• Hanover Bancorp, Inc. Reports Earnings for the Second Fiscal Quarter and Declares $0.10 Quarterly Cash Dividend

    المصدر: Nasdaq GlobeNewswire / 27 أبريل 2023 08:00:02   America/New_York

    Second Fiscal Quarter Performance Highlights

    • Net Income: Net income for the quarter ended March 31, 2023 totaled $3.2 million or $0.43 per diluted share (including Series A preferred shares). Adjusted (non-GAAP) net income (excluding severance and retirement expenses) was $3.6 million or $0.48 per diluted share for the quarter ended March 31, 2023.
    • Deposits: Total deposits were $1.7 billion at March 31, 2023, an increase of $189.6 million from December 31, 2022. Insured deposits, including municipal deposits that are fully collateralized, accounted for approximately 84% of total deposits at March 31, 2023.
    • Strong Liquidity Position: At March 31, 2023, liquidity sources, which includes cash and unencumbered securities and secured and unsecured funding capacity, totaled $602.2 million which was approximately 216% of uninsured deposit balances.
    • Lending Activity: Loans totaled $1.79 billion, a net increase of $40.6 million, or 9.3% annualized, from December 31, 2022. The Company’s current loan pipeline is approximately $191 million, with approximately 84% being niche-residential, conventional C&I and SBA and USDA lending opportunities.   Loans secured by office space accounted for only approximately 3.0% of the total loan portfolio with a total balance of $54.3 million, of which less than 1% is located in Manhattan.
    • SBA Expansion: The Bank’s current expansion of its SBA and USDA Banking Team is nearly complete, positioning the Bank to realize the benefit of the expected increase in lending activity with few additional expense implications.
    • Hauppauge Banking Center: The opening of the Bank’s Hauppauge Business Banking Center is expected to take place in May 2023 and will become the nexus of commercial lending and deposit activity for our expanded C&I banking initiatives, which are integral to our ongoing commitment to diversify our balance sheet and sources of funding as we fill the void left by the diminishing number of commercial banks on Long Island and in the wider NYC Metro area.
    • Accumulated Other Comprehensive Loss, net of tax, was $941 thousand, reflecting the relatively small size of the Company’s investment portfolio and represents approximately 0.52% of total capital at March 31, 2023.
    • Capital Strength: The Bank’s Tier 1 leverage ratio was 9.79% and its Total Risk-Based capital ratio was 13.93% at March 31, 2023, each significantly above the regulatory minimums for a well-capitalized institution. The Company’s Tangible Common Equity ratio was 7.84% at March 31, 2023, 8.41% at September 30, 2022, and 7.90% at March 31, 2022.
    • Tangible Book Value Per Share: Tangible book value per share (including Series A preferred shares) increased to $21.96 at March 31, 2023 from $21.00 at September 30, 2022 and $19.75 at March 31, 2022.
    • Quarterly Cash Dividend: The Company’s Board of Directors approved a $0.10 per share cash dividend on both common and Series A preferred shares payable on May 17, 2023 to stockholders of record on May 10, 2023.
    • Net Interest Income: Net interest income was $13.9 million for the quarter ended March 31, 2023, a decrease of $0.8 million, or 5.6% versus the comparable 2022 period.
    • Net Interest Margin: The Company’s net interest margin during the quarter ended March 31, 2023 was 3.04% versus 3.49% in the quarter ended December 31, 2022 and 4.26% in the quarter ended March 31, 2022. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 2.97% in the quarter ended March 31, 2023, 3.43% in the quarter ended December 31, 2022 and 3.86% in the quarter ended March 31, 2022.
    • Balance Sheet: Assets totaled $2.07 billion at March 31, 2023 versus $1.84 billion at September 30, 2022 and $1.48 billion at March 31, 2022.

    MINEOLA, N.Y., April 27, 2023 (GLOBE NEWSWIRE) -- Hanover Bancorp, Inc. (“Hanover” or “the Company” – NASDAQ: HNVR), the holding company for Hanover Community Bank (“the Bank”), today reported results for the quarter ended March 31, 2023 and the payment of a $0.10 per share cash dividend on both common and Series A preferred shares payable on May 17, 2023 to stockholders of record on May 10, 2023.

    Earnings Summary for the Quarter Ended March 31, 2023

    The Company reported net income for the quarter ended March 31, 2023 of $3.2 million or $0.43 per diluted share (including Series A preferred shares), versus $5.9 million or $1.00 per diluted share in the comparable year ago period. The Company recorded adjusted (non-GAAP) net income (excluding severance and retirement expenses) of $3.6 million or $0.48 per diluted share in the quarter ended March 31, 2023, versus adjusted (non-GAAP) net income of $5.9 million or $1.00 per diluted share in the comparable 2022 quarter. Excluding the impact of net purchase accounting accretion, the Company’s net income was $3.0 million or $0.40 per diluted share (including Series A preferred shares) in the quarter ended March 31, 2023 versus net income of $4.8 million or $0.83 per diluted share in the comparable 2022 period. In connection with the Company’s initial public offering in May 2022, average shares outstanding increased to 7,324,036 in the 2023 period from 5,753,513 in the comparable period of 2022. Returns on average assets and average stockholders’ equity were 0.68% and 7.24%, respectively, in the quarter ended March 31, 2023, versus 1.63% and 17.83%, respectively, in the comparable 2022 quarter, and 1.18% and 12.04% in the December 31, 2022 quarter. Adjusted (non-GAAP) returns, exclusive of severance and retirement expenses, on average total assets and average stockholders’ equity were 0.75% and 8.03%, respectively, in the quarter ended March 31, 2023.

    The decline in net income recorded in the second fiscal quarter of 2023 versus the comparable 2022 quarter resulted primarily from an increase in the provision for loan losses expense, which included a required accounting charge related to the write-off of two purchased credit impaired loans acquired in the Savoy Bank acquisition totaling $407 thousand, a decrease in gain on sale of loans, a decrease in purchase accounting accretion and an increase in non-interest expense. The increase in non-interest expense was primarily due to increases in occupancy and equipment, legal and consulting fees and regulatory assessments. Included in compensation and benefits expense in the first quarter of 2023 was expense related to the staffing for the SBA and C&I Banking teams, severance payments in January 2023 paid in connection with a loan personnel restructuring initiative and the acceleration of stock compensation expense recognition on restricted stock awards for an executive who retired this quarter offset by lower incentive compensation expense resulting from reduced projected lending activity and lower deferred loan origination costs. While the volume of SBA loan sales was on target, the corresponding gains on the sales of the guaranteed portion were lower than expected in the quarter primarily due to the continuing impact of depressed secondary market premiums and loan closing delays due to borrower considerations.

    Net interest income was $13.9 million for the quarter ended March 31, 2023, a decrease of $0.8 million, or 5.6% versus the comparable 2022 period due to compression of the Company’s net interest margin to 3.04% in the 2023 quarter from 4.26% in the comparable 2022 quarter. The year over year decrease in purchase accounting accretion accounted for 33 basis points of the decline in the net interest margin. The yield on interest earning assets increased to 5.47% in the 2023 quarter from 4.60% in the comparable 2022 quarter, an increase of 87 basis points, offset by a 250 basis point increase in the cost of interest-bearing liabilities to 2.94% in 2023 from 0.44% in the second fiscal quarter of 2022 due to the rapid and significant rise in interest rates and to a lesser extent, the Company’s decision to increase liquidity as a result of the recent industry events.

    Earnings Summary for the Six Months Ended March 31, 2023

    For the six months ended March 31, 2023, the Company reported net income of $8.5 million or $1.15 per diluted share (including Series A preferred shares), versus $12.4 million or $2.15 per diluted share a year ago. The Company recorded adjusted (non-GAAP) net income (excluding severance and retirement expenses) of $8.9 million or $1.20 per diluted share for the six months ended March 31, 2023, versus adjusted (non-GAAP) net income of $12.4 million or $2.15 per diluted share in the comparable 2022 six-month period. Excluding the impact of net purchase accounting accretion, the Company’s net income was $8.1 million or $1.10 per diluted share (including Series A preferred shares) for the six months ended March 31, 2023 versus net income of $10.1 million or $1.76 per diluted share in the comparable 2022 period. In connection with the Company’s initial public offering in May 2022, average shares outstanding increased to 7,308,317 for the six months ended March 31, 2023 from 5,657,179 in the comparable period of 2022.

    The decline in net income recorded for the six months ended March 31, 2023 versus the comparable 2022 period resulted primarily from an increase in the provision for loan losses expense due to growth in the loan portfolio and the write-off of two purchased credit impaired loans acquired in the Savoy Bank acquisition totaling $407 thousand, a decrease in gain on sale of loans, a decrease in purchase accounting accretion and an increase in non-interest expense. The increase in non-interest expense was primarily due to increases in occupancy and equipment, legal and consulting fees and regulatory assessments. Compensation and benefits expense declined in the six months ended March 31, 2023 compared to the comparable period of 2022 for the same reasons discussed above for the quarter over quarter comparisons.

    Net interest income was $29.2 million for the six months ended March 31, 2023, a decrease of $0.8 million, or 2.7% versus the comparable 2022 period due to compression of the Company’s net interest margin to 3.26% in the 2023 period from 4.32% in the comparable 2022 period. The year over year decrease in purchase accounting accretion accounted for 37 basis points of the decline in the net interest margin. The yield on interest earning assets increased to 5.32% in the 2023 period from 4.69% in the comparable 2022 period, an increase of 63 basis points, offset by a 207 basis point increase in the cost of interest-bearing liabilities to 2.53% in 2023 from 0.46% in the comparable 2022 period due to the rapid and significant rise in interest rates.

    Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s quarterly results: “We are pleased to have weathered the unprecedented events of the first quarter of 2023, well positioned to take advantage of the opportunities that will arise from the uncertainty created by soaring interest rates and the recent banking failures. Further, in the midst of these industry challenges, we were pleased to see the strength of our existing deposit base and confidence from our customers in the safety and soundness of the Company. As of March 31, 2023, we are well-capitalized, highly liquid and looking forward to realizing strong returns on the forward-thinking investments we have made in the expansion of our core banking teams and exploration of new initiatives in recent quarters. These critical, scalable opportunities will drive our growth, maximizing our appeal to retail and commercial customers seeking relationship banking with superior service.”

    Balance Sheet Highlights

    Total assets at March 31, 2023 were $2.07 billion versus $1.84 billion at September 30, 2022. Total deposits at March 31, 2023 increased to $1.71 billion compared to $1.53 billion at September 30, 2022. During the quarter ended March 31, 2023, total deposits increased $189.6 million from December 31, 2022.

    The Company had $449.7 million in total municipal deposits at March 31, 2023, at a weighted average rate of 3.59% versus $416.9 million at a weighted average rate of 1.19% at September 30, 2022. The Company’s municipal deposit program is built on long-standing relationships developed in the local marketplace. During the recent challenges and disruptions faced in our industry, not only did we maintain all previous municipal relationships but also added new municipal customers and additional deposits. This core deposit business will continue to provide a stable source of funding for the Company’s lending products at costs lower than both consumer deposits and market-based borrowings.

    Total borrowings at March 31, 2023 were $137.0 million with a weighted average rate and term of 3.43% and 38 months, respectively. At March 31, 2023 and September 30, 2022, the Company had $131.0 million and $37.8 million, respectively, of term FHLB advances outstanding. The Company added $100.7 million of extended duration FHLB term advances in March 2023 to provide additional liquidity and enhance the interest rate sensitivity profile. There were no FHLB overnight borrowings outstanding at March 31, 2023. The Company had $55.0 million of FHLB overnight borrowings outstanding at September 30, 2022.

    Stockholders’ equity increased to $180.5 million at March 31, 2023 from $172.6 million at September 30, 2022, resulting in an increase in tangible book value per share (including Series A preferred shares) to $21.96 at March 31, 2023 from $21.00 at September 30, 2022. This increase was primarily due to net income earned during the six months ended March 31, 2023. The accumulated other comprehensive loss at March 31, 2023 was minimal at 0.52% of total equity and was comprised solely of the $941 thousand after tax net unrealized loss on the investment portfolio.

    Loan Portfolio Growth and Allowance for Loan Losses

    On a linked quarter basis, the Company exhibited net loan growth of $40.6 million, a 9.3% increase on an annualized basis. For the twelve months ended March 31, 2023, the Bank’s loan portfolio grew to $1.79 billion, for an increase of 42.4% excluding PPP loans. Year over year growth was concentrated primarily in multi-family, residential and commercial real estate loans. At March 31, 2023, the Company’s residential loan portfolio (including home equity) amounted to $597.8 million, with an average loan balance of $486 thousand and a weighted average loan-to-value ratio of 56%. Commercial real estate and multifamily loans totaled $1.13 billion at March 31, 2023, with an average loan balance of $1.5 million and a weighted average loan-to-value ratio of 60%. The Company’s commercial real estate concentration ratio was 467% of capital at March 31, 2023 versus 470% of capital at December 31, 2022, with loans secured by office space accounted for only approximately 3.0% of the total loan portfolio with a total balance of $54.3 million. The Company’s current loan pipeline is approximately $191 million, with approximately 84% being niche-residential, conventional C&I and SBA and USDA lending opportunities.

    Historically, the Bank has generated additional income by strategically originating and selling residential and government guaranteed loans to other financial institutions at premiums, while also retaining servicing rights in some sales. However, due to the pace of interest rate increases over the last year, the residential loan sale market remains inactive, and the Bank continues originating residential loans for its own portfolio. With respect to the sale of government guaranteed loans, we continue to expect reduced secondary market sale premiums on a year-over-year basis in the current interest rate environment. During the quarter ended March 31, 2023, the Company sold $12.8 million in SBA loans and recorded gains on the sale of loans held-for-sale of $1.0 million. The Company recorded gains of $1.6 million on the sale of SBA loans in the quarter ended March 31, 2022.

    As part of our efforts to diversify our loan portfolio away from loans secured by commercial real estate, we expect the pace and volume of C&I and SBA and USDA guaranteed loans to increase with the ongoing addition of related lending personnel. Commencing in 2022, we expanded our government guaranteed activities nationally with the ongoing expansion of our SBA and USDA Banking Team and we recruited a C&I Banking Team that continues to expand as we pursue new lending and core deposit growth opportunities.

    During the second fiscal quarter of 2023, the Bank recorded a provision for loan losses expense of $0.9 million, including a required accounting charge related to the write-off of two purchased credit impaired loans acquired in the Savoy Bank acquisition totaling $407 thousand. The March 31, 2023, allowance for loan losses balance was $14.9 million versus $12.8 million at September 30, 2022. The allowance for loan losses as a percent of total loans was 0.83% at March 31, 2023 versus 0.79% at September 30, 2022. The allowance for loan losses as a percent of total loans excluding acquired loans (“originated loans”) was 0.95% at March 31, 2023. At March 31, 2023, non-performing loans totaled $11.0 million of which $9.0 million represented legacy Savoy originated loans that were either written down to fair value at the acquisition date or are 100% guaranteed by the SBA. The remaining $2.0 million of non-performing loans represent primarily Hanover originated residential credits with a weighted average loan-to-value ratio of 63%.

    Net Interest Margin

    The Bank’s net interest margin was 3.04% during the second fiscal quarter of 2023 versus 4.26% in the comparable 2022 quarter and 3.49% in the December 31, 2022 quarter. The decrease from the prior year quarter and linked quarter was primarily related to the increase in the total cost of funds, partially offset by the increase in the average yield on loans and to a lesser extent, the Company’s decision to increase liquidity as a result of the recent industry events. The decrease from the prior year’s comparable quarter included a 33 basis point impact related to the reduction in purchase accounting accretion. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 2.97% and 3.86% in the quarters ended March 31, 2023 and 2022, respectively, and 3.43% in the quarter ended December 31, 2022. The margin compression reflects the effects of the rapid and significant rise in interest rates and the competitive deposit environment.

    About Hanover Community Bank and Hanover Bancorp, Inc.

    Hanover Bancorp, Inc. (NASDAQ: HNVR), is a bank holding company for Hanover Community Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to client needs. Management and the Board of Directors are comprised of a select group of successful local businessmen and women who are committed to the success of the Bank by knowing and understanding the metro-New York area’s financial needs and opportunities. Backed by state-of-the-art technology, Hanover offers a full range of financial services. Hanover employs a complete suite of consumer, commercial, and municipal banking products and services, including multi-family and commercial mortgages, residential loans, business loans and lines of credit. Hanover also offers its customers access to 24-hour ATM service with no fees attached, free checking with interest, telephone banking, advanced technologies in mobile and internet banking for our consumer and business customers, safe deposit boxes and much more. The Company’s corporate administrative office is located in Mineola, New York where it also operates a full-service branch office along with additional branch locations in Garden City Park, Forest Hills, Flushing, Sunset Park, Rockefeller Center and Chinatown, New York, and Freehold, New Jersey.

    Hanover Community Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, call (516) 548-8500 or visit the Bank’s website at www.hanoverbank.com.

    Non-GAAP Disclosure

    This discussion includes non-GAAP financial measures, including the Company’s adjusted operating earnings, adjusted net interest margin, adjusted returns on average assets and shareholders’ equity, and adjusted operating efficiency ratio. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes that the presentation of non-GAAP financial measures provides both management and investors with a greater understanding of the Company’s operating results and trends in addition to the results measured in accordance with GAAP, and provides greater comparability across time periods. While management uses non-GAAP financial measures in its analysis of the Company’s performance, this information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP. The Company’s non-GAAP financial measures may not be comparable to similarly titled measures used by other financial institutions.

    With respect to the calculations of adjusted operating net income, adjusted net interest income, adjusted net interest margin, and adjusted operating efficiency ratio for the periods presented in this discussion, reconciliations to the most comparable U.S. GAAP measures are provided in the tables that follow.

    Forward-Looking Statements

    This release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may be identified by the use of such words as "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Hanover Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Hanover Bancorp, Inc. may turn out to be incorrect. They can be affected by inaccurate assumptions that Hanover Bancorp, Inc. might make or by known or unknown risks and uncertainties, including those discussed in our Annual Report on Form 10-K under Item 1A - Risk Factors, as updated by our subsequent filings with the Securities and Exchange Commission. Further, the adverse effect of the COVID-19 pandemic on the Company, its customers, and the communities where it operates may adversely affect the Company’s business, results of operations and financial condition for an indefinite period of time. Consequently, no forward-looking statement can be guaranteed. Hanover Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release or to conform these statements to actual events.



    HANOVER BANCORP, INC.
    STATEMENTS OF CONDITION (unaudited)
    (dollars in thousands)
           
      March 31, September 30, March 31,
       2023   2022   2022 
    Assets     
    Cash and cash equivalents$204,355  $149,947  $127,140 
    Securities-available for sale, at fair value 11,849   12,285   5,070 
    Investments-held to maturity 4,263   4,414   4,629 
           
    Loans, net of deferred loan fees and costs 1,787,365   1,623,531   1,289,041 
    Less: allowance for loan losses (14,879)  (12,844)  (9,886)
    Loans, net 1,772,486   1,610,687   1,279,155 
           
    Goodwill 19,168   19,168   19,168 
    Premises & fixed assets 15,692   14,462   14,833 
    Operating lease assets 11,008   -   - 
    Other assets 32,899   29,095   26,686 
     Assets$2,071,720  $1,840,058  $1,476,681 
           
    Liabilities and stockholders' equity     
    Core deposits$1,276,422  $1,189,033  $943,995 
    Time deposits 430,852   339,073   286,247 
    Total deposits 1,707,274   1,528,106   1,230,242 
           
    Borrowings 136,962   101,752   75,823 
    Subordinated debentures 24,594   24,568   24,541 
    Operating lease liabilities 11,711   -   - 
    Other liabilities 10,657   13,048   11,307 
     Liabilities 1,891,198   1,667,474   1,341,913 
           
    Stockholders' equity 180,522   172,584   134,768 
     Liabilities and stockholders' equity$2,071,720  $1,840,058  $1,476,681 
           


    HANOVER BANCORP, INC.
    CONSOLIDATED STATEMENTS OF INCOME (unaudited)
    (dollars in thousands, except per share data)
             
      Three Months Ended Six Months Ended
      3/31/2023 3/31/2022 3/31/2023 3/31/2022
             
    Interest income$25,060  $15,941  $47,632  $32,557 
    Interest expense 11,136   1,197   18,444   2,544 
     Net interest income 13,924   14,744   29,188   30,013 
    Provision for loan losses 932   500   2,432   1,400 
     Net interest income after provision for loan losses 12,992   14,244   26,756   28,613 
             
    Loan servicing and fee income 539   734   1,217   1,424 
    Service charges on deposit accounts 67   46   130   109 
    Gain on sale of loans held-for-sale 995   1,575   1,573   3,067 
    Gain on sale of investments -   105   -   105 
    Other operating income 155   212   247   343 
     Non-interest income 1,756   2,672   3,167   5,048 
             
    Compensation and benefits 5,564   5,618   9,896   10,557 
    Occupancy and equipment 1,537   1,370   3,014   2,783 
    Data processing 441   392   859   759 
    Marketing and advertising 183   153   333   186 
    Professional fees 881   640   1,564   1,139 
    Other operating expenses 1,961   1,184   3,172   2,198 
     Non-interest expense 10,567   9,357   18,838   17,622 
             
     Income before income taxes 4,181   7,559   11,085   16,039 
    Income tax expense 972   1,699   2,538   3,642 
             
     Net income$3,209  $5,860  $8,547  $12,397 
             
    Earnings per share ("EPS"):(1)       
    Basic$0.44  $1.02  $1.17  $2.19 
    Diluted$0.43  $1.00  $1.15  $2.15 
             
    Average shares outstanding for basic EPS (1) 7,010,573   5,492,387   7,009,734   5,490,415 
    Average shares outstanding for diluted EPS (1) 7,102,806   5,588,716   7,103,052   5,586,523 
             
    (1) Calculation includes common stock and Series A preferred stock for the three and six months ended 3/31/23.
             
    Note: Prior period information has been adjusted to conform to current period presentation.
             


    HANOVER BANCORP, INC.
    CONSOLIDATED STATEMENTS OF INCOME (unaudited)
    QUARTERLY TREND
    (dollars in thousands, except per share data)
               
      Three Months Ended
      3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022
               
    Interest income$25,060  $22,572  $19,613  $16,259  $15,941 
    Interest expense 11,136   7,308   3,191   1,439   1,197 
     Net interest income 13,924   15,264   16,422   14,820   14,744 
    Provision for loan losses 932   1,500   2,050   1,000   500 
     Net interest income after provision for loan losses 12,992   13,764   14,372   13,820   14,244 
               
    Loan servicing and fee income 539   678   681   779   734 
    Service charges on deposit accounts 67   63   63   60   46 
    Gain on sale of loans held-for-sale 995   578   1,227   849   1,575 
    Gain on sale of investments -   -   -   -   105 
    Other operating income 155   92   24   140   212 
     Non-interest income 1,756   1,411   1,995   1,828   2,672 
               
    Compensation and benefits 5,564   4,332   4,265   4,843   5,618 
    Occupancy and equipment 1,537   1,477   1,457   1,394   1,370 
    Data processing 441   418   496   374   392 
    Marketing and advertising 183   150   50   112   153 
    Acquisition costs -   -   -   250   - 
    Professional fees 881   683   850   579   640 
    Other operating expenses 1,961   1,211   1,713   1,178   1,184 
     Non-interest expense 10,567   8,271   8,831   8,730   9,357 
               
     Income before income taxes 4,181   6,904   7,536   6,918   7,559 
    Income tax expense 972   1,566   1,712   1,585   1,699 
               
     Net income$3,209  $5,338  $5,824  $5,333  $5,860 
               
    Earnings per share ("EPS"):(1)         
    Basic$0.44  $0.73  $0.80  $0.81  $1.02 
    Diluted$0.43  $0.72  $0.79  $0.80  $1.00 
               
    Average shares outstanding for basic EPS (1) 7,010,573   7,008,913   6,997,101   6,272,102   5,492,387 
    Average shares outstanding for diluted EPS (1) 7,102,806   7,103,911   7,090,117   6,371,164   5,588,716 
               
    (1) Calculation includes common stock and Series A preferred stock for the quarters ended 3/31/23 and 12/31/22.
               
    Note: Prior period information has been adjusted to conform to current period presentation.
               


    HANOVER BANCORP, INC.
    CONSOLIDATED NON-GAAP FINANCIAL INFORMATION (1) (unaudited)
    (dollars in thousands, except per share data)
            
     Three Months Ended Six Months Ended
     3/31/2023 3/31/2022 3/31/2023 3/31/2022
            
    ADJUSTED NET INCOME:       
    Net income, as reported$3,209  $5,860  $8,547  $12,397 
    Adjustments:       
    Severance and retirement expenses 456   -   456   - 
    Total adjustments, before income taxes 456   -   456   - 
    Adjustment for reported effective income tax rate 105   -   105   - 
    Total adjustments, after income taxes 351   -   351   - 
    Adjusted net income$3,560  $5,860  $8,898  $12,397 
    Basic earnings per share - adjusted$0.49  $1.02  $1.22  $2.19 
    Diluted earnings per share - adjusted$0.48  $1.00  $1.20  $2.15 
            
    ADJUSTED OPERATING EFFICIENCY RATIO(2):        
    Operating efficiency ratio, as reported 67.39%  54.05%  58.22%  50.41%
    Adjustments:       
    Severance and retirement expenses -2.91%  0.00%  -1.41%  0.00%
    Adjusted operating efficiency ratio 64.48%  54.05%  56.81%  50.41%
            
    ADJUSTED RETURN ON AVERAGE ASSETS 0.75%  1.63%  0.96%  1.72%
    ADJUSTED RETURN ON AVERAGE EQUITY 8.03%  17.83%  10.03%  19.16%
            
    (1)  A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with U.S. GAAP. While management uses non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP.
            
    (2) Excludes gain on sale of securities available for sale.
            


    HANOVER BANCORP, INC.
    SELECTED FINANCIAL DATA (unaudited)
    (dollars in thousands)
            
     Three Months Ended Six Months Ended
     3/31/2023 3/31/2022 3/31/2023 3/31/2022
    Profitability:       
    Return on average assets 0.68%  1.63%  0.92%  1.72%
    Return on average equity (1) 7.24%  17.83%  9.64%  19.16%
    Return on average tangible equity (1) 8.12%  20.91%  10.83%  22.57%
    Pre-provision net revenue to average assets 1.08%  2.24%  1.46%  2.41%
    Yield on average interest-earning assets 5.47%  4.60%  5.32%  4.69%
    Cost of average interest-bearing liabilities 2.94%  0.44%  2.53%  0.46%
    Net interest rate spread (2) 2.53%  4.16%  2.79%  4.23%
    Net interest margin (3) 3.04%  4.26%  3.26%  4.32%
    Non-interest expense to average assets 2.23%  2.60%  2.03%  2.44%
    Operating efficiency ratio (4) 67.39%  54.05%  58.22%  50.41%
            
    Average balances:       
    Interest-earning assets$1,857,782  $1,404,983  $1,795,079  $1,393,049 
    Interest-bearing liabilities 1,534,205   1,115,078   1,462,258   1,110,620 
    Loans 1,766,679   1,274,485   1,723,601   1,264,043 
    Deposits 1,603,684   1,202,233   1,537,615   1,174,748 
    Borrowings 112,720   112,475   117,992   131,726 
            
            
    (1) Includes common stock and Series A preferred stock for the three and six months ended 3/31/23.
    (2) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
    (3) Represents net interest income divided by average interest-earning assets.
    (4) Excludes gain on sale of securities available for sale.
            


    HANOVER BANCORP, INC.
    SELECTED FINANCIAL DATA (unaudited)
    (dollars in thousands, except share and per share data)
            
     At or For the Three Months Ended
     3/31/2023 12/31/2022 9/30/2022 6/30/2022
    Asset quality:       
    Provision for loan losses$932  $1,500  $2,050  $1,000 
    Net (charge-offs)/recoveries (457)  60   (92)  - 
    Allowance for loan losses 14,879   14,404   12,844   10,886 
    Allowance for loan losses to total loans (1) 0.83%  0.82%  0.79%  0.77%
    Allowance for loan losses to originated loans (1)(4) 0.95%  0.95%  0.94%  1.00%
    Non-performing loans (2)(3)$11,031  $11,798  $13,512  $13,729 
    Non-performing loans/total loans 0.62%  0.68%  0.83%  0.97%
    Non-performing loans/total assets 0.53%  0.59%  0.73%  0.85%
    Allowance for loan losses/non-performing loans 134.88%  122.09%  95.06%  79.29%
            
    Capital (Bank only):       
    Tier 1 Capital$185,449  $182,934  $178,340  $171,753 
    Tier 1 leverage ratio 9.79%  10.34%  10.90%  11.64%
    Common equity tier 1 capital ratio 12.88%  14.17%  15.21%  16.27%
    Tier 1 risk based capital ratio 12.88%  14.17%  15.21%  16.27%
    Total risk based capital ratio 13.93%  15.30%  16.32%  17.32%
            
    Equity data:       
    Shares outstanding (5) 7,331,092   7,299,000   7,285,648   7,296,624 
    Stockholders' equity$180,522  $177,628  $172,584  $167,391 
    Book value per share (5) 24.62   24.34   23.69   22.94 
    Tangible common equity (5) 160,992   158,079   153,017   147,805 
    Tangible book value per share (5) 21.96   21.66   21.00   20.26 
    Tangible common equity ("TCE") ratio (5) 7.84%  8.05%  8.41%  9.29%
            
    (1) Calculation excludes loans held for sale.
    (2) Includes $0.7 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.2 million
    of loans fully guaranteed by the SBA at 3/31/23.
    (3) Includes $1.2 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.2 million
    of loans fully guaranteed by the SBA at 12/31/22, 9/30/22 and 6/30/22.
    (4) Calculation excludes acquired loans.
    (5) Includes common stock and Series A preferred stock at 3/31/23 and 12/31/22.
            
    Note: Prior period information has been adjusted to conform to current period presentation.
     


    HANOVER BANCORP, INC.
    STATISTICAL SUMMARY
    QUARTERLY TREND
    (unaudited, dollars in thousands, except share data)
            
     3/31/2023 12/31/2022 9/30/2022 6/30/2022
            
    Loan distribution (1):       
    Residential mortgages$567,106  $550,161  $488,692  $407,328 
    Multifamily 588,244   590,530   575,061   479,366 
    Commercial real estate 541,924   533,442   485,891   447,618 
    Commercial & industrial 59,184   46,162   46,285   56,932 
    Home equity 30,664   26,358   27,566   24,520 
    Consumer 243   157   36   13 
            
    Total loans$ 1,787,365  $ 1,746,810  $ 1,623,531  $ 1,415,777 
            
    Sequential quarter growth rate 2.32%  7.59%  14.67%  9.83%
            
    Loans sold during the quarter$12,756  $8,047  $19,342  $9,490 
            
    Funding distribution:       
    Demand$178,592  $199,556  $219,225  $220,357 
    N.O.W. 627,102   536,092   582,457   542,391 
    Savings 79,414   107,275   128,927   104,826 
    Money market 391,314   285,471   258,424   183,703 
    Total core deposits 1,276,422   1,128,394   1,189,033   1,051,277 
    Time 430,852   389,256   339,073   298,272 
    Total deposits 1,707,274   1,517,650   1,528,106   1,349,549 
    Borrowings 136,962   238,273   101,752   56,963 
    Subordinated debentures 24,594   24,581   24,568   24,554 
            
    Total funding sources$ 1,868,830  $ 1,780,504  $ 1,654,426  $ 1,431,066 
            
    Sequential quarter growth rate - total deposits 12.49%  -0.68%  13.23%  9.70%
            
    Period-end core deposits/total deposits ratio 74.76%  74.35%  77.81%  77.90%
            
    Period-end demand deposits/total deposits ratio 10.46%  13.15%  14.35%  16.33%
            
    (1) Excluding loans held for sale
            


    HANOVER BANCORP, INC.         
    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1) (unaudited)    
    (dollars in thousands, except share and per share amounts)      
              
              
     3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022
    Tangible common equity         
    Total equity (2)$180,522  $177,628  $172,584  $167,391  $134,768 
    Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (19,168)
    Less: core deposit intangible (362)  (381)  (399)  (418)  (438)
    Tangible common equity (2)$160,992  $158,079  $153,017  $147,805  $115,162 
              
    Tangible common equity ("TCE") ratio        
    Tangible common equity (2)$160,992  $158,079  $153,017  $147,805  $115,162 
    Total assets 2,071,720   1,983,692   1,840,058   1,609,757   1,476,681 
    Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (19,168)
    Less: core deposit intangible (362)  (381)  (399)  (418)  (438)
    Tangible assets$2,052,190  $1,964,143  $1,820,491  $1,590,171  $1,457,075 
    TCE ratio (2) 7.84%  8.05%  8.41%  9.29%  7.90%
              
    Tangible book value per share         
    Tangible equity (2)$160,992  $158,079  $153,017  $147,805  $115,162 
    Shares outstanding (2) 7,331,092   7,299,000   7,285,648   7,296,624   5,829,569 
    Tangible book value per share (2)$21.96  $21.66  $21.00  $20.26  $19.75 
              
    (1)  A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with U.S. GAAP. While management uses non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP.
    (2)  Includes common stock and Series A preferred stock at 3/31/23 and 12/31/22.
     


    HANOVER BANCORP, INC.
    NET INTEREST INCOME ANALYSIS
    For the Three Months Ended March 31, 2023 and 2022
    (unaudited, dollars in thousands)
                
     2023 2022
     Average   Average Average   Average
     Balance Interest Rate Balance Interest Rate
                
    Assets:           
    Interest-earning assets:           
    Loans$1,766,679  $23,941  5.50% $1,274,485  $15,749  5.01%
    Investment securities 16,408   198  4.89%  11,547   106  3.72%
    Interest-earning cash 68,308   788  4.68%  114,889   45  0.16%
    FHLB stock and other investments 6,387   133  8.45%  4,062   41  4.09%
    Total interest-earning assets 1,857,782   25,060  5.47%  1,404,983   15,941  4.60%
    Non interest-earning assets:           
    Cash and due from banks 9,809       8,405     
    Other assets 54,014       47,243     
    Total assets$1,921,605      $1,460,631     
                
    Liabilities and stockholders' equity:           
    Interest-bearing liabilities:           
    Savings, N.O.W. and money market deposits$1,012,839  $7,792  3.12% $696,240  $345  0.20%
    Time deposits 408,646   2,383  2.36%  306,363   401  0.53%
    Total savings and time deposits 1,421,485   10,175  2.90%  1,002,603   746  0.30%
    Borrowings 88,134   627  2.89%  87,948   117  0.54%
    Subordinated debentures 24,586   334  5.51%  24,527   334  5.52%
    Total interest-bearing liabilities 1,534,205   11,136  2.94%  1,115,078   1,197  0.44%
    Demand deposits 182,199       199,630     
    Other liabilities 25,291       12,662     
    Total liabilities 1,741,695       1,327,370     
    Stockholders' equity 179,910       133,261     
    Total liabilities & stockholders' equity$1,921,605      $1,460,631     
    Net interest rate spread    2.53%     4.16%
    Net interest income/margin  $ 13,924  3.04%   $ 14,744  4.26%
                


    HANOVER BANCORP, INC.
    NET INTEREST INCOME ANALYSIS
    For the Six Months Ended March 31, 2023 and 2022
    (unaudited, dollars in thousands)
                
     2023 2022
     Average   Average Average   Average
     Balance Interest Rate Balance Interest Rate
                
    Assets:           
    Interest-earning assets:           
    Loans$1,723,601  $45,920  5.34% $1,264,043  $32,130  5.10%
    Investment securities 16,459   410  5.00%  13,613   260  3.83%
    Interest-earning cash 48,580   1,063  4.39%  110,729   84  0.15%
    FHLB stock and other investments 6,439   239  7.44%  4,664   83  3.57%
    Total interest-earning assets 1,795,079   47,632  5.32%  1,393,049   32,557  4.69%
    Non interest-earning assets:           
    Cash and due from banks 10,216       8,334     
    Other assets 53,245       48,136     
    Total assets$1,858,540      $1,449,519     
                
    Liabilities and stockholders' equity:           
    Interest-bearing liabilities:           
    Savings, N.O.W. and money market deposits$961,225  $12,556  2.62% $652,268  $711  0.22%
    Time deposits 383,041   3,930  2.06%  326,626   892  0.55%
    Total savings and time deposits 1,344,266   16,486  2.46%  978,894   1,603  0.33%
    Borrowings 93,412   1,291  2.77%  107,213   277  0.52%
    Subordinated debentures 24,580   667  5.44%  24,513   664  5.43%
    Total interest-bearing liabilities 1,462,258   18,444  2.53%  1,110,620   2,544  0.46%
    Demand deposits 193,349       195,854     
    Other liabilities 25,039       13,254     
    Total liabilities 1,680,646       1,319,728     
    Stockholders' equity 177,894       129,791     
    Total liabilities & stockholders' equity$1,858,540      $1,449,519     
    Net interest rate spread    2.79%     4.23%
    Net interest income/margin  $ 29,188  3.26%   $ 30,013  4.32%
                


    Investor and Press Contact:
    Lance P. Burke
    Chief Financial Officer
    (516) 548-8500


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