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Hanover Bancorp, Inc. Ny (HNVR) SEC Filing 8-K Material Event for the period ending Monday, May 16, 2022

Hanover Bancorp, Inc. Ny

CIK: 1828588 Ticker: HNVR

Exhibit 99.1

Graphic

FOR IMMEDIATE RELEASE

Investor and Press Contacts:

Brian K. Finneran

President

Lance P. Burke

Chief Financial Officer

(516) 548-8500

Hanover Bancorp, Inc. Completes Initial Public Offering and

Reports Second Fiscal Quarter Net Income of $5.9 million

Second Fiscal Quarter Performance 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, NY – May 16, 2022 – 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.

2


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.

3


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.

4


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.

5


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.

6


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

7


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.

8


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.

9


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.

10


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.

11


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

12


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

13


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.

14


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