• Hanover Bancorp, Inc. Reports Third Quarter 2024 Results and Declares $0.10 Quarterly Cash Dividend

    المصدر: Nasdaq GlobeNewswire / 23 أكتوبر 2024 15:00:52   America/Chicago

    Third Quarter Performance Highlights

    • Net Income: Net income for the quarter ended September 30, 2024 totaled $3.5 million or $0.48 per diluted share (including Series A preferred shares). Adjusted (non-GAAP) net income (excluding severance and retirement expenses) was $3.7 million or $0.50 per diluted share for the quarter ended September 30, 2024.
    • Record Non-interest Income: The Company reported record non-interest income of $4.0 million for the quarter ended September 30, 2024, an increase of $0.3 million or 9.17% from the quarter ended June 30, 2024 and $0.2 million or 6.66% from the quarter ended September 30, 2023.
    • Net Interest Income: Net interest income was $13.1 million for the quarter ended September 30, 2024, an increase of $1.3 million, or 11.04% from the September 30, 2023 quarter.
    • Net Interest Margin: The Company’s net interest margin during the quarter ended September 30, 2024 increased to 2.37% from 2.29% in the quarter ended September 30, 2023.
    • Strong Liquidity Position: At September 30, 2024, undrawn liquidity sources, which include cash and unencumbered securities and secured and unsecured funding capacity, totaled $637.1 million or approximately 240% of uninsured deposit balances.
    • Deposit Activity: Core deposits, consisting of Demand, NOW, Savings and Money Market, increased $71.0 million or 5.14% from December 31, 2023. Total deposits increased $52.9 million or 2.78% from December 31, 2023. Insured and collateralized deposits, which include municipal deposits, accounted for approximately 86% of total deposits at September 30, 2024.
    • Loan Growth: Loans totaled $2.01 billion, a net increase of $48.6 million or 3.31% annualized, from December 31, 2023. The Company’s commercial real estate concentration ratio continued to improve, decreasing to 397% of capital at September 30, 2024 from 432% of capital at December 31, 2023 and 448% of capital at September 30, 2023. The Company continues to focus loan growth primarily in residential loan products originated for sale to specific buyers in the secondary market, C&I and SBA loans, which strategically enhances our management of liquidity and capital while producing additional non-interest income.
    • Asset Quality: At September 30, 2024, the Bank’s asset quality remained solid with non-performing loans totaling $15.5 million, representing 0.77% of the total loan portfolio, and the allowance for credit losses equaling 1.17% of total loans. Loans secured by office space accounted for 2.27% of the total loan portfolio with a total balance of $45.5 million, of which less than 1% is located in Manhattan.
    • Banking Initiatives: At September 30, 2024, the Company’s banking initiatives reflected continuing momentum:
      • SBA & USDA Banking: Gains on sale of SBA loans totaled $2.4 million for the quarter ended September 30, 2024, representing a 63.83% increase over the comparable 2023 quarter. Total SBA loans sold were $27.1 million for the quarter ended September 30, 2024, representing a 47.00% increase over the comparable 2023 quarter. Premiums earned on the sale of SBA loans increased to 9.59% for the quarter ended September 30, 2024 from 8.66% for the quarter ended September 30, 2023.
      • C&I Banking/Hauppauge Business Banking Center: The C&I Banking Team and the Hauppauge Business Banking Center increased deposits to $96.0 million as of September 30, 2024 from $36.1 million at September 30, 2023. Loan originations tied to this office were $8 million during the quarter. Momentum continues to build with current deposits of $105 million and deposit and C&I loan pipelines related to this office of $43 million and $104 million, respectively.
      • Residential Lending: The Bank continues to originate loans for its portfolio while developing the flow origination program launched in late 2023. Of the $27.3 million in closed loans originated in the quarter ended September 30, 2024, $7.4 million were originated for the Bank’s portfolio and reflected a weighted average yield of 7.59% before origination and other fees, which average 50-100 bps per loan, and a weighted average LTV of 61%.
    • Tangible Book Value Per Share: Tangible book value per share (including Series A preferred shares) was $23.28 at September 30, 2024 compared to $22.51 at December 31, 2023.  
    • 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 November 13, 2024 to stockholders of record on November 6, 2024.
    • Port Jefferson Branch: The Company has received regulatory approval for the opening of a full-service branch in Port Jefferson, New York. Business development staff have already joined the Company in anticipation of the opening of this location. The Bank expects this site to be fully operational in the first quarter of 2025.

    MINEOLA, N.Y., Oct. 23, 2024 (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 September 30, 2024 and the declaration of a $0.10 per share cash dividend on both common and Series A preferred shares payable on November 13, 2024 to stockholders of record on November 6, 2024.

    Earnings Summary for the Quarter Ended September 30, 2024

    The Company reported net income for each of the quarters ended September 30, 2024 and 2023 of $3.5 million or $0.48 per diluted share (including Series A preferred shares). The Company recorded adjusted (non-GAAP) net income (excluding severance and retirement expenses) of $3.7 million or $0.50 per diluted share in the quarter ended September 30, 2024, versus adjusted (non-GAAP) net income (excluding a litigation settlement payment) of $2.8 million or $0.38 per diluted share in the comparable 2023 quarter. Returns on average assets, average stockholders’ equity and average tangible equity were 0.62%, 7.35% and 8.19%, respectively, for the quarter ended September 30, 2024, versus 0.66%, 7.58% and 8.47%, respectively, for the comparable quarter of 2023.   Adjusted (non-GAAP) returns, exclusive of severance and retirement expenses on average assets, average stockholders’ equity and average tangible equity were 0.65%, 7.69% and 8.56%, respectively, in the quarter ended September 30, 2024, versus 0.53%, 6.00% and 6.71%, respectively, in the comparable 2023 quarter, exclusive of a litigation settlement payment.

    While net interest income and non-interest income increased during the quarter ended September 30, 2024 compared to the September 30, 2023 quarter, this was offset by an increase in non-interest expenses, particularly compensation and benefits, resulting in flat earnings between these periods.   The increase in non-interest income is primarily related to the increase in the gain on sale of loans held-for-sale which was partially offset by a decrease in other operating income. In the September 30, 2023 quarter, the Company settled ongoing litigation and received a settlement payment of $975 thousand which was recorded in other operating income. Included in compensation and benefits expense in the third quarter of 2024 was expense related to additional staff for the SBA, C&I Banking and Operations teams and severance payments in August 2024 paid in connection with a loan personnel restructuring initiative. These expenses were offset by lower incentive compensation expense resulting from reduced projected lending activity and lower deferred loan origination costs.

    Net interest income was $13.1 million for the quarter ended September 30, 2024, an increase of $1.3 million, or 11.04%, versus the comparable 2023 quarter due to improvement of the Company’s net interest margin to 2.37% in the 2024 quarter from 2.29% in the comparable 2023 quarter. The yield on interest earning assets increased to 6.17% in the 2024 quarter from 5.61% in the comparable 2023 quarter, an increase of 56 basis points that was partially offset by a 58 basis point increase in the cost of interest-bearing liabilities to 4.53% in 2024 from 3.95% in the third quarter of 2023.

    Earnings Summary for the Nine Months Ended September 30, 2024

    For the nine months ended September 30, 2024, the Company reported net income of $8.4 million or $1.14 per diluted share (including Series A preferred shares), versus $9.8 million or $1.33 per diluted share (including Series A preferred shares) in the comparable 2023 nine-month period.   The Company recorded adjusted (non-GAAP) net income (excluding severance and retirement expenses) of $8.6 million or $1.16 per diluted share for the nine months ended September 30, 2024, versus adjusted (non-GAAP) net income (excluding severance and retirement expenses and a litigation settlement payment) of $9.4 million or $1.27 per diluted share in the comparable 2023 nine-month period.

    The decrease in net income recorded for the nine months ended September 30, 2024 from the comparable 2023 period resulted from an increase in the provision for credit losses and an increase in non-interest expense, which were partially offset by an increase in non-interest income, consisting primarily of gain on sale of loans held-for-sale. The increase in non-interest expense was primarily attributed to additional staff for the SBA, C&I Banking and Operations teams.   The Company’s effective tax rate decreased to 24.50% for the nine months ended September 30, 2024 from 26.03% in the comparable 2023 period.

    Net interest income was $39.3 million for the nine months ended September 30, 2024, a slight increase of $0.1 million, or 0.14% from the comparable 2023 period. The Company’s net interest margin was 2.41% in the 2024 period and 2.65% in the comparable 2023 period. The yield on interest earning assets increased to 6.14% in the 2024 period from 5.58% in the comparable 2023 period, an increase of 56 basis points that was offset by a 95 basis point increase in the cost of interest-bearing liabilities to 4.45% in 2024 from 3.50% in the comparable 2023 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 with third-quarter results, which reflect the benefits of our diversified revenue streams. Strategic expansion of our C&I banking and government guaranteed lending initiatives continue to deliver sustained results. The success of our Hauppauge Business Banking Center over the last 16 months has yielded exceptional results as evidenced by over $100 million in deposits. Our investment in diversifying our residential lending activities from portfolio originations to including flow originations is gaining momentum. The continued decline in interest rates forecast by many economists is expected to provide sustained net interest margin expansion over the near term, having an anticipated positive impact on earnings. We believe these factors, coupled with our commitment to efficiency across our organization, position us for continued growth and opportunity, particularly in a market with continued consolidation. We continue to strategically seek opportunities to recruit talent and expand our footprint in the underserved Long Island community and wider New York City markets.”

    Balance Sheet Highlights

    Total assets at September 30, 2024 were $2.33 billion versus $2.27 billion at December 31, 2023. Total securities available for sale at September 30, 2024 were $98.4 million, an increase of $36.9 million from December 31, 2023, primarily driven by growth in U.S. Treasury securities, corporate bonds and mortgage-backed securities.

    Total deposits at September 30, 2024 were $1.96 billion, an increase of $52.9 million or 2.78%, compared to $1.90 billion at December 31, 2023. Our loan to deposit ratio was 102% at September 30, 2024 and 103% at December 31, 2023.

    Although core deposits, comprised of Demand, NOW, Savings and Money Market, grew to $1.45 billion as of September 30, 2024 from $1.38 billion as of December 31, 2023, Demand deposit balances decreased from $207.8 million to $206.3 million during the same period. This decrease was confined to deposits made by residential loan borrowers in anticipation of residential loan closings. These funds comprise the equity residential borrowers are required to contribute to residential loan closings. The volume of these deposits rise and fall in proportion to the volume of anticipated residential loan closings. As the pace of residential lending increases, the volume of Demand deposits will increase accordingly. Demand deposits, net of balances related to residential loan closings, grew to $181.8 million as of September 30, 2024 from $166.4 million as of December 31, 2023, an increase of 9.28%, underscoring the continued success of our C&I Banking vertical.

    The Company had $366.2 million in total municipal deposits at September 30, 2024, at a weighted average rate of 4.24% versus $528.1 million at a weighted average rate of 4.62% at December 31, 2023. The Company’s municipal deposit program is built on long-standing relationships developed in the local marketplace. This core deposit business will continue to provide a stable source of funding for the Company’s lending products at costs lower than those of consumer deposits and market-based borrowings.   The Company continues to broaden its municipal deposit base and currently services 39 customer relationships.

    Total borrowings at September 30, 2024 were $125.8 million, with a weighted average rate and term of 4.25% and 22 months, respectively. At September 30, 2024 and December 31, 2023, the Company had $107.8 million and $126.7 million, respectively, of term FHLB advances outstanding. The Company had $18.0 million of FHLB overnight borrowings outstanding at September 30, 2024 and none at December 31, 2023. At September 30, 2024 and December 31, 2023, the Company’s borrowings from the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) were $0 and $2.3 million, respectively.   The Company had no borrowings outstanding under lines of credit with correspondent banks at September 30, 2024 and December 31, 2023.   The Company utilizes a number of strategies to manage interest rate risk, including interest rate swap agreements which currently provide a benefit to net interest income.

    Stockholders’ equity was $192.3 million at September 30, 2024 compared to $184.8 million at December 31, 2023. The $7.5 million increase was primarily due to an increase of $6.2 million in retained earnings and a decrease of $0.3 million in accumulated other comprehensive loss. The increase in retained earnings was due primarily to net income of $8.4 million for the nine months ended September 30, 2024, which was offset by $2.2 million of dividends declared. The accumulated other comprehensive loss at September 30, 2024 was 1.10% of total equity and was comprised of a $1.0 million after tax net unrealized loss on the investment portfolio and a $1.1 million after tax net unrealized loss on derivatives.

    Loan Portfolio

    For the nine months ended September 30, 2024, the Bank’s loan portfolio grew to $2.01 billion, for an increase of $48.6 million or 3.31% annualized. Growth was concentrated primarily in residential, SBA and C&I loans. At September 30, 2024, the Company’s residential loan portfolio (including home equity) amounted to $745.9 million, with an average loan balance of $483 thousand and a weighted average loan-to-value ratio of 57%. Commercial real estate and multifamily loans totaled $1.09 billion at September 30, 2024, with an average loan balance of $1.5 million and a weighted average loan-to-value ratio of 59%. As will be discussed below, only approximately 37% of the multifamily portfolio is subject to rent regulation. The Company’s commercial real estate concentration ratio continued to improve, decreasing to 397% of capital at September 30, 2024 from 432% of capital at December 31, 2023, with loans secured by office space accounting for 2.27% of the total loan portfolio and totaling $45.5 million. The Company’s loan pipeline with executed term sheets at September 30, 2024 is approximately $142 million, with approximately 97% being niche-residential, conventional C&I and SBA and USDA lending opportunities.  

    Historically, the Bank 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, with the rapid increases in interest rates in recent years, the appetite among the Bank’s purchasers of residential loans for acquiring pools of loans declined, eliminating the Bank’s ability to sell residential loans in its portfolio on desirable terms. Commencing in late 2023, the Bank initiated development of a flow origination program under which the Bank originates individual loans for sale to specific buyers, thereby positioning the Bank to resume residential loan sales and generate fee income to complement sale premiums earned from the sale of the guaranteed portion of SBA loans. During the quarter ended September 30, 2024, the Company sold $16.5 million of residential loans under this program and recorded gains on sale of loans held-for-sale of $0.4 million. We expect the volume of activity to increase as the year progresses and our flow pipeline continues to build. Because we continue to prioritize the management of liquidity and capital, new business development is largely focused on flow originations over portfolio growth.

    The Bank’s investment in government guaranteed lending continues to yield results. During the quarters ended September 30, 2024 and 2023, the Company sold approximately $27.1 million and $18.4 million, respectively, in the government guaranteed portion of SBA loans and recorded gains on sale of loans held-for-sale of $2.4 million and $1.5 million, respectively.

    Commercial Real Estate Statistics

    A significant portion of the Bank’s commercial real estate portfolio consists of loans secured by Multi-Family and CRE-Investor owned real estate that are predominantly subject to fixed interest rates for an initial period of 5 years. The Bank’s exposure to Land/Construction loans is minor at $9.5 million, all at floating interest rates, and CRE-owner occupied loans have a sizable mix of floating rates. As shown below, these two portfolios have only 11% combined of loans maturing through the balance of 2024 and 2025, with 55% maturing in 2027 alone.

    Multi-Family Market Rent Portfolio Fixed Rate Reset/Maturity Schedule Multi-Family Stabilized Rent Portfolio Fixed Rate Reset/Maturity Schedule
    Calendar Period
    (loan data as of
    9/30/24)    		 #
    Loans    		 Total O/S
    ($000's
    omitted)    		 Avg O/S
    ($000's
    omitted)    		 Avg Interest
    Rate    		 Calendar Period
    (loan data as of
    9/30/24)    		 #
    Loans    		 Total O/S
    ($000's
    omitted)    		 Avg O/S
    ($000's
    omitted)    		 Avg Interest
    Rate
                             
    2024 3 $1,861 $620 7.07% 2024 4 $4,014 $1,004 5.43%
    2025 9  15,977  1,775 4.16% 2025 14  19,438  1,388 4.57%
    2026 36  119,170  3,310 3.66% 2026 20  43,147  2,157 3.67%
    2027 72  178,368  2,477 4.31% 2027 53  125,417  2,366 4.22%
    2028 18  29,980  1,666 6.16% 2028 11  9,966  906 7.12%
    2029+ 8  5,647  706 7.32% 2029+ 5  2,326  465 6.40%
    Fixed Rate 146  351,003  2,404 4.30% Fixed Rate 107  204,308  1,909 4.33%
    Floating Rate 3  457  152 9.56% Floating Rate 1  1,804  1,804 6.25%
    Total 149 $351,460 $2,359 4.32% Total 108 $206,112 $1,908 4.34%


    CRE Investor Portfolio Fixed Rate Reset/Maturity Schedule
    Calendar Period
    (loan data as of
    9/30/24)    		 #
    Loans    		 Total O/S
    ($000's omitted)    		 Avg O/S
    ($000's omitted)    		 Avg Interest
    Rate
                
    2024 18 $30,965 $1,720 5.56%
    2025 27  18,259  676 5.11%
    2026 33  45,806  1,388 4.85%
    2027 87  149,261  1,716 4.75%
    2028 32  32,826  1,026 6.65%
    2029+ 16  6,519  407 6.15%
    Fixed Rate 213  283,636  1,332 5.13%
    Floating Rate 3  12,368  4,123 8.80%
    Total CRE-Inv. 216 $296,004 $1,370 5.28%


    Rental breakdown of Multi-Family portfolio

    The table below segments our portfolio of loans secured by Multi-Family properties based on rental terms and location. As shown below, 63% of the combined portfolio is secured by properties subject to free market rental terms, the dominant tenant type, and both the Market Rent and Stabilized Rent segments of our portfolio present very similar average borrower profiles. The portfolio is primarily located in the New York City boroughs of Brooklyn, the Bronx and Queens. 

    Multi-Family Loan Portfolio - Loans by Rent Type
    Rent Type # of Notes Outstanding
    Loan Balance    		 % of Total
    Multi-Family    		 Avg Loan
    Size    		 LTV Current
    DSCR    		 Avg #
    of Units
        ($000's omitted)    ($000's omitted)       
                       
    Market 149 $351,460 63%$2,359 61.8%1.40 11
    Location                  
    Manhattan 7 $17,911 3%$2,559 52.0%1.63 15
    Other NYC 94 $246,140 44%$2,619 61.5%1.39 10
    Outside NYC 48 $87,409 16%$1,821 64.8%1.40 12
                       
    Stabilized 108 $206,112 37%$1,908 63.1%1.38 11
    Location                  
    Manhattan 7 $10,892 2%$1,556 53.5%1.49 15
    Other NYC 89 $176,115 32%$1,979 63.5%1.38 11
    Outside NYC 12 $19,105 3%$1,592 64.7%1.40 16


    Office Property Exposure

    The Bank’s exposure to the Office market is minor at $45 million (2% of all loans), has a 1.8x weighted average DSCR, a 54% weighted average LTV and less than $400 thousand of exposure in Manhattan. The portfolio has no delinquencies, defaults or modifications.

    Asset Quality and Allowance for Credit Losses

    The Bank’s asset quality ratios remain solid. At September 30, 2024, the Company reported $15.5 million in non-performing loans which represented 0.77% of total loans outstanding. Non-performing loans were $14.5 million at December 31, 2023 and $15.8 million at June 30, 2024.

    During the third quarter of 2024, the Bank recorded a provision for credit losses expense of $0.2 million. The September 30, 2024, allowance for credit losses balance was $23.4 million versus $19.7 million at December 31, 2023 and $23.6 million at June 30, 2024. The allowance for credit losses as a percent of total loans was 1.17% at September 30 and June 30, 2024, inclusive of a $2.5 million allowance on an individually analyzed loan, versus 1.00% at December 31, 2023, which does not include the aforementioned $2.5 million allowance.  

    Net Interest Margin

    The Bank’s net interest margin increased to 2.37% for the quarter ended September 30, 2024 from 2.29% in the quarter ended September 30, 2023. The increase from the prior year quarter was primarily related to the increase in the average yield on loans, partially offset by the increase in the average total cost of funds. The Bank’s net interest margin was 2.46% in the quarter ended June 30, 2024, inclusive of $321 thousand or 6 bps related to an interest recovery on the sale of a non-performing loan. There were no such recoveries in the current quarter. Further, contributing to the decrease from the prior linked quarter was an increase in the total cost of interest-bearing deposits primarily related to the delayed timing of the Fed rate cut and our decision to ensure deposit retention via shorter duration products. Despite the linked quarter margin compression, we believe the Company is well positioned for the current or more favorable interest rate environments.

    About Hanover Community Bank and Hanover Bancorp, Inc.

    Hanover Bancorp, Inc. (NASDAQ: HNVR), is the 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 businesspeople 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 offers 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, Hauppauge, Forest Hills, Flushing, Sunset Park, Rockefeller Center and Chinatown, New York, and Freehold, New Jersey, with a new branch opening in Port Jefferson, New York in the first quarter of 2025.

    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, including the financial statements attached thereto, includes non-GAAP financial measures which include the Company’s adjusted net income, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity, tangible common equity (“TCE”) ratio, TCE, tangible assets, tangible book value per share, return on average tangible equity and 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 and reconciliations of adjusted net income, TCE, tangible assets, TCE ratio and tangible book value per share, 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 health emergencies or natural disasters 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)
           
      September 30, June 30, December 31,
       2024   2024   2023 
    Assets      
    Cash and cash equivalents$141,231  $141,115  $177,207 
    Securities-available for sale, at fair value 98,359   98,813   61,419 
    Investments-held to maturity 3,828   3,902   4,041 
    Loans held for sale 16,721   11,615   8,904 
           
    Loans, net of deferred loan fees and costs 2,005,813   2,012,954   1,957,199 
    Less: allowance for credit losses (23,406)  (23,644)  (19,658)
    Loans, net 1,982,407   1,989,310   1,937,541 
           
    Goodwill  19,168   19,168   19,168 
    Premises & fixed assets 16,373   16,541   15,886 
    Operating lease assets 8,776   9,210   9,754 
    Other assets 40,951   41,424   36,140 
     Assets$2,327,814  $2,331,098  $2,270,060 
           
    Liabilities and stockholders' equity     
    Core deposits$1,453,444  $1,477,824  $1,382,397 
    Time deposits 504,100   464,105   522,198 
    Total deposits 1,957,544   1,941,929   1,904,595 
           
    Borrowings 125,805   148,953   128,953 
    Subordinated debentures 24,675   24,662   24,635 
    Operating lease liabilities 9,472   9,911   10,459 
    Other liabilities 17,979   15,571   16,588 
     Liabilities 2,135,475   2,141,026   2,085,230 
           
    Stockholders' equity 192,339   190,072   184,830 
     Liabilities and stockholders' equity$2,327,814  $2,331,098  $2,270,060 



    HANOVER BANCORP, INC.
    CONSOLIDATED STATEMENTS OF INCOME (unaudited)
    (dollars in thousands, except per share data)
              
      Three Months Ended Nine Months Ended 
      9/30/2024 9/30/2023 9/30/2024 9/30/2023 
              
    Interest income$34,113 $28,952 $99,965 $82,471 
    Interest expense 21,011  17,153  60,681  43,243 
     Net interest income 13,102  11,799  39,284  39,228 
    Provision for credit losses (1) 200  500  4,540  1,932 
     Net interest income after provision for credit losses 12,902  11,299  34,744  37,296 
              
    Loan servicing and fee income 960  681  2,709  2,031 
    Service charges on deposit accounts 123  75  333  212 
    Gain on sale of loans held-for-sale 2,834  1,468  7,926  3,515 
    Gain on sale of investments -  -  4  - 
    Other operating income 37  1,483  180  1,679 
     Non-interest income 3,954  3,707  11,152  7,437 
              
    Compensation and benefits 6,840  5,351  18,901  16,320 
    Occupancy and equipment 1,799  1,758  5,412  4,882 
    Data processing 547  516  1,560  1,533 
    Professional fees 762  800  2,297  2,462 
    Federal deposit insurance premiums 360  386  1,043  1,101 
    Other operating expenses 1,930  1,506  5,499  5,152 
     Non-interest expense 12,238  10,317  34,712  31,450 
              
     Income before income taxes 4,618  4,689  11,184  13,283 
    Income tax expense 1,079  1,166  2,740  3,457 
              
     Net income$3,539 $3,523 $8,444 $9,826 
              
    Earnings per share ("EPS"):(2)        
    Basic$0.48 $0.48 $1.14 $1.34 
    Diluted$0.48 $0.48 $1.14 $1.33 
              
    Average shares outstanding for basic EPS (2)(3) 7,411,064  7,327,345  7,395,758  7,327,836 
    Average shares outstanding for diluted EPS (2)(3) 7,436,068  7,407,483  7,420,415  7,407,954 
              
    (1) CECL was adopted effective 10/1/23. Prior periods were based on the incurred loss methodology.
    (2) Calculation includes common stock and Series A preferred stock.
    (3) Average shares outstanding before subtracting participating securities.
              
    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
      9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023
               
    Interest income$34,113 $33,420 $32,432 $31,155 $28,952
    Interest expense 21,011  20,173  19,497  18,496  17,153
     Net interest income 13,102  13,247  12,935  12,659  11,799
    Provision for credit losses (1) 200  4,040  300  200  500
     Net interest income after provision for credit losses 12,902  9,207  12,635  12,459  11,299
               
    Loan servicing and fee income 960  836  913  778  681
    Service charges on deposit accounts 123  114  96  85  75
    Gain on sale of loans held-for-sale 2,834  2,586  2,506  2,326  1,468
    Gain on sale of investments -  4  -  -  -
    Other operating income 37  82  61  65  1,483
     Non-interest income 3,954  3,622  3,576  3,254  3,707
               
    Compensation and benefits 6,840  6,499  5,562  5,242  5,351
    Occupancy and equipment 1,799  1,843  1,770  1,746  1,758
    Data processing 547  495  518  530  516
    Professional fees 762  717  818  729  800
    Federal deposit insurance premiums 360  365  318  375  386
    Other operating expenses 1,930  1,751  1,818  2,048  1,506
     Non-interest expense 12,238  11,670  10,804  10,670  10,317
               
     Income before income taxes 4,618  1,159  5,407  5,043  4,689
    Income tax expense 1,079  315  1,346  1,280  1,166
               
     Net income$3,539 $844 $4,061 $3,763 $3,523
               
    Earnings per share ("EPS"):(2)         
    Basic$0.48 $0.11 $0.55 $0.51 $0.48
    Diluted$0.48 $0.11 $0.55 $0.51 $0.48
               
    Average shares outstanding for basic EPS (2)(3) 7,411,064  7,399,816  7,376,227  7,324,133  7,327,345
    Average shares outstanding for diluted EPS (2)(3) 7,436,068  7,449,110  7,420,926  7,383,529  7,407,483
               
    (1) CECL was adopted effective 10/1/23. Prior periods were based on the incurred loss methodology.
    (2) Calculation includes common stock and Series A preferred stock.
    (3) Average shares outstanding before subtracting participating securities.
               
    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 Nine Months Ended
     9/30/2024 9/30/2023 9/30/2024 9/30/2023
            
    ADJUSTED NET INCOME:       
    Net income, as reported$3,539  $3,523  $8,444  $9,826 
    Adjustments:       
    Litigation settlement payment -   (975)  -   (975)
    Severance and retirement expenses 219   -   219   456 
    Total adjustments, before income taxes 219   (975)  219   (519)
    Adjustment for reported effective income tax rate 55   (243)  55   (138)
    Total adjustments, after income taxes 164   (732)  164   (381)
    Adjusted net income$3,703  $2,791  $8,608  $9,445 
    Basic earnings per share - adjusted$0.50  $0.38  $1.16  $1.29 
    Diluted earnings per share - adjusted$0.50  $0.38  $1.16  $1.27 
            
    ADJUSTED OPERATING EFFICIENCY RATIO(2):        
    Operating efficiency ratio, as reported 71.75%  66.53%  68.83%  67.39%
    Adjustments:       
    Litigation settlement payment 0.00%  4.47%  0.00%  1.44%
    Severance and retirement expenses -1.28%  0.00%  -0.43%  -0.98%
    Adjusted operating efficiency ratio 70.47%  71.00%  68.40%  67.85%
            
    ADJUSTED RETURN ON AVERAGE ASSETS 0.65%  0.53%  0.51%  0.62%
    ADJUSTED RETURN ON AVERAGE EQUITY 7.69%  6.00%  6.04%  6.93%
    ADJUSTED RETURN ON AVERAGE TANGIBLE EQUITY 8.56%  6.71%  6.73%  7.77%
            
    (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 Nine Months Ended
     9/30/2024 9/30/2023 9/30/2024 9/30/2023
    Profitability:       
    Return on average assets 0.62%  0.66%  0.50%  0.64%
    Return on average equity (1) 7.35%  7.58%  5.93%  7.21%
    Return on average tangible equity (1) 8.19%  8.47%  6.60%  8.08%
    Pre-provision net revenue to average assets 0.85%  0.98%  0.94%  1.00%
    Yield on average interest-earning assets 6.17%  5.61%  6.14%  5.58%
    Cost of average interest-bearing liabilities 4.53%  3.95%  4.45%  3.50%
    Net interest rate spread (2) 1.64%  1.66%  1.69%  2.08%
    Net interest margin (3) 2.37%  2.29%  2.41%  2.65%
    Non-interest expense to average assets 2.15%  1.94%  2.08%  2.06%
    Operating efficiency ratio (4)  71.75%  66.53%  68.83%  67.39%
            
    Average balances:       
    Interest-earning assets$2,201,068  $2,046,502  $2,175,478  $1,975,584 
    Interest-bearing liabilities 1,847,177   1,723,235   1,822,613   1,653,908 
    Loans 2,019,384   1,840,900   2,006,142   1,802,349 
    Deposits 1,891,132   1,638,777   1,835,862   1,644,964 
    Borrowings 150,770   259,549   181,445   186,187 
            
            
    (1) Includes common stock and Series A preferred stock.
    (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) Represents non-interest expense divided by the sum of net interest income and non-interest income excluding 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
     9/30/2024 6/30/2024 3/31/2024 12/31/2023
    Asset quality:       
    Provision for credit losses - loans (1)$200  $3,850  $300  $200 
    Net (charge-offs)/recoveries (438)  (79)  (85)  677 
    Allowance for credit losses 23,406   23,644   19,873   19,658 
    Allowance for credit losses to total loans (2) 1.17%  1.17%  0.99%  1.00%
    Non-performing loans$15,469  $15,828  $14,878  $14,451 
    Non-performing loans/total loans 0.77%  0.79%  0.74%  0.74%
    Non-performing loans/total assets 0.66%  0.68%  0.64%  0.64%
    Allowance for credit losses/non-performing loans 151.31%  149.38%  133.57%  136.03%
            
    Capital (Bank only):       
    Tier 1 Capital$198,196  $195,703  $195,889  $193,324 
    Tier 1 leverage ratio 8.85%  8.89%  8.90%  9.08%
    Common equity tier 1 capital ratio 12.99%  12.78%  12.99%  13.17%
    Tier 1 risk based capital ratio 12.99%  12.78%  12.99%  13.17%
    Total risk based capital ratio 14.24%  14.21%  14.19%  14.31%
            
    Equity data:       
    Shares outstanding (3) 7,428,366   7,402,163   7,392,412   7,345,012 
    Stockholders' equity$192,339  $190,072  $189,543  $184,830 
    Book value per share (3) 25.89   25.68   25.64   25.16 
    Tangible common equity (3) 172,906   170,625   170,080   165,351 
    Tangible book value per share (3) 23.28   23.05   23.01   22.51 
    Tangible common equity ("TCE") ratio (3) 7.49%  7.38%  7.43%  7.35%
            
    (1) Excludes $0, $190 thousand, $0 and $0 provision for credit losses on unfunded commitments for the quarters ended 9/30/24, 6/30/24, 3/31/24 and 12/31/23, respectively.
    (2) Calculation excludes loans held for sale.
    (3) Includes common stock and Series A preferred stock.
            
    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)
            
     9/30/2024 6/30/2024 3/31/2024 12/31/2023
            
    Loan distribution (1):       
    Residential mortgages$719,037  $733,040  $730,017  $689,211 
    Multifamily 557,634   562,503   568,043   572,849 
    Commercial real estate 529,948   549,725   556,708   561,183 
    Commercial & industrial 171,899   139,209   123,419   107,912 
    Home equity 26,825   27,992   26,879   25,631 
    Consumer 470   485   449   413 
            
      Total loans$ 2,005,813  $ 2,012,954  $ 2,005,515  $ 1,957,199 
            
    Sequential quarter growth rate -0.35%  0.37%  2.47%  4.41%
            
    CRE concentration ratio 397%  403%  416%  432%
            
    Loans sold during the quarter$43,537  $35,302  $26,735  $29,740 
            
    Funding distribution:       
    Demand$206,327  $199,835  $202,934  $207,781 
    N.O.W. 621,880   661,998   708,897   661,276 
    Savings 53,024   44,821   48,081   47,608 
    Money market 572,213   571,170   493,123   465,732 
    Total core deposits 1,453,444   1,477,824   1,453,035   1,382,397 
    Time 504,100   464,105   464,227   522,198 
    Total deposits 1,957,544   1,941,929   1,917,262   1,904,595 
    Borrowings 125,805   148,953   148,953   128,953 
    Subordinated debentures 24,675   24,662   24,648   24,635 
            
      Total funding sources$ 2,108,024  $ 2,115,544  $ 2,090,863  $ 2,058,183 
            
    Sequential quarter growth rate - total deposits 0.80%  1.29%  0.67%  9.77%
            
    Period-end core deposits/total deposits ratio 74.25%  76.10%  75.79%  72.58%
            
    Period-end demand deposits/total deposits ratio 10.54%  10.29%  10.58%  10.91%
            
    (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)
              
     9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023
    Tangible common equity         
    Total equity (2)$192,339  $190,072  $189,543  $184,830  $185,907 
    Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (19,168)
    Less: core deposit intangible (265)  (279)  (295)  (311)  (327)
    Tangible common equity (2)$172,906  $170,625  $170,080  $165,351  $166,412 
              
    Tangible common equity ("TCE") ratio        
    Tangible common equity (2)$172,906  $170,625  $170,080  $165,351  $166,412 
    Total assets 2,327,814   2,331,098   2,307,508   2,270,060   2,149,632 
    Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (19,168)
    Less: core deposit intangible (265)  (279)  (295)  (311)  (327)
    Tangible assets$2,308,381  $2,311,651  $2,288,045  $2,250,581  $2,130,137 
    TCE ratio (2) 7.49%  7.38%  7.43%  7.35%  7.81%
              
    Tangible book value per share         
    Tangible equity (2)$172,906  $170,625  $170,080  $165,351  $166,412 
    Shares outstanding (2) 7,428,366   7,402,163   7,392,412   7,345,012   7,320,419 
    Tangible book value per share (2)$23.28  $23.05  $23.01  $22.51  $22.73 
              
    (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.



    HANOVER BANCORP, INC.
    NET INTEREST INCOME ANALYSIS
    For the Three Months Ended September 30, 2024 and 2023
    (unaudited, dollars in thousands)
                
     2024
    		 2023
     Average   Average Average   Average
     Balance Interest Yield/Cost Balance Interest Yield/Cost
                
    Assets:           
    Interest-earning assets:           
    Loans$2,019,384 $31,356 6.18% $1,840,900 $26,059 5.62%
    Investment securities 103,870  1,619 6.20%  15,232  198 5.16%
    Interest-earning cash 69,204  934 5.37%  176,884  2,391 5.36%
    FHLB stock and other investments 8,610  204 9.43%  13,486  304 8.94%
    Total interest-earning assets 2,201,068  34,113 6.17%  2,046,502  28,952 5.61%
    Non interest-earning assets:           
    Cash and due from banks 9,360      6,700    
    Other assets 50,730      53,638    
    Total assets$2,261,158     $2,106,840    
                
    Liabilities and stockholders' equity:           
    Interest-bearing liabilities:           
    Savings, N.O.W. and money market deposits$1,209,030 $13,941 4.59% $985,625 $10,186 4.10%
    Time deposits 487,377  5,546 4.53%  478,061  4,060 3.37%
    Total savings and time deposits 1,696,407  19,487 4.57%  1,463,686  14,246 3.86%
    Borrowings 126,104  1,198 3.78%  234,936  2,604 4.40%
    Subordinated debentures 24,666  326 5.26%  24,613  303 4.88%
    Total interest-bearing liabilities 1,847,177  21,011 4.53%  1,723,235  17,153 3.95%
    Demand deposits 194,725      175,091    
    Other liabilities 27,826      23,994    
    Total liabilities 2,069,728      1,922,320    
    Stockholders' equity 191,430      184,520    
    Total liabilities & stockholders' equity$2,261,158     $2,106,840    
    Net interest rate spread    1.64%     1.66%
    Net interest income/margin  $ 13,102 2.37%   $ 11,799 2.29%
                



    HANOVER BANCORP, INC.
    NET INTEREST INCOME ANALYSIS
    For the Nine Months Ended September 30, 2024 and 2023
    (unaudited, dollars in thousands)
                
     2024 2023
     Average   Average Average   Average
     Balance Interest Yield/Cost Balance Interest Yield/Cost
                
    Assets:           
    Interest-earning assets:           
    Loans$2,006,142 $92,217 6.14% $1,802,349 $75,581 5.61%
    Investment securities 99,363  4,610 6.20%  15,837  594 5.01%
    Interest-earning cash 60,202  2,445 5.42%  147,423  5,673 5.14%
    FHLB stock and other investments 9,771  693 9.47%  9,975  623 8.35%
    Total interest-earning assets 2,175,478  99,965 6.14%  1,975,584  82,471 5.58%
    Non interest-earning assets:           
    Cash and due from banks 8,431      8,238    
    Other assets 50,593      53,720    
    Total assets$2,234,502     $2,037,542    
                
    Liabilities and stockholders' equity:           
    Interest-bearing liabilities:           
    Savings, N.O.W. and money market deposits$1,162,587 $39,541 4.54% $1,026,164 $27,883 3.63%
    Time deposits 478,581  15,418 4.30%  441,557  9,657 2.92%
    Total savings and time deposits 1,641,168  54,959 4.47%  1,467,721  37,540 3.42%
    Borrowings 156,792  4,744 4.04%  161,588  4,732 3.92%
    Subordinated debentures 24,653  978 5.30%  24,599  971 5.28%
    Total interest-bearing liabilities 1,822,613  60,681 4.45%  1,653,908  43,243 3.50%
    Demand deposits 194,694      177,243    
    Other liabilities 26,944      24,253    
    Total liabilities 2,044,251      1,855,404    
    Stockholders' equity 190,251      182,138    
    Total liabilities & stockholders' equity$2,234,502     $2,037,542    
    Net interest rate spread    1.69%     2.08%
    Net interest income/margin  $ 39,284 2.41%   $ 39,228 2.65%


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


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