Home / Top News / Hanover Bancorp, Inc. Completes Initial Public Offering and Reports Second Fiscal Quarter Net Income of $5.9 million

Hanover Bancorp, Inc. Completes Initial Public Offering and Reports Second Fiscal Quarter Net Income of $5.9 million

Second Fiscal Quarter Highlights

  • Initial Public Offering: The Company completed its Initial Public Offering (IPO) and began trading on the Nasdaq Global Select Market under the symbol HNVR on May 11, 2022. Gross proceeds of $26.8 million were raised at an offering price of $21.00 per share.
  • Net Income: Net income for the quarter ended March 31, 2022, totaled $5.9 million or $1.00 per diluted common share, versus $2.1 million or $0.48 per diluted common share in the same period a year ago. The Company recorded net income for the six months ended March 31, 2022 of $12.4 million or $2.15 per diluted common share compared to $3.6 million or $0.84 per diluted common share in the comparable 2021 six-month period.
  • Initiation of Quarterly Cash Dividend: The Company’s Board of Directors approved a $0.10 per common share cash dividend paid on February 15, 2022, to stockholders of record on February 8, 2022.
  • Financial Performance Metrics: Returns on average total assets and average stockholders’ equity were 1.63% and 17.83%, respectively, in the quarter ended March 31, 2022, versus 0.97% and 10.28% in the comparable 2021 period.
  • Net Interest Income: Net interest income was $14.7 million for the quarter ended March 31, 2022, an increase of $6.9 million, or 89.0%, versus the comparable 2021 quarter.
  • Net Interest Margin: The Company’s net interest margin increased during the quarter ended March 31, 2022, to 4.26% versus 3.79% in the quarter ended March 31, 2021. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 3.86% in the quarter ended March 31, 2022, and 3.90% in the quarter ended December 31, 2021.
  • Balance Sheet: Assets totaled $1.48 billion at March 31, 2022, versus $1.48 billion at September 30, 2021, and $890.4 million at March 31, 2021.
  • Capital Strength: The Bank’s Tier 1 leverage ratio was 10.06% and its Total Risk-Based capital ratio was 15.85% at March 31, 2022, each significantly above the regulatory minimums for a well-capitalized institution. The Company’s Tangible Common Equity ratio was 7.90% at March 31, 2022 versus 7.02% at September 30, 2021 and 9.06% at March 31, 2021.
  • Tangible Book Value Per Share: Tangible book value per common share increased to $19.75 at March 31, 2022, from $18.49 at September 30, 2021, and $19.19 at March 31, 2021.
  • Strong Lending Activity: On a linked quarter basis, the Company exhibited net loan growth, excluding Paycheck Protection Program (“PPP”) loans, of $46.7 million or 15.5% on an annualized basis. The Company’s current loan pipeline is in excess of $400 million.
  • Expansion into New Jersey Market: The Company opened a full-service branch in Freehold, New Jersey on March 4, 2022. This location will expand the Company’s niche Small Business Administration (“SBA”) lending footprint into both the New Jersey and eastern Pennsylvania marketplaces.

MINEOLA, N. Y., May 16, 2022 (GLOBE NEWSWIRE) — Hanover Bancorp, Inc. (“Hanover” or “the Company”), the holding company for Hanover Community Bank (“the Bank”) today reported significant performance achievements for the quarter ended March 31, 2022, highlighted by strong levels of net income, net interest income and net interest margin. Further, the Company’s Board of Directors approved the payment of a $0.10 per common share cash dividend paid on February 15, 2022, to stockholders of record on February 8, 2022. This was the Company’s first cash dividend.

Earnings Summary for the Quarter Ended March 31, 2022

The Company reported net income for the quarter ended March 31, 2022, of $5.9 million or $1.00 per diluted common share, versus $2.1 million or $0.48 per diluted common share in the comparable year ago period, representing an increase of $3.8 million. Returns on average assets and average stockholders’ equity were 1.63% and 17.83%, respectively, in the quarter ended March 31, 2022, versus 0.97% and 10.28% in the comparable 2021 quarter.

The improvement in net income recorded in the second fiscal quarter of 2022 resulted from a $6.9 million or 89.0% increase in net interest income coupled with a $2.0 million improvement in non-interest income. Partially offsetting these positive factors was a $3.6 million increase in total operating expenses, principally resulting from growth in compensation and benefits primarily due to an increase in personnel from the May 2021 acquisition of Savoy Bank (“Savoy”), coupled with a $300 thousand increase in the provision for loan losses expense due to growth in the loan portfolio in the second fiscal quarter of 2022. The year-over-year growth in net interest income was due to an increase in average interest-earning assets of $571.2 million in 2022, primarily related to the acquisition of Savoy, coupled with a substantial widening of the Company’s net interest margin to 4.26% in 2022 from 3.79% in the comparable 2021 quarter. The margin improvement resulted principally from a 52 basis point reduction in the cost of interest-bearing liabilities to 0.44% in 2022 from 0.96% in the second fiscal quarter of 2021.

Earnings Summary for the Six Months Ended March 31, 2022

For the six months ended March 31, 2022, the Company reported net income of $12.4 million or $2.15 per diluted common share versus $3.6 million or $0.84 per diluted common share a year ago.

The improved level of earnings in 2022 resulted from a $14.9 million increase in net interest income, principally due to a 66 basis point widening of the company’s net interest margin to 4.32% in the six months ended March 31, 2022, and a $4.1 million increase in non-interest income, primarily from gains on the sale of loans held for sale. Partially offsetting these positive factors was a $6.3 million increase in total operating expenses, principally resulting from growth in compensation and benefits related to increased headcount as the Company has continued to grow and create the infrastructure required for a public reporting company, and as experienced executives have been added to implement new product initiatives such as municipal banking and expanded commercial real estate and commercial and industrial lending coupled with an increase in personnel from the May 2021 acquisition of Savoy. In addition, the Company’s effective tax rate increased to 22.7% in 2022 from 20.4% in the comparable year ago period.

Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s quarterly results: “I am very pleased to report that Hanover Bancorp, Inc. completed its Initial Public Offering on May 10, raising gross capital proceeds of $26.8 million ($24.0 million net of the underwriting discount and estimated offering expenses). The IPO is an outstanding achievement in the face of a tough economic environment, highlighted by record inflation, higher interest rates and equity market turbulence for companies in general, and banks in particular. I’ve envisioned this day since I joined Hanover in 2012 and I’m truly proud of the efforts made by our staff and outside professionals to bring this dream to reality for all Hanover shareholders. We intend to use this capital to fund the continued growth and expansion of the Company.”

“I am also proud to report our solid operating results across the board during the second fiscal quarter of 2022. We have been able to seamlessly integrate the Savoy Bank acquisition and welcome their customers into the Hanover family while simultaneously growing our core franchise in a highly profitable way. We are also ahead of the post-merger financial and operational goals that we established for ourselves when we initially announced the Savoy transaction. Our returns on average assets and average stockholders’ equity during the second fiscal quarter amounted to 1.63% and 17.83%, respectively. Our operating efficiency ratio during the quarter was 54.1%. These ratios place us in the upper echelon of our community bank peer group. We now possess the ability to build our earning asset base across multiple highly profitable lending niches funded by strong deposit generating businesses. Further, we continue to explore a number of Fintech-related partnerships that, if completed, would benefit us in generating additional fee income and additional low-cost deposit funding.”

Balance Sheet Highlights

Total assets at March 31, 2022, were $1.48 billion versus $1.48 billion at September 30, 2021 and $890.4 million at March 31, 2021 primarily due to the Savoy acquisition. Total deposits at March 31, 2022, increased to $1.23 billion compared to $1.16 billion at September 30, 2021 and $718.2 million at March 31, 2021, the result of growth in core deposits (Demand, N.O.W., Savings and Money Market) of $157.2 million from fiscal year end and $531.0 million from March 31, 2021. The quarter over quarter increase resulted from deposits acquired in the Savoy transaction as well as significant growth in the Company’s municipal deposit portfolio.

The Company had $405.0 million in total municipal deposits at March 31, 2022, at a weighted average rate of 0.18% versus $350.5 million at September 30, 2021 and $153.5 million at March 31, 2021. 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 consumer deposits.

Borrowings at March 31, 2022, were $75.8 million, including $37.9 million in Federal Reserve Paycheck Protection Program Liquidity Facility advances, with a weighted average rate and term of 0.82% and 35 months, respectively. Management reduced usage of its Federal Home Loan Bank (“FHLB”) borrowing capacity in the second fiscal quarter of 2022 as other lower cost funding options were utilized to replace maturing FHLB advances. At March 31, 2022, the Bank had $37.9 million of FHLB advances outstanding versus $56.4 million a year ago. The Company had $165.9 million in additional borrowing capacity from the FHLB at March 31, 2022.

Stockholders’ equity increased to $134.8 million at March 31, 2022, from $122.5 million at September 30, 2021 and $82.2 million at the comparable 2021 date, resulting in an increase in tangible book value per share over the past twelve months to $19.75 at March 31, 2022, from $19.19 at the comparable 2021 date. Common shares outstanding were 5,829,569 and 4,194,890 at March 31, 2022 and 2021, respectively.

Loan Portfolio Growth and Allowance for Loan Losses

On a linked quarter basis, the Company exhibited net loan growth, excluding PPP loans, of $46.7 million or 15.5% on an annualized basis. For the twelve months ended March 31, 2022, the Bank’s loan portfolio grew to $1.29 billion, primarily due to the acquisition of Savoy. Year over year growth was concentrated primarily in multi-family, commercial real estate, and commercial and industrial loans. At March 31, 2022, the Company’s residential loan portfolio (including home equity) amounted to $424.5 million, with an average loan balance of $450 thousand and a weighted average loan-to-value ratio of 54%. Commercial real estate and multifamily loans totaled $792.0 million at March 31, 2022, with an average loan balance of $1.25 million and a weighted average loan-to-value ratio of 60%. The Company’s commercial real estate concentration ratio was 415% of capital at March 31, 2022, versus 355% and 247% of capital at September 30, 2021 and March 31, 2021, respectively. At March 31, 2022, the Company’s loan pipeline was approximately $300 million. The loan pipeline is currently in excess of $400 million.

Historically, the Bank has generated additional income by strategically originating and selling its primary lending products to other financial institutions at premiums, while also retaining servicing rights in some sales. The Bank expects that it will continue to originate loans, for its own portfolio and for sale, which will result in continued growth in interest income while also realizing gains on sale of loans to others and recording servicing income. With respect to the Bank’s residential growth strategy, management expects to originate more loans to retain in its portfolio as opposed to selling into the secondary market due to the continued increase in interest rates. Accordingly, we expect a decrease in secondary market sales. During the quarter ended March 31, 2022, the Company sold $16.2 million in SBA loans and recorded gains on the sale of loans held-for-sale of $1.6 million versus gains of $1.5 million in the quarter ended December 31, 2021. The Company recorded gains of $295 thousand on the sale of performing loans in the quarter ended March 31, 2021.

During the second fiscal quarter of 2022, the Bank recorded a provision for loan losses expense of $500 thousand. The March 31, 2022, allowance for loan losses balance was $9.9 million versus $8.2 million a year ago. The allowance for loan losses as a percent of total loans was 0.77% at March 31, 2022, versus 0.73% at December 31, 2021, and 1.07% at March 31, 2021. The allowance for loan losses as a percent of total loans excluding acquired loans (“originated loans”) was 1.04% at March 31, 2022. At March 31, 2022, non-performing loans totaled $12.0 million of which $8.2 million represented legacy Savoy Bank originated loans that were either written down to fair value at the acquisition date or are 100% guaranteed by the SBA. The remaining $3.8 million of non-performing loans represent primarily Hanover originated residential credits with a weighted average loan-to-value ratio of 50%.

Net Interest Margin

The Bank’s net interest margin improved to 4.26% during the second fiscal quarter of 2022, versus 3.79% in the comparable 2021 quarter and 4.39% in the quarter ended December 31, 2021. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 3.86% and 3.90% in the quarters ended March 31, 2022, and December 31, 2021, respectively.

Operating Efficiency Ratio

The Bank’s operating efficiency ratio was 54.1% in the second fiscal quarter of 2022 versus 69.4% a year ago.

Expansion into New Jersey Market

The Company opened a full-service branch in Freehold, New Jersey on March 4, 2022. This location, coupled with our success in recruiting business development officers in recent months, will expand the Company’s SBA lending footprint into both the New Jersey and eastern Pennsylvania marketplaces.

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. 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.

Investor and Press Contacts:
Brian K. Finneran
President

Lance P. Burke
Chief Financial Officer
(516) 548-8500

HANOVER BANCORP, INC.
STATEMENTS OF CONDITION (unaudited)
(dollars in thousands)

           
  March 31,   September 30,   March 31,
   2022     2021     2021 
Assets          
Cash and cash equivalents $ 127,140     $ 166,544     $ 77,529  
Securities-available for sale, at fair value   5,070       7,747       7,801  
Investments-held to maturity   4,629       8,611       9,470  
Loans held for sale               893  
           
Loans, net of deferred loan fees and costs   1,289,041       1,247,125       763,596  
Less: allowance for loan losses   (9,886 )     (8,552 )     (8,179 )
Loans, net   1,279,155       1,238,573       755,417  
           
Goodwill   19,168       19,168       1,710  
Premises & fixed assets   14,833       15,002       14,328  
Other assets   26,686       28,996       23,284  
Assets  $ 1,476,681     $ 1,484,641     $ 890,432  
           
Liabilities and stockholders’ equity          
Core deposits $ 943,995     $ 786,826     $ 412,992  
Time deposits   286,247       377,836       305,192  
Total deposits   1,230,242       1,164,662       718,184  
           
Borrowings   75,823       159,642       56,417  
Subordinated debentures   24,541       24,513       24,482  
Other liabilities   11,307       13,295       9,104  
 Liabilities   1,341,913       1,362,112       808,187  
           
Stockholders’ equity   134,768       122,529       82,245  
 Liabilities and stockholders’ equity $ 1,476,681     $ 1,484,641     $ 890,432  
           

HANOVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(dollars in thousands, except per share data)

               
  Three Months Ended   Six Months Ended
  3/31/2022   3/31/2021   3/31/2022   3/31/2021
               
Interest income $ 15,941   $ 9,380   $ 32,557   $ 18,877
Interest expense   1,197     1,578     2,544     3,748
Net interest income   14,744     7,802     30,013     15,129
Provision for loan losses   500     200     1,400     300
Net interest income after provision for loan losses   14,244     7,602     28,613     14,829
               
Loan servicing and fee income   734     139     1,424     222
Service charges on deposit accounts   46     17     109     32
Gain on sale of loans held-for-sale   1,575     295     3,067     476
Gain on sale of investments   105     240     105     240
Other operating income   212     1     343     8
Non-interest income   2,672     692     5,048     978
               
Compensation and benefits   5,618     3,268     10,557     6,376
Occupancy and equipment   1,370     1,209     2,783     2,380
Data processing   392     270     759     515
Marketing and advertising   153     19     186     67
Acquisition costs       151         296
Professional fees   640     308     1,139     720
Other operating expenses   1,184     500     2,198     961
Non-interest expense   9,357     5,725     17,622     11,315
               
Income before income taxes   7,559     2,569     16,039     4,492
Income tax expense   1,699     514     3,642     918
               
Net income $ 5,860   $ 2,055   $ 12,397   $ 3,574
               
Basic earnings per share $ 1.02   $ 0.49   $ 2.19   $ 0.85
Diluted earnings per share $ 1.00   $ 0.48   $ 2.15   $ 0.84
               
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
  3/31/2022   12/31/2021   9/30/2021   6/30/2021   3/31/2021
                   
Interest income $ 15,941   $ 16,616   $ 17,760   $ 12,038   $ 9,380
Interest expense   1,197     1,347     1,629     1,590     1,578
Net interest income   14,744     15,269     16,131     10,448     7,802
Provision for loan losses   500     900     700         200
Net interest income after provision for loan losses   14,244     14,369     15,431     10,448     7,602
                   
Loan servicing and fee income   734     690     584     401     139
Service charges on deposit accounts   46     63     61     34     17
Gain on sale of loans held-for-sale   1,575     1,492     619     212     295
Gain on sale of investments   105                 240
Other operating income   212     130     457     3     1
Non-interest income   2,672     2,375     1,721     650     692
                   
Compensation and benefits   5,618     4,939     4,463     3,923     3,268
Occupancy and equipment   1,370     1,413     1,298     1,300     1,209
Data processing   392     366     346     419     270
Marketing and advertising   153     33     33     18     19
Acquisition costs           197     3,937     151
Professional fees   640     499     616     370     308
Other operating expenses   1,184     1,014     1,005     765     500
Non-interest expense   9,357     8,264     7,958     10,732     5,725
                   
Income before income taxes   7,559     8,480     9,194     366     2,569
Income tax expense   1,699     1,943     2,138     145     514
                   
Net income $ 5,860   $ 6,537   $ 7,056   $ 221   $ 2,055
                   
Basic earnings per share $ 1.02   $ 1.18   $ 1.27   $ 0.05   $ 0.49
Diluted earnings per share $ 1.00   $ 1.16   $ 1.25   $ 0.05   $ 0.48
                   
                   
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
  3/31/2022   3/31/2021   3/31/2022   3/31/2021
               
ADJUSTED NET INCOME:              
Net income, as reported $ 5,860     $ 2,055     $ 12,397     $ 3,574  
Adjustments:              
Merger-related expenses         151             296  
Debt extinguishment charges                     54  
Total adjustments, before income taxes         151             350  
Adjustment for reported effective income tax rate         30             72  
Total adjustments, after income taxes         121             278  
Adjusted net income $ 5,860     $ 2,176     $ 12,397     $ 3,852  
Basic earnings per share – adjusted $ 1.02     $ 0.52     $ 2.19     $ 0.92  
Diluted earnings per share – adjusted $ 1.00     $ 0.51     $ 2.15     $ 0.91  
               
ADJUSTED NET INTEREST INCOME:              
Net interest income, as reported $ 14,744     $ 7,802     $ 30,013     $ 15,129  
Adjustments:              
Debt extinguishment charges                     54  
Adjusted net interest income $ 14,744     $ 7,802     $ 30,013     $ 15,183  
               
ADJUSTED NET INTEREST MARGIN:              
Net interest margin, as reported   4.26 %     3.79 %     4.32 %     3.66 %
Adjustments:              
Debt extinguishment charges                     0.01 %
Adjusted net interest margin   4.26 %     3.79 %     4.32 %     3.67 %
               
ADJUSTED OPERATING EFFICIENCY RATIO(2):              
Operating efficiency ratio, as reported   54.05 %     69.36 %     50.41 %     71.31 %
Adjustments:              
Merger-related expenses         -1.83 %           -1.87 %
Debt extinguishment charges                     -0.24 %
Adjusted operating efficiency ratio   54.05 %     67.53 %     50.41 %     69.20 %
               
ADJUSTED RETURN ON AVERAGE ASSETS   1.63 %     1.02 %     1.72 %     0.90 %
ADJUSTED RETURN ON AVERAGE EQUITY   17.83 %     10.88 %     19.16 %     9.65 %
               
(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
  3/31/2022   3/31/2021   3/31/2022   3/31/2021
Profitability:              
   Return on average assets   1.63 %     0.97 %     1.72 %     0.84 %
   Return on average equity   17.83 %     10.28 %     19.16 %     8.95 %
   Yield on average interest-earning assets   4.60 %     4.56 %     4.69 %     4.57 %
   Cost of average interest-bearing liabilities   0.44 %     0.96 %     0.46 %     1.12 %
Net interest rate spread (1)   4.16 %     3.60 %     4.23 %     3.45 %
Net interest margin (2)   4.26 %     3.79 %     4.32 %     3.66 %
   Non-interest expense to average assets   2.60 %     2.69 %     2.44 %     2.64 %
Operating efficiency ratio (3)   54.05 %     69.36 %     50.41 %     71.31 %
               
Average balances:              
   Interest-earning assets $ 1,404,983     $ 833,778     $ 1,393,049     $ 828,912  
   Interest-bearing liabilities   1,115,078       665,423       1,110,620       673,537  
   Loans   1,274,485       742,004       1,264,043       733,283  
   Deposits   1,202,233       690,024       1,174,748       675,876  
   Borrowings   112,475       83,283       131,726       93,320  
               
               
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Represents net interest income divided by average interest-earning assets.    
(3) 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
  3/31/2022   12/31/2021   9/30/2021   6/30/2021
Asset quality:              
   Provision for loan losses $ 500     $ 900     $ 700     $  
   Net (charge-offs)/recoveries         (66 )           (327 )
   Allowance for loan losses   9,886       9,386       8,552       7,852  
Allowance for loan losses to total loans (1)   0.77 %     0.73 %     0.69 %     0.61 %
Allowance for loan losses to originated loans (1)(5)   1.04 %     1.08 %     1.13 %     1.13 %
Non-performing loans (2)(3)(4) $ 11,953     $ 8,616     $ 9,547     $ 8,120  
   Non-performing loans/total loans   0.93 %     0.67 %     0.77 %     0.63 %
   Non-performing loans/total assets   0.81 %     0.59 %     0.64 %     0.53 %
   Allowance for loan losses/non-performing loans   82.71 %     108.94 %     89.58 %     96.70 %
               
Capital (Bank only):              
   Tier 1 Capital $ 139,959 $ 132,006 $ 123,666 $ 118,536
   Tier 1 leverage ratio   10.06 %     9.92 %     9.45 %     11.20 %
   Common equity tier 1 capital ratio   14.76 %     14.44 %     14.54 %     14.05 %
   Tier 1 risk based capital ratio   14.76 %     14.44 %     14.54 %     14.05 %
   Total risk based capital ratio   15.85 %     15.52 %     15.59 %     15.01 %
               
Equity data:              
   Common shares outstanding   5,829,569       5,562,799       5,563,426       5,552,457  
   Stockholders’ equity $ 134,768 $ 129,379 $ 122,529 $ 115,238
   Book value per common share   23.12       23.26       22.02       20.75  
   Tangible common equity   115,162       109,752       102,881       96,636  
   Tangible book value per common share   19.75       19.73       18.49       17.40  
   Tangible common equity (“TCE”) ratio   7.90 %     7.63 %     7.02 %     6.35 %
               
(1) Calculation excludes loans held for sale.       
(2) Includes $1.5 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.5 million of loans fully guaranteed by the SBA at 3/31/22.
(3) Includes $2.5 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.5 million of loans fully guaranteed by the SBA at 9/30/21 and 12/31/21.    
(4) Includes $3.5 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.5 million of loans fully guaranteed by the SBA at 6/30/21.       
(5) Calculation excludes acquired loans.       
        
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)

               
  3/31/2022   12/31/2021   9/30/2021   6/30/2021
               
Loan distribution (1):              
Residential mortgages $ 400,686     $ 411,664     $ 420,445     $ 429,107  
Multifamily   389,262       358,831       266,715       227,887  
Commercial real estate   402,780       372,282       364,178       341,102  
Commercial & industrial   72,501       109,718       172,077       270,481  
Home equity   23,810       24,908       23,697       24,669  
Consumer   2       31       13       16  
               
  Total loans $ 1,289,041     $ 1,277,434     $ 1,247,125     $ 1,293,262  
               
Sequential quarter growth rate   0.91 %     2.43 %     -3.57 %     69.36 %
               
Loans sold during the quarter $ 16,233     $ 35,195     $ 13,997     $ 13,498  
               
Funding distribution:              
Demand $ 197,118     $ 190,723     $ 191,537     $ 179,259  
N.O.W.   508,841       437,920       353,978       250,172  
Savings   65,530       58,526       60,163       58,217  
Money market   172,506       162,699       181,148       211,085  
  Total core deposits   943,995       849,868       786,826       698,733  
Time   286,247       326,883       377,836       460,689  
  Total deposits   1,230,242       1,176,751       1,164,662       1,159,422  
Borrowings   75,823       113,274       159,642       228,625  
Subordinated debentures   24,541       24,504       24,513       24,498  
               
  Total funding sources $ 1,330,606     $ 1,314,529     $ 1,348,817     $ 1,412,545  
               
Sequential quarter growth rate – total deposits   4.55 %     1.04 %     0.45 %     61.44 %
               
Period-end core deposits/total deposits ratio   76.73 %     72.22 %     67.56 %     60.27 %
               
Period-end demand deposits/total deposits ratio   16.02 %     16.21 %     16.45 %     15.46 %
               
(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)

                   
  3/31/2022   12/31/2021   9/30/2021   6/30/2021   3/31/2021
Tangible common equity                  
Total equity $ 134,768     $ 129,379     $ 122,529     $ 115,238     $ 82,245  
Less: goodwill   (19,168 )     (19,168 )     (19,168 )     (18,100 )     (1,710 )
Less: core deposit intangible   (438 )     (459 )     (480 )     (502 )     (19 )
Tangible common equity $ 115,162     $ 109,752     $ 102,881     $ 96,636     $ 80,516  
                   
Tangible common equity (“TCE”) ratio                
Tangible common equity $ 115,162     $ 109,752     $ 102,881     $ 96,636     $ 80,516  
Total assets   1,476,681       1,458,180       1,484,641       1,541,443       890,432  
Less: goodwill   (19,168 )     (19,168 )     (19,168 )     (18,100 )     (1,710 )
Less: core deposit intangible   (438 )     (459 )     (480 )     (502 )     (19 )
Tangible assets $ 1,457,075     $ 1,438,553     $ 1,464,993     $ 1,522,841     $ 888,703  
TCE ratio   7.90 %     7.63 %     7.02 %     6.35 %     9.06 %
                   
Tangible book value per share                  
Tangible common equity $ 115,162     $ 109,752     $ 102,881     $ 96,636     $ 80,516  
Common shares outstanding   5,829,569       5,562,799       5,563,426       5,552,457       4,194,890  
Tangible book value per share $ 19.75     $ 19.73     $ 18.49     $ 17.40     $ 19.19  
                   
(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.
                   

HANOVER BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Three Months Ended March 31, 2022 and 2021
(unaudited, dollars in thousands)

                       
   2022    2021
  Average       Average   Average       Average
  Balance   Interest   Rate   Balance   Interest   Rate
                       
Assets:                      
Interest-earning assets:                      
Loans $ 1,274,485   $ 15,749   5.01 %   $ 742,004   $ 9,133   4.99 %
Investment securities   11,547     106   3.72 %     17,595     182   4.20 %
Interest-earning cash   114,889     45   0.16 %     70,465     19   0.11 %
FHLB stock and other investments   4,062     41   4.09 %     3,714     46   5.02 %
Total interest-earning assets   1,404,983     15,941   4.60 %     833,778     9,380   4.56 %
Non interest-earning assets:                      
Cash and due from banks   8,405             5,576        
Other assets   47,243             23,797        
Total assets $ 1,460,631           $ 863,151        
                       
Liabilities and stockholders’ equity:                      
Interest-bearing liabilities:                      
Savings, N.O.W. and money market deposits $ 696,240   $ 345   0.20 %   $ 247,336   $ 157   0.26 %
Time deposits   306,363     401   0.53 %     334,804     915   1.11 %
Total savings and time deposits   1,002,603     746   0.30 %     582,140     1,072   0.75 %
Fed funds purchased & FHLB & FRB advances   87,948     117   0.54 %     58,807     180   1.24 %
Note payable                      
Subordinated debentures   24,527     334   5.52 %     24,476     326   5.40 %
Total interest-bearing liabilities   1,115,078     1,197   0.44 %     665,423     1,578   0.96 %
Demand deposits   199,630             107,884        
Other liabilities   12,662             8,764        
Total liabilities   1,327,370             782,071        
Stockholders’ equity   133,261             81,080        
Total liabilities & stockholders’ equity $ 1,460,631           $ 863,151        
Net interest rate spread         4.16 %           3.60 %
Net interest income/margin     $ 14,744   4.26 %       $ 7,802   3.79 %
                       

HANOVER BANCORP, INC.
NET INTEREST INCOME ANALYSIS
For the Six Months Ended March 31, 2022 and 2021
(unaudited, dollars in thousands)

                         
   2022    2021  
  Average       Average   Average       Average  
  Balance   Interest   Rate   Balance   Interest   Rate  
                         
Assets:                        
Interest-earning assets:                        
Loans $ 1,264,043   $ 32,130   5.10 %   $ 733,283   $ 18,391   5.03 %  
Investment securities   13,613     260   3.83 %     17,052     355   4.18 %  
Interest-earning cash   110,729     84   0.15 %     74,758     40   0.11 %  
FHLB stock and other investments   4,664     83   3.57 %     3,819     91   4.78 %  
Total interest-earning assets   1,393,049     32,557   4.69 %     828,912     18,877   4.57 %  
Non interest-earning assets:                        
Cash and due from banks   8,334             5,138          
Other assets   48,136             24,051          
Total assets $ 1,449,519           $ 858,101          
                         
Liabilities and stockholders’ equity:                        
Interest-bearing liabilities:                        
Savings, N.O.W. and money market deposits $ 652,268   $ 711   0.22 %   $ 216,783   $ 274   0.25 %  
Time deposits   326,626     892   0.55 %     363,434     2,369   1.31 %  
Total savings and time deposits   978,894     1,603   0.33 %     580,217     2,643   0.91 %  
Fed funds purchased & FHLB & FRB advances   107,213     277   0.52 %     68,983     401   1.17 %  
Note payable               659     73   22.22 % (1)
Subordinated debentures   24,513     664   5.43 %     23,678     631   5.34 %  
Total interest-bearing liabilities   1,110,620     2,544   0.46 %     673,537     3,748   1.12 %  
Demand deposits   195,854             95,659          
Other liabilities   13,254             8,844          
Total liabilities   1,319,728             778,040          
Stockholders’ equity   129,791             80,061          
Total liabilities & stockholders’ equity $ 1,449,519           $ 858,101          
Net interest rate spread         4.23 %           3.45 %  
Net interest income/margin     $ 30,013   4.32 %       $ 15,129   3.66 %  
                         
(1) Includes impact of debt extinguishment charges. Excluding the impact of these charges, the average rate was 5.78%.     
                         

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