• Hanover Bancorp, Inc. Reports Earnings for the First Quarter with Increased Net Income and Net Interest Income and Strong Non-interest Income

    Source: Nasdaq GlobeNewswire / 17 Apr 2024 08:30:23   America/New_York

    First Quarter Performance Highlights

    • Net Income: Net income for the quarter ended March 31, 2024 totaled $4.1 million or $0.55 per diluted share (including Series A preferred shares), versus $3.8 million or $0.51 per diluted share (including Series A preferred shares) in the prior linked quarter and $3.2 million or $0.43 per diluted share (including Series A preferred shares) in the comparable 2023 quarter. Our first quarter results reflect linked quarter and year over year increases in diluted earnings per share (“EPS”) of 7.8% and 27.9%, respectively.
    • Net Interest Income: Net interest income was $12.9 million for the quarter ended March 31, 2024, an increase of $0.3 million, or 2.2% from the prior linked quarter as new loan growth at current, higher market rates continue to mitigate increased funding costs.
    • Net Interest Margin: The Company’s net interest margin during the quarter ended March 31, 2024 increased to 2.41% from 2.40% in the quarter ended December 31, 2023.
    • Strong Non-interest Income: The Company’s non-interest income increased $0.3 million or 9.9% from the quarter ended December 31, 2023 and $1.8 million or 103.6% from the quarter ended March 31, 2023. This quarter’s non-interest income was a record for the Company when considering continuing revenues. Although non-interest income was higher for the quarter ended September 30, 2023, those results included income from a litigation settlement.
    • Strong Liquidity Position: At March 31, 2024, undrawn liquidity sources, which include cash and unencumbered securities and secured and unsecured funding capacity, totaled $644.1 million or approximately 265% of uninsured deposit balances.
    • Deposit Activity: Core deposits, consisting of Demand, NOW, Savings and Money Market, increased $70.6 million or 5.1% from December 31, 2023 and $176.6 million or 13.8% from March 31, 2023. Total deposits increased $12.7 million or 0.7% from December 31, 2023 and $210.0 million or 12.3% from March 31, 2023. Insured and collateralized deposits, which include municipal deposits, accounted for approximately 87% of total deposits at March 31, 2024.
    • Loan Growth: Loans totaled $2.01 billion, a net increase of $48.3 million, or 9.9% annualized, from December 31, 2023, and up $218.1 million or 12.2% from March 31, 2023, primarily driven by growth in niche-residential, conventional C&I and SBA loans.
    • Asset Quality: At March 31, 2024, the Bank’s asset quality remained strong with non-performing loans representing 0.74% of the total loan portfolio and the allowance for credit losses equaling 0.99% of total loans. Loans secured by office space accounted for approximately 2.3% of the total loan portfolio with a total balance of $46.0 million, of which less than 1% is located in Manhattan.
    • Banking Initiatives: At March 31, 2024, the Company’s banking initiatives reflected continuing momentum:
      • SBA & USDA Banking: Gains on sale of SBA loans totaled $2.5 million for the quarter ended March 31, 2024, representing a 152% increase over the comparable 2023 quarter. Total SBA loans sold were $26.7 million for the quarter ended March 31, 2024, representing a 110% increase over the comparable 2023 quarter. Premiums earned on the sale of SBA loans for the current quarter were 9.56% compared to 8.31% for the quarter ended March 31, 2023.
      • C&I Banking/Hauppauge Business Banking Center: The C&I Banking Team and the Hauppauge Business Banking Center increased deposits to $64.4 million as of March 31, 2024 and originated $24.2 million in loans during the quarter. Momentum continues to build with deposits of $70.3 million and a loan pipeline of $53.7 million as of April 15, 2024.
      • Residential Lending: The Bank achieved $53.2 million in closed loans for the quarter ended March 31, 2024 with a weighted average yield of 7.50% before origination and other fees, which average 50-100 bps per loan, and a weighted average LTV of 62%.
    • Tangible Book Value Per Share: Tangible book value per share (including Series A preferred shares) was $23.01 at March 31, 2024 compared to $22.51 at December 31, 2023 (inclusive of a one-time current expected credit loss (“CECL”) implementation adjustment of $3.2 million, net of tax, or $0.43 per share, recorded on October 1, 2023) and $21.96 at March 31, 2023. Return on tangible common equity (“ROTCE”) was 9.71% for the quarter ended March 31, 2024 compared to 9.06% from the quarter ended December 31, 2023 and 8.12% for the quarter ended March 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 May 15, 2024 to stockholders of record on May 8, 2024.

    MINEOLA, N.Y., April 17, 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 March 31, 2024 and the declaration of a $0.10 per share cash dividend on both common and Series A preferred shares payable on May 15, 2024 to stockholders of record on May 8, 2024.

    Earnings Summary for the Quarter Ended March 31, 2024

    The Company reported net income for the quarter ended March 31, 2024 of $4.1 million or $0.55 per diluted share (including Series A preferred shares), versus $3.2 million or $0.43 per diluted share (including Series A preferred shares) in the comparable 2023 quarter and $3.8 million or $0.51 per diluted share (including Series A preferred shares) for the quarter ended December 31, 2023. Diluted EPS increased 27.9% from March 31, 2023 and 7.8% from December 31, 2023. Returns on average assets and average stockholders’ equity were 0.74% and 8.70%, respectively, for the quarter ended March 31, 2024, versus 0.68% and 7.24%, respectively, for the comparable quarter of 2023, and 0.69% and 8.10%, respectively, for the quarter ended December 31, 2023. ROTCE was 9.71% for the quarter ended March 31, 2024 compared to 8.12% for the quarter ended March 31, 2023 and 9.06% for the quarter ended December 31, 2023. ROTCE increased in the current quarter by 19.6% from the quarter ended March 31, 2023 and 7.2% from the quarter ended December 31, 2023.

    The increase in net income recorded in the first quarter of 2024 from the comparable 2023 quarter resulted from an increase in non-interest income and a decrease in the provision for credit losses, which were partially offset by an increase in non-interest expense, primarily in occupancy and equipment. Additionally, net interest income decreased due to the continued impact of higher funding costs resulting from the rapid rise in interest rates driven by the Federal Reserve. Finally, the Company’s effective tax rate increased to 24.9% in the first quarter of 2024 from 23.2% in the comparable 2023 period due to increased business in other states, related to our SBA and USDA lending program.

    Net interest income was $12.9 million for the quarter ended March 31, 2024, a decrease of $1.0 million, or 7.1%, versus the comparable 2023 period due to compression of the Company’s net interest margin to 2.41% in the 2024 quarter from 3.04% in the comparable 2023 quarter. The yield on interest earning assets increased to 6.03% in the 2024 quarter from 5.47% in the comparable 2023 quarter, an increase of 56 basis points that was offset by a 139 basis point increase in the cost of interest-bearing liabilities to 4.33% in 2024 from 2.94% in the first quarter of 2023. The rapid rise in interest rates driven by the Federal Reserve and, to a lesser extent, the Company’s decision to maintain increased liquidity due to market conditions resulted in the higher cost of funds. Net interest income on a linked quarter basis increased $0.3 million or 2.18%.

    Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s quarterly results: “Our first quarter results reflect linked quarter increases of 7.84% and 7.17%, and year over year increases of 27.91% and 19.58%, in diluted EPS and ROTCE, respectively, due to the continued expansion of our SBA and C&I Banking verticals. Our investments in these initiatives anticipated the current interest rate environment, enabling our continued strategic growth despite the persistence of uncertain economic conditions. We are very pleased with these results and remain committed to disciplined expense management and selective growth in scalable, profitable business verticals to drive results in the immediate future. Longer term, we believe our balance sheet is well-positioned for favorable changes in the interest rate environment predicted by many economists.”

    Balance Sheet Highlights

    Total assets at March 31, 2024 were $2.31 billion versus $2.27 billion at December 31, 2023. Total securities available for sale at March 31, 2024 were $92.7 million, an increase of $31.3 million from December 31, 2023, primarily driven by growth in U.S. Treasury securities.

    Total deposits at March 31, 2024 increased to $1.92 billion compared to $1.90 billion at December 31, 2023. During the quarter ended March 31, 2024, total deposits increased $12.7 million or 0.7% from December 31, 2023. Our loan to deposit ratio was 105% at March 31, 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 March 31, 2024 from $1.38 billion as of December 31, 2023, Demand deposit balances decreased from $207.8 million to $202.9 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 and 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 $180.4 million as of March 31, 2024 from $166.4 million as of December 31, 2023, an increase of 8.5%, underscoring the continued success of our C&I Banking vertical.

    The Company had $576.3 million in total municipal deposits at March 31, 2024, at a weighted average rate of 4.65% 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 37 customer relationships.

    Total borrowings at March 31, 2024 were $149.0 million, including $2.3 million in Federal Reserve Paycheck Protection Program Liquidity Facility advances, with a weighted average rate and term of 3.94% and 24 months, respectively. At March 31, 2024 and December 31, 2023, the Company had $121.7 million and $126.7 million, respectively, of term FHLB advances outstanding. The Company had $5.0 million of FHLB overnight borrowings outstanding at March 31, 2024 and none at December 31, 2023. The Company had $20.0 million in borrowings outstanding under lines of credit with correspondent banks at March 31, 2024 and none at 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 $189.5 million at March 31, 2024 compared to $184.8 million at December 31, 2023. The $4.7 million increase was primarily due to an increase of $3.3 million in retained earnings and a decrease of $1.2 million in accumulated other comprehensive loss. The increase in retained earnings was due primarily to net income of $4.1 million for the quarter ended March 31, 2024, which was offset by $0.7 million of dividends declared. The accumulated other comprehensive loss at March 31, 2024 was 0.68% of total equity and was comprised of a $1.2 million after tax net unrealized loss on the investment portfolio and a $0.1 million after tax net unrealized loss on derivatives.

    Loan Portfolio Growth, Asset Quality and Allowance for Credit Losses

    On a linked quarter basis, the Company exhibited net loan growth of $48.3 million, a 9.9% increase on an annualized basis. For the twelve months ended March 31, 2024, the Bank’s loan portfolio grew to $2.01 billion, for an increase of 12.2%. Year over year growth was concentrated primarily in residential, SBA and C&I loans. At March 31, 2024, the Company’s residential loan portfolio (including home equity) amounted to $756.9 million, with an average loan balance of $493 thousand and a weighted average loan-to-value ratio of 57%. Commercial real estate and multifamily loans totaled $1.12 billion at March 31, 2024, 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 continued its steady decline, decreasing to 416% of capital at March 31, 2024 from 432% of capital at December 31, 2023, with loans secured by office space accounting for 2.3% of the total loan portfolio and totaling $46.0 million. The Company’s loan pipeline at March 31, 2024 is approximately $220 million, with approximately 95% 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 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 expects to originate 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 origination of SBA loans. During the quarters ended March 31, 2024 and 2023, the Company sold $26.7 million and $12.8 million, respectively, of SBA loans and recorded gains on sale of loans held-for-sale of $2.5 million and $1.0 million, respectively.

    The pace of new residential loan applications is historically slower in the first quarter and was more so in the first quarter of 2024 due to our intentional and continued prioritization of loan pricing over loan volume. As volume builds as the year progresses and we commence originations under our flow lending program, we expect the volume of applications to grow. A more diversified residential lending program is expected to provide greater flexibility with respect to earnings, liquidity and asset management.

    The Bank’s asset quality ratios remain strong and among the best in its peer group of community banks. At March 31, 2024, the Company reported $14.9 million in non-performing loans which represented 0.74% of total loans outstanding. Of the non-performing loans, $8.3 million are legacy Savoy Bank originated loans that were either written down to fair value at the acquisition date or are 100% guaranteed by the SBA. Non-performing loans were $14.5 million at December 31, 2023. During the first quarter of 2024, the Bank recorded a provision for credit losses expense of $0.3 million. The March 31, 2024, allowance for credit losses balance was $19.9 million versus $19.7 million at December 31, 2023 and $14.9 million at March 31, 2023. The increase in the allowance for credit losses on loans is mostly attributable to additional provisioning related to increased loan volume. The allowance for credit losses as a percent of total loans was 0.99% at March 31, 2024 versus 1.00% at December 31, 2023.

    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 $10 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 13% combined of loans maturing through the balance of 2024 and 2025, with 50% maturing in 2027 alone.

    Multi-Family Portfolio Fixed Rate Reset/Maturity Schedule CRE Investor Portfolio Fixed Rate Reset/Maturity Schedule
    Calendar Period (loan data as of 3/31/24) # Loans Total O/S ($000's omitted) Avg O/S ($000's omitted) Avg Interest Rate Calendar Period (loan data as of 3/31/24) # Loans Total O/S ($000's omitted) Avg O/S ($000's omitted) Avg Interest Rate
                             
    2024 19 $16,529 $870 6.64% 2024 32 $41,800 $1,306 5.68%
    2025 20  33,057  1,653 4.13% 2025 30  20,121  671 5.12%
    2026 57  165,968  2,912 3.67% 2026 31  44,701  1,442 4.73%
    2027 124  306,222  2,469 4.27% 2027 86  150,228  1,747 4.72%
    2028 29  40,201  1,386 6.39% 2028 33  33,570  1,017 6.64%
    2029+ 9  3,810  423 6.10% 2029+ 12  3,822  319 5.69%
    Fixed Rate 258  565,787  2,193 4.31% Fixed Rate 224  294,242  1,314 5.12%
    Floating Rate 4  2,256  564 7.01% Floating Rate 5  18,695  3,739 8.85%
    Total Multi-Family 262 $568,043 $2,168 4.33% Total CRE-Inv. 229 $312,937 $1,367 5.34%

     


     

    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 New York City and most heavily concentrated in the three 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 152 $356,243 63%$2,343 62.4%1.40 11
    Location                  
    Manhattan 7 $18,015 3%$2,574 52.2%1.38 15
    Other NYC 96 $249,540 44%$2,599 62.1%1.40 10
    Outside NYC 49 $88,688 16%$1,810 65.3%1.42 12
                       
    Stabilized 110 $211,800 37%$1,925 63.7%1.39 12
    Location                  
    Manhattan 7 $11,150 2%$1,593 54.0%1.50 15
    Other NYC 91 $181,370 32%$1,993 64.1%1.38 11
    Outside NYC 12 $19,280 3%$1,607 65.3%1.37 16

     


     

    Office Property Exposure

    The Bank’s exposure to the Office market is minor at $46 million (2% of all loans), has a 1.8x weighted average DSCR, a 55% weighted average LTV and less than $400 thousand of exposure in Manhattan. The portfolio has no delinquencies, defaults or modifications.

    Net Interest Margin

    The Bank’s net interest margin increased to 2.41% for the quarter ended March 31, 2024 from 2.40% in the quarter ended December 31, 2023. The increase from the prior linked quarter was primarily related to the increase in the average yield on loans and decrease in the average cost of borrowings, partially offset by the increase in the average cost of deposits. The Bank’s net interest margin was 3.04% in the quarter ended March 31, 2023. The decrease from the prior year 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 year over year margin compression reflects the effects of the rapid and significant rise in interest rates and the competitive deposit environment. 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 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, Hauppauge, 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 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 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 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.

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


    HANOVER BANCORP, INC.     
    STATEMENTS OF CONDITION (unaudited)     
    (dollars in thousands)     
           
      March 31, December 31, March 31,
       2024   2023   2023 
    Assets      
    Cash and cash equivalents$136,481  $177,207  $204,355 
    Securities-available for sale, at fair value 92,709   61,419   11,849 
    Investments-held to maturity 3,973   4,041   4,263 
    Loans held for sale 7,641   8,904   - 
           
    Loans, net of deferred loan fees and costs 2,005,515   1,957,199   1,787,365 
    Less: allowance for credit losses (1) (19,873)  (19,658)  (14,879)
    Loans, net 1,985,642   1,937,541   1,772,486 
           
    Goodwill  19,168   19,168   19,168 
    Premises & fixed assets 15,648   15,886   15,692 
    Operating lease assets 9,336   9,754   11,008 
    Other assets 36,910   36,140   32,899 
     Assets$2,307,508  $2,270,060  $2,071,720 
           
    Liabilities and stockholders' equity     
    Core deposits$1,453,035  $1,382,397  $1,276,422 
    Time deposits 464,227   522,198   430,852 
    Total deposits 1,917,262   1,904,595   1,707,274 
           
    Borrowings 148,953   128,953   136,962 
    Subordinated debentures 24,648   24,635   24,594 
    Operating lease liabilities 10,039   10,459   11,711 
    Other liabilities 17,063   16,588   10,657 
     Liabilities 2,117,965   2,085,230   1,891,198 
           
    Stockholders' equity 189,543   184,830   180,522 
     Liabilities and stockholders' equity$2,307,508  $2,270,060  $2,071,720 
           
    (1) CECL was adopted effective 10/1/23. Prior periods were based on the incurred loss methodology.  


    HANOVER BANCORP, INC.    
    CONSOLIDATED STATEMENTS OF INCOME (unaudited)   
    (dollars in thousands, except per share data)    
      Three Months Ended 
      3/31/2024 3/31/2023 
          
    Interest income$32,432  $25,060 
    Interest expense 19,497   11,136 
     Net interest income 12,935   13,924 
    Provision for credit losses (1) 300   932 
     Net interest income after provision for credit losses 12,635   12,992 
          
    Loan servicing and fee income 913   539 
    Service charges on deposit accounts 96   67 
    Gain on sale of loans held-for-sale 2,506   995 
    Other operating income 61   155 
     Non-interest income 3,576   1,756 
          
    Compensation and benefits 5,562   5,564 
    Occupancy and equipment 1,770   1,537 
    Data processing 518   441 
    Professional fees 818   881 
    Federal deposit insurance premiums 318   358 
    Other operating expenses 1,818   1,786 
     Non-interest expense 10,804   10,567 
          
     Income before income taxes 5,407   4,181 
    Income tax expense 1,346   972 
          
     Net income$4,061  $3,209 
          
    Earnings per share ("EPS"):(2)    
    Basic$0.55  $0.44 
    Diluted$0.55  $0.43 
          
    Average shares outstanding for basic EPS (2)(3) 7,376,227   7,324,036 
    Average shares outstanding for diluted EPS (2)(3) 7,420,926   7,406,933 
          
    (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 
      3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023 
                
    Interest income$32,432  $31,155  $28,952  $28,459  $25,060 
    Interest expense 19,497   18,496   17,153   14,954   11,136 
     Net interest income 12,935   12,659   11,799   13,505   13,924 
    Provision for credit losses (1) 300   200   500   500   932 
     Net interest income after provision for credit losses 12,635   12,459   11,299   13,005   12,992 
                
    Loan servicing and fee income 913   778   681   811   539 
    Service charges on deposit accounts 96   85   75   70   67 
    Gain on sale of loans held-for-sale 2,506   2,326   1,468   1,052   995 
    Other operating income 61   65   1,483   41   155 
     Non-interest income 3,576   3,254   3,707   1,974   1,756 
                
    Compensation and benefits 5,562   5,242   5,351   5,405   5,564 
    Occupancy and equipment 1,770   1,746   1,758   1,587   1,537 
    Data processing 518   530   516   576   441 
    Professional fees 818   729   800   781   881 
    Federal deposit insurance premiums 318   375   386   357   358 
    Other operating expenses 1,818   2,048   1,506   1,860   1,786 
     Non-interest expense 10,804   10,670   10,317   10,566   10,567 
                
     Income before income taxes 5,407   5,043   4,689   4,413   4,181 
    Income tax expense 1,346   1,280   1,166   1,319   972 
                
     Net income$4,061  $3,763  $3,523  $3,094  $3,209 
                
    Earnings per share ("EPS"):(2)          
    Basic$0.55  $0.51  $0.48  $0.42  $0.44 
    Diluted$0.55  $0.51  $0.48  $0.42  $0.43 
                
    Average shares outstanding for basic EPS (2)(3) 7,376,227   7,324,133   7,327,345   7,332,090   7,324,036 
    Average shares outstanding for diluted EPS (2)(3) 7,420,926   7,383,529   7,407,483   7,407,613   7,406,933 
                
    (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.   
    SELECTED FINANCIAL DATA (unaudited)  
    (dollars in thousands)   
        
     Three Months Ended
     3/31/2024 3/31/2023
    Profitability:   
    Return on average assets 0.74%  0.68%
    Return on average equity (1) 8.70%  7.24%
    Return on average tangible equity (1) 9.71%  8.12%
    Pre-provision net revenue to average assets 1.03%  1.08%
    Yield on average interest-earning assets 6.03%  5.47%
    Cost of average interest-bearing liabilities 4.33%  2.94%
    Net interest rate spread (2) 1.70%  2.53%
    Net interest margin (3) 2.41%  3.04%
    Non-interest expense to average assets 1.96%  2.23%
    Operating efficiency ratio (4)  65.44%  67.39%
        
    Average balances:   
    Interest-earning assets$2,162,835  $1,857,782 
    Interest-bearing liabilities 1,810,397   1,534,205 
    Loans 1,984,075   1,766,679 
    Deposits 1,842,642   1,603,684 
    Borrowings 162,427   112,720 
        
        
    (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.


    HANOVER BANCORP, INC.       
    SELECTED FINANCIAL DATA (unaudited)       
    (dollars in thousands, except share and per share data)      
            
     At or For the Three Months Ended
     3/31/2024 12/31/2023 9/30/2023 6/30/2023
    Asset quality:       
    Provision for credit losses$300  $200  $500  $500 
    Net (charge-offs)/recoveries (85)  677   (1,183)  (10)
    Allowance for credit losses 19,873   19,658   14,686   15,369 
    Allowance for credit losses to total loans (1) 0.99%  1.00%  0.78%  0.84%
    Non-performing loans (2)(3)$14,878  $14,451  $15,061  $10,785 
    Non-performing loans/total loans 0.74%  0.74%  0.80%  0.59%
    Non-performing loans/total assets 0.64%  0.64%  0.70%  0.51%
    Allowance for credit losses/non-performing loans 133.57%  136.03%  97.51%  142.50%
            
    Capital (Bank only):       
    Tier 1 Capital$195,889$193,324$190,928$188,568
    Tier 1 leverage ratio 8.90%  9.08%  9.16%  9.16%
    Common equity tier 1 capital ratio 12.99%  13.17%  13.55%  13.16%
    Tier 1 risk based capital ratio 12.99%  13.17%  13.55%  13.16%
    Total risk based capital ratio 14.19%  14.31%  14.60%  14.24%
            
    Equity data:       
    Shares outstanding (4) 7,392,412   7,345,012   7,320,419   7,334,120 
    Stockholders' equity$189,543  $184,830$185,907$182,806
    Book value per share (4) 25.64   25.16   25.40   24.93 
    Tangible common equity (4) 170,080   165,351   166,412   163,294 
    Tangible book value per share (4) 23.01   22.51   22.73   22.26 
    Tangible common equity ("TCE") ratio (4) 7.43%  7.35%  7.81%  7.77%
            
    (1) Calculation excludes loans held for sale.       
    (2) Includes $0.1 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.4 million 
    of loans fully guaranteed by the SBA at 9/30/23.       
    (3) Includes $0.1 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 6/30/23.       
    (4) 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)      
            
     3/31/2024 12/31/2023 9/30/2023 6/30/2023
            
    Loan distribution (1):       
    Residential mortgages$730,017  $689,211  $630,374  $598,747 
    Multifamily 568,043   572,849   578,895   583,837 
    Commercial real estate 556,708   561,183   550,334   546,120 
    Commercial & industrial 123,419   107,912   87,575   67,918 
    Home equity 26,879   25,631   26,959   26,517 
    Consumer 449   413   425   364 
            
    Total loans$ 2,005,515  $ 1,957,199  $ 1,874,562  $ 1,823,503 
            
    Sequential quarter growth rate 2.47%  4.41%  2.80%  2.02%
            
    Loans sold during the quarter$26,735  $29,740  $18,403  $12,610 
            
    Funding distribution:       
    Demand$202,934  $207,781  $185,731  $180,303 
    N.O.W. 708,897   661,276   503,704   480,108 
    Savings 48,081   47,608   54,502   67,626 
    Money market 493,123   465,732   461,057   409,097 
    Total core deposits 1,453,035   1,382,397   1,204,994   1,137,134 
    Time 464,227   522,198   530,076   456,505 
    Total deposits 1,917,262   1,904,595   1,735,070   1,593,639 
    Borrowings 148,953   128,953   179,849   293,849 
    Subordinated debentures 24,648   24,635   24,621   24,608 
            
    Total funding sources$ 2,090,863  $ 2,058,183  $ 1,939,540  $ 1,912,096 
            
    Sequential quarter growth rate - total deposits 0.67%  9.77%  8.87%  -6.66%
            
    Period-end core deposits/total deposits ratio 75.79%  72.58%  69.45%  71.35%
            
    Period-end demand deposits/total deposits ratio 10.58%  10.91%  10.70%  11.31%
            
    (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)      
              
     3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023
    Tangible common equity         
    Total equity (2)$189,543  $184,830  $185,907  $182,806  $180,522 
    Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (19,168)
    Less: core deposit intangible (295)  (311)  (327)  (344)  (362)
    Tangible common equity (2)$170,080  $165,351  $166,412  $163,294  $160,992 
              
    Tangible common equity ("TCE") ratio        
    Tangible common equity (2)$170,080  $165,351  $166,412  $163,294  $160,992 
    Total assets 2,307,508   2,270,060   2,149,632   2,121,783   2,071,720 
    Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (19,168)
    Less: core deposit intangible (295)  (311)  (327)  (344)  (362)
    Tangible assets$2,288,045  $2,250,581  $2,130,137  $2,102,271  $2,052,190 
    TCE ratio (2) 7.43%  7.35%  7.81%  7.77%  7.84%
              
    Tangible book value per share         
    Tangible equity (2)$170,080  $165,351  $166,412  $163,294  $160,992 
    Shares outstanding (2) 7,392,412   7,345,012   7,320,419   7,334,120   7,331,092 
    Tangible book value per share (2)$23.01  $22.51  $22.73  $22.26  $21.96 
              
    (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 March 31, 2024 and 2023          
    (unaudited, dollars in thousands)           
                
      2024   2023 
     Average   Average Average   Average
     Balance Interest Yield/CostBalance Interest Yield/Cost
                
    Assets:           
    Interest-earning assets:           
    Loans$1,984,075  $29,737  6.03% $1,766,679  $23,941  5.50%
    Investment securities 94,845   1,457  6.18%  16,408   198  4.89%
    Interest-earning cash 74,672   1,014  5.46%  68,308   788  4.68%
    FHLB stock and other investments 9,243   224  9.75%  6,387   133  8.45%
    Total interest-earning assets 2,162,835   32,432  6.03%  1,857,782   25,060  5.47%
    Non interest-earning assets:           
    Cash and due from banks 7,945       9,809     
    Other assets 49,941       54,014     
    Total assets$2,220,721      $1,921,605     
                
    Liabilities and stockholders' equity:           
    Interest-bearing liabilities:           
    Savings, N.O.W. and money market deposits$1,161,191  $12,933  4.48% $1,012,839  $7,792  3.12%
    Time deposits 486,779   4,962  4.10%  408,646   2,383  2.36%
    Total savings and time deposits 1,647,970   17,895  4.37%  1,421,485   10,175  2.90%
    Borrowings 137,788   1,276  3.72%  88,134   627  2.89%
    Subordinated debentures 24,639   326  5.32%  24,586   334  5.51%
    Total interest-bearing liabilities 1,810,397   19,497  4.33%  1,534,205   11,136  2.94%
    Demand deposits 194,672       182,199     
    Other liabilities 27,959       25,291     
    Total liabilities 2,033,028       1,741,695     
    Stockholders' equity 187,693       179,910     
    Total liabilities & stockholders' equity$2,220,721      $1,921,605     
    Net interest rate spread    1.70%     2.53%
    Net interest income/margin  $ 12,935  2.41%   $ 13,924  3.04%



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