % |
|                                                       |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Securities                  held to maturity:**          |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  government and agency                |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| obligations                                                |   | $                                                 | -      |   |                            |   | -      | %                                  |   | $      | 2,000                               |   |   |                                  | 4.11   | %      |         | $      | -      |          |   |   | -            | %      |   | $ | 133 |   |   |   | 6.63 | % |   | $ | 2,133 |   |   |   | 4.27 | % |
| Municipal                  Bonds                           |   |                                              | -      |   |                            |   | -      | %                                  |   |   | -                                   |   |   |                                  | -      | %      |         |   | 137    |          |   |   | 6.00         | %      |   |   | - |   |   |   | - | % |   |   | 137 |   |   |   | 6.00 | % |
| Mortgage-backed                  securities                |   |                                              | 1,263  |   |                            |   | 3.97   | %                                  |   |   | 5,710                               |   |   |                                  | 4.21   | %      |         |   | 2,009  |          |   |   | 4.15         | %      |   |   | 6,863 |   |   |   | 4.78 | % |   |   | 15,845 |   |   |   | 4.43 | % |
|                                                       |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  securities held to maturity    | $      | 1,263                                             |   |   |                            | 3.97   | %      |                               | $      | 7,710  |                                |   |   | 4.18                                  | %      |   | $            | 2,146  |   |          |   | 4.27   | %            |   | $ | 6,996 |   |   |   | 4.81 | % |   | $ | 18,115 |   |   |   | 4.42 | % |
|                                                       |   |                                              |   |   |                            |   |   |                               |   |   |                                |   |   |                                  |   |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  securities**                      |   | $                                                 | 1,263  |   |                            |   | 3.97   | %                                  |   | $      | 7,710                               |   |   |                                  | 4.18   | %      |         | $      | 10,543 |          |   |   | 4.58         | %      |   | $ | 26,030 |   |   |   | 5.30 | % |   | $ | 45,546 |   |   |   | 4.91 | % |

**Sources      of Funds**

***General.***

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*Table            of Contents*

***Deposits.***
* *
** **

|                                      |        | **For                  the Year Ended September 30,**   |    |
|-------------------------------------------|-------------|---------------------------------------------------------|---------|
|                                      |        | **2007**                                                |    |   | **2006** |   |   | **2005** |   |
|                                      |        |                                                    |    |   |   |   |   | **Weighted** |   |   |   |   |   |   |   |   | **Weighted** |   |   |   |   |   |   |   |   | **Weighted** |   |
|                                      |        |                                                    |    |   |   |   |   | **Average** |   |   |   |   |   |   |   |   | **Average** |   |   |   |   |   |   |   |   | **Average** |   |
| **Deposit                  Types:**  | **Balance** |                                                    |    | **Percent** |   |   | **Rate** |   |   | **Balance** |   |   | **Percent** |   |   | **Rate** |   |   | **Balance** |   |   | **Percent** |   |   | **Rate** |   |
|                                      |        | **(Dollars                  in thousands)**   |
|                                      |        |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                  accounts          |        | $                                                       | 21,514  |   |   |   | 5.83 | % |   |   | - |   |   | $ | 20,491 |   |   |   | 6.29 | % |   |   | - |   |   | $ | 14,566 |   |   |   | 5.24 | % |   |   | - |   |
| Savings                  accounts         |        |                                                    | 35,577  |   |   |   | 9.65 | % |   |   | 0.98 | % |   |   | 43,127 |   |   |   | 13.25 | % |   |   | 1.14 | % |   |   | 53,819 |   |   |   | 19.35 | % |   |   | 1.05 | % |
| NOW                  accounts             |        |                                                    | 32,158  |   |   |   | 8.72 | % |   |   | 1.77 | % |   |   | 30,519 |   |   |   | 9.37 | % |   |   | 1.95 | % |   |   | 28,149 |   |   |   | 10.12 | % |   |   | 0.79 | % |
| Money                  market accounts    |        |                                                    | 78,979  |   |   |   | 21.42 | % |   |   | 3.69 | % |   |   | 56,107 |   |   |   | 17.23 | % |   |   | 4.09 | % |   |   | 30,499 |   |   |   | 10.97 | % |   |   | 1.97 | % |
| Certificates                  of deposit  |        |                                                    | 172,063 |   |   |   | 46.66 | % |   |   | 4.74 | % |   |   | 149,811 |   |   |   | 46.01 | % |   |   | 4.29 | % |   |   | 126,165 |   |   |   | 45.37 | % |   |   | 3.05 | % |
| Retirement                  accounts      |        |                                                    | 28,486  |   |   |   | 7.72 | % |   |   | 4.61 | % |   |   | 25,547 |   |   |   | 7.85 | % |   |   | 4.09 | % |   |   | 24,892 |   |   |   | 8.95 | % |   |   | 3.72 | % |
|                                      |        |                                                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  deposits           |        | $                                                       | 368,777 |   |   |   | 100.00 | % |   |   | 3.61 | % |   | $ | 325,602 |   |   |   | 100.00 | % |   |   | 3.33 | % |   | $ | 278,090 |   |   |   | 100.00 | % |   |   | 2.21 | % |

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*Table            of Contents*

| Three                  months or less                             |   | $      | 21,268 |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|
| Over                  three months through six months             |   |   | 21,572 |   |
| Over                  six months through one year                 |   |   | 18,972 |   |
| Over                  one year to three years                     |   |   | 7,627  |   |
| Over                  three years                                 |   |   | 2,522  |   |
|                                                              |   |   |   |   |
|           Total |   | $      | 71,961 |   |

|                                                                 |   | **For                  The Years Ended September 30,** |    |
|----------------------------------------------------------------------|--------|--------------------------------------------------------|---------|
|                                                                 |   | **2007**                                               |    |   | **2006** |   |   | **2005** |   |
|                                                                 |   | **(Dollars                  in thousands)**            |    |
|                                                                 |   |                                                   |    |   |   |   |   |   |   |
| Beginning                  balance                                   |   | $                                                      | 305,111 |   |   | $ | 263,524 |   |   | $ | 214,049 |   |
| Net                  deposits (withdrawals) before interest credited |   |                                                   | 30,141  |   |   |   | 33,644 |   |   |   | 44,903 |   |
| Interest                  credited                                   |   |                                                   | 12,011  |   |   |   | 7,944 |   |   |   | 4,572 |   |
|                                                                 |   |                                                   |    |   |   |   |   |   |   |   |   |   |
| Ending                  balance                                      |   | $                                                      | 347,263 |   |   | $ | 305,111 |   |   | $ | 263,524 |   |

***Borrowings.***

| Year   |   |   |   |
|--------|--------|--------|--------|
| 2008   |   |   | 4,022  |   |
| 2009   |   |   | 7,757  |   |
| 2010   |   |   | 6,777  |   |
| 2011   |   |   | 5,000  |   |
| 2012   |   |   | 5,228  |   |
|   |   |   |   |   |
|   |   | $      | 28,784 |   |

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*Table            of Contents*

|                                                               |   | **At                  September 30,**       |   |
|--------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                               |   | **2007**                                    |   |   | **2006** |   |
|                                                               |   | **(Dollars                  in thousands)** |   |
|                                                               |   |                                        |   |   |   |   |
| Balance                  at end of year                            |   | $                                           | 11,200 |   |   | $ | 28,875 |   |
| Weighted                  average balance during the year          |   |                                        | 28,828 |   |   |   | 11,727 |   |
| Weighted                  average interest rate at the end of year |   |                                        | 5.24   | % |   |   | 5.51 | % |
| Maximum                  month-end balance during the year         |   |                                        | 42,300 |   |   |   | 28,875 |   |
| Average                  interest rate during the year             |   |                                        | 5.36   | % |   |   | 4.81 | % |

**Subsidiary      Activities**

**Personnel**

**FEDERAL      AND STATE TAXATION**

**Federal      Taxation**

***General***
*.      *

----

*Table            of Contents*

***Method      of Accounting***
*. *

***Bad      Debt Reserves***
*. *

***Taxable      Distributions and Recapture***
*. *

***Alternative      Minimum Tax***
*. *

***Net      Operating Loss Carryovers***
*. *

***Corporate      Dividends-Received Deduction***
*. *

**State      Taxation**

***New      Jersey***
*** ***
***State***
***Taxation.***

----

*Table            of Contents*

***Delaware***
***and***
***New      Jersey***
*** ***
***State***
***Taxation.***

**SUPERVISION      AND REGULATION**

**General**

----

*Table            of Contents*

**New      Jersey Banking Regulation**

***Activity      Powers.***
** **

|   | · | real                estate mortgages; |
|--------|--------|---------------------------------------|

|   | · | consumer                and commercial loans; |
|--------|--------|-----------------------------------------------|

|   | · | specific                types of debt securities, including certain corporate debt securities                and                obligations of federal, state and local governments and                agencies; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | certain                types of corporate equity securities;                and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | certain                other assets. |
|--------|--------|--------------------------------------|

***Loans-to-One-Borrower      Limitations.***

***Dividends.***

***Minimum      Capital Requirements.***

***Examination      and Enforcement.***

----

*Table            of Contents*

**Federal      Banking Regulation**

***Capital      Requirements.***

|   | · | common                stockholders’ equity, excluding the unrealized appreciation or                depreciation, net of tax, from available-for-sale                securities; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | non-cumulative                perpetual preferred stock, including any related retained earnings;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | minority                interests in consolidated subsidiaries minus all intangible assets,                other                than qualifying servicing rights and any net unrealized loss on marketable                equity securities. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | cumulative                perpetual preferred stock; |
|--------|--------|------------------------------------------------------|

|   | · | certain                perpetual preferred stock for which the dividend rate may be reset                periodically; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | hybrid                capital instruments, including mandatory convertible                securities; |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | term                subordinated debt; |
|--------|--------|----------------------------------------|

|   | · | intermediate                term preferred stock; |
|--------|--------|---------------------------------------------------|

|   | · | allowance                for loan losses; and |
|--------|--------|-----------------------------------------------|

|   | · | up                to 45% of pretax net unrealized holding gains on available-for-sale                equity                securities with readily determinable fair market                values. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

|   | · | the                quality of the bank’s interest rate risk management                process; |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | the                overall financial condition of the bank;                and |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | the                level of other risks at the bank for which capital is                needed. |
|--------|--------|-------------------------------------------------------------------------------------------------|

***Activity      Restrictions on State-Chartered Banks.***
* *

***Federal      Home Loan Bank System.***

----

*Table            of Contents*

|   | (i) | 0.2%                of its mortgage related assets, calculated annually, which include                one-to-four family residential mortgage loans, multifamily and                non-residential real estate loans, home equity loans, and mortgage-backed                investment securities; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | 4.5%                (or such greater fraction as established by the Federal Home Loan                Bank of                New York) of its advances from the Federal Home Loan Bank of New                York,                calculated daily. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Enforcement.***
* *

***Prompt      Corrective Action.***
* *

|   | · | its                ratio of total capital to risk-weighted assets is at least                10%; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | its                ratio of Tier 1 capital to risk-weighted assets is at least 6%;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | its                ratio of Tier 1 capital to total assets is at least 5%, and it is                not                subject to any order or directive by the Federal Deposit Insurance                Corporation to meet a specific capital                level. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | its                ratio of total capital to risk-weighted assets is at least 8%;                or |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | its                ratio of Tier 1 capital to risk-weighted assets is at least 4%;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | its                ratio of Tier 1 capital to total assets is at least 4% (3% if the                bank                receives the highest rating under the Uniform Financial Institutions                Rating System) and it is not a well-capitalized                institution. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | its                total risk-based capital is less than 8%;                or |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | its                Tier 1 risk-based-capital is less than 4%;                and |
|--------|--------|----------------------------------------------------------------------------------|

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*Table            of Contents*

|   | · | its                leverage ratio is less than 4% (or less than 3% if the institution                receives the highest rating under the Uniform Financial Institutions                Rating System). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | its                total risk-based capital is less than                6%; |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | its                Tier 1 capital is less than 3%; or |
|--------|--------|-------------------------------------------------------|

|   | · | its                leverage ratio is less than 3%. |
|--------|--------|----------------------------------------------------|

|   | · | insolvency,                or when the assets of the bank are less than its liabilities to depositors                and others; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | substantial                dissipation of assets or earnings through violations of law or unsafe                or                unsound practices; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | existence                of an unsafe or unsound condition to transact                business; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | likelihood                that the bank will be unable to meet the demands of its depositors                or to                pay its obligations in the normal course of business;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | insufficient                capital, or the incurring or likely incurring of losses that will                deplete                substantially all of the institution’s capital with no reasonable prospect                of replenishment of capital without federal                assistance. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Deposit      Insurance.***
* *

----

*Table            of Contents*

***Transactions      with Affiliates of Magyar Bank.***
* *

|   | · | limits                the extent to which the bank or its subsidiaries may engage in “covered                transactions” with any one affiliate to an amount equal to 10% of such                bank’s capital stock and retained earnings, and limits all such                transactions with all affiliates to an amount equal to 20% of such                capital                stock and retained earnings; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | requires                that all such transactions be on terms that are consistent with safe                and                sound banking practices. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

***Prohibitions      Against Tying Arrangements.***

***Privacy      Standards.***

----

*Table            of Contents*

***Community      Reinvestment Act and Fair Lending Laws.***
** **

|   | · | a                lending test, to evaluate the institution’s record of making loans in its                service areas; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                investment test, to evaluate the institution’s record of investing in                community development projects, affordable housing, and programs                benefiting low or moderate income individuals and businesses;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                service test, to evaluate the institution’s delivery of services through                its branches, ATMs and other                offices. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Loans      to a Bank’s Insiders**

***Federal      Regulation.***
** **

----

*Table            of Contents*

***New      Jersey***
***Regulation.***

**Federal      Reserve System**

**The      USA Patriot Act**

----

*Table            of Contents*

**Sarbanes-Oxley      Act of 2002**

**Holding      Company Regulation**

***Federal      Regulation.***
* *

----

*Table            of Contents*

|   | · | making                or servicing loans; |
|--------|--------|-------------------------------------------|

|   | · | performing                certain data processing services; |
|--------|--------|-------------------------------------------------------------|

|   | · | providing                discount brokerage services, or acting as fiduciary, investment or                financial advisor; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------|

|   | · | leasing                personal or real property; |
|--------|--------|---------------------------------------------------|

|   | · | making                investments in corporations or projects designed primarily to promote                community welfare; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | acquiring                a savings and loan association. |
|--------|--------|----------------------------------------------------------|

|   | · | each                of its depository institution subsidiaries is “well                capitalized;” |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | each                of its depository institution subsidiaries is “well                managed;” |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | each                of its depository institution subsidiaries has at least a “satisfactory”                Community Reinvestment Act rating at its most recent examination;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                bank holding company has filed a certification with the Federal Reserve                Board stating that it elects to become a financial holding                company. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Table            of Contents*

***Conversion      of***
***Magyar Bancorp, MHC***
***to      Stock Form***

***New      Jersey***
***Regulation.***
** **

***Acquisition      of Magyar Bancorp, Inc.***
** **

***Federal      Securities Laws.***

----

*Table            of Contents*

**Risk      Factors**

**Changes      in Interest Rates May Hurt our Profits and Asset Values.**

|   | · | the                interest income we earn on our interest-earning assets, such as loans                and                securities; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                interest expense we pay on our interest-bearing liabilities, such                as                deposits and borrowings. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

**A      Significant Portion of Our Commercial Business, Commercial Real Estate and      Construction Loan Portfolio Has Been Originated in the Last Three      Years.**

----

*Table            of Contents*

**Because      We Intend to Continue our Emphasis on the Origination of Commercial Business,      Commercial Real Estate and Construction Loans, Our Lending Risk Will      Increase.**

**Our      Profits Have Declined over the Past Three Years, and May Not Improve in the      Foreseeable Future.**

**A      Downturn in the New Jersey Economy or a Decline in Real Estate Values Could      Reduce Our Profits.**

**If      Our Allowance for Loan Losses is Not Sufficient to Cover Actual Loan Losses,      Our      Earnings Could Decrease.**

----

*Table            of Contents*

**Strong      Competition Within Our Market Area May Limit Our Growth and      Profitability.**

**If      We Declare Dividends on Our Common Stock, Magyar Bancorp, MHC will be Prohibited      From Waiving the Receipt of Dividends by Current Federal Reserve Board Policy,      Which May Result in Lower Dividends for All Other      Stockholders.**

----

*Table            of Contents*

| **ITEM                2.** | **Description                of Property** |
|----------------------------|--------------------------------------------|

|                                          |   |                                 |   | **Original                  Year**      |   | **Year                  of**          |
|-----------------------------------------------|--------|--------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|
| **Location**                                  |   | **Leased                  or Owned** |   | **Leased                  or Acquired** |   | **Lease                  Expiration** |
| **Main                  Office:**             |   |                                 |   |                                    |   |                                  |
| 400                  Somerset Street          |   | Owned                                |   | 2005                                    |   |  -                               |
| New                  Brunswick, New Jersey    |   |                                 |   |                                    |   |                                  |
|                                          |   |                                 |   |                                    |   |                                  |
| **Full                  - Service Branches:** |   |                                 |   |                                    |   |                                  |
| 582                  Milltown Road            |   | Leased                               |   | 2002                                    |   | 2012                                  |
| North                  Brunswick, New Jersey  |   |                                 |   |                                    |   |                                  |
|                                          |   |                                 |   |                                    |   |                                  |
| 3050                  Highway No. 27          |   | Owned                                |   | 1969                                    |   |  -                               |
| South                  Brunswick, New Jersey  |   |                                 |   |                                    |   |                                  |
|                                          |   |                                 |   |                                    |   |                                  |
| 1000                  Route 202 South         |   | Leased                               |   | 2006                                    |   | 2031                                  |
| Branchburg,                  New Jersey       |   |                                 |   |                                    |   |                                  |
|                                          |   |                                 |   |                                    |   |                                  |
| 89                  French Street             |   | Leased                               |   | 2006                                    |   | 2011                                  |
| New                  Brunswick, New Jersey    |   |                                 |   |                                    |   |                                  |

| **ITEM                3.** | **Legal                Proceedings** |
|----------------------------|--------------------------------------|

| **ITEM                4.** | **Submission                of Matters to a Vote of Security                Holders** |
|----------------------------|---------------------------------------------------------------------------------------|

**PART      II**

| **ITEM                5.** | **Market                for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity                Securities** |
|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Table            of Contents*

| ** Fiscal                  Year Ended**            |   |     |   |   |    |   |   | **Closing** |   |        | **Dividends** |   |
|---------------------------------------------------------|--------|----------|--------|--------|---------|--------|--------|-------------|--------|-------------|---------------|--------|
| **September                  30, 2007**                 |   | **High** |   |   | **Low** |   |   | **Price**   |   |        | **Declared**  |   |
|                                                    |   |     |   |   |    |   |   |        |   |        |          |   |
|  Quarter                  ended September 30, 2007 |   | $        | 14.17  |   |    | $      | 10.75  |        |   | $           | 10.76         |   |   | $ | - |   |
|  Quarter                  ended June 30, 2007      |   |     | 15.20  |   |    |   | 13.88  |        |   |        | 14.18         |   |   |   | - |   |
|  Quarter                  ended March 31, 2007     |   |     | 14.98  |   |    |   | 13.60  |        |   |        | 14.25         |   |   |   | - |   |
|  Quarter                  ended December 31, 2006  |   |     | 14.05  |   |    |   | 12.05  |        |   |        | 13.76         |   |   |   | - |   |
|                                                    |   |     |   |   |    |   |   |        |   |        |          |   |   |   |   |   |
|                                                    |   |     |   |   |    |   |   |        |   |        |          |   |   |   |   |   |
| ** Fiscal                  Year Ended**            |   |     |   |   |    |   |   |        |   | **Closing** |          |   | **Dividends** |   |
| **September                  30, 2006**                 |   | **High** |   |   | **Low** |   |   | **Price**   |   |        | **Declared**  |   |
|                                                    |   |     |   |   |    |   |   |        |   |        |          |   |   |   |   |   |
|  Quarter                  ended September 30, 2006 |   | $        | 13.97  |   |    | $      | 11.00  |        |   | $           | 13.17         |   |   | $ | - |   |
|  Quarter                  ended June 30, 2006      |   |     | 12.00  |   |    |   | 10.75  |        |   |        | 11.20         |   |   |   | - |   |
|  Quarter                  ended March 31, 2006     |   |     | 12.39  |   |    |   | 10.35  |        |   |        | 12.02         |   |   |   | - |   |

|                                                                                |                                              | **Number                  of securities to** |         |   |                                  |                                      |   | **Number                  of**           |   |
|-------------------------------------------------------------------------------------|---------------------------------------------------|----------------------------------------------|--------------|--------|---------------------------------------|-------------------------------------------|--------|------------------------------------------|--------|
|                                                                                | **                 be issued upon exercise** |                                         | **Weighted** |   |                                  | **securities                  remaining** |   |
|                                                                                |                                              | **of                  outstanding options**  |         |   | **average                  exercise** |                                      |   | **available                  for**       |   |
|                                                                                |                                              | **and                  rights**              |         |   | **price(1)**                          |                                      |   | **issuance                  under plan** |   |
|                                                                                |                                              |                                         |         |   |                                  |                                      |   |                                     |   |
| Stock                  options                                                      |                                              |                                         | 217,826      |   |                                  | $                                         | 14.61  |                                     |   |   | 54,503 |   |
| Shares                  of restricted stock                                         |                                              |                                         | -            |   |                                  |                                      | -      |                                     |   |   | 5,452 |   |
| Total                                                                               |                                              |                                         | 217,826      |   |                                  | $                                         | 14.61  |                                     |   |   | 59,955 |   |
| **_____________**                                                                   |                                              |                                         |         |   |                                  |                                      |   |                                     |   |   |   |   |
| (1)Reflects                  weighted average exercise price of stock options only. |                                              |                                         |         |   |                                  |

|   | (b) | Not                applicable. |
|--------|-----|--------------------------------|

|   | (c) | Share                repurchases. |
|--------|-----|-----------------------------------|

----

*Table            of Contents*

|                                                     |   |                          |    |   |                        |   |   | Remaining                  Number |   |
|----------------------------------------------------------|--------|-------------------------------|---------|--------|-----------------------------|--------|--------|-----------------------------------|--------|
|                                                     |   | Total                  Number |    |   | Average                     |   |   | of                  Shares That   |   |
|                                                     |   | of                  Shares    |    |   | Price                  Paid |   |   | May                  be Purchased |   |
| Period                                                   |   | Purchased                     |    |   | Per                  Share  |   |   | Under                  the Plan   |   |
|                                                     |   |                          |    |   |                        |   |   |                              |   |
| April                  1, 2007 through June 30, 2007     |   |                          | 92,100  |   |                        | $      | 14.76  |                              |   |   | 38,827 |   |
| July                  1, 2007 through September 30, 2007 |   |                          | 32,700  |   |                        | $      | 11.63  |                              |   |   | 6,127 |   |
| Total                                                    |   |                          | 124,800 |   |                        | $      | 13.94  |                              |   |   |   |   |

| **ITEM                6.** | **Management’s                Discussion and Analysis or Plan of                Operation** |
|----------------------------|---------------------------------------------------------------------------------------------------|

**Overview**

----

*Table            of Contents*

**Critical      Accounting Policies**

----

*Table            of Contents*

**Comparison      of Financial Condition at September 30, 2007 and September 30,      2006**

***Total      Assets.***

***Loans      Receivable.***

----

*Table            of Contents*

***Investment      Securities.***

***Bank-Owned      Life      Insurance.***

***Other      Real Estate Owned.***

***Deposits.***

***Borrowed      Funds.***

***Stockholders’      Equity.***

----

*Table            of Contents*

**Comparison      of Operating Results for the Years Ended September 30, 2007 and      2006**

***Net      Income.***

***Net      Interest and Dividend      Income.***

***Average      Balance Sheet.***

----

*Table            of Contents*

| **MAGYAR                  BANCORP, INC. AND SUBSIDIARY** |
|----------------------------------------------------------|
| Comparative                  Average Balance Sheets      |
| (Dollars                  In Thousands)                  |

|                                                                                                      |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|---------|--------|------------------------|--------|--------|------------|--------|--------|----------------|--------|--------|------------------------|---------|--------|------------|--------|--------|----------------|--------|--------|------------------------|--------|--------|------------|---------|
|                                                                                                      |   | For                  the Year Ended September 30,         |    |
|                                                                                                      |   | 2007                                                      |    |   | 2006                   |   |   | 2005  |   |
|                                                                                                      |   | AverageBalance                                            |    |   | InterestIncome/Expense |   |   | Yield/Cost |   |   | AverageBalance |   |   | InterestIncome/Expense |    |   | Yield/Cost |   |   | AverageBalance |   |   | InterestIncome/Expense |   |   | Yield/Cost |    |
|                                                                                                      |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |
|                                                                                                      |   | (Dollars                  in thousands)    |
| Interest-earning                  assets:                                                                 |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |
| Interest-earning                  deposits                                                                |   | $                                                         | 241     |   |                   | $      | 12     |       |   |   | 4.79           | %      |   | $                      | 2,441   |   |       | $      | 106    |           |   |   | 4.34                   | %      |   | $          | 750     |   |   | $ | 18 |   |   |   | 2.40 | % |
| Loans                  receivable, net                                                                    |   |                                                      | 371,972 |   |                   |   | 27,096 |       |   |   | 7.28           | %      |   |                   | 311,706 |   |       |   | 21,520 |           |   |   | 6.90                   | %      |   |       | 217,955 |   |   |   | 13,029 |   |   |   | 5.98 | % |
| Securities                                                                                                |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                   |   |                                                      | 40,407  |   |                   |   | 1,786  |       |   |   | 4.42           | %      |   |                   | 47,048  |   |       |   | 1,801  |           |   |   | 3.83                   | %      |   |       | 63,421  |   |   |   | 2,427 |   |   |   | 3.83 | % |
| Tax-exempt                  (1)                                                                           |   |                                                      | 2,961   |   |                   |   | 176    |       |   |   | 5.95           | %      |   |                   | 1,214   |   |       |   | 69     |           |   |   | 5.68                   | %      |   |       | 149     |   |   |   | 13 |   |   |   | 8.52 | % |
| FHLB                  of NY stock                                                                         |   |                                                      | 2,962   |   |                   |   | 218    |       |   |   | 7.37           | %      |   |                   | 2,408   |   |       |   | 119    |           |   |   | 4.94                   | %      |   |       | 2,008   |   |   |   | 94 |   |   |   | 4.68 | % |
| Total                  interest-earning assets                                                            |   |                                                      | 418,543 |   |                   |   | 29,288 |       |   |   | 7.00           | %      |   |                   | 364,817 |   |       |   | 23,615 |           |   |   | 6.47                   | %      |   |       | 284,283 |   |   |   | 15,581 |   |   |   | 5.48 | % |
| Noninterest-earning                  assets                                                               |   |                                                      | 42,091  |   |                   |   |   |       |   |   |           |   |   |                   | 30,693  |   |       |   |   |           |   |   |                   |   |   |       | 26,989  |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                             |   | $                                                         | 460,634 |   |                   |   |   |       |   |   |           |   |   | $                      | 395,510 |   |       |   |   |           |   |   |                   |   |   | $          | 311,272 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Interest-bearing                  liabilities:                                                            |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Savings                  accounts (2)                                                                     |   | $                                                         | 38,615  |   |                   | $      | 410    |       |   |   | 1.06           | %      |   | $                      | 55,623  |   |       | $      | 621    |           |   |   | 1.12                   | %      |   | $          | 51,625  |   |   | $ | 340 |   |   |   | 0.66 | % |
| NOW                  accounts (3)                                                                         |   |                                                      | 101,088 |   |                   |   | 3,628  |       |   |   | 3.59           | %      |   |                   | 70,470  |   |       |   | 1,681  |           |   |   | 2.39                   | %      |   |       | 57,551  |   |   |   | 633 |   |   |   | 1.10 | % |
| Time                  deposits (4)                                                                        |   |                                                      | 188,306 |   |                   |   | 8,653  |       |   |   | 4.60           | %      |   |                   | 166,118 |   |       |   | 6,192  |           |   |   | 3.73                   | %      |   |       | 123,412 |   |   |   | 3,406 |   |   |   | 2.76 | % |
| Total                  interest-bearing deposits                                                          |   |                                                      | 328,009 |   |                   |   | 12,691 |       |   |   | 3.87           | %      |   |                   | 292,211 |   |       |   | 8,494  |           |   |   | 2.91                   | %      |   |       | 232,588 |   |   |   | 4,379 |   |   |   | 1.88 | % |
| Borrowings                                                                                                |   |                                                      | 56,403  |   |                   |   | 2,857  |       |   |   | 5.07           | %      |   |                   | 39,172  |   |       |   | 1,829  |           |   |   | 4.67                   | %      |   |       | 37,340  |   |   |   | 1,573 |   |   |   | 4.22 | % |
| Loan                  payable                                                                             |   |                                                      | -       |   |                   |   | -      |       |   |   |           |   |   |                   | 807     |   |       |   | 64     |           |   |   | 7.93                   | %      |   |       | 965     |   |   |   | 67 |   |   |   | 6.94 | % |
| Total                  interest-bearing liabilities                                                       |   |                                                      | 384,412 |   |                   |   | 15,548 |       |   |   | 4.04           | %      |   |                   | 332,190 |   |       |   | 10,387 |           |   |   | 3.13                   | %      |   |       | 270,893 |   |   |   | 6,020 |   |   |   | 2.22 | % |
| Noninterest-bearing                  liabilities                                                          |   |                                                      | 27,633  |   |                   |   |   |       |   |   |           |   |   |                   | 24,509  |   |       |   |   |           |   |   |                   |   |   |       | 16,582  |   |   |   |   |   |   |   |   |   |
| Total                  liabilities                                                                        |   |                                                      | 412,045 |   |                   |   |   |       |   |   |           |   |   |                   | 356,699 |   |       |   |   |           |   |   |                   |   |   |       | 287,475 |   |   |   |   |   |   |   |   |   |
| Retained                  earnings                                                                        |   |                                                      | 48,589  |   |                   |   |   |       |   |   |           |   |   |                   | 38,811  |   |       |   |   |           |   |   |                   |   |   |       | 23,797  |   |   |   |   |   |   |   |   |   |
| Total                  liabilities and retained earnings                                                  |   | $                                                         | 460,634 |   |                   |   |   |       |   |   |           |   |   | $                      | 395,510 |   |       |   |   |           |   |   |                   |   |   | $          | 311,272 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                                      |    |   |                   |   |   |       |   |   |           |   |   |                   |    |   |       |   |   |           |   |   |                   |   |   |       |    |   |   |   |   |   |   |   |   |   |
| Tax-equivalent                  basis adjustment                                                          |   |                                                      |    |   |                   |   | (60    | )          |   |   |           |   |   |                   |    |   |       |   | (20    | )              |   |   |                   |   |   |       |    |   |   |   | (4 | ) |   |   |   |   |
| Net                  interest income                                                                      |   |                                                      |    |   |                   | $      | 13,680 |       |   |   |           |   |   |                   |    |   |       | $      | 13,208 |           |   |   |                   |   |   |       |    |   |   | $ | 9,557 |   |   |   |   |   |
| Interest                  rate spread                                                                     |   |                                                      |    |   |                   |   |   |       |   |   | 2.96           | %      |   |                   |    |   |       |   |   |           |   |   | 3.34                   | %      |   |       |    |   |   |   |   |   |   |   | 3.26 | % |
| Net                  interest-earning assets                                                              |   | $                                                         | 34,131  |   |                   |   |   |       |   |   |           |   |   | $                      | 32,627  |   |       |   |   |           |   |   |                   |   |   | $          | 13,391  |   |   |   |   |   |   |   |   |   |
| Net                  interest margin                  (5)                                                 |   |                                                      |    |   |                   |   |   |       |   |   | 3.27           | %      |   |                   |    |   |       |   |   |           |   |   | 3.62                   | %      |   |       |    |   |   |   |   |   |   |   | 3.36 | % |
| Average                  interest-earning assets to average interest-bearing                  liabilities |   |                                                      | 108.88  | %      |                   |   |   |       |   |   |           |   |   |                   | 109.82  | %      |       |   |   |           |   |   |                   |   |   |       | 104.94  | % |   |   |   |   |   |   |   |   |

| (1) | Calculated                using 34% tax rate for all periods. |
|-----|---------------------------------------------------------------|

| (2) | Includes                passbook savings, money market passbook and club                accounts. |
|-----|---------------------------------------------------------------------------------------------------|

| (3) | Includes                interest-bearing checking and money market                accounts. |
|-----|---------------------------------------------------------------------------------------------|

| (4) | Includes                certificates of deposits and individual retirement                accounts. |
|-----|-----------------------------------------------------------------------------------------------------|

| (5) | Calculated                as net interest income divided by average total interest-earning                assets. |
|-----|-------------------------------------------------------------------------------------------------------------------|

----

*Table            of Contents*

***Rate/Volume        Analysis.***
* *

|                                                       |   | **For                  the Years Ended September 30** |   |
|------------------------------------------------------------|--------|-------------------------------------------------------|--------|
|                                                       |   | **2007                  vs. 2006**                    |   |   | **2006                  vs. 2005** |   |
|                                                       |   | **Increase                  (decrease)**              |   |   |   |   |   | **Increase                  (decrease)** |   |   |   |   |
|                                                       |   | **due                  to**                           |   |   |   |   |   | **due                  to** |   |   |   |   |
|                                                       |   | **Volume**                                            |   |   | **Rate** |   |   | **Net** |   |   | **Volume** |   |   | **Rate** |   |   | **Net** |   |
|                                                       |   | **(Dollars                  in thousands)**           |   |
| **Interest-earning                  assets:**              |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                  deposits                 |   | $                                                     | (94    | ) |   | $ | - |   |   | $ | (94 | ) |   | $ | 41 |   |   | $ | 47 |   |   | $ | 88 |   |
| Loans                                                      |   |                                                  | 4,161  |   |   |   | 1,415 |   |   |   | 5,576 |   |   |   | 5,606 |   |   |   | 2,885 |   |   |   | 8,491 |   |
| Securities                                                 |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                    |   |                                                  | (254   | ) |   |   | 239 |   |   |   | (15 | ) |   |   | (627 | ) |   |   | 1 |   |   |   | (626 | ) |
| Tax-exempt                  (1)                            |   |                                                  | 99     |   |   |   | 8 |   |   |   | 107 |   |   |   | 91 |   |   |   | (35 | ) |   |   | 56 |   |
| FHLB                  of NY stock                          |   |                                                  | 27     |   |   |   | 72 |   |   |   | 99 |   |   |   | 19 |   |   |   | 6 |   |   |   | 25 |   |
| Total                  interest-earning assets             |   |                                                  | 3,939  |   |   |   | 1,734 |   |   |   | 5,673 |   |   |   | 5,130 |   |   |   | 2,904 |   |   |   | 8,034 |   |
|                                                       |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest-bearing                  liabilities:**         |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                  accounts (2)                      |   |                                                  | (189   | ) |   |   | (22 | ) |   |   | (211 | ) |   |   | 26 |   |   |   | 255 |   |   |   | 281 |   |
| NOW                  accounts (3)                          |   |                                                  | 733    |   |   |   | 1,214 |   |   |   | 1,947 |   |   |   | 142 |   |   |   | 906 |   |   |   | 1,048 |   |
| Time                  deposits (4)                         |   |                                                  | 826    |   |   |   | 1,635 |   |   |   | 2,461 |   |   |   | 1,179 |   |   |   | 1,607 |   |   |   | 2,786 |   |
| Total                  interest-bearing deposits           |   |                                                  | 1,370  |   |   |   | 2,827 |   |   |   | 4,197 |   |   |   | 1,347 |   |   |   | 2,768 |   |   |   | 4,115 |   |
| Federal                  Home Loan Bank borrowings         |   |                                                  | 803    |   |   |   | 225 |   |   |   | 1,028 |   |   |   | 77 |   |   |   | 178 |   |   |   | 255 |   |
| Loan                  payable                              |   |                                                  | (64    | ) |   |   | - |   |   |   | (64 | ) |   |   | (11 | ) |   |   | 8 |   |   |   | (3 | ) |
| Total                  interest-bearing liabilities        |   |                                                  | 2,109  |   |   |   | 3,052 |   |   |   | 5,161 |   |   |   | 1,413 |   |   |   | 2,954 |   |   |   | 4,367 |   |
|                                                       |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                  (decrease) in tax equivalent     |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                  interest income                       |   | $                                                     | 1,830  |   |   | $ | (1,318 | ) |   | $ | 512 |   |   | $ | 3,717 |   |   | $ | (50 | ) |   | $ | 3,667 |   |
| Change                  in tax-equivalent basis adjustment |   |                                                  |   |   |   |   |   |   |   |   | (40 | ) |   |   |   |   |   |   |   |   |   |   | (16 | ) |
|                                                       |   |                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                  in net interest income           |   |                                                  |   |   |   |   |   |   |   | $ | 472 |   |   |   |   |   |   |   |   |   |   | $ | 3,651 |   |

| (1) | Calculated                using 34% tax rate for all periods. |
|-----|---------------------------------------------------------------|

| (2) | Includes                passbook savings, money market passbook and club                accounts. |
|-----|---------------------------------------------------------------------------------------------------|

| (3) | Includes                interest-bearing checking and money market                accounts. |
|-----|---------------------------------------------------------------------------------------------|

| (4) | Includes                certificates of deposits and individual retirement                accounts. |
|-----|-----------------------------------------------------------------------------------------------------|

***Interest      Income.***

----

*Table            of Contents*

***Interest      Expense.  ***

***Provision      for Loan      Losses.***

***Other      Income.***

----

*Table            of Contents*

***Other      Expenses.***

***Income      Tax Expense      (Benefit).***

**Management      of Market Risk**

***General***

----

*Table            of Contents*

***Net      Interest Income Analysis.***

|                                    |   |   | Estimated                     |   |   | Estimated                  Increase              |   |   |       |   |   | Estimated                  Increase       |   |
|-----------------------------------------|--------|--------|-------------------------------|--------|--------|--------------------------------------------------|--------|--------|------------|--------|--------|-------------------------------------------|--------|
| Change                  in              |   |   | Net                  Interest |   |   | in                  NII Year 1    |   |   |       |   |   | (Decrease)                  in NII Year 2 |   |
| Interest                  rates         |   |   | Income                        |   |   |                                             |   |   |       |   |   | Estimated                                 |   |   |   |   |   |   |   |
| (Basis                  Points)(1)      |   |   | (NII)                  Year 1 |   |   | Amount                                           |   |   | Percentage |   |   | NII                  Year 2               |   |   | Amount |   |   | Percentage |   |
| (Dollars                  in thousands) |
|                                    |   |   |                          |   |   |                                             |   |   |       |   |   |                                      |   |   |   |   |   |   |   |
|                                    | +200   |   |                          | $      | 13,025 |                                             |   | $      | 52         |   |   |                                      | 0.40   | % |   | $ | 12,515 |   |   | $ | (458 | ) |   |   | -3.53 | % |
| Unchanged                               |   |   |                          | 12,973 |   |                                             |   | -      |       |   |   | -                                         |   |   |   | 13,284 |   |   |   | 312 |   |   |   | 2.40 | % |
|                                    | -200   |   |                          |   | 13,560 |                                             |   |   | 587        |   |   |                                      | 4.53   | % |   |   | 15,255 |   |   |   | 2,282 |   |   |   | 17.59 | % |

**Liquidity      and Capital Resources**

----

*Table            of Contents*

----

*Table            of Contents*

**Off-Balance      Sheet Arrangements and Aggregate Contractual Obligations**

***Commitments.***
* *

***Contractual      Obligations.***

|                                             |   | **Payments                  Due by Period** |    |
|--------------------------------------------------|--------|---------------------------------------------|---------|
|                                             |   | **Less                  Than**              |    |   | **One                  to** |   |   | **Three                  to** |   |   | **More                  Than** |   |   |   |   |
|                                             |   | **One                  Year**               |    |   | **Three                  Years** |   |   | **Five                  Years** |   |   | **Five                  Years** |   |   | **Total** |   |
|                                             |   | **(Dollars                  in thousands)** |    |
| Certificates                  of deposit         |   | $                                           | 169,961 |   |   | $ | 24,165 |   |   | $ | 6,423 |   |   | $ | - |   |   | $ | 200,549 |   |
| Federal                  Home Loan Bank advances |   |                                        | 4,022   |   |   |   | 14,535 |   |   |   | 10,228 |   |   |   | - |   |   |   | 28,785 |   |
| Repurchase                  agreements           |   |                                        | -       |   |   |   | - |   |   |   | 10,000 |   |   |   | - |   |   |   | 10,000 |   |
| Available                  lines of credit       |   |                                        | 23,354  |   |   |   | 17 |   |   |   | 79 |   |   |   | 9,724 |   |   |   | 33,173 |   |
| Operating                  leases                |   |                                        | 286     |   |   |   | 572 |   |   |   | 450 |   |   |   | - |   |   |   | 1,308 |   |
| Total                                            |   | $                                           | 197,623 |   |   | $ | 39,289 |   |   | $ | 27,180 |   |   | $ | 9,724 |   |   | $ | 273,815 |   |
| Commitments                  to extend credit    |   | $                                           | 41,211  |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 41,211 |   |

**New      Accounting Pronouncements**

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*Table            of Contents*

----

*Table            of Contents*

| **ITEM                7.** | **Financial                Statements** |
|----------------------------|-----------------------------------------|

**TABLE      OF CONTENTS**

|   Consolidated                Financial Statements:                                                           |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                               |   |
| Report                of Independent Registered Public Accounting Firm                                                       | 55     |
|                                                                                                                         |   |
| Consolidated                Balance Sheets as of September 30, 2007 and 2006                                                 | 56     |
|                                                                                                                         |   |
| Consolidated                Statements of Income for the Years                                                               |   |
| ended                September 30, 2007 and 2006                                                                             | 57     |
|                                                                                                                         |   |
| Consolidated                Statements of Changes in Shareholders’ Equity for the                Years                 |   |
| ended                September 30, 2007 and 2006                                                                             | 58     |
|                                                                                                                         |   |
| Consolidated                Statements of Cash Flows for the Years                                                           |   |
| ended                September 30, 2007 and 2006                                                                             | 59     |
|                                                                                                                         |   |
| Notes                to Consolidated Financial Statements                                                                    | 60     |
|                                                                                                               |   |
|   Signatures                                                                                                  |   |
|   Exhibit                31.1                                                                                 |   |
|   Certification                Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002  |   |
|   Exhibit                31.2                                                                                 |   |
|   Certification                Pursuant to Section 302 of the Sarbanes-Oxley Act of                2002  |   |
|   Exhibit                32                                                                                   |   |
|   Certification                Pursuant to Section 906 of the Sarbanes-Oxley Act of                2002  |   |

----

*Table            of Contents*

**Report      of Independent Registered Public Accounting Firm**

----

*Table            of Contents*

| **MAGYAR                BANCORP, INC. AND SUBSIDIARY**                                                 |
|------------------------------------------------------------------------------------------------------------------|
| Consolidated                Balance Sheets                                                                       |
| (In                Thousands, Except Share Data)                                                                 |
|                                                                                                             |   | **September                30,**    |   |
|                                                                                                             |   | **2007** |   |   | **2006** |   |
|                                                                                                             |   |   |   |   |   |   |
| **Assets**                                                                                                       |   |   |   |   |   |   |
| Cash                                                                                                             |   | $ | 5,132 |   |   | $ | 5,912 |   |
| Interest                earning deposits with banks                                                              |   |   | 101 |   |   |   | 105 |   |
| Total                cash and cash equivalents                                                                   |   |   | 5,233 |   |   |   | 6,017 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Investment                securities - available for sale, at fair value                                         |   |   | 27,373 |   |   |   | 18,169 |   |
| Investment                securities - held to maturity, at amortized cost (fair value of                $17,957 |   |   |   |   |   |
| and                $23,358 at September 30, 2007 and 2006, respectively)                                         |   |   | 18,116 |   |   |   | 23,895 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Federal                Home Loan Bank of New York stock, at cost                                                 |   |   | 2,325 |   |   |   | 2,870 |   |
| Loans                receivable, net of allowance for loan losses of $3,754 and $3,892                at         |   |   |   |   |   |   |   |   |
| September                30, 2007 and 2006, respectively                                                         |   |   | 381,614 |   |   |   | 347,969 |   |
| Bank                owned life insurance                                                                         |   |   | 10,120 |   |   |   | 9,606 |   |
| Accrued                interest receivable                                                                       |   |   | 2,521 |   |   |   | 2,218 |   |
| Premises                and equipment, net                                                                       |   |   | 22,302 |   |   |   | 21,690 |   |
| Other                real estate owned                                                                           |   |   | 2,238 |   |   |   | - |   |
| Other                assets                                                                                      |   |   | 1,335 |   |   |   | 1,770 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Total                assets                                                                                      |   | $ | 473,177 |   |   | $ | 434,204 |   |
| **Liabilities                and Stockholders' Equity**                                                          |   |   |   |   |   |   |   |   |
| Liabilities                                                                                                      |   |   |   |   |   |   |   |   |
| Deposits                                                                                                         |   | $ | 368,777 |   |   | $ | 325,602 |   |
| Escrowed                funds                                                                                    |   |   | 1,172 |   |   |   | 1,158 |   |
| Federal                Home Loan Bank of New York advances                                                       |   |   | 39,985 |   |   |   | 47,996 |   |
| Securities                sold under agreements to repurchase                                                    |   |   | 10,000 |   |   |   | 5,000 |   |
| Accrued                interest payable                                                                          |   |   | 1,706 |   |   |   | 1,141 |   |
| Accounts                payable and other liabilities                                                            |   |   | 3,344 |   |   |   | 5,095 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Total                liabilities                                                                                 |   |   | 424,984 |   |   |   | 385,992 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Stockholders'                equity                                                                              |   |   |   |   |   |   |   |   |
| Preferred                stock: $.01 Par Value, 1,000,000 shares authorized; none                issued          |   |   | - |   |   |   | - |   |
| Common                stock: $.01 Par Value, 8,000,000 shares authorized;                5,923,742               |   |   |   |   |   |   |   |   |
| issued;                5,798,942 and 5,923,742 outstanding at September 30, 2007                                 |   |   |   |   |   |   |   |   |
| and                September 30, 2006, respectively                                                              |   |   | 59 |   |   |   | 59 |   |
| Additional                paid-in capital                                                                        |   |   | 26,082 |   |   |   | 25,786 |   |
| Treasury                stock, 124,800 shares at cost                                                            |   |   | (1,740 | ) |   |   | - |   |
| Unearned                shares held by Employee Stock Ownership Plan                                             |   |   | (1,845 | ) |   |   | (2,133 | ) |
| Retained                earnings                                                                                 |   |   | 25,717 |   |   |   | 25,001 |   |
| Accumulated                other comprehensive loss, net                                                         |   |   | (80 | ) |   |   | (501 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Total                stockholders' equity                                                                        |   |   | 48,193 |   |   |   | 48,212 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| Total                liabilities and stockholders' equity                                                        |   | $ | 473,177 |   |   | $ | 434,204 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |
| The                accompanying notes are an integral part of these                statements.                   |

----

*Table            of Contents*

| **MAGYAR                  BANCORP, INC. AND SUBSIDIARY**                                           |
|----------------------------------------------------------------------------------------------------|
| Consolidated                  Statements of Income                                                 |
| (In                  Thousands, Except Per Share Data)                                             |
|                                                                                               |   |   |   |   |   |   |
|                                                                                               |   | For                  the Years |   |
|                                                                                               |   | Ended                  September 30, |   |
|                                                                                               |   | 2007 |   |   | 2006 |   |
|                                                                                               |   |   |   |   |   |   |
| Interest                  and dividend income                                                      |   |   |   |   |   |   |
| Loans,                  including fees                                                             |   | $ | 27,096 |   |   | $ | 21,519 |   |
| Investment                  securities                                                             |   |   |   |   |   |   |   |   |
| Taxable                                                                                            |   |   | 1,798 |   |   |   | 1,907 |   |
| Tax-exempt                                                                                         |   |   | 116 |   |   |   | 50 |   |
| Federal                  Home Loan Bank of New York stock                                          |   |   | 218 |   |   |   | 119 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Total                  interest and dividend income                                                |   |   | 29,228 |   |   |   | 23,595 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                  |   |   |   |   |   |   |   |   |
| Deposits                                                                                           |   |   | 12,691 |   |   |   | 8,494 |   |
| Borrowings                                                                                         |   |   | 2,857 |   |   |   | 1,893 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Total                  interest expense                                                            |   |   | 15,548 |   |   |   | 10,387 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Net                  interest and dividend income                                                  |   |   | 13,680 |   |   |   | 13,208 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Provision                  for loan losses                                                         |   |   | 398 |   |   |   | 961 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Net                  interest and dividend income after                                            |   |   |   |   |   |   |   |   |
| provision                  for loan losses                                                         |   |   | 13,282 |   |   |   | 12,247 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Other                  income                                                                      |   |   |   |   |   |   |   |   |
| Service                  charges                                                                   |   |   | 968 |   |   |   | 771 |   |
| Other                  operating income                                                            |   |   | 462 |   |   |   | 302 |   |
| Gains                  on sales of loans                                                           |   |   | 24 |   |   |   | 9 |   |
| Losses                  on the sales of investment securities                                      |   |   | - |   |   |   | (104 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |
| Total                  other income                                                                |   |   | 1,454 |   |   |   | 978 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Other                  expenses                                                                    |   |   |   |   |   |   |   |   |
| Compensation                  and employee benefits                                                |   |   | 7,942 |   |   |   | 6,951 |   |
| Occupancy                  expenses                                                                |   |   | 2,538 |   |   |   | 1,975 |   |
| Advertising                                                                                        |   |   | 286 |   |   |   | 329 |   |
| Professional                  fees                                                                 |   |   | 617 |   |   |   | 710 |   |
| Service                  fees                                                                      |   |   | 514 |   |   |   | 438 |   |
| Contribution                  to charitable foundation                                             |   |   | - |   |   |   | 1,547 |   |
| Other                  expenses                                                                    |   |   | 1,866 |   |   |   | 1,398 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Total                  other expenses                                                              |   |   | 13,763 |   |   |   | 13,348 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Income                  (loss) before income tax expense (benefit)                                 |   |   | 973 |   |   |   | (123 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |
| Income                  tax expense (benefit)                                                      |   |   | 257 |   |   |   | (128 | ) |
|                                                                                               |   |   |   |   |   |   |   |   |
| Net                  income                                                                        |   | $ | 716 |   |   | $ | 5 |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| Net                  income per share- basic and diluted                                           |   | $ | 0.12 |   |   | N/A |   |
|                                                                                               |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these                  statements. |   |

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*Table            of Contents*

| **MAGYAR                  BANCORP, INC. AND SUBSIDIARY**                                         |
|--------------------------------------------------------------------------------------------------|
| Consolidated                  Statement of Changes in Stockholders' Equity                  |
|  Years                  ended September 30, 2007 and 2006                                   |
|  (In                  Thousands, Except for Share Amounts)                                  |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                                                                             |   | Common                  Stock |   |   | Additional |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |
|                                                                                             |   | Shares |   |   | Par |   |   | Paid-In |   |   | Treasury |   |   | Unearned |   |   | Retained |   |  Comprehensive  |   |   |   |
|                                                                                        | Outstanding |   |   | Value |   |   | Capital |   |   | Stock |   |   | ESOP                  Shares |   |   | Earnings |   |   | Income/(Loss) |   |   | Total |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  September 30, 2005                                                     |   |   | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 24,996 |   |   | $ | (608 | ) |   | $ | 24,388 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net                  income                                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | 5 |   |
|  Other                  comprehensive income, net of                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  reclassification                  adjustments and taxes                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 107 |   |   |   | 107 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  comprehensive income                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 112 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock                                                        |   |   | 5,923,742 |   |   |   | 59 |   |   |   | 25,770 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 25,829 |   |
| Common                  stock acquired by ESOP                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,306 | ) |   |   | - |   |   |   | - |   |   |   | (2,306 | ) |
| Allocation                  of ESOP stock                                                        |   |   | - |   |   |   | - |   |   |   | 16 |   |   |   | - |   |   |   | 173 |   |   |   | - |   |   |   | - |   |   |   | 189 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance,                  September 30, 2006                                               |   |   | 5,923,742 |   |   | $ | 59 |   |   | $ | 25,786 |   |   | $ | - |   |   | $ | (2,133 | ) |   | $ | 25,001 |   |   | $ | (501 | ) |   | $ | 48,212 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net                  income                                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 716 |   |   |   | - |   |   |   | 716 |   |
|  Other                  comprehensive income, net of                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  reclassification                  adjustments and taxes                                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 421 |   |   |   | 421 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  comprehensive income                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,137 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Purchase                  of treasury stock                                                |   |   | (124,800 | ) |   |   | - |   |   |   | - |   |   |   | (1,740 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,740 | ) |
|  Allocation                  of ESOP stock                                                  |   |   | - |   |   |   | - |   |   |   | 26 |   |   |   | - |   |   |   | 288 |   |   |   | - |   |   |   | - |   |   |   | 314 |   |
|  Compensation                  cost for stock options                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and                  restricted stock                                                      |   |   | - |   |   |   | - |   |   |   | 270 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 270 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Balance,                  September 30, 2007                                               |   |   | 5,798,942 |   |   | $ | 59 |   |   | $ | 26,082 |   |   | $ | (1,740 | ) |   | $ | (1,845 | ) |   | $ | 25,717 |   |   | $ | (80 | ) |   | $ | 48,193 |   |
|                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of this                  statement. |

----

*Table            of Contents*

| **MAGYAR                  BANCORP, INC. AND SUBSIDIARY**                                                     |
|--------------------------------------------------------------------------------------------------------------|
| Consolidated                  Statements of Cash Flows                                                       |
| (In                  Thousands)                                                                              |
|                                                                                                         |   | For                  the Years Ended |   |
|                                                                                                         |   | September                  30, |   |
|                                                                                                         |   | 2007 |   |   | 2006 |   |
|                                                                                                         |   |   |   |   |   |   |
| Operating                  activities                                                                        |   |   |   |   |   |   |
| Net                  income                                                                                  |   | $ | 716 |   |   | $ | 5 |   |
| Adjustment                  to reconcile net income to net cash provided by                                  |   |   |   |   |   |   |   |   |
| operating                  activities                                                                        |   |   |   |   |   |   |   |   |
| Contribution                  of stock to charitable foundation                                              |   |   | - |   |   |   | 1,047 |   |
| Depreciation                  expense                                                                        |   |   | 1,145 |   |   |   | 1,000 |   |
| Premium                  amortization on investment securities, net                                          |   |   | 158 |   |   |   | 166 |   |
| Mortgage                  loans originated for sale                                                          |   |   | (3,312 | ) |   |   | - |   |
| Proceeds                  from mortgage loan sales                                                           |   |   | 3,312 |   |   |   | 2,817 |   |
| Provision                  for loan losses                                                                   |   |   | 398 |   |   |   | 961 |   |
| Gains                  on sale of loans                                                                      |   |   | (24 | ) |   |   | (9 | ) |
| Losses                  on sale of investment securities                                                     |   |   | - |   |   |   | 104 |   |
| ESOP                  compensation expense                                                                   |   |   | 314 |   |   |   | 189 |   |
| Stock-based                  compensation expense                                                            |   |   | 270 |   |   |   | - |   |
| Deferred                  income tax provision                                                               |   |   | (185 | ) |   |   | (477 | ) |
| Increase                  in accrued interest receivable                                                     |   |   | (303 | ) |   |   | (662 | ) |
| Increase                  in bank owned life insurance                                                       |   |   | (377 | ) |   |   | (223 | ) |
| Decrease                  in other assets                                                                    |   |   | 240 |   |   |   | 3,874 |   |
| Increase                  in accrued interest payable                                                        |   |   | 565 |   |   |   | 645 |   |
| (Decrease)                  increase in accounts payable and other liabilities                               |   |   | (1,256 | ) |   |   | 593 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Net                  cash provided by operating activities                                                   |   |   | 1,661 |   |   |   | 10,030 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Investing                  activities                                                                        |   |   |   |   |   |   |   |   |
| Net                  increase in loans receivable                                                            |   |   | (36,257 | ) |   |   | (84,421 | ) |
| Purchases                  of investment securities available for sale                                       |   |   | (13,772 | ) |   |   | (7,612 | ) |
| Sales                  of investment securities available for sale                                           |   |   | 142 |   |   |   | 3,896 |   |
| Proceeds                  from maturities/calls of investment securities held to                  maturity   |   |   | - |   |   |   | 4,010 |   |
| Proceeds                  from maturities/calls of investment securities available for                  sale |   |   | - |   |   |   | 2,519 |   |
| Principal                  repayments on investment securities held to maturity                              |   |   | 5,709 |   |   |   | 6,293 |   |
| Principal                  repayments on investment securities available for sale                            |   |   | 4,560 |   |   |   | 3,738 |   |
| Purchases                  of bank owned life insurance                                                      |   |   | (137 | ) |   |   | (3,570 | ) |
| Purchases                  of premises and equipment                                                         |   |   | (1,757 | ) |   |   | (3,227 | ) |
| Redemption                  (purchase) of Federal Home Loan Bank of New York stock                           |   |   | 545 |   |   |   | (426 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Net                  cash used in investing activities                                                       |   |   | (40,967 | ) |   |   | (78,800 | ) |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Financing                  activities                                                                        |   |   |   |   |   |   |   |   |
| Net                  increase in deposits                                                                    |   |   | 43,175 |   |   |   | 47,512 |   |
| Net                  proceeds from issurance of common stock                                                 |   |   | - |   |   |   | 24,782 |   |
| Net                  purchase of common stock for ESOP                                                       |   |   | - |   |   |   | (2,306 | ) |
| Stock                  compensation tax benefit                                                              |   |   | 84 |   |   |   | - |   |
| Net                  increase (decrease) in escrowed funds                                                   |   |   | 14 |   |   |   | (37 | ) |
| Proceeds                  from long-term advances                                                            |   |   | 10,326 |   |   |   | - |   |
| Repayments                  of long-term advances                                                            |   |   | (3,662 | ) |   |   | (1,951 | ) |
| Proceeds                  of short-term advances                                                             |   |   | - |   |   |   | 11,075 |   |
| Repayments                  of short-term advances                                                           |   |   | (17,675 | ) |   |   | - |   |
| Proceeds                  of securities sold under agreements to repurchase                                  |   |   | 10,000 |   |   |   | - |   |
| Repayments                  of securities sold under agreements to repurchase                                |   |   | (2,000 | ) |   |   | (5,000 | ) |
| Repayments                  of loans payable                                                                 |   |   | - |   |   |   | (2,497 | ) |
| Purchase                  of treasury stock                                                                  |   |   | (1,740 | ) |   |   | - |   |
| Net                  cash provided by financing activities                                                   |   |   | 38,522 |   |   |   | 71,578 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Net                  (decrease) increase in cash and cash equivalents                                        |   |   | (784 | ) |   |   | 2,808 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents, beginning of year                                                |   |   | 6,017 |   |   |   | 3,209 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents, end of year                                                      |   | $ | 5,233 |   |   | $ | 6,017 |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| Supplemental                  disclosures of cash flow information                                           |   |   |   |   |   |   |   |   |
| Cash                  paid for                                                                               |   |   |   |   |   |   |   |   |
| Interest                                                                                                     |   | $ | 14,983 |   |   | $ | 9,742 |   |
| Income                  taxes                                                                                |   |   | 512 |   |   |   | 30 |   |
| Non-cash                  investing activities                                                               |   |   |   |   |   |   |   |   |
| Real                  estate acquired in full satisfaction of loans in                  foreclosure          |   | $ | 2,238 |   |   |   | - |   |
|                                                                                                         |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these                  statements.           |

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | On                January 23, 2006, Magyar Bank completed a reorganization involving                a                series of transactions by which our corporate structure was changed                from a                mutual savings bank to the mutual holding company form of ownership.                Magyar Bank became a New Jersey-chartered stock savings bank subsidiary                of                Magyar Bancorp, Inc., a Delaware-chartered mid-tier stock holding                company. Magyar Bancorp, Inc. (the Company) owns 100% of the                outstanding shares of common stock of Magyar Bank. Magyar Bancorp,                Inc. is                a majority-owned subsidiary of Magyar Bancorp, MHC, a New Jersey-chartered                mutual holding company. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Magyar                Bancorp, MHC, owns 54.0%, or 3,200,450, of the issued shares of common                stock of Magyar Bancorp, Inc. Of the remaining shares, 2,598,492,                or                43.9%, are held by public stockholders and 124,800, or 2.1%, are                held by                Magyar Bancorp, Inc. in treasury stock. So long as Magyar Bancorp,                MHC                exists, it will be required to own a majority of the voting stock                of                Magyar Bancorp, Inc. Magyar Bancorp, MHC is subject to comprehensive                regulation and examination by the Board of Governors of the Federal                Reserve System and the New Jersey Department of Banking and                Insurance. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Magyar                Bank (the Bank) is subject to regulations issued by the New Jersey                Department of Banking and Insurance and the Federal Deposit Insurance                Corporation. The Bank’s administrative offices are located in New                Brunswick, New Jersey. The Bank has five branch offices which are                located                in New Brunswick (two including the main branch), North Brunswick,                South                Brunswick and Branchburg, New Jersey. The Bank’s savings deposits are                insured by the FDIC through the Deposit Insurance Fund (DIF); also,                the                Bank is a member of the Federal Home Loan Bank of New                York. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|   | MagBank              Investment Company, a New Jersey investment corporation subsidiary              of              Magyar Bank was formed on August 15, 2006 for the purpose of buying,              selling and holding investment              securities.  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|   | Hungaria              Urban Renewal, LLC is a Delaware limited-liability corporation established              in 2002 as a qualified intermediary operating for the purpose of acquiring              and developing Magyar Bank’s new main office. The Bank owns a 100%              interest in Hungaria Urban Renewal, LLC, which will have no other business              other than owning the Bank’s main office              site.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Magyar                Service Corporation, a New Jersey corporation, is a wholly owned,                non-bank                subsidiary of Magyar Bank. Magyar Service Corporation, which also                operates                under the name Magyar Financial Services, receives commissions from                annuity and life insurance sales referred to a licensed, non-bank                financial planner. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Bank competes with other banking and financial institutions in its                primary                market areas. Commercial banks, savings banks, savings and loan                associations, credit unions and money market funds actively compete                for                savings and time certificates of deposit and all types of loans.                Such                institutions, as well as consumer financial and insurance companies,                may                be considered competitors of the Bank with respect to one or more                of the                services it renders. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Bank is subject to regulations of certain state and federal agencies                and,                accordingly, the Bank is periodically examined by such regulatory                authorities. As a consequence of the regulation of commercial banking                activities, the Bank’s business is particularly susceptible to future                state and federal legislation and                regulations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | 1.  Basis                of Financial Statement                Presentation |
|--------|---------------------------------------------------------------------------------------|

|   | The                accounting and reporting policies of the Company conform to accounting                principles generally accepted in the United States of America (US                GAAP)                and predominant practices within the banking industry. The financial                statements include the accounts of the Company, and its wholly owned                subsidiaries, the Bank, MagBank Investment Company, Magyar Service                Corporation, and Hungaria Urban Renewal, LLC. All intercompany balances                and transactions have been eliminated in the financial                statements. In                preparing financial statements in conformity with US GAAP, management                is                required to make estimates and assumptions that affect the reported                amounts of assets and liabilities, the disclosure of contingent assets                and                liabilities at the date of the financial statements, and the reported                amounts of revenues and expenses during the reporting period. Actual                results could differ from those                estimates. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                principal estimate that is particularly susceptible to significant                change                in the near term relates to the allowance for loan losses. The evaluation                of the adequacy of the allowance for loan losses includes an analysis                of                the individual loans and overall risk characteristics and size of                the                different loan portfolios, and takes into consideration current economic                and market conditions, the capability of specific borrowers to pay                specific loan obligations, as well as current loan collateral values.                However, actual losses on specific loans, which also are encompassed                in                the analysis, may vary from estimated                losses. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.  Cash                and Cash Equivalents |
|--------|--------------------------------------------------------|

|   | For                purposes of reporting cash flows, cash and cash equivalents include                cash                on hand, amounts due from banks, time deposits with original maturities                less than three months and overnight                deposits. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.  Investment                Securities |
|--------|----------------------------------------------------|

|   | The                Company classifies investment securities as held-to-maturity,                available-for-sale, or trading. |
|--------|---------------------------------------------------------------------------------------------------------------------------------|

|   | Investment                securities held-to-maturity are carried at cost adjusted for amortization                of premium and accretion of discount over the term of the related                investments using the interest method. The Company has the ability                and                positive intent to hold these securities to maturity and, accordingly,                adjustments are not made for temporary declines in fair value below                amortized cost. A decline in the fair value of any held-to-maturity                security that is deemed other than temporary is charged to earnings.                The                investment in Federal Home Loan Bank of New York stock is classified                as a                restricted security, carried at cost and evaluated for                impairment. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Investment                securities classified as available-for-sale are carried at fair value                with                unrealized gains and losses excluded from earnings and reported in                a                separate component of stockholders’ equity, net of related income tax                effects. Gains and losses on sales of investment securities are recognized                upon realization utilizing the specific identification                method. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company did not have any securities classified as trading during                the                periods presented. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | Premium                or discount on investment securities is recognized as an adjustment                of                yield by use of the interest method over the expected life of the                investment security. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company follows Statement of Financial Accounting Standards (SFAS)                No.                133, which was amended by SFAS No. 138, “Accounting for Certain Derivative                Instruments and Certain Hedging Activities”,                SFAS |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | No.                149, “Amendment of Statement 133 on Derivative Instruments and Hedging                Activities”, and SFAS No. 150, “Accounting for Certain Financial                Instruments with Characteristics of both Liabilities and Equity”,                (collectively SFAS No. 133).  SFAS No. 133, as amended, requires                that entities recognize all derivatives as either assets or liabilities                in                the statement of financial condition and measure those instruments                at fair                value. In                November 2005, the Financial Accounting Standards Board (FASB) issued                FASB                Staff Position (FSP) 115-1, *The Meaning of Other-Than-Temporary                Impairment and Its Application to Certain Investments.*This FSP                provides additional guidance on when an investment in a debt or equity                security should be considered impaired and when that impairment should                be                considered other-than-temporary and recognized as a loss in earnings.                Specifically, the guidance clarifies that an investor should recognize                an                impairment loss no later than when the impairment is deemed                other-than-temporary, even if a decision to sell has not been made.                The                FSP also requires certain disclosures about unrealized losses that                have                not been recognized as other-than-temporary impairments. At September                30,                2007 and 2006, the Company had no unrecognized losses on investments                that                would be defined as other than temporarily under FSP                115-1. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.  Loans                and Allowance for Loan Losses |
|--------|------------------------------------------------------------------|

|   | Loans                that management has the intent and ability to hold for the foreseeable                future or until maturity or payoff are stated at the amount of unpaid                principal and reduced by an allowance for loan losses. Interest on                loans                is accrued and credited to operations based upon the principal amounts                outstanding. The allowance for loan losses is established through                a                provision for possible loan losses charged to operations. Loans are                charged against the allowance for loan losses when management believes                that the collectibility of the principal is                unlikely. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Income                recognition of interest is discontinued when, in the opinion of                management, the collectibility of such interest becomes doubtful.                A loan                is generally classified as non-accrual when the scheduled payment(s)                due                on the loan is delinquent for more than three months. Loan origination                fees and certain direct origination costs are deferred and amortized                over                the life of the related loans as an adjustment to the yield on loans                receivable using the effective interest                method. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                allowance for loan losses is maintained at an amount management deems                adequate to cover estimated losses. In determining the level to be                maintained, management evaluates many factors, including current                economic                trends, industry experience, historical loss experience, industry                loan                concentrations, the borrowers’ ability to repay and repayment performance,                and estimated collateral values. In the opinion of management, the                present                allowance is adequate to absorb reasonable, foreseeable loan losses.                While                management uses the best information available to make such evaluations,                future adjustments to the allowance may be necessary based on changes                in                economic conditions or any of the other factors used in management’s                determination.  In addition, various regulatory agencies, as an                integral part of their examination process, periodically review the                Company’s allowance for losses on loans. Such agencies may require the                Company to recognize additions to the allowance based on their judgments                about information available to them at the time of their examination.                Charge-offs to the allowance are made when the loan is transferred                to                other real estate owned or other determination of impairment. Recoveries                on loans previously charged off are also recorded through the                allowance. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company accounts for its impaired loans in accordance with SFAS No.                114,                “Accounting by Creditors for Impairment of a Loan,” as amended by SFAS                No. 118, “Accounting by Creditors for Impairment of a Loan - Income                Recognition and Disclosures.” This standard requires that a creditor                measure impairment based on the present value of expected future                cash                flows discounted at the loan’s effective interest rate except that, as a                practical expedient, a creditor may measure impairment based on a                loan’s                observable market price less estimated costs of disposal, or the                fair                value of the collateral less estimated costs of disposal if the loan                is |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | collateral                dependent. Regardless of the measurement method, a creditor may measure                impairment based on the fair value of the collateral when the creditor                determines that foreclosure is                probable. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company records cash receipts on impaired loans that are non-performing                as                a reduction to principal before applying amounts to interest or late                charges unless specifically directed by the Bankruptcy Court to apply                payments otherwise. The Company continues to recognize interest income                on                impaired loans that are performing. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company follows Financial Accounting Standards Board (FASB) Interpretation                (FIN) 45, “Guarantor’s Accounting and Disclosure Requirements for                Guarantees, including Indirect Guarantees of Indebtedness of Others.” FIN                45 requires a guarantor entity, at the inception of a guarantee covered                by                the measurement provisions of the interpretation, to record a liability                for the fair value of the obligation undertaken in issuing the guarantee.                At September 30, 2007 and 2006, the Company did not hold any guarantees                subject to FIN 45. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Statement                of Position (SOP) 03-3, “Accounting for Loans or Certain Debt Securities                Acquired in a Transfer”  applies to a loan with the evidence of                deterioration of credit quality since origination acquired by completion                of a transfer for which it is probable, at acquisition, that the                Company                will be unable to collect all contractually required payments receivable.                The Company had no such loans at September 30, 2007 or                2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5.  Premises                and Equipment |
|--------|-----------------------------------------------------|

|   | Premises                and equipment are carried at cost less accumulated depreciation,                and                include expenditures for new facilities, major betterments and renewals.                Expenditures for maintenance and repairs are charged to expense as                incurred. Depreciation is computed using the straight-line method                based                upon the estimated useful lives of the related assets for financial                reporting purposes and using the mandated methods by asset type for                income                tax purposes. Leasehold improvements are depreciated using the                straight-line method based upon the initial term of the                lease. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company accounts for the impairment of long-lived assets in accordance                with SFAS No. 144, “Accounting for the Impairment or Disposal of                Long-Lived Assets.” The standard requires recognition and measurement for                the impairment of long-lived assets to be held and used or to be                disposed                of by sale. The Company had no impaired long-lived assets at September                30,                2007 and 2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.                Derivative Contracts |
|--------|----------------------------------------|

|   | Derivative                contracts are carried at fair value with unrealized gains and losses                excluded from earnings and reported in a separate component of                stockholders’ equity, net of related income tax effects. Gains and losses                on derivative contracts are recognized upon realization utilizing                the                specific identification method. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company follows Statement of Financial Accounting Standards (SFAS)                No.                133, which was amended by SFAS No. 138, “Accounting for Certain Derivative                Instruments and Certain Hedging Activities”, SFAS No. 149, “Amendment of                Statement 133 on Derivative Instruments and Hedging Activities”, and SFAS                No. 150, “Accounting for Certain Financial Instruments with                Characteristics of both Liabilities and Equity”, (collectively SFAS No.                133).  SFAS No. 133, as amended, requires that entities                recognize all derivatives as either assets or liabilities in the                statement                of financial condition and measure those instruments at fair                value. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Real                estate properties acquired through loan foreclosures are recorded                at                estimated fair value less cost to sell at the time of foreclosure                with any                write-downs charged against the allowance for loan losses.                Subsequent |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | valuations                are periodically performed by management and the carrying value is                adjusted by a charge to expense to reflect any subsequent declines                in the                estimated fair value. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.  Income                Taxes |
|--------|-------------------------------------------|

|   | Under                the asset and liability method, deferred tax assets and liabilities                are                determined based on the difference between the financial statement                and the                tax basis of assets and liabilities as measured by the enacted tax                rates,                which will be in effect when these temporary differences are estimated                to                reverse. Deferred tax expense is the result of changes in deferred                tax                assets and liabilities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.  Advertising                Costs |
|--------|------------------------------------------------|

|   | The                Company expenses advertising costs as                incurred. |
|--------|-----------------------------------------------------------------------------------|

|   | 10.  Financial                Instruments |
|--------|-----------------------------------------------------|

|   | SFAS                No. 107, “Disclosures about Fair Value of Financial Instruments,” requires                the Company to disclose the estimated fair value of their assets                and                liabilities considered to be financial instruments. Financial instruments                requiring disclosure consist primarily of investment securities,                loans,                deposits and borrowings. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11.                Earnings Per Share Basic                  earnings per share is calculated by dividing income available to                  common                  stockholders by the weighted average number of shares of common                  stock                  outstanding for the period. The weighted average common shares                  outstanding                  include shares held by the Magyar Bancorp MHC and shares allocated                  to the                  Employee Stock Ownership Plan. Earnings per share is not presented                  for the                  year ended September 30, 2006, as the Company did not have publicly-held                  shares outstanding during each day of the period and therefore                  was not                  deemed meaningful.Diluted                  earnings per share is calculated by adjusting the weighted average                  common                  shares outstanding to reflect the potential dilution that could                  occur                  using the treasury stock method if securities or other contracts                  to issue                  common stock, such as stock options and unvested restricted stock,                  were                  exercised and converted into common stock. The resulting shares                  issued                  would share in the earnings of the Company. Shares issued and shares                  reacquired during the period are weighted for the portion of the                  period                  that they were outstanding.The                  following tables illustrate the reconciliation of the numerators                  and                  denominators of the basic and diluted earnings per share (EPS)                  calculations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                                                                                  |   | **Year                  Ended September 30, 2007** |    |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|---------|
|                                                                                                  |   |                                               |    |   | **Weighted** |   |   |   |   |
|                                                                                                  |   |                                               |    |   | **average** |   |   | **Per                  share** |   |
|                                                                                                  |   | **Income**                                         |    |   | **shares** |   |   | **Amount** |   |
| Basic                  EPS                                                                            |   |                                               |    |   |   |   |   |   |   |
| Net                  income available to common shareholders                                          |   | $                                                  | 716,000 |   |   | $ | 5,888,059 |   |   | $ | 0.12 |   |
|                                                                                                  |   |                                               |    |   |   |   |   |   |   |   |   |   |
| Effect                  of dilutive securities                                                        |   |                                               |    |   |   |   |   |   |   |   |   |   |
| Options                  and grants                                                                   |   |                                               | -       |   |   |   | - |   |   | $ | - |   |
|                                                                                                  |   |                                               |    |   |   |   |   |   |   |   |   |   |
| Diluted                  EPS                                                                          |   |                                               |    |   |   |   |   |   |   |   |   |   |
| Net                  income available to common shareholders plus assumed                  conversion |   | $                                                  | 716,000 |   |   | $ | 5,888,059 |   |   | $ | 0.12 |   |
|                                                                                                  |   |                                               |    |   |   |   |   |   |   |   |   |   |
| All                    options are anti-dilutive at September 30, 2007.                               |   |

|   | 12.  Comprehensive                Income (Loss) SFAS                No. 130, “Reporting Comprehensive Income,” established standards for                reporting comprehensive income, which includes net income as well                as                certain other items which result in a change to equity during the                period. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                income tax effects allocated to comprehensive income (loss) for the                year                ended September 30, 2007 and 2006 are as                follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |
|---------------------------------------------------------|--------|-------------------------------------|--------------|-------------|--------------|------------|--------|-----------------------------|------------|--------------|---------------------------------|--------------|------------|---------|--------|--------|-----------------------------|--------|
|                                                    |   | **2007**                            |         |        | **2006**     |       |
|                                                    |   |                                |         |        |         |       |   | **Net                  of** |       |         |                            |         |       |    |   |   | **Net                  of** |   |
|                                                    |   | **Before                  Tax**     |         |        | **Tax**      |       |   | **Tax**                     |       |         | **Before                  Tax** |         |       | **Tax** |   |   | **Tax**                     |   |
|                                                    |   | **Amount**                          |    | **Expense** |    | **Amount** |   |                        | **Amount** |    | **Expense**                     |    | **Amount** |    |
|                                                    |   | **(In                  thousands)** |         |
| Unrealized                  holding gains (losses)      |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |
| arising                  during period on:              |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |
|                                                    |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |
| Available-for-sale                  investments         |   | $                                   | 222          |        |         | $          | (82    | )                           |       | $            | 140                             |         |       | $       | 411    |   |                        | $      | (191 | ) |   | $ | 220 |   |
|                                                    |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |   |   |   |   |   |   |
| Less                  reclassification adjustment for   |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |   |   |   |   |   |   |
| losses                  realized in net income          |   |                                | -            |        |         |       | -      |                        |       |         | -                               |         |       |    | (104   | )      |                        |   | 45 |   |   |   | (59 | ) |
|                                                    |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |   |   |   |   |   |   |
| Minimum                  pension liability              |   |                                | 495          |        |         |       | (198   | )                           |       |         | 297                             |         |       |    | (336   | )      |                        |   | 134 |   |   |   | (202 | ) |
|                                                    |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |   |   |   |   |   |   |
| Interest                  rate derivative               |   |                                | 72           |        |         |       | (88    | )                           |       |         | (16                             | )            |       |    | 148    |   |                        |   | - |   |   |   | 148 |   |
|                                                    |   |                                |         |        |         |       |   |                        |       |         |                            |         |       |    |   |   |                        |   |   |   |   |   |   |   |
| Other                  comprehensive income (loss), net |   | $                                   | 789          |        |         | $          | (368   | )                           |       | $            | 421                             |         |       | $       | 119    |   |                        | $      | (12 | ) |   | $ | 107 |   |

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | Certain                2006 amounts have been reclassified to conform to the 2007 financial                statement presentation. |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | 14.                Bank Owned Life Insurance |
|--------|----------------------------------------------|

|   | The                Company has purchased Bank Owned Life Insurance policies (“BOLI”). BOLI                involves the purchasing of life insurance by the Company on directors                and                executive officers. The proceeds are used to help defray the costs                of                non-qualified compensation plans. The Company is the owner and beneficiary                of the policies. BOLI is recorded on the consolidated Balance Sheet                at its                cash surrender value and changes in the cash surrender value are                recorded                in non-interest income. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15.  New                Accounting Pronouncements |
|--------|-------------------------------------------------------------|

|   | FIN                48, “Accounting for Uncertainty in Income Taxes: an Interpretation of                FASB                Statement No. 109, “Accounting for Income Taxes” clarifies SFAS No.                109, to indicate a criterion that an individual tax position would                have to                meet for some or all of the benefit of that position to be recognized                in                an entity’s financial statements. The Company will be required to                apply FIN 48 to all tax positions for which the statute of limitations                remains open and is effective October 1, 2007 for the Company. We                anticipate that certain liabilities will be reversed upon adoption of                FIN 48. Based on the Company’s preliminary assessment of the impact of FIN                48, we estimate that liabilities will decrease approximately $600,000                and retained earnings will increase by the same amount as of                October 1, 2007 as a result of the adoption in FIN 48. SFAS                  No. 157, “Fair Value Measurements” 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 (as of October 1, 2008 for the                  Company) and interim periods within those fiscal years. The Company                  does                  not expect the adoption of SFAS No. 157 to have a material impact on                  its financial statements.SFAS                  No. 159 “The Fair Value Option for Financial Assets and Financial                  Liabilities” includes an amendment of FASB Statement No. 115 and 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 October 1, 2008 for the                  Company).                  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 Company has not made an early adoption election and SFAS No.                  159 is                  currently under evaluation by the Company to determine the impact                  on the                  Company’s consolidated financial statements.Staff                  Accounting Bulletin No. 108, “Considering the Effects of Prior Year                  Misstatements when Quantifying Misstatements in Current Year Financial                  Statements” (SAB 108), addresses diversity in practice in quantifying                  financial statement misstatements. SAB 108 requires that registrants                  use a                  dual approach in quantifying misstatements based on their impact                  on the                  financial statements and related disclosures. SAB 108 is effective                  as of                  September 30, 2007, allowing a one-time transitional cumulative                  effect                  adjustment to retained earnings for errors (if any) that were not                  previously deemed material, but are material under the guidance                  in SAB                  108. The Company does not expect SAB 108 to have a material impact on                  its financial |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

| Expected                  life  | 6.5                  years |
|---------------------------------|----------------------------|
| Discount                  rate  | 4.51%                      |
| Volatility                      | 16.67%                     |
| Dividend                  yield | 0.71%                      |

|                                               |   |                           |    |   |                            |   | Weighted                                |   |                             |   |
|----------------------------------------------------|--------|--------------------------------|---------|--------|---------------------------------|--------|-----------------------------------------|--------|----------------------------------|--------|
|                                               |   |                           |    |   | Weighted                        |   | Average                                 |   | Aggregate                        |   |
|                                               |   | Number                  of     |    |   | Average                         |   | Remaining                               |   | Intrinsic                        |   |
|                                               |   | Stock                  Options |    |   | Exercise                  Price |   |  Contractual                  Life |   | Value                            |   |
|                                               |   |                           |    |   |                            |   |                                    |   |                             |   |
| Balance                  at September 30, 2006     |   |                           | -       |   |                            |   | -                                       |   |                             |   |   |   |
| Granted                                            |   |                           | 217,826 |   |                            | $      | 14.61                                   |   |                             |   |   |   |
| Exercised                                          |   |                           | -       |   |                            |   | -                                       |   |                             |   |   |   |
| Forfeited                                          |   |                           | -       |   |                            |   | -                                       |   |                             |   |   |   |
| Balance                  at September 30, 2007     |   |                           | 217,826 |   |                            | $      | 14.61                                   |   |  9.4                  years |   | $ | - |   |
|                                               |   |                           |    |   |                            |   |                                    |   |                             |   |   |   |   |
| Exercisable                  at September 30, 2007 |   |                           | -       |   |                            |   | -                                       |   |  N/A                        |   | N/A |   |

|                                           |   |                           |    |   | Weighted                    |   |
|------------------------------------------------|--------|--------------------------------|---------|--------|-----------------------------|--------|
|                                           |   |                           |    |   | Average                     |   |
|                                           |   | Number                  of     |    |   | Grant                  Date |   |
|                                           |   | Stock                  Options |    |   | Fair                  Value |   |
|                                           |   |                           |    |   |                        |   |
| Balance                  at September 30, 2006 |   |                           | -       |   |                        |   | - |   |
| Granted                                        |   |                           | 217,826 |   |                        | $      | 3.91 |   |
| Exercised                                      |   |                           | -       |   |                        |   | - |   |
| Forfeited                                      |   |                           | -       |   |                        |   | - |   |
| Balance                  at September 30, 2007 |   |                           | 217,826 |   |                        | $      | 3.91 |   |

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                           |   |                          |    |   | Weighted                    |   |
|------------------------------------------------|--------|-------------------------------|---------|--------|-----------------------------|--------|
|                                           |   |                          |    |   | Average                     |   |
|                                           |   | Number                  of    |    |   | Grant                  Date |   |
|                                           |   | Stock                  Awards |    |   | Fair                  Value |   |
|                                           |   |                          |    |   |                        |   |
| Balance                  at September 30, 2006 |   |                          | -       |   |                        |   | - |   |
| Granted                                        |   |                          | 103,479 |   |                        | $      | 14.55 |   |
| Forfeited                                      |   |                          | -       |   |                        |   | - |   |
| Balance                  at September 30, 2007 |   |                          | 103,479 |   |                        | $      | 14.55 |   |

| Shares                  released for allocation |   |   | 17,936  |   |
|-------------------------------------------------|--------|--------|---------|--------|
| Unreleased                  shares              |   |   | 199,927 |   |
|                                            |   |   |    |   |
| Total                  ESOP shares              |   |   | 217,863 |   |

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | The                unamortized cost, gross unrealized gains or losses and the fair value                of                the Bank’s investment securities available-for-sale and held-to-maturity                are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                  |   | September                  30, 2007     |   |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                  |   |                                    |   |   | Gross |   |   | Gross |   |   |   |   |
|                                                                                  |   | Amortized                               |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                  |   | Cost                                    |   |   | Gain |   |   | Losses |   |   | Value |   |
|                                                                                  |   | (Dollars                  in thousands) |   |
| Securities                  available for sale                                        |   |                                    |   |   |   |   |   |   |   |   |   |   |
|      Municipal                  bonds                        |   | $                                       | 3,214  |   |   | $ | 10 |   |   | $ | (8 | ) |   | $ | 3,216 |   |
|      Mortgage-backed                  securities             |   |                                    | 24,217 |   |   |   | 73 |   |   |   | (133 | ) |   |   | 24,157 |   |
|                                                                                  |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total               |   | $                                       | 27,431 |   |   | $ | 83 |   |   | $ | (141 | ) |   | $ | 27,373 |   |
|                                                                                  |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                  held to maturity                                          |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      U.S.                  government and agency obligations |   |                                    | 2,133  |   |   |   | 1 |   |   |   | (16 | ) |   | $ | 2,119 |   |
|      Municipal                  bonds                        |   |                                    | 137    |   |   |   | 7 |   |   |   | - |   |   |   | 143 |   |
|      Mortgage-backed                  securities             |   |                                    | 15,846 |   |   |   | 49 |   |   |   | (200 | ) |   |   | 15,695 |   |
|                                                                                  |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total               |   | $                                       | 18,116 |   |   | $ | 57 |   |   | $ | (216 | ) |   | $ | 17,957 |   |

|                                                                                  |   |                                    |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                  |   | September                  30, 2006     |   |
|                                                                                  |   |                                    |   |   |       | Gross  |   |       | Gross  |   |   |   |   |   |
|                                                                                  |   | Amortized                               |   |   | Unrealized |   |   | Unrealized |   |   | Fair   |   |
|                                                                                  |   | Cost                                    |   |   | Gain       |   |   | Losses     |   |   | Value  |   |
|                                                                                  |   | (Dollars                  in thousands) |   |
| Securities                  available for sale                                        |   |                                    |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|      Municipal                  bonds                        |   | $                                       | 2,049  |   |       | $      | 17     |       |   | $      | -      |   |   | $      | 2,066  |   |
|      Equity                  securities                      |   |                                    | 142    |   |       |   | -      |       |   |   | -      |   |   |   | 142    |   |
|      Mortgage-backed                  securities             |   |                                    | 16,258 |   |       |   | 34     |       |   |   | (331   | )      |   |   | 15,961 |   |
|                                                                                  |   |                                    |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|            Total               |   | $                                       | 18,449 |   |       | $      | 51     |       |   | $      | (331   | )      |   | $      | 18,169 |   |
|                                                                                  |   |                                    |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
| Securities                  held to maturity                                          |   |                                    |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|      U.S.                  government and agency obligations |   |                                    | 2,157  |   |       |   | 4      |       |   |   | (56    | )      |   | $      | 2,105  |   |
|      Municipal                  bonds                        |   |                                    | 137    |   |       |   | 8      |       |   |   | -      |   |   |   | 145    |   |
|      Mortgage-backed                  securities             |   |                                    | 21,601 |   |       |   | 39     |       |   |   | (532   | )      |   |   | 21,108 |   |
|                                                                                  |   |                                    |   |   |       |   |   |       |   |   |   |   |   |   |   |   |
|            Total               |   | $                                       | 23,895 |   |       | $      | 51     |       |   | $      | (588   | )      |   | $      | 23,358 |   |

|   | The                contractual maturities of mortgage-backed securities held-to-maturity                generally exceed 20 years; however, the effective lives are expected                to be shorter due to anticipated prepayments. The amortized                cost |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | and                fair value of the Company’s debt securities available-for-sale and                held-to-maturity at September 30, 2007, by contractual maturity,                are shown                below. Expected maturities may differ from contractual maturities                because                borrowers may have the right to call or prepay                obligations. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                    |   | **September                  30, 2007**     |   |
|-------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                    |   | **Available                  For Sale**     |   |   | **Held                  To Maturity** |   |
|                                                                    |   | **Amortized**                               |   |   | **Fair** |   |   | **Amortized** |   |   | **Fair** |   |
|                                                                    |   | **Cost**                                    |   |   | **Value** |   |   | **Cost** |   |   | **Value** |   |
|                                                                    |   | **(Dollars                  in thousands)** |   |
|                                                                    |   |                                        |   |   |   |   |   |   |   |   |   |   |
| Due                  in one year or less                                |   | $                                           | -      |   |   | $ | - |   |   | $ | 1,263 |   |   | $ | 1,282 |   |
| Due                  after one year through five years                  |   |                                        | -      |   |   |   | - |   |   |   | 7,710 |   |   |   | 7,571 |   |
| Due                  after five year through ten years                  |   |                                        | 8,397  |   |   |   | 8,354 |   |   |   | 2,146 |   |   |   | 2,108 |   |
| Due                  after ten years                                    |   |                                        | 19,034 |   |   |   | 19,019 |   |   |   | 6,997 |   |   |   | 6,996 |   |
|                                                                    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total |   | $                                           | 27,431 |   |   | $ | 27,373 |   |   | $ | 18,116 |   |   | $ | 17,957 |   |

|   | There                was one sale of $142,000 of equity securities from the available-for-sale                portfolio during the year ended September 30, 2007 for no gain or                loss.                There were sales of $3,896,000 of U.S. agency obligations from the                available-for-sale portfolio during the year ended September 30,                2006. The                Company recognized a gross loss of $104,000 on the                sale. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                of September 30, 2007 and 2006, securities having an estimated fair                value                of approximately $1,137,000 and $1,137,000, respectively, were pledged                to                secure public deposits. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Details                of securities with unrealized losses for the years ended September                30,                2007 and 2006 are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                    |   |                           |   |   | **September                  30, 2007**     |   |
|-------------------------------------------------------------------------|--------|--------------------------------|--------|--------|---------------------------------------------|--------|
|                                                                    |   |                           |   |   | **Less                  Than 12 Months**    |   |   | **12                  Months Or Greater** |   |   | **Total** |   |
| ** Description                  Of**                               |   | **Number                  Of** |   |   | **Fair**                                    |   |   | **Unrealized** |   |   | **Fair** |   |   | **Unrealized** |   |   | **Fair** |   |   | **Unrealized** |   |
| ** Securities**                                                    |   | **Securities**                 |   |   | **Value**                                   |   |   | **Losses** |   |   | **Value** |   |   | **Losses** |   |   | **Value** |   |   | **Losses** |   |
|                                                                    |   |                           |   |   | **(Dollars                  in thousands)** |   |
| U.S.                  government and                                    |   |                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| agency                  obligations                                     |   |                           | 2      |   |                                        | $      | - |   |   | $ | - |   |   | $ | 2,087 |   |   | $ | 16 |   |   | $ | 2,087 |   |   | $ | 16 |   |
| Municipal                  bonds                                        |   |                           | 4      |   |                                        |   | 2,298 |   |   |   | 8 |   |   |   | - |   |   |   | - |   |   |   | 2,298 |   |   |   | 8 |   |
| Mortgage-backed                  securities                             |   |                           | 27     |   |                                        |   | 3,313 |   |   |   | 7 |   |   |   | 17,170 |   |   |   | 326 |   |   |   | 20,483 |   |   |   | 333 |   |
|                                                                    |   |                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total |   |                           | 33     |   |                                        | $      | 5,611 |   |   | $ | 15 |   |   | $ | 19,257 |   |   | $ | 342 |   |   | $ | 24,868 |   |   | $ | 357 |   |

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                                                    |   |                           |   |   | **September                  30, 2006**     |   |
|-------------------------------------------------------------------------|--------|--------------------------------|--------|--------|---------------------------------------------|--------|
|                                                                    |   |                           |   |   | **Less                  Than 12 Months**    |   |   | **12                  Months Or Greater** |   |   | **Total** |   |
| ** Description                  Of**                               |   | **Number                  Of** |   |   | **Fair**                                    |   |   | **Unrealized** |   |   | **Fair** |   |   | **Unrealized** |   |   | **Fair** |   |   | **Unrealized** |   |
| ** Securities**                                                    |   | **Securities**                 |   |   | **Value**                                   |   |   | **Losses** |   |   | **Value** |   |   | **Losses** |   |   | **Value** |   |   | **Losses** |   |
|                                                                    |   |                           |   |   | **(Dollars                  in thousands)** |   |
| U.S.                  government and                                    |   |                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| agency                  obligations                                     |   |                           | 2      |   |                                        | $      | - |   |   | $ | - |   |   | $ | 2,071 |   |   | $ | 55 |   |   | $ | 2,071 |   |   | $ | 55 |   |
| Mortgage-backed                  securities                             |   |                           | 53     |   |                                        |   | 4,314 |   |   |   | 29 |   |   |   | 27,096 |   |   |   | 834 |   |   |   | 31,410 |   |   |   | 863 |   |
|                                                                    |   |                           |   |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total |   |                           | 55     |   |                                        | $      | 4,314 |   |   | $ | 29 |   |   | $ | 29,167 |   |   | $ | 889 |   |   | $ | 33,481 |   |   | $ | 918 |   |

|   | The                investment securities listed above currently have fair values less                than                amortized cost and therefore contain unrealized losses. The Company                evaluated these securities and determined that the decline in value                is                primarily related to fluctuations in the interest rate environment                and not                related to any company or industry specific event. At September 30,                2007                and September 30, 2006, there were approximately thirty-four and                fifty-five investment securities with unrealized losses. The Company                anticipates full recovery of amortized costs with respect to these                securities. The Company has the intent and ability to hold these                investments until maturity or market price recovery. Management has                considered factors regarding other than temporarily impaired securities                and determined that there are no securities with impairment that                is other                than temporary as of September 30, 2007 and 2006. On                October 1, 2006, the Company adopted Financial Accounting Standards                Board                (FASB) No. 155, “Accounting for Certain Hybrid Financial                Instruments-an amendment of FASB statements No. 133 and 140.” This                statement permits fair value remeasurement of certain hybrid financial                instruments, clarifies the scope of SFAS No. 133, “Accounting                for Derivative Instruments and Hedging Activities” regarding interest-only                and principal-only strips, and provides further guidance on certain                issues                regarding beneficial interests in securitized financial assets,                concentrations of credit risk and qualifying special purpose entities.                The                adoption of SFAS No. 155 did not have a material impact on the                Company’s consolidated financial statements ended September 30,                2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | Loans                receivable are comprised of the                following: |
|--------|--------------------------------------------------------------------------------|

|                                             |   | **September                  30,**          |    |
|--------------------------------------------------|--------|---------------------------------------------|---------|
|                                             |   | **2007**                                    |    |   | **2006** |   |
|                                             |   | **(Dollars                  in thousands)** |    |
|                                             |   |                                        |    |   |   |   |
| One                  -to-four family residential |   | $                                           | 152,474 |   |   | $ | 143,245 |   |
| Commercial                  real estate          |   |                                        | 81,275  |   |   |   | 68,567 |   |
| Construction                                     |   |                                        | 97,150  |   |   |   | 90,342 |   |
| Home                  equity lines of credit     |   |                                        | 12,894  |   |   |   | 10,843 |   |
| Commercial                  business             |   |                                        | 26,630  |   |   |   | 24,510 |   |
| Other                                            |   |                                        | 15,159  |   |   |   | 14,846 |   |
|                                             |   |                                        |    |   |   |   |   |   |
| Total                  loans receivable          |   |                                        | 385,582 |   |   |   | 352,353 |   |
| Net                  deferred loan fees          |   |                                        | (214    | ) |   |   | (492 | ) |
| Allowance                  for loan losses       |   |                                        | (3,754  | ) |   |   | (3,892 | ) |
|                                             |   |                                        |    |   |   |   |   |   |
| Total                  loans receivable, net     |   | $                                           | 381,614 |   |   | $ | 347,969 |   |

|   | Certain                directors and executive officers of the Bank have loans with the                Company.                Such loans were made in the ordinary course of business at the Company’s                normal credit terms, including interest rate and collateralization,                and do                not represent more than a normal risk of collection. Total loans                receivable from directors and executive officers was approximately                $3,045,000 and $3,709,000 at September 30, 2007 and 2006, respectively.                Total principal additions were approximately $87,000 and total principal                repayments were approximately $586,000 for the year ended September                30,                2007. Loans to an officer no longer with the Bank totaled $165,000                at                September 30, 2007 and 2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At                September 30, 2007 and 2006, the Company was servicing loans for                others                amounting to approximately $2,827,000 and $12,278,000, respectively.                Servicing loans for others generally consist of collecting mortgage                payments, maintaining escrow accounts, disbursing payments to investors,                and foreclosure processing. Loan servicing income is recorded on                the cash                basis and includes servicing fees from investors and certain charges                collected from borrowers, such as late payment fees. In connection                with                loans serviced for others, the Company held borrowers’ escrow balances of                approximately $32,000 and $20,000 at September 30, 2007 and 2006,                respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                following summarizes the activity in the allowance for loan losses                for the                years ended September 30, 2007 and                2006: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                                       |   | **2007**                                    |   |   | **2006** |   |
|------------------------------------------------------------|--------|---------------------------------------------|--------|--------|----------|--------|
|                                                       |   | **(Dollars                  in thousands)** |   |
|                                                       |   |                                        |   |   |     |   |
| Balance,                  beginning of year                |   | $                                           | 3,892  |   |     | $      | 3,129 |   |
| Provision                  for loan loss charged to income |   |                                        | 398    |   |     |   | 961 |   |
| Recoveries                                                 |   |                                        | 120    |   |     |   | - |   |
| Charge-offs                                                |   |                                        | (656   | )      |     |   | (198 | ) |
|                                                       |   |                                        |   |   |     |   |   |   |
| Balance,                  end of year                      |   | $                                           | 3,754  |   |     | $      | 3,892 |   |

|   | At                September 30, 2007 and 2006 non-performing loans had a total principal                balance of approximately $8,048,000 and $7,400,000, respectively.                The                amount of interest income not recognized on loans was approximately                $885,000 and $49,000 for the years ended September 30, 2007 and 2006,                respectively. As of September 30, 2007 and 2006 there were no loans                greater than three months past due on which the Company continued                to                accrue interest income. At September 30, 2007 and September 30, 2006,                there were no commitments to lend additional funds to borrowers whose                loans are classified as                non-accrual. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Total                loans pledged as collateral against Federal Home Loan Bank of New                York                borrowings were $100.5 million and $75.4 million as of September                30, 2007                and 2006, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                following is a summary of impaired                loans: |
|--------|-----------------------------------------------------------------------------|

|                                                   |   | **September                  30,**          |   |
|--------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                   |   | **2007**                                    |   |   | **2006** |   |
|                                                   |   | **(Dollars                  in thousands)** |   |
|                                                   |   |                                        |   |   |   |   |
| Impaired                  loans for which an allowance |   |                                        |   |   |   |   |
| for                  credit losses has been provided   |   | $                                           | 1,184  |   |   | $ | 6,527 |   |
|                                                   |   |                                        |   |   |   |   |   |   |
| Impaired                  loans for which no allowance |   |                                        |   |   |   |   |   |   |
| for                  credit losses has been provided   |   |                                        | 7,501  |   |   |   | - |   |
|                                                   |   |                                        |   |   |   |   |   |   |
| Total                  impaired loans                  |   |                                        | 8,685  |   |   |   | 6,527 |   |
|                                                   |   |                                        |   |   |   |   |   |   |
| Allowance                  on impaired loans           |   |                                        | 316    |   |   |   | 850 |   |
|                                                   |   |                                        |   |   |   |   |   |   |
| Net                  impaired loans                    |   | $                                           | 8,369  |   |   | $ | 5,677 |   |

|   | The                average recorded investment in impaired loans was $8,957,000 and                $1,704,000, no interest income was recognized while the loans were                impaired, and no interest income was recognized using the cash basis                method of accounting while these loans were impaired for the years                ended                September 30, 2007 and 2006,                respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company has interest-only mortgage loans with principal balances                of $19.0                million and $15.9 million at September 30, 2007 and 2006, respectively.                The average interest-only term on these loans is 5 years at                which |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | time                these loans reset to fully amortize over twenty-five years, on average.                The first of these interest-only loans is due to reset on July 1,                2008. As                these loans are collateralized by residential real estate and have                an                average loan-to-value of 70% as of September 30, 2007, management                does not                expect any losses on these loans. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                following is a summary of accrued interest                receivable: |
|--------|------------------------------------------------------------------------------------------|

|                                                                                                     |   | **September                  30,**          |   |
|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                     |   | **2007**                                    |   |   | **2006** |   |
|                                                                                                     |   | **(Dollars                  in thousands)** |   |
|                                                                                                     |   |                                        |   |   |   |   |
| Loans                                                                                                    |   | $                                           | 2,269  |   |   | $ | 2,023 |   |
| Investment                  securities                                                                   |   |                                        | 51     |   |   |   | 41 |   |
| Mortgage-backed                  securities                                                              |   |                                        | 201    |   |   |   | 154 |   |
|                                                                                                     |   |                                        |   |   |   |   |   |   |
|           Accrued                  interest receivable |   | $                                           | 2,521  |   |   | $ | 2,218 |   |

|   | Premises                and equipment consist of the                following: |
|--------|--------------------------------------------------------------------------------|

|                                                                                          | **Estimated**                     |   | **September                  30,**          |   |
|-----------------------------------------------------------------------------------------------|-----------------------------------|--------|---------------------------------------------|--------|
|                                                                                          | **Useful                  Lives** |   | **2007**                                    |   |   | **2006** |   |
|                                                                                          |                              |   | **(Dollars                  in thousands)** |   |
|                                                                                          |                              |   |                                        |   |   |   |   |
| Land                                                                                          | Indefinite                        |   | $                                           | 3,095  |   |   | $ | 2,628 |   |
| Buildings                  and improvements                                                   | 10-40                  years      |   |                                        | 20,244 |   |   |   | 19,161 |   |
| Furniture,                  fixtures and equipment                                            | 5-7  years              |   |                                        | 3,130  |   |   |   | 2,923 |   |
|                                                                                          |                              |   |                                        | 26,469 |   |   |   | 24,712 |   |
|      Less                  accumulated depreciation and amortization |                              |   | (4,167                                      | )      |   |   | (3,022 | ) |
|                                                                                          |                              |   |                                        |   |   |   |   |   |   |
|                                                                                          |                              |   | $                                           | 22,302 |   |   | $ | 21,690 |   |

|   | For                the years ended September 30, 2007 and 2006, depreciation expense                included                in occupancy expense amounted to approximately $1,145,000 and $1,000,000,                respectively. Hungaria                Urban Renewal, LLC was formed in 2002 and its sole purpose was to                purchase                the land and construct the office building for which the Company                is the                primary tenant. During the period of construction, the Company had                leased                the land and building from the entity. The lease payments were structured                to equal the debt service on the loans plus a nominal fee. The lease                agreement contained an irrevocable purchase option allowing the Company                to                purchase the land and building from this entity for the aggregated                outstanding indebtedness. The Company acquired a 100% interest in                Hungaria                Urban Renewal, LLC, which will have no other business other than                owning                the Bank’s main office site. At September 30, 2007, Hungaria Urban                Renewal, LLC accounted for approximately $3,095,000, $13,095,000,                and                $878,000 of land, building, |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | The                Company held $2.2 million of real estate owned properties at September                30,                2007 and held no real estate owned properties at September 30, 2006.                The                Company did not incur any write downs on foreclosed properties during                the                years ended September 30, 2007 and 2006. There was no impairment                on these                properties at September 30, 2007. Further declines in real estate                values                may result in increased foreclosed real estate expense in the future.                Routine holding costs are charged to expense as incurred and improvements                to real estate owned that enhance the value of the real estate are                capitalized.In November 2007, the Company sold real estate owned                that was being carried at September 30, 2007 in the amount of $958,000.                The Company recorded a loss on the sale in the amount of                $50,000. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | A                summary of deposits by type of account follows (in                thousands): |
|--------|------------------------------------------------------------------------------------------------|

|                                    |   |                                        |    |   |     |   |
|-----------------------------------------|--------|---------------------------------------------|---------|--------|----------|--------|
|                                    |   | **September                  30,**          |    |
|                                    |   | **2007**                                    |    |   | **2006** |   |
|                                    |   | **(Dollars                  in thousands)** |    |
|                                    |   |                                        |    |   |     |   |
| Demand                  accounts        |   | $                                           | 21,514  |   |     | $      | 20,491 |   |
| Savings                  accounts       |   |                                        | 35,577  |   |     |   | 43,127 |   |
| NOW                  accounts           |   |                                        | 32,158  |   |     |   | 30,519 |   |
| Money                  market accounts  |   |                                        | 78,979  |   |     |   | 56,107 |   |
| Certificate                  of deposit |   |                                        | 172,063 |   |     |   | 149,811 |   |
| Retirement                  accounts    |   |                                        | 28,486  |   |     |   | 25,547 |   |
|                                    |   |                                        |    |   |     |   |   |   |
|                                    |   | $                                           | 368,777 |   |     | $      | 325,602 |   |

|   | The                aggregate amount of deposit accounts with a minimum denomination                of                $100,000 was approximately $145,552,000 and $117,336,000 at September                30,                2007 and 2006, respectively. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At                September 30, 2007, certificates of deposit (including individual                retirement accounts) have contractual maturities as follows (in                thousands): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Year   |   |    |    |
|--------|--------|---------|---------|
| 2008   |   | $  | 169,960 |   |
| 2009   |   |    | 17,951  |   |
| 2010   |   |    | 6,214   |   |
| 2011   |   |    | 1,588   |   |
| 2012   |   |    | 4,836   |   |
|   |   |    |    |   |
|   |   | $  | 200,549 |   |

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | 1.  Federal                Home Loan Bank of New York                Advances |
|--------|-----------------------------------------------------------------------------------------|

|   | Long                term Federal Home Loan Bank of New York (FHLBNY) advances at September                30,                2007 and September 30, 2006 totaled approximately $28,784,000 and                $22,121,000, respectively. These advances had a weighted average                interest                rate of 4.61% and 4.59% for the years ended September 30, 2007 and                2006,                respectively. The advances were collateralized by unencumbered qualified                assets consisting of 1-4 family residential mortgage loans. Advances                are                made pursuant to several different credit programs offered from time                to                time by the FHLBNY. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Long                term FHLBNY advances as of                September 30, 2007 mature as follows (in                thousands): |
|--------|-----------------------------------------------------------------------------------------------------------------------------------|

| Year   |   |    |   |
|--------|--------|---------|--------|
| 2008   |   | $  | 4,022  |   |
| 2009   |   |    | 7,757  |   |
| 2010   |   |    | 6,777  |   |
| 2011   |   |    | 5,000  |   |
| 2012   |   |    | 5,228  |   |
|   |   |    |   |   |
|   |   | $       | 28,784 |   |

|   | Additionally,                the Company has established two short-term borrowing arrangements                with the                FHLBNY:  (1) an Overnight Line of Credit and (2) a One-Month                Overnight Repricing Line of Credit in the amount of $46,834,000                each.  Each of the foregoing expires on July 31, 2008. For the                periods ended September 30, 2007 and 2006, the Company had aggregate                balances of $11,200,000 and $28,875,000, respectively, outstanding                under                these short term arrangements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Information                concerning short-term arrangements with the FHLBNY is summarized                as                follows: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|                                                               |   |                                        |   |   |     |   |
|--------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|----------|--------|
|                                                               |   | **September                  30,**          |   |
|                                                               |   | **2007**                                    |   |   | **2006** |   |
|                                                               |   | **(Dollars                  in thousands)** |   |
|                                                               |   |                                        |   |   |     |   |
| Balance                  at end of year                            |   | $                                           | 11,200 |   |     | $      | 28,875 |   |
| Weighted                  average balance during the year          |   |                                        | 28,828 |   |     |   | 11,727 |   |
| Weighted                  average interest rate at the end of year |   |                                        | 5.24   | %      |     |   | 5.51 | % |
| Maximum                  month-end balance during the year         |   |                                        | 42,300 |   |     |   | 28,875 |   |
| Average                  interest rate during the year             |   |                                        | 5.36   | %      |     |   | 4.81 | % |

|   | As                of September 30, 2007, the Company had the ability to borrow an additional                $74,432,000 using available                collateral. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.  Securities                Sold Under Reverse Repurchase                Agreements |
|--------|-------------------------------------------------------------------------------------------------|

|   | Qualifying                repurchase agreements are treated as financings and are reflected                as a                liability in the consolidated balance sheet. At September 30, 2007                and                2006, the Company had repurchase agreements of approximately $10,000,000                and $5,000,000, respectfully. These agreements are collateralized                by                securities underlying the |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | The                income tax expense (benefit) is comprised of the following components                for                the years ended September 30, |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|     |   | **2007**                                    |   |   | **2006** |   |
|----------|--------|---------------------------------------------|--------|--------|----------|--------|
|     |   | **(Dollars                  in thousands)** |   |
| Current  |   | $                                           | 72     |   |     | $      | 349 |   |
| Deferred |   |                                        | 185    |   |     |   | (477 | ) |
|     |   | $                                           | 257    |   |     | $      | (128 | ) |

|                                                                                                                                                                        |   |                                        |   |   |     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|----------|--------|
|                                                                                                                                                                        |   | **2007**                                    |   |   | **2006** |   |
|                                                                                                                                                                        |   | **(Dollars                  in thousands)** |   |
| Income                  tax at statutory rate                                                                                                                               |   | $                                           | 331    |   |     | $      | (41 | ) |
| Increase                  (decrease) resulting from:                                                                                                                        |   |                                        |   |   |     |   |   |   |
| State                  income taxes, net of federal income tax benefit                                                                                                      |   |                                        | 47     |   |     |   | (23 | ) |
| Tax-exempt                  income, net                                                                                                                                     |   |                                        | (161   | )      |     |   | (79 | ) |
| Nondeductible                  expenses                                                                                                                                     |   |                                        | 5      |   |     |   | 11 |   |
| Share                  based compensation                                                                                                                                   |   |                                        | 20     |   |     |   | - |   |
| Employee                  stock ownership plan                                                                                                                              |   |                                        | 28     |   |     |   | 5 |   |
| Other,                  net                                                                                                                                                 |   |                                        | (13    | )      |     |   | (1 | ) |
|                     Total                  income tax expense (benefit) |   | $                                           | 257    |   |     | $      | (128 | ) |

|                                                              |   |                                        |   |   |     |   |
|-------------------------------------------------------------------|--------|---------------------------------------------|--------|--------|----------|--------|
|                                                              |   | **September                  30,**          |   |
|                                                              |   | **2007**                                    |   |   | **2006** |   |
|                                                              |   | **(Dollars                  in thousands)** |   |
|                                                              |   |                                        |   |   |     |   |
| Employee                  benefits                                |   | $                                           | 258    |   |     | $      | 173 |   |
| Net                  unrealized holding losses on investment      |   |                                        |   |   |     |   |   |   |
| securities                  available for sale                    |   |                                        | 18     |   |     |   | 100 |   |
| Unrealized                  loss, minimum pension liability       |   |                                        | 114    |   |     |   | 312 |   |
| Unrealized                  gain, derivative contracts            |   |                                        | (88    | )      |     |   | - |   |
| Deferred                  loan fees                               |   |                                        | 178    |   |     |   | (95 | ) |
| Discount                  accretion on investments                |   |                                        | (99    | )      |     |   | (107 | ) |
| Depreciation                                                      |   |                                        | (1,782 | )      |     |   | (1,295 | ) |
| Allowance                  for loan losses                        |   |                                        | 1,083  |   |     |   | 1,138 |   |
| Charitable                  Contributions                         |   |                                        | 580    |   |     |   | 589 |   |
| Valuation                  Allowance                              |   |                                        | (75    | )      |     |   | (75 | ) |
|                                                              |   |                                        |   |   |     |   |   |   |
| Net                  deferred tax asset, included in other assets |   | $                                           | 187    |   |     | $      | 740 |   |

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | Management                has recorded a tax valuation allowance of $75,000 relating to the                deferred                tax asset established in connection with the Company’s contribution to the                charitable foundation established in connection with its public offering                on January 23, 2006. The Company determined that, based on its assessment                of future taxable income and expectations of charitable contributions,                it                is probable that the tax benefit of the contribution may not be fully                realized. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Prior                to 1996, savings banks that met certain definitions, tests and other                conditions prescribed by the Internal Revenue Code were allowed to                deduct,                with limitations, a bad debt deduction computed as a percentage of                taxable                income before such deduction. Currently, the Company employs the                reserve                method to account for bad debt. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company is not required to provide a deferred tax liability for its                tax                loss reserve as of December 31, 1987 (the Base Year). The amount                of this                reserve on which no deferred taxes have been provided is approximately                $1,258,000. This reserve could be recognized as taxable income and                create                a current and/or deferred tax liability using the income tax rates                then in                effect if one of the following occur: (1) the Company’s retained earnings                represented by this reserve is used for purposes other than to absorb                losses from bad debts, including dividends or distributions in                liquidation, (2) the Company fails to meet the definitions, tests,                or                other conditions provided by the Internal Revenue Code for a qualified                savings and loan association, or (3) there is a change in the Federal                tax                law. Deferred tax liabilities have been recorded for tax loss reserves                in                excess of book reserves recorded after the Base                Year. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company will be required to apply FIN 48 to all tax positions for                which                the statute of limitations remains open and is effective October                1, 2007                for the Company. Based on the Company’s preliminary assessment of the                impact of FIN 48, management estimates that liabilities will                decrease approximately $600,000 and retained earnings will increase                by the                same amount as of October 1, 2007 as a result of the adoption in FIN                48. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On                January 26, 2006, the Company’s defined-benefit pension plan was frozen                and amended to eliminate future benefit accruals after February 15,                2006. The                Company had a noncontributory defined benefit pension plan covering                all                eligible employees. Plan assets are invested in six diversified investment                funds of the Pentegra Retirement Trust (the Trust), a no load series                open-ended mutual fund. The Trust has been given discretion by the                Plan                Sponsor to determine the appropriate strategic asset allocation versus                plan liabilities, as governed by the Trust’s Statement of Investment                Objectives and Guidelines (the                Guidelines). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                long-term investment objective is to be invested 65% in equity securities                (equity mutual funds) and 35% in debt securities (bond mutual funds).                If                the plan is underfunded under the Guidelines, the bond fund portion                will                be temporarily increased to 50% in order to lessen asset value volatility.                When the plan is no longer underfunded, the bond fund portion will                be                decreased back to 35%. 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 Trust                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 sheet at June 30, 2007 and September                30, 2006: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                                            |   | **At                  June 30,**            |   |   | **At                  September 30,** |   |
|-----------------------------------------------------------------|--------|---------------------------------------------|--------|--------|---------------------------------------|--------|
|                                                            |   | **2007**                                    |   |   | **2006**                              |   |
|                                                            |   | **(Dollars                  in thousands)** |   |
|                                                            |   |                                        |   |   |                                  |   |
| Actuarial                  present value of benefit obligations |   | $                                           | 3,074  |   |                                  | $      | 3,313 |   |
|                                                            |   |                                        |   |   |                                  |   |   |   |
| Change                  in benefit obligations                  |   |                                        |   |   |                                  |   |   |   |
| Projected                  benefit obligation, beginning        |   | $                                           | 3,313  |   |                                  | $      | 3,409 |   |
| Decrease                  due to increase in the discount rate  |   |                                        | (278   | )      |                                  |   | - |   |
| Service                  cost                                   |   |                                        | -      |   |                                  |   | 48 |   |
| Interest                  cost                                  |   |                                        | 186    |   |                                  |   | 190 |   |
| Amendments                                                      |   |                                        | -      |   |                                  |   | (413 | ) |
| Actuarial                  gain (loss)                          |   |                                        | (46    | )      |                                  |   | 198 |   |
| Annuity                  payments and lump sum distributions    |   |                                        | (101   | )      |                                  |   | (119 | ) |
|                                                            |   |                                        |   |   |                                  |   |   |   |
| Projected                  benefit obligation, end              |   | $                                           | 3,074  |   |                                  | $      | 3,313 |   |
|                                                            |   |                                        |   |   |                                  |   |   |   |
| Change                  in plan assets                          |   |                                        |   |   |                                  |   |   |   |
| Market                  value of assets, beginning              |   | $                                           | 2,374  |   |                                  | $      | 2,098 |   |
| Actual                  return on plan assets                   |   |                                        | 301    |   |                                  |   | 195 |   |
| Employer                  contributions                         |   |                                        | 4      |   |                                  |   | 200 |   |
| Annuity                  payments and lump sum distributions    |   |                                        | (101   | )      |                                  |   | (119 | ) |
|                                                            |   |                                        |   |   |                                  |   |   |   |
| Market                  value of assets, end                    |   | $                                           | 2,578  |   |                                  | $      | 2,374 |   |
|                                                            |   |                                        |   |   |                                  |   |   |   |
| Funded                  Status                                  |   | $                                           | (496   | )      |                                  | $      | (939 | ) |

|                                                                                                                                                      |   | **For                  the Year Ended**     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                                                                                                      |   | **September                  30,**          |   |
|                                                                                                                                                      |   | **2007**                                    |   |   | **2006** |   |
|                                                                                                                                                      |   | **(Dollars                  in thousands)** |   |
|                                                                                                                                                      |   |                                        |   |   |   |   |
| Service                  cost benefits earned during the year                                                                                             |   | $                                           | -      |   |   | $ | 48 |   |
| Interest                  cost on projected benefit obligation                                                                                            |   |                                        | 186    |   |   |   | 190 |   |
| Expected                  return on plan assets                                                                                                           |   |                                        | (173   | ) |   |   | (153 | ) |
| Amortization                  of unrecognized loss                                                                                                        |   |                                        | 43     |   |   |   | 81 |   |
| Amortization                  of transitional obligation                                                                                                  |   |                                        | -      |   |   |   | 1 |   |
| Amortization                  of unrecognized past service liability                                                                                      |   |                                        | -      |   |   |   | 8 |   |
|                                                                                                                                                      |   |                                        |   |   |   |   |   |   |
|                     Net                  Pension Cost |   | $                                           | 56     |   |   | $ | 175 |   |

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|        | The                Bank’s pension plan weighted-average asset allocations at June 30, 2007                and September 30, 2006, by asset category are as                follows: |
|--------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | **At                  June 30,** |   |   | **At                  September 30,** |   |
|------------------------------------------------------|--------|----------------------------------|--------|--------|---------------------------------------|--------|
|                                                 |   | **2007**                         |   |   | **2006**                              |   |
|                                                 |   |                             |   |   |                                  |   |
| Equity                  securities                   |   |                             | 61     | %      |                                  |   | 55 | % |
| Debt                  securities (Bond Mutual Funds) |   |                             | 36     | %      |                                  |   | 38 | % |
| Other                  (Money Market Fund)           |   |                             | 3      | %      |                                  |   | 7 | % |
|                                                 |   |                             |   |   |                                  |   |   |   |
| Total                                                |   |                             | 100    | %      |                                  |   | 100 | % |

|        | Expected                Contributions |
|--------------------------------------|---------------------------------------|

|        | For                the fiscal year ending September 30, 2008, the Bank expects to contribute                $7,300 to the Plan. |
|--------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|

|        | Estimated                Future Benefit Payments |
|--------------------------------------|--------------------------------------------------|

|        | The                following benefit payments, which reflect approximate expected future                service, as appropriate, are expected to be paid as follows (in                thousands): |
|--------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10/01/2007                  - 09/30/2008 |   | $      | 138   |   |
|------------------------------------------|--------|--------|-------|--------|
| 10/01/2008                  - 09/30/2009 |   |   | 141   |   |
| 10/01/2009                  - 09/30/2010 |   |   | 149   |   |
| 10/01/2010                  - 09/30/2011 |   |   | 153   |   |
| 10/01/2011                  - 09/30/2012 |   |   | 157   |   |
| Years                  2012-2016         |   |   | 893   |   |
|                                     |   | $      | 1,631 |   |

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | SFAS                  No. 158, “Employers’ Accounting for Defined Benefit Pension and Other                  Postretirement Plans,” requires employers to recognize on their balance                  sheets the funded status of pension and other postretirement benefit                  plans. Statement 158 also requires fiscal-year-end measurements                  of plan                  assets and benefit obligations, eliminating the use of earlier                  measurement                  dates currently permissible. The new measurement-date requirement                  will not                  be effective until fiscal years ending after December 15, 2008 (as of                  September 30, 2009 for the Company). The Statement amends Statements                  87,                  88, 106 and 132R, but retains most of their measurement and disclosure                  guidance and will not change the amounts recognized in the income                  statement as net periodic benefit cost. SFAS No. 158 is effective                  for                  fiscal years beginning after December 15, 2006 and does not have                  a                  material impact on the Company’s consolidated financial statements ended                  September 30, 2007. The Company did not record an adjustment with                  regard                  to the adoption of SFAS No. 158 due to the fact that the plan was                  frozen.                  The approximately ($496,000) and ($939,000) funded status of the                  plan has                  been reflected as a liability in the Company’s statement of financial                  position and as a component of accumulated other comprehensive                  income, net                  of tax, for the years ended September 30, 2007 and 2006,                  respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company maintains a Supplemental Executive Retirement Plan (SERP)                for the                benefit of its senior officers. In addition, the Company also adopted                voluntary Deferred Income and Emeritus Plans on behalf of their directors                and those directors elected by the Board as “Director Emeritus.” The SERP                provides the Company with the opportunity to supplement the retirement                income of selected officers to achieve equitable wage replacement                at                retirement while the Deferred Income Plan provides participating                directors                with an opportunity to defer all or a portion of their fees into                a tax                deferred accumulation account for future retirement. The Director                Emeritus                Plan enables the Company to reward its directors for longevity of                service                in consideration of their availability and consultation at a sum                equal to                a fifteen year certain annuity based on fifty-percent of their directors’                last years’ Board fee. The SERP is based upon achieving retirement                benefits equal to two percent multiplied by the number of service                years                multiplied by the final salary. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In                2001, the Company adopted a New Director Emeritus Plan (the New Plan),                which supplemented the prior Director Emeritus Plans. Under the New                Plan,                the Directors will be entitled to a Benefit upon attainment of his/her                benefit age. The Directors will receive an annual amount in monthly                installments based on his/her total Board and Committee fees in the                twelve                months prior to attainment of his/her benefit age. The amount will                be 10%                plus 2% for each year of service up to five years of service. Provided                a                director has served for at least five years, the director’s                retirement                benefit will be at least 50% of such board fees, committee fees and/or                retainer, with a maximum retirement benefit of 60%, based on years                of                service. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company funds the plans through a modified endowment contract. Income                recorded for the plans represents life insurance income as recorded                based                on the projected increases in cash surrender values of life insurance                policies. As of September 30, 2007 and 2006, the Life Insurance Contracts                had cash surrender values of approximately $10,120,000 and $9,606,000,                respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company is recording benefit costs so that the cost of each participant’s                retirement benefits is being expensed and accrued over the participant’s                active employment so as to result in a liability at retirement date                equal                to the present value of the benefits expected to be provided. As                of                September 30, 2007 and 2006, the Company had accrued approximately                $45,000                and $60,000, respectively, for benefits under these                Plans. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | The                Company has a defined contribution 401(k) plan covering all employees,                as                defined under the plan document.  Employees may contribute to                the plan, as defined under the plan document, and the Bank can make                discretionary contributions. The Bank contributed approximately $170,000                and $87,000 to the plan for the years ended September 30, 2007 and                2006,                respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1. | Lease                Commitments |
|--------|----|----------------------------------|

|   | Approximate                future minimum payments under non-cancelable operating leases are                due as                follows for the year ended September 30th (in                thousands): |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       |   |   |   |   |
|------------|--------|--------|--------|--------|
| 2008       |   | $      | 286    |   |
| 2009       |   |   | 286    |   |
| 2010       |   |   | 286    |   |
| 2011       |   |   | 286    |   |
| 2012       |   |   | 164    |   |
| Thereafter |   |   | 2,894  |   |
|       |   |   |   |   |
|       |   | $      | 4,202  |   |

|   | The                total rental expense was approximately $400,000 and $175,000 for                the years                ended September 30, 2007 and 2006,                respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | Contingencies |
|--------|----|---------------|

|   | The                Company, from time to time, is 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. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|

|  | The              Company uses derivative financial instruments, such as interest rate              floors and collars, as part of its interest rate risk              management. Interest rate caps and floors are agreements whereby one              party agrees to pay or receive a floating rate of interest on a notional              principal amount for a predetermined period of time if certain market              interest rate thresholds are met. The Company considers the credit              risk              inherent in these contracts to be              negligible.  |
|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | The                  Company holds one Prime-based interest rate floor and one Prime-based                  interest rate collar. The interest rate collar involved the purchase                  of an                  interest rate floor combined with the sale of an interest rate                  cap. In                  accordance with SFAS No. 133 cash flow hedge accounting, the amortization                  of the costs of the derivatives flowed through the Bank’s income statement                  as a reduction to loan interest income. In addition, all changes in                  fair value of the derivative contracts are recorded through other                  comprehensive income.The                  table below shows the notional amount, strike and maturity date                  of each                  interest rate derivative contract as of September 30, 2007 and                  2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   |                                    |    |   |   |   |     |   | Fair                  Value       |   |
|--------------------------------------|--------|-----------------------------------------|---------|--------|--------|--------|----------|--------|-----------------------------------|--------|
|                                 |   | Notional                                |    |   |   |   | Maturity |   | at                  September 30, |   |
|                                 |   | Amount                                  |    |   | Strike |   | Date     |   | 2007                              |   |   | 2006 |   |
|                                 |   | (Dollars                  in thousands) |    |
| Interest                  rate floor |   | $                                       | 5,000   |   |   |   | 7.25     | %      | 12/27/10                          |   | $ | 64 |   |   | $ | 53 |   |
| Interest                  rate floor |   |                                    | 10,000  |   |   |   | 8.00     | %      | 06/23/13                          |   |   | 441 |   |   |   | 412 |   |
| Interest                  rate cap   |   |                                    | (10,000 | )      |   |   | 9.50     | %      | 06/23/13                          |   |   | (76 | ) |   |   | (91 | ) |
|                                 |   |                                    |    |   |   |   |     |   |                              |   | $ | 429 |   |   | $ | 374 |   |

|   | The                  Company is a party to financial instruments with off-balance-sheet                  risk in                  the normal course of business to meet the financing needs of its                  customers. These financial instruments are commitments to extend                  credit.                  Those instruments involve, to varying degrees, elements of credit                  and                  interest rate risk in excess of the amounts recognized in the balance                  sheets.The Company’s exposure to credit loss in the event of                  nonperformance by the other party to the financial instrument for                  commitments to extend credit is represented by the contractual                  notional                  amount of those instruments. The Company uses the same credit policies                  in                  making commitments and conditional obligations as it does for                  on-balance-sheet instruments. At                  September 30, 2007 and 2006, the Company had outstanding commitments                  (substantially all of which expire within one year) to originate                  residential mortgage loans, construction loans, commercial real                  estate and                  consumer loans.  These commitments were comprised of fixed and                  variable rate loans. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                          |   | **September                  30,**          |   |
|---------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                          |   | **2007**                                    |   |   | **2006** |   |
|                                                          |   | **(Dollars                  in thousands)** |   |
| Financial                  instruments whose contract amounts |   |                                        |   |   |   |   |
| represent                  credit risk (in thousands)         |   |                                        |   |   |   |   |
| Letters                  of credit                            |   | $                                           | 1,047  |   |   | $ | 556 |   |
| Unused                  lines of credit                       |   | $                                           | 33,173 |   |   | $ | 30,977 |   |
| Fixed                  rate loan commitments                  |   | $                                           | 9,765  |   |   | $ | 6,499 |   |
| Variable                  rate loan commitments               |   | $                                           | 31,446 |   |   | $ | 32,634 |   |

|   | The                following methods and assumptions were used to estimate the fair                value of                each class of financial instruments for which it is practicable to                estimate fair value: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | Cash                and interest earning deposits with banks:  The carrying amounts                are a reasonable estimate of fair                value. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Investment                securities:  For investment securities, fair values are                calculated individually based on quoted market                prices. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Loans:  Fair                value for the loan portfolio is estimated based on discounted cash                flow                analysis using interest rates currently offered for loans with similar                terms to borrowers of similar credit                quality. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | For                nonperforming loans, fair value is calculated by first reducing the                carrying value by a reserve amount based on internal and regulatory                loan                classifications.  Values are further adjusted according to                recent appraised values on the individual properties.  If recent                appraisals are not available, a discount is applied depending on                the date                of the last appraisal performed on the property.  The carrying                value, which is net of reserves and valuation allowances, is therefore                considered a reasonable estimate of fair                value. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Bank-owned                life insurance:  The carrying amounts are based on the cash                surrender values of the individual policies, which is a reasonable                estimate of fair value. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                fair value of commitments to extend credit is estimated based on                the                amount of unamortized deferred loan commitment fees.  The fair                value of letters of credit is based on the amount of unearned fees                plus                the estimated costs to terminate the letters of credit. Fair values                of                unrecognized financial instruments including commitments to extend                credit                and the fair value of letter of credit are considered                immaterial. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Savings                deposits: The fair value of savings deposits with no stated maturity,                such                as money market deposit accounts, interest-bearing checking accounts                and                savings accounts, is equal to the amount payable on demand.  The                fair value of certificates of deposit is based on the discounted                value of                contractual cash flows.  The discount rate is equivalent to the                rate currently offered by the Bank for deposits of similar size,                type and                maturity. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Accrued                interest receivable and payable: For these short-term instruments,                the                carrying amount is a reasonable estimate of fair                value. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Federal                Home Loan Bank of New York advances and Securities sold under reverse                repurchase agreements:  The fair value of borrowings is based on                the discounted value of contractual cash flows.  The discount                rate is equivalent to the rate currently offered by the Federal Home                Loan                Bank of New York for borrowings of similar maturity and                terms. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Interest                rate derivatives: The third party value of interest rate derivative                contracts are based on the fair market value using market prices                provided                from brokers trading in such instruments, less their carrying value.                The                carrying value is the price paid for the derivative contracts less                prior                amortization of the price paid. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                carrying amounts and estimated fair values of the Company’s financial                instruments at September 30, 2007 and 2006 are as                follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                                    |   | **2007**                                    |    |   | **2006**  |    |
|---------------------------------------------------------|--------|---------------------------------------------|---------|--------|-----------|---------|
|                                                    |   | **Carrying**                                |    |   | **Fair**  |    |   | **Carrying** |   |   | **Fair** |   |
|                                                    |   | **Value**                                   |    |   | **Value** |    |   | **Value** |   |   | **Value** |   |
|                                                    |   | **(Dollars                  in thousands)** |    |
|                                                    |   |                                        |    |   |      |    |   |   |   |   |   |   |
| Financial                  assets                       |   |                                        |    |   |      |    |   |   |   |   |   |   |
| Investment                  securities                  |   | $                                           | 45,489  |   |      | $       | 45,330 |   |   | $ | 42,064 |   |   | $ | 41,527 |   |
| Loan,                  net of allowance for loan losses |   | $                                      | 381,614 |   |      | $  | 376,810 |   |   | $  | 347,969 |   |   | $  | 346,638 |   |
| Bank                  owned insurance policies          |   | $                                           | 10,120  |   |      | $  | 10,120 |   |   | $  | 9,606 |   |   | $  | 9,606 |   |
|                                                    |   |                                        |    |   |      |    |   |   |   |   |   |   |   |   |   |   |
| Financial                  liabilities                  |   |                                        |    |   |      |    |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                |   |                                        |    |   |      |    |   |   |   |   |   |   |   |   |   |   |
| Demand,                  NOW and money market savings   |   | $                                      | 168,228 |   |      | $  | 168,228 |   |   | $  | 150,244 |   |   | $  | 150,244 |   |
| Certificates                  of deposit                |   |                                        | 200,549 |   |      |    | 200,655 |   |   |   | 175,358 |   |   |   | 174,493 |   |
|                                                    |   |                                        |    |   |      |    |   |   |   |   |   |   |   |   |   |   |
| Total                  deposits                         |   | $                                      | 368,777 |   |      | $  | 368,883 |   |   | $  | 325,602 |   |   | $  | 324,737 |   |
|                                                    |   |                                        |    |   |      |    |   |   |   |   |   |   |   |   |   |   |
| Borrowings                                              |   | $                                      | 49,985  |   |      | $  | 50,114 |   |   | $  | 52,996 |   |   | $  | 52,652 |   |
|                                                    |   |                                        |    |   |      |    |   |   |   |   |   |   |   |   |   |   |
| Interest                  rate derivatives              |   | $                                      | 429     |   |      | $  | 429 |   |   | $  | 374 |   |   | $  | 374 |   |

|   | The                fair value of commitments to extend credit is estimated based on                the                amount of unamortized deferred loan commitment fees. The fair value                of                letters of credit is based on the amount of unearned fees plus the                estimated cost to terminate the letters of credit. Fair values of                unrecognized financial instruments including commitments to extend                credit                and the fair value of letters of credit are considered                immaterial. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                Company and Bank are required to maintain minimum amounts of capital                to                total “risk-weighted” assets, as defined by the banking regulators.                Failure to meet minimum capital requirements can initiate certain                mandatory and possibly discretionary actions by regulators that,                if                undertaken, could have a direct material effect on the Company’s financial                statements. Under capital adequacy guidelines and the regulatory                framework                for prompt corrective action, the Company and Bank must meet specific                capital guidelines that involve quantitative measures of the Company’s and                Bank’s assets, liabilities, and certain off balance sheet items as                calculated under regulatory accounting practices. The capital amounts                and                classification are also subject to qualitative judgments by the regulators                about components, risk weightings and other                factors. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Quantitative                measures established by regulation to ensure capital adequacy require                the                Company and Bank to maintain minimum ratios of Leverage Capital,                Tier I                and Total Risk-based Capital. The following table sets forth the                Company’s                actual and required capital levels under those                measures: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|                                                      |   |                                              |   |                               |        |                               |   |                         |   |                                     |   | To                  be well-capitalized |
|-----------------------------------------------------------|--------|---------------------------------------------------|--------|------------------------------------|-------------|------------------------------------|--------|------------------------------|--------|------------------------------------------|--------|-----------------------------------------|
|                                                      |   |                                              |   |                               |        |                               |   | For                  capital |   | under                  prompt corrective |
|                                                      |   | Actual                                       |   | adequacy                  purposes |        | action                  provisions |
|                                                      |   | Amount                                            |   |                               | Ratio  |                               | Amount |                         | Ratio  |                                     | Amount |                                    | Ratio |
| As                  of September 30, 2007                 |   | ** **(Dollars                  in thousands) |
| Total                  Capital (to risk-weighted assets)  |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |
| Magyar                  Bancorp, Inc.                     |   | $                                            | 51,854 |                               |        |                               | 14.07  | %                            |   | $                                   | 29,491 |                                    | ≥  8.00% |   | N/A |   | N/A |
| Magyar                  Bank                              |   |                                              | 41,287 |                               |        |                               | 11.20  | %                            |   |                                     | 29,490 |                                    | ≥  8.00% |   |   | 36,863 |   | ≥                  10.00% |
|                                                      |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Tier                  1 Capital (to risk-weighted assets) |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |
| Magyar                  Bancorp, Inc.                     |   |                                              | 48,100 |                               |        |                               | 13.05  | %                            |   |                                     | 14,745 |                                    | ≥  4.00% |   | N/A |   | N/A |
| Magyar                  Bank                              |   |                                              | 37,533 |                               |        |                               | 10.18  | %                            |   |                                     | 14,745 |                                    | ≥  4.00% |   |   | 22,118 |   | ≥   6.00% |
|                                                      |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Tier                  1 Capital (to average assets)       |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Magyar                  Bancorp, Inc.                     |   |                                              | 48,100 |                               |        |                               | 10.44  | %                            |   |                                     | 13,819 |                                    | ≥  3.00% |   | N/A |   | N/A |
| Magyar                  Bank                              |   |                                              | 37,533 |                               |        |                               | 7.94   | %                            |   |                                     | 13,819 |                                    | ≥  3.00% |   |   | 23,031 |   | ≥   5.00% |
|                                                      |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| As                  of September 30, 2006                 |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Total                  Capital (to risk-weighted assets)  |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |
| Magyar                  Bancorp, Inc.                     |   |                                              | 52,134 |                               |        |                               | 14.81  | %                            |   |                                     | 28,171 |                                    | ≥  8.00% |   | N/A |   | N/A |
| Magyar                  Bank                              |   |                                              | 39,663 |                               |        |                               | 11.26  | %                            |   |                                     | 28,170 |                                    | ≥  8.00% |   |   | 35,214 |   | ≥                  10.00% |
|                                                      |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Tier                  1 Capital (to risk-weighted assets) |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |
| Magyar                  Bancorp, Inc.                     |   |                                              | 48,242 |                               |        |                               | 13.70  | %                            |   |                                     | 14,085 |                                    | ≥  4.00% |   | N/A |   | N/A |
| Magyar                  Bank                              |   |                                              | 35,771 |                               |        |                               | 10.16  | %                            |   |                                     | 14,085 |                                    | ≥  4.00% |   |   | 21,128 |   | ≥   6.00% |
|                                                      |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Tier                  1 Capital (to average assets)       |   |                                              |   |                               |        |                               |   |                         |   |                                     |   |                                    |   |   |   |   |   |   |
| Magyar                  Bancorp, Inc.                     |   |                                              | 48,242 |                               |        |                               | 12.20  | %                            |   |                                     | 11,865 |                                    | ≥  3.00% |   | N/A |   | N/A |
| Magyar                  Bank                              |   |                                              | 35,771 |                               |        |                               | 8.61   | %                            |   |                                     | 11,865 |                                    | ≥  3.00% |   |   | 19,776 |   | ≥   5.00% |

|   | As                of September 30, 2007, the most recent notification from the Federal                Deposit Insurance Corporation categorized the Bank as well-capitalized                under the regulatory framework for prompt corrective action. There                are no                conditions or events since that notification that management believes                have                changed the Bank’s category. At September 30, 2007, management believes                that the Bank meets all capital adequacy requirements to which it                is                subject. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | On                July 6, 2005, the Board of Directors of Magyar Bank adopted a Plan                of                Reorganization from a Mutual Savings Bank to a Mutual Holding Company                and                Stock Issuance Plan pursuant to which the Bank proposed to reorganize                from                a New Jersey-chartered mutual savings bank into the mutual holding                company                structure pursuant to the laws of the State of New Jersey, the regulations                of the Commissioner, the regulations of the FDIC, and other applicable                federal laws and regulations. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**MAGYAR      BANCORP, INC. AND SUBSIDIARY**

|   | On                January 23, 2006, the Company completed its Plan of Reorganization                from a                Mutual Savings Bank to a Mutual Holding. A principal part of the                Reorganization was (i) the formation of the Mutual Holding Company                as a                New Jersey-chartered mutual holding company, (ii) the formation of                the                Stock Holding Company as a capital stock corporation and a wholly-owned                subsidiary of the Mutual Holding Company, and (iii) the conversion                of the                Bank to the Stock Bank, which is a New Jersey-chartered stock savings                bank                and a wholly-owned subsidiary of the Stock Holding Company as long                as the                Mutual Holding Company is in existence.  The Mutual Holding                Company will always own at least a majority of the Stock Holding                Company’s                common stock so long as the Mutual Holding Company is in                existence.  The Reorganization was approved by the Commissioner,                the FDIC, and the FRB. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Concurrently                with the Reorganization, the Stock Holding Company offered for sale                45.97%                of its Common Stock in the Stock Offering on a priority basis to                qualifying depositors and Tax-Qualified Employee Plans of the Bank.                The                Stock Offering was conducted in accordance with applicable federal                and                state laws and regulations. 3,200,450 shares of Common Stock of the                Stock                Holding Company were issued to the Company, and 2,618,550 shares                of Common                Stock of the Stock Holding Company were sold to depositors of the                Bank at                $10.00 per share (the "Stock Offering"). The gross offering proceeds                were                $26,185,500 and net proceeds after offering and conversion costs                were                $24,782,000.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | As                part of the Stock Offering and consistent with the Bank’s ongoing                commitment to remain an independent community-oriented savings bank,                the                Bank established a charitable foundation. The charitable foundation                complements the Bank’s existing community reinvestment and charitable                activities in a manner that will allow the community to share in                the                growth and success of the Bank. Accordingly, concurrently with the                completion of the Stock Offering, the Bank contributed 104,742 shares                of                Common Stock and $500,000 cash to the Magyar Bank Charitable                Foundation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

| **ITEM                8.** | **Changes                In and Disagreements With Accountants on Accounting and Financial                Disclosure** |
|----------------------------|------------------------------------------------------------------------------------------------------------------------|

| **ITEM8A.** | **Controls                and Procedures** |
|-------------|--------------------------------------------|

| **ITEM8B.** | **Other                Information** |
|-------------|--------------------------------------|

**PART      III**

| **ITEM                9.** | **Directors,                Executive Officers, Promoters, Control Persons, and Corporate Governance; Compliance with Section                16(a) of the Exchange                Act** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **ITEM                10.** | **Executive                Compensation** |
|-----------------------------|-------------------------------------------|

| **ITEM                11.** | **Security                Ownershipof Certain Beneficial Owners and Management                and                Related Stockholder                Matters** |
|-----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

| **ITEM                12.** | **Certain                Relationships and Related Transactions, and                Director                Independence** |
|-----------------------------|----------------------------------------------------------------------------------------------------------------------------|

| **ITEM                13.** | **Exhibits ** |
|-----------------------------|--------------------|

|   | 3.1   | Certificate                of Incorporation of Magyar Bancorp, Inc.*                                                                                                                                                                                     |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.2   | Bylaws                of Magyar Bancorp, Inc.*                                                                                                                                                                                                           |
|   | 4     | Form                of Common Stock Certificate of Magyar Bancorp, Inc.*                                                                                                                                                                                 |
|   | 10.1  | Form                of Employee Stock Ownership Plan*                                                                                                                                                                                                    |
|   | 10.2  | Restated                Executive Supplemental Retirement Income Agreement for Elizabeth                E.                Hance**                                                                                                                        |
|   | 10.3  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Elizabeth E. Hance**                                                                                                              |
|   | 10.4  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Joseph J. Lukacs, Jr.**                                                                                                           |
|   | 10.5  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Salvatore J. Romano**                                                                                                             |
|   | 10.6  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Joseph A. Yelencsics**                                                                                                            |
|   | 10.7  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Edward C. Stokes, III**                                                                                                           |
|   | 10.8  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Martin A. Lukacs**                                                                                                                |
|   | 10.9  | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Thomas Lankey**                                                                                                                   |
|   | 10.10 | Restated                Director Supplemental Retirement Income and Deferred Compensation                Agreement for Andrew G. Hodulik**                                                                                                               |
|   | 10.11 | Form                of Employment Agreement for Elizabeth E. Hance*                                                                                                                                                                                      |
|   | 10.12 | Form                of Change in Control Agreement for Executive Officers*                                                                                                                                                                               |
|   | 10.13 | Executive                Supplemental Retirement Income Agreement for Jon                Ansari**                                                                                                                                                        |
|   | 10.14 | Executive                Supplemental Retirement Income Agreement for John                Fitzgerald**                                                                                                                                                   |
|   | 14    | Code                of Ethics***                                                                                                                                                                                                                         |
|   | 21    | Subsidiaries                of Registrant*                                                                                                                                                                                                               |
|   | 31.1  | Certification                of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities                Exchange Act of 1934, as amended, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002 |
|   | 31.2  | Certification                of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities                Exchange Act of 1934, as amended, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002 |
|   | 32    | Certification                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. Section 1350, as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |

| * | Incorporated                by reference to the Registration Statement on Form SB-2 of Magyar                Bancorp,                Inc. (file no. 333-128392), originally filed with the Securities                and                Exchange Commission on September 16, 2005, as                amended. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ** | These                exhibits are available for viewing at the Securities and Exchange                Commission’s web-site, www.sec.gov. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------|

| *** | Available                on our website*www.magbank.com* |
|-----|----------------------------------------------------------|

| **ITEM                14.** | **Principal                Accountant Fees and                Services** |
|-----------------------------|--------------------------------------------------------------------------|

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*Table            of Contents*

**SIGNATURES**

|                                   | **MAGYAR                BANCORP, INC.**                                                                                                                                                                                    |
|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |                                                                                                                                                                                                                       |
|                                   |                                                                                                                                                                                                                       |
| Date:                December 21, 2007 | By:                /s/ Elizabeth E.                Hance                            |
|                                   | Elizabeth                E. Hance                                                                                                                                                                                          |
|                                   | President                and Chief Executive Officer                                                                                                                                                                       |
|                                   | (Duly                Authorized Representative)                                                                                                                                                                            |

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*Table            of Contents*

| **Signatures**                                                                                                                    |   | **Title**                                                     |   | **Date**                           |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|------------------------------------|
|                                                                                                                              |   |                                                          |   |                               |
| /s/                  Elizabeth E. Hance                                                                       |   | President                  and Chief Executive Officer        |   | December                  21, 2007 |
| Elizabeth                  E. Hance                                                                                               |   | (Principal                  Executive Officer)                |   |                               |
|                                                                                                                              |   |                                                          |   |                               |
|                                                                                                                              |   |                                                          |   |                               |
| /s/                  Jon R.                  Ansari              |   | Senior                  Vice President and                    |   | December                  21, 2007 |
| Jon                  R. Ansari                                                                                                    |   | Chief                  Financial Officer                      |   |                               |
|                                                                                                                              |   | (Principal                  Financial and Accounting Officer) |   |                               |
|                                                                                                                              |   |                                                          |   |                               |
|                                                                                                                              |   |                                                          |   |                               |
| /s/                  Joseph J. Lukacs, Jr.                                                                                        |   | Chairman                  of the Board                        |   | December                  21, 2007 |
| Joseph                  J. Lukacs, Jr.                                                                                            |   |                                                          |   |                               |
|                                                                                                                              |   |                                                          |   |                               |
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| /s/                  Andrew Hodulik                                             |   | Director                                                      |   | December                  21, 2007 |
| Andrew                  Hodulik                                                                                                   |   |                                                          |   |                               |
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| /s/                  Thomas                  Lankey                        |   | Director                                                      |   | December                  21, 2007 |
| Thomas                  Lankey                                                                                                    |   |                                                          |   |                               |
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| /s/                  Martin A. Lukacs                                                |   | Director                                                      |   | December                  21, 2007 |
| Martin                  A. Lukacs, D.M.D.                                                                                         |   |                                                          |   |                               |
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| /s/                  Salvatore J. Romano                                                                      |   | Director                                                      |   | December                  21, 2007 |
| Salvatore                  J. Romano, Ph.D.                                                                                       |   |                                                          |   |                               |
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| /s/                  Joseph A. Yelencsics                                                                          |   | Director                                                      |   | December                  21, 2007 |
| Joseph                  A. Yelencsics                                                                                             |   |                                                          |   |                               |