Financial Performance - For the three months ended September 30, 2025, the Company reported revenue of $18.0 million, an increase from $17.1 million in the same period of 2024, representing a growth of 5.6%[141] - Net income for the three months ended September 30, 2025, was $3.5 million, or $0.47 per diluted share, compared to $3.5 million, or $0.48 per diluted share for the same period in 2024, indicating a slight decrease in earnings per share[143] - The Company recorded net income of $7.5 million for the nine months ended September 30, 2025, a decrease of $0.9 million compared to $8.4 million in the same period of 2024[191] - Non-interest income decreased by $1.1 million for the nine months ended September 30, 2025, primarily due to a $1.8 million decrease in net gain on sale of loans held for sale[198] - Non-interest income for the three months ended September 30, 2025, totaled $2.785 million, down from $3.954 million in the same quarter of 2024[187] Operational Efficiency - The Company's efficiency ratio improved to 66.71% for the three months ended September 30, 2025, down from 71.75% in the same quarter of 2024, reflecting better operational efficiency[147] - The net interest margin improved to 2.74% for the three months ended September 30, 2025, compared to 2.37% in the same quarter of 2024, driven by a decrease in the cost of interest-bearing liabilities to 3.89%[179] - Total non-interest expense increased by $5.9 million for the nine months ended September 30, 2025, driven by a $2.1 million increase in salaries and employee benefits and one-time core system conversion expenses of $3.2 million[199] Asset and Loan Management - Total assets remained stable at $2.3 billion as of September 30, 2025, consistent with the total assets reported at December 31, 2024[149] - The Company sold $21.4 million in residential loans under its flow origination program during the quarter ended September 30, 2025, compared to $16.5 million in the same quarter of 2024, marking a 29.5% increase[138] - As of September 30, 2025, the residential loan portfolio was $751.5 million, representing 37.8% of total loans[150] - Total loans with credit risk ratings of Special Mention and Substandard rose to $66.4 million at September 30, 2025, up from $40.8 million at December 31, 2024[202] Credit Quality and Losses - Total non-accrual loans increased to $17.2 million, or 0.86% of total loans, as of September 30, 2025, up from $15.4 million, or 0.77% of total loans, in the same period of 2024[146] - The allowance for credit losses as a percentage of total non-accrual loans was 130% as of September 30, 2025, down from 152% a year earlier, indicating a tightening of credit standards[146] - The provision for credit losses on loans was $1.4 million for the three months ended September 30, 2025, compared to $0.2 million in the same quarter of 2024, with net charge-offs of $0.6 million during the quarter[183] - The allowance for credit losses amounted to $22.4 million or 1.12% of total loans outstanding at September 30, 2025, compared to 1.15% at December 31, 2024[203] Capital and Liquidity - As of September 30, 2025, the Bank had total stockholders' equity of $201.8 million, up from $196.6 million at December 31, 2024, with retained earnings increasing by $5.2 million due to net income of $7.5 million for the nine months ended September 30, 2025[167] - The Bank's tier 1 leverage ratio was 9.15%, and the common equity tier 1 risk-based capital ratio was 13.13% as of September 30, 2025, exceeding all regulatory guidelines for a well-capitalized institution[169] - Total borrowings were $100.7 million as of September 30, 2025, down from $107.8 million at December 31, 2024[152] - The company had undrawn liquidity sources totaling $712.2 million, approximately 253% of uninsured deposit balances[162] Market Presence and Strategic Initiatives - The Company opened a new full-service branch in Port Jefferson, New York, in June 2025, expanding its market presence in the Suffolk County area[134] - The Company completed its core processing system conversion to FIS Horizon in February 2025, enhancing its technological capabilities[132] - The Company was added to the Russell 2000 Index in late June 2025, which may enhance its visibility and attractiveness to investors[133] Deposits and Funding - Total deposits remained stable at $2.0 billion as of September 30, 2025, with a loan to deposit ratio of 101%[151] - Core deposit balances accounted for 71.5% of total deposits at September 30, 2025, down from 74.5% at December 31, 2024[151] - The municipal deposit program totaled $513.6 million, or 26.0% of total deposits, as of September 30, 2025[151] - At September 30, 2025, the aggregate amount of outstanding uninsured deposits was $281.9 million, or 14.3% of total deposits[151] Shareholder Returns - The Company declared a cash dividend of $0.10 per share on both common and Series A preferred shares, payable on November 20, 2025[174] - The Company repurchased 25,264 shares of its common stock at an aggregate cost of $546 thousand during the nine months ended September 30, 2025, with remaining buyback authority of 340,786 shares[170]

Core Insights - Hanover Bancorp, Inc. reported quarterly earnings of $0.47 per share, missing the Zacks Consensus Estimate of $0.49 per share, and down from $0.5 per share a year ago, representing an earnings surprise of -4.08% [1] - The company posted revenues of $18.01 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 5.72%, compared to year-ago revenues of $17.06 million [2] - Hanover Bancorp shares have declined approximately 12.5% year-to-date, contrasting with the S&P 500's gain of 17.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.55 on revenues of $19.7 million, and for the current fiscal year, it is $1.92 on revenues of $75.5 million [7] - The estimate revisions trend for Hanover Bancorp was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Zacks Industry Rank for Banks - Northeast places it in the top 14% of over 250 Zacks industries, suggesting that the industry outlook can significantly impact stock performance [8]

Financial Performance - Net income for Q3 2025 was $3.5 million, or $0.47 per diluted share, compared to $2.4 million, or $0.33 per diluted share in the prior quarter[1]. - Pre-provision net revenue reached $6.0 million, resulting in a return on average assets of 1.05%, the highest since Q1 2023[1]. - Net interest income increased to $15.2 million, up $2.1 million, or 16.19%, from Q3 2024[6]. - Net income for the three months ended September 30, 2025, was $3,491,000, slightly down from $3,539,000 in the same period of 2024[39]. - Basic earnings per share (EPS) for the three months ended September 30, 2025, was $0.47, compared to $0.48 for the same period in 2024[39]. - Net interest income for the three months ended September 30, 2025, was $15,223,000, up from $13,102,000 for the same period in 2024, representing a 16.2% increase[39]. - Net income for the quarter was $3,491,000, up 42.9% from $2,443,000 in the previous quarter, resulting in a basic earnings per share of $0.47[41][43]. - The adjusted net income for the three months ended September 30, 2025, was $3,491,000, compared to $3,703,000 for the same period in 2024[43]. Asset and Deposit Growth - Total assets were $2.33 billion at September 30, 2025, compared to $2.31 billion at December 31, 2024[11]. - Total deposits rose by $20.5 million, or 1.05%, from December 31, 2024, with demand deposits increasing by $21.3 million, or 10.08%[12]. - Total deposits increased to $1,974,823,000 as of September 30, 2025, from $1,951,281,000 as of June 30, 2025, reflecting a growth of 1.2%[38]. - Total assets amounted to $2,331,580,000, a slight increase from $2,311,976,000 as of June 30, 2025[38]. - Stockholders' equity increased to $199,391,000 in 2025 from $190,251,000 in 2024, reflecting a stronger capital position[56]. - Total assets increased to $2,250,546,000 in 2025 from $2,234,502,000 in 2024, indicating growth in the company's balance sheet[56]. Loan Performance - Loans totaled $1.99 billion, a net increase of $22.2 million, or 4.52% annualized from the previous quarter[1]. - The loan-to-deposit ratio improved to 101% at September 30, 2025, from 102% at December 31, 2024[12]. - The Bank's C&I loan originations for Q3 2025 were approximately $24.1 million, with expectations for growth in lending and deposit activity as the year progresses[18]. - Total loans increased to $1,988,683 thousand, reflecting a sequential growth rate of 1.13% from the previous quarter[53]. - The average yield on loans was 6.01% for Q3 2025, compared to 6.18% in Q3 2024[55]. Credit Quality and Provisions - The Bank reported $17.2 million in non-performing loans as of September 30, 2025, an increase from $12.7 million at June 30, 2025[28]. - The allowance for credit losses was $22.4 million at September 30, 2025, representing 1.12% of total loans[29]. - The provision for credit losses for the three months ended September 30, 2025, was $1,325,000, compared to $200,000 for the same period in 2024, indicating a significant increase in credit loss provisions[39]. - The provision for credit losses was $1,325,000, a decrease from $2,357,000 in the prior quarter, indicating improved asset quality[41]. - The allowance for credit losses to total loans ratio was 1.12%, up from 1.10% in the previous quarter, indicating a cautious approach to credit risk[51]. Interest Income and Margins - The Bank's net interest margin increased to 2.74% for the quarter ended September 30, 2025, compared to 2.37% in the same quarter of 2024[31]. - Net interest income for Q3 2025 was $15,223 thousand, representing a margin of 2.74%, up from $13,102 thousand and 2.37% in Q3 2024[55]. - The net interest rate spread improved to 2.03% in 2025 from 1.69% in 2024, indicating better profitability on interest-earning assets[56]. Non-Interest Income - Non-interest income for the three months ended September 30, 2025, was $2,785,000, down from $3,954,000 in the same period of 2024, a decrease of 29.6%[39]. - Non-interest income for the quarter was $2,785,000, a decrease from $3,561,000 in the previous quarter[41]. Strategic Outlook - The company plans to continue expanding its core verticals and developing hi-tech branches in key markets[10]. - The company anticipates potential impacts from competitive pressures and changes in the interest rate environment, which could affect future performance[36].

Core Insights - Hanover Bancorp, Inc. reported a net income of $3.5 million or $0.47 per diluted share for the quarter ended September 30, 2025, which is consistent with the previous year but shows a slight decrease in earnings per share from $0.48 in Q3 2024 [3][5][44] - The company declared a cash dividend of $0.10 per share on both common and Series A preferred shares, payable on November 20, 2025 [2][5] Financial Performance - Net interest income increased to $15.2 million for Q3 2025, a rise of $2.1 million or 16.19% from Q3 2024, driven by an improved net interest margin of 2.74% compared to 2.37% in the prior year [5][7][35] - Pre-provision net revenue reached $6.0 million, marking the highest level since Q1 2023, with a return on average assets of 1.05% [5][11] - Non-interest income decreased, particularly in gains on the sale of loans held-for-sale, which impacted overall profitability [4][5] Balance Sheet Highlights - Total assets were $2.33 billion as of September 30, 2025, up from $2.31 billion at the end of 2024 [13] - Total deposits increased by $20.5 million or 1.05% from December 31, 2024, with demand deposits rising by $21.3 million or 10.08% [14] - The loan portfolio totaled $1.99 billion, reflecting a net increase of $22.2 million or 4.52% annualized from the previous quarter [18] Loan and Deposit Growth - The company continues to focus on diversifying its loan portfolio, with a reduction in the commercial real estate concentration ratio to 362% of capital as of September 30, 2025 [18] - The loan-to-deposit ratio improved to 101% at the end of Q3 2025, indicating a healthy balance between loans and deposits [14] - The company reported strong growth in its municipal deposit program, which provides a stable funding source for lending products [15] Cost Management - Non-interest expenses decreased by $0.6 million or 4.78% from the previous quarter, primarily due to lower incentive compensation and data processing costs [6] - The effective tax rate for Q3 2025 was 25.2%, up from 23.4% in Q3 2024, with expectations of a normalized rate of 25.0% for the remainder of the year [4][9] Market Position and Strategy - The company is expanding its market share through the development of high-tech branches in key markets, supported by local business development officers [11] - Management anticipates that further Federal Open Market Committee rate decreases will positively influence performance and lending opportunities [11]

Core Insights - Hanover Community Bank has launched a redesigned website aimed at enhancing the digital experience for users through improved features and navigation across devices [1][3] - The new site is designed to cater to a diverse audience, including long-time clients and new visitors, ensuring quick access to valuable information [2][4] Company Initiatives - The website launch is part of Hanover Bank's strategic initiatives to support long-term growth and adapt to the fast-paced digital environment [3] - The redesign emphasizes collaboration, accessibility, and a client-first approach, reflecting the bank's core principles [3][4] User Experience Enhancements - The revamped site features an organized user journey based on primary service verticals: business, personal, and municipal banking, improving content discovery and navigation [3][6] - Key highlights include a modernized user interface, full responsiveness for various devices, and simplified access to banking solutions [6] Brand Philosophy - The redesign aligns with Hanover Bank's guiding philosophy of "Forward Together," aiming to deliver a customer-first banking experience [4] - The initiative involved cross-departmental collaboration to create a dynamic digital experience that evolves with customer needs [4]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Hanover Bancorp, Inc. and its subsidiary for the periods ended June 30, 2025, and December 31, 2024, including statements of financial condition, income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Consolidated Statements of Financial Condition](index=5&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Financial Condition (in thousands) | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :----------------------------------- | :-------------------------- | :------------------ | | **Assets** | | | | Total cash and cash equivalents | $164,535 | $162,857 | | Securities available for sale | $102,636 | $83,755 | | Loans, net | $1,944,881 | $1,962,745 | | TOTAL ASSETS | $2,311,976 | $2,312,110 | | **Liabilities** | | | | Total deposits | $1,951,281 | $1,954,283 | | Borrowings | $107,805 | $107,805 | | TOTAL LIABILITIES | $2,113,091 | $2,115,472 | | **Stockholders' Equity** | | | | TOTAL STOCKHOLDERS' EQUITY | $198,885 | $196,638 | - Total assets remained stable at approximately **$2.31 billion** from December 31, 2024, to June 30, 2025. Securities available for sale increased by **$18.9 million**, while net loans decreased by **$17.86 million**. Total stockholders' equity increased by **$2.25 million**[9](index=9&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over a period Consolidated Income Statement (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $32,049 | $33,420 | $64,886 | $65,852 | | Total interest expense | $17,254 | $20,173 | $35,462 | $39,670 | | Net interest income | $14,795 | $13,247 | $29,424 | $26,182 | | Provision for credit losses | $2,357 | $4,040 | $2,957 | $4,340 | | Total non-interest income | $3,561 | $3,622 | $7,293 | $7,198 | | Total non-interest expense | $12,616 | $11,670 | $28,612 | $22,474 | | NET INCOME | $2,443 | $844 | $3,964 | $4,905 | | Basic EPS | $0.33 | $0.11 | $0.53 | $0.67 | | Diluted EPS | $0.33 | $0.11 | $0.53 | $0.66 | - Net income for the three months ended June 30, 2025, significantly increased to **$2.443 million** from **$0.844 million** in the prior year, driven by higher net interest income and lower provision for credit losses. However, net income for the six months ended June 30, 2025, decreased to **$3.964 million** from **$4.905 million** in the prior year, primarily due to increased non-interest expenses, including one-time conversion costs[11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items, such as unrealized gains or losses Consolidated Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $2,443 | $844 | $3,964 | $4,905 | | Net change in unrealized gains (losses) on securities available for sale | $201 | $(204) | $377 | $67 | | Change in unrealized (loss) gain on cash flow hedges | $(32) | $170 | $(270) | $1,056 | | Total other comprehensive income (loss), net of tax | $169 | $(34) | $107 | $1,123 | | Total comprehensive income, net of tax | $2,612 | $810 | $4,071 | $6,028 | - Total comprehensive income for the three months ended June 30, 2025, increased to **$2.612 million** from **$0.810 million** in the prior year, primarily due to net income growth and positive unrealized gains on available-for-sale securities. For the six months, total comprehensive income decreased to **$4.071 million** from **$6.028 million**, mainly due to a significant decrease in unrealized gains on cash flow hedges[12](index=12&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement outlines changes in equity components, including net income, dividends, and stock transactions Changes in Stockholders' Equity (in thousands) | Metric | Balance at January 1, 2025 | Balance at June 30, 2025 | Balance at January 1, 2024 | Balance at June 30, 2024 | | :----------------------------------- | :------------------------- | :----------------------- | :------------------------- | :----------------------- | | Total Stockholders' Equity | $196,638 | $198,885 | $184,830 | $190,072 | | Net income (6 months) | $3,964 | | $4,905 | | | Other comprehensive income (loss), net of tax (6 months) | $107 | | $1,123 | | | Cash dividends declared (6 months) | $(1,499) | | $(1,477) | | - Total stockholders' equity increased from **$196.638 million** at January 1, 2025, to **$198.885 million** at June 30, 2025, primarily driven by net income and other comprehensive income, partially offset by cash dividends[15](index=15&type=chunk)[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $2,052 | $493 | | Net cash provided by (used in) investing activities | $5,323 | $(92,501) | | Net cash (used in) provided by financing activities | $(5,697) | $55,916 | | Increase (decrease) in cash and cash equivalents | $1,678 | $(36,092) | | Cash and cash equivalents, end of period | $164,535 | $141,115 | - Net cash provided by operating activities increased significantly to **$2.052 million** for the six months ended June 30, 2025, from **$0.493 million** in the prior year. Investing activities shifted from a net outflow of **$92.501 million** in 2024 to a net inflow of **$5.323 million** in 2025, largely due to changes in securities purchases and maturities. Financing activities resulted in a net cash outflow of **$5.697 million** in 2025, a reversal from a net inflow of **$55.916 million** in 2024, primarily due to changes in deposits and borrowings[19](index=19&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the financial statements [Note 1. Basis of Presentation and Accounting Policies](index=12&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20ACCOUNTING%20POLICIES) This note describes the accounting principles and presentation methods used in the financial statements - Hanover Bancorp, Inc. reincorporated from New York to Maryland on June 25, 2025, following shareholder and regulatory approvals. The Company completed its core data processing system conversion to FIS Horizon in February 2025, incurring approximately **$3.2 million** in non-recurring expenses[2

Core Viewpoint - Hanover Bancorp, Inc. reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.57 per share, representing an earnings surprise of -42.11% [1][2] Financial Performance - The company posted revenues of $18.36 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.9%, compared to $16.87 million in the same quarter last year [2] - Over the last four quarters, Hanover Bancorp has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - Hanover Bancorp shares have lost approximately 3.1% since the beginning of the year, while the S&P 500 has gained 7.3% [3] - The current Zacks Rank for Hanover Bancorp is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.60 on revenues of $19.6 million, and for the current fiscal year, it is $2.37 on revenues of $77.3 million [7] - The estimate revisions trend for Hanover Bancorp was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Banks - Northeast industry, to which Hanover Bancorp belongs, is currently in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides an overview of Hanover Bancorp, Inc.'s strong second-quarter 2025 performance, key announcements, and CEO insights [Second Quarter Performance Highlights](index=1&type=section&id=1.1%20Second%20Quarter%20Performance%20Highlights) Hanover Bancorp, Inc. reported strong second-quarter 2025 results, marked by increased net income, significant demand deposit growth, and continued net interest margin expansion. The company also achieved inclusion in the Russell 2000 Index and maintained a strong liquidity position and solid asset quality | Metric | Q2 2025 | Change from Q1 2025 | Change from Q2 2024 | | :-------------------------------- | :---------------- | :------------------ | :------------------ | | Net Income | $2.4 million | - | - | | Diluted EPS | $0.33 | - | - | | Pre-Provision Net Revenue | $5.7 million | - | - | | Return on Average Assets (PPNR) | 1.04% | - | - | | Net Interest Income | $14.8 million | +1.13% | +11.69% | | Net Interest Margin | 2.76% | +0.08% | +0.30% | | Demand Deposits Growth (from Mar 31, 2025) | $28.1 million | +13.03% | - | | Demand Deposits Growth (from Dec 31, 2024) | $32.0 million | - | +15.12% | | Commercial Real Estate Concentration Ratio | 368% of capital | - | - | | Non-Performing Loans | $12.7 million | - | - | | Non-Performing Loans % of Total Loan Portfolio | 0.64% | - | - | | Allowance for Credit Losses % of Total Loans | 1.10% | - | - | - Undrawn liquidity sources totaled **$686.5 million**, approximately **274%** of uninsured deposit balances, with insured and collateralized deposits accounting for about **87%** of total deposits[1](index=1&type=chunk) - The company continues to manage its Multi-Family and Commercial Real Estate portfolios, reducing the commercial real estate concentration ratio to **368% of capital** at June 30, 2025, from **403%** at June 30, 2024[1](index=1&type=chunk) [General Announcement & Dividend Declaration](index=2&type=section&id=1.2%20General%20Announcement%20%26%20Dividend%20Declaration) Hanover Bancorp, Inc. announced its second-quarter 2025 results, declared a cash dividend, and highlighted its recent inclusion in the Russell 2000 Index, signifying increased market recognition - The Company's Board of Directors approved a **$0.10 per share** cash dividend on both common and Series A preferred shares, payable on August 13, 2025, to stockholders of record on August 6, 2025[2](index=2&type=chunk)[6](index=6&type=chunk) - Hanover Bancorp, Inc. was added to the Russell 2000 Index in late June 2025, enhancing its visibility among investment managers and institutional investors[6](index=6&type=chunk) - The company expanded its strategic presence in Suffolk County Long Island with the opening of its tenth branch in Port Jefferson, New York, in June 2025[6](index=6&type=chunk) [CEO Commentary](index=3&type=section&id=1.3%20CEO%20Commentary) Chairman and CEO Michael P. Puorro highlighted strong Q2 performance, attributing it to increased Pre-Provision Net Revenue, robust non-interest bearing deposit growth, and improved Net Interest Margin. He emphasized strategic expansion, inclusion in the Russell 2000, and diversified revenue verticals as drivers for future shareholder value, anticipating benefits from a more favorable interest rate environment - Second quarter performance reflects increased Pre-Provision Net Revenue of **$5.7 million** and strong non-interest bearing deposit growth of **$28.1 million**, driven by successful C&I and Municipal banking verticals[10](index=10&type=chunk) - The company is pleased with the Port Jefferson branch opening and plans continued opportunistic expansion into underserved markets of Eastern Long Island[10](index=10&type=chunk) - With inclusion in the Russell 2000, continued development of diversified revenue verticals, and a liability-sensitive balance sheet, the company anticipates delivering continued shareholder value and benefiting from a more favorable interest rate environment[10](index=10&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section analyzes Hanover Bancorp, Inc.'s financial performance for the second quarter and first half of 2025, focusing on earnings, net interest income, and margin trends [Earnings Summary - Quarter Ended June 30, 2025](index=2&type=section&id=2.1%20Earnings%20Summary%20-%20Quarter%20Ended%20June%2030%2C%202025) Hanover Bancorp reported a significant increase in net income for Q2 2025 compared to Q2 2024, driven by higher net interest income and lower provision for credit losses, despite increased non-interest expenses | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :---------------- | :---------------- | :--------- | | Net Income | $2.4 million | $0.8 million | +$1.6 million | | Diluted EPS | $0.33 | $0.11 | +$0.22 | | Return on Average Assets | 0.44% | 0.15% | +0.29% | | Return on Average Stockholders' Equity | 4.93% | 1.77% | +3.16% | | Return on Average Tangible Equity | 5.46% | 1.97% | +3.49% | | Net Interest Income | $14.8 million | $13.2 million | +11.69% | | Net Interest Margin | 2.76% | 2.46% | +0.30% | | Cost of Interest-Bearing Liabilities | 3.94% | 4.48% | -0.54% | | Yield on Interest Earning Assets | 5.98% | 6.22% | -0.24% | | Effective Tax Rate | 27.8% | 27.2% | +0.6% | - The increase in net income was primarily due to higher net interest income and a decrease in provision for credit losses, partially offset by increased non-interest expenses, particularly compensation and benefits related to new branch staffing and C&I banking team additions[4](index=4&type=chunk) [Earnings Summary - Six Months Ended June 30, 2025](index=3&type=section&id=2.2%20Earnings%20Summary%20-%20Six%20Months%20Ended%20June%2030%2C%202025) For the first half of 2025, net income decreased year-over-year due to higher non-interest expenses, including one-time core system conversion costs. However, adjusted net income (non-GAAP) showed a significant increase, reflecting underlying operational improvements | Metric | H1 2025 | H1 2024 | YoY Change | | :-------------------------------- | :---------------- | :---------------- | :--------- | | Net Income (GAAP) | $4.0 million | $4.9 million | -$0.9 million | | Diluted EPS (GAAP) | $0.53 | $0.66 | -$0.13 | | Adjusted Net Income (Non-GAAP) | $6.5 million | $4.9 million | +$1.6 million | | Adjusted Diluted EPS (Non-GAAP) | $0.87 | $0.66 | +$0.21 | | Return on Average Assets (GAAP) | 0.36% | 0.44% | -0.08% | | Adjusted Return on Average Assets (Non-GAAP) | 0.59% | 0.44% | +0.15% | | Net Interest Income | $29.4 million | $26.2 million | +12.38% | | Net Interest Margin | 2.72% | 2.43% | +0.29% | | Cost of Interest-Bearing Liabilities | 3.98% | 4.41% | -0.43% | | Yield on Interest Earning Assets | 5.99% | 6.12% | -0.13% | | Effective Tax Rate | 23.0% | 25.3% | -2.3% | - The decrease in GAAP net income was primarily due to increased non-interest expenses, including compensation and benefits, and **$2.6 million (net of tax)** in one-time core system conversion expenses[7](index=7&type=chunk)[8](index=8&type=chunk) - The improvement in net interest margin was a result of late 2024 reductions in the Fed Funds effective rate and the liability-sensitive nature of the Bank's balance sheet[9](index=9&type=chunk) [Net Interest Income & Margin Analysis](index=8&type=section&id=2.3%20Net%20Interest%20Income%20%26%20Margin%20Analysis) The Bank's net interest margin continued to expand in Q2 2025, reaching 2.76%, driven by a decrease in the cost of interest-bearing liabilities, partially offset by a slight decrease in the yield on interest-earning assets. This trend is attributed to the liability-sensitive balance sheet and recent Federal Funds rate reductions Net Interest Margin Trends | Period | Net Interest Margin | | :-------------------- | :------------------ | | Q2 2025 | 2.76% | | Q1 2025 | 2.68% | | Q2 2024 | 2.46% | - The net interest margin increase was primarily due to a **54 basis point decrease** in the cost of interest-bearing liabilities (to **3.94%** in Q2 2025 from **4.48%** in Q2 2024), partially offset by a **24 basis point decrease** in the yield on interest-earning assets (to **5.98%** from **6.22%**)[5](index=5&type=chunk)[31](index=31&type=chunk) - On a linked-quarter basis, net interest income increased by **$0.2 million (1.13%)**, driven by an **8 basis point increase** in net interest margin due to a **7 basis point decrease** in the cost of interest-bearing liabilities[5](index=5&type=chunk) [Balance Sheet & Loan Portfolio](index=3&type=section&id=Balance%20Sheet%20%26%20Loan%20Portfolio) This section details the Bank's balance sheet highlights, including asset and deposit trends, and provides an in-depth overview of its loan portfolio composition and risk management strategies [Balance Sheet Highlights](index=3&type=section&id=3.1%20Balance%20Sheet%20Highlights) The balance sheet remained stable with total assets and deposits consistent with year-end 2024. Key trends include strong demand deposit growth, an improved loan-to-deposit ratio, and a slight increase in stockholders' equity driven by net income | Metric | June 30, 2025 | December 31, 2024 | YoY Change (from June 30, 2024) | | :-------------------------------- | :---------------- | :------------------ | :------------------------------ | | Total Assets | $2.31 billion | $2.31 billion | - | | Total Deposits | $1.95 billion | $1.95 billion | +0.48% | | Demand Deposits | $243.7 million | $211.7 million | +21.93% | | Municipal Deposits | $517.4 million | $509.3 million | +14.31% | | Total Borrowings | $107.8 million | $107.8 million | - | | Stockholders' Equity | $198.9 million | $196.6 million | - | | Tangible Book Value Per Share | $23.94 | $23.86 | - | - Demand deposits increased by **$43.8 million (21.93%)** from June 30, 2024, and **$32.0 million (15.12%)** from December 31, 2024, reflecting success in C&I and Municipal banking verticals[12](index=12&type=chunk) - The loan-to-deposit ratio improved to **101%** at June 30, 2025, from **102%** at December 31, 2024[12](index=12&type=chunk) [Loan Portfolio Overview](index=4&type=section&id=3.2%20Loan%20Portfolio%20Overview) The Bank's loan portfolio decreased slightly in the first half of 2025 due to active management of commercial real estate and multifamily loan concentrations. The company is strategically shifting loan growth towards residential, C&I, and SBA loans, with a focus on secondary market sales and relationship-based CRE lending | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :---------------- | :------------------ | :------- | | Total Loan Portfolio | $1.97 billion | $1.98 billion | -$19.1 million | | Residential Loan Portfolio (incl. home equity) | $738.8 million | - | - | | Commercial Real Estate & Multifamily Loans | $1.08 billion | - | - | | Commercial Real Estate Concentration Ratio | 368% of capital | 385% of capital | -17% | | Office Space Loans | $48.9 million | - | - | | Office Space Loans % of Total Loan Portfolio | 2.48% | - | - | | Loan Pipeline (executed term sheets) | $190.2 million | - | - | - The company originated **$62.2 million** in residential loans in Q2 2025 and sold **$23.7 million** of residential loans, recording **$0.5 million** in gains on sale[17](index=17&type=chunk) - SBA loan originations and gains on sale were lower than expected due to the 'higher-for-longer' interest rate environment, tariffs, and tightened credit standards, but the Bank anticipates higher volumes in 2026 with additional business development officers[19](index=19&type=chunk) [Commercial Real Estate Statistics](index=5&type=section&id=3.2.1%20Commercial%20Real%20Estate%20Statistics) A significant portion of the Bank's commercial real estate portfolio consists of Multi-Family and CRE-Investor owned real estate, predominantly with fixed interest rates for an initial 5-year period. A substantial portion of these loans will have rate resets or mature in 2025-2027 Multi-Family Market Rent Portfolio Fixed Rate Reset/Maturity Schedule | Calendar Period | Loans | Total O/S (in thousands) | Avg O/S (in thousands) | Avg Interest Rate | | :-------------- | :------ | :------------------------- | :----------------------- | :---------------- | | 2025 | 7 | $8,609 | $1,230 | 5.29% | | 2026 | 36 | $117,249 | $3,257 | 3.66% | | 2027 | 70 | $185,157 | $2,645 | 4.41% | | Fixed Rate Total | 138 | $343,916 | $2,492 | 4.32% | Multi-Family Stabilized Rent Portfolio Fixed Rate Reset/Maturity Schedule | Calendar Period | Loans | Total O/S (in thousands) | Avg O/S (in thousands) | Avg Interest Rate | | :-------------- | :------ | :------------------------- | :----------------------- | :---------------- | | 2025 | 8 | $14,950 | $1,869 | 4.54% | | 2026 | 20 | $42,310 | $2,115 | 3.67% | | 2027 | 51 | $122,901 | $2,410 | 4.22% | | Fixed Rate Total | 99 | $195,690 | $1,977 | 4.34% | CRE Investor Portfolio Fixed Rate Reset/Maturity Schedule | Calendar Period | Loans | Total O/S (in thousands) | Avg O/S (in thousands) | Avg Interest Rate | | :-------------- | :------ | :------------------------- | :----------------------- | :---------------- | | 2025 | 25 | $33,503 | $1,340 | 7.28% | | 2026 | 30 | $35,702 | $1,190 | 4.90% | | 2027 | 89 | $156,924 | $1,763 | 4.86% | | Fixed Rate Total | 191 | $268,332 | $1,405 | 5.45% | [Multi-Family Stress Results](index=6&type=section&id=3.2.2%20Multi-Family%20Stress%20Results) A proforma stress evaluation of the Bank's Multifamily stabilized loan portfolio, assuming a 6% interest rate and 30-year amortization, indicates that 3% of the portfolio (10 loans, $18 million) would have DSCRs less than 1x but maintain projected LTVs under 100%. The majority (97%) would have DSCRs greater than 1x and LTVs within policy guidelines Multi-Family Stabilized Rent Portfolio Pro Forma Stress Results | DSCR Range | Loans | Total O/S (in thousands) | % of Total MF Portfolio | Current Weighted Average LTV | Projected Weighted Average LTV | | :--------- | :------ | :------------------------- | :---------------------- | :--------------------------- | :----------------------------- | | < 1.0 | 10 | $18,153 | 3% | 61% | 95% | | 1.0 < x <1.2 | 24 | $69,751 | 13% | 65% | 74% | | 1.2 < x <1.3 | 20 | $34,897 | 6% | 62% | 67% | | 1.3 < x <1.5 | 15 | $38,547 | 7% | 63% | 61% | | 1.5 < x <2.0 | 18 | $25,805 | 5% | 58% | 53% | | x > 2.0 | 12 | $8,537 | 2% | 43% | 33% | | Total | 99 | $195,690 | 36% | 62% | 67% | - The stress test assumes a recast of current loan balances at **6%** with a **30-year amortization** for loans where the current interest rate is below **6%**, and an implied property valuation using a **6% cap rate** and last reported NOI[22](index=22&type=chunk) - Management believes overall demand for multifamily housing in their market will allow borrowers to proactively address adverse impacts, as evidenced by successful refinancings of maturities and rate resets in the past 12 months[23](index=23&type=chunk) [Multi-Family Rental Breakdown](index=7&type=section&id=3.2.3%20Multi-Family%20Rental%20Breakdown) The Multi-Family loan portfolio is predominantly secured by properties subject to free market rental terms (64%), with both Market Rent and Stabilized Rent segments showing similar average borrower profiles. The portfolio is primarily concentrated in the New York City boroughs of Brooklyn, the Bronx, and Queens Multi-Family Loan Portfolio - Loans by Rent Type | Rent Type | Notes | Outstanding Loan Balance (in thousands) | % of Total Multi Family | Avg Loan Size (in thousands) | Current LTV | DSCR | Avg of Units | | :-------- | :------ | :---------------------------------------- | :---------------------- | :----------------------------- | :---------- | :--- | :------------- | | Market | 140 | $344,263 | 64% | $2,459 | 61.8% | 1.41 | 11 | | Stabilized | 99 | $195,690 | 36% | $1,977 | 61.8% | 1.44 | 12 | - The portfolio's primary locations are Manhattan (**2% Market, 2% Stabilized**), Other NYC (**47% Market, 31% Stabilized**), and Outside NYC (**15% Market, 3% Stabilized**)[26](index=26&type=chunk) [Office Property Exposure](index=7&type=section&id=3.2.4%20Office%20Property%20Exposure) The Bank's exposure to the Office market is minimal, representing only 2.48% of the total loan portfolio, with a very small portion located in Manhattan. The office loan pool demonstrates solid asset quality metrics | Metric | Value | | :-------------------------------- | :---------------- | | Total Office Loan Balance | $48.9 million | | % of Total Loan Portfolio | 2.48% | | Weighted Average DSCR | 2.48x | | Weighted Average LTV | 53% | | Exposure in Manhattan | < $350,000 | [Asset Quality & Capital](index=7&type=section&id=Asset%20Quality%20%26%20Capital) This section reviews the Bank's asset quality metrics, including non-performing loans and allowance for credit losses, alongside its capital adequacy [Asset Quality and Allowance for Credit Losses](index=7&type=section&id=4.1%20Asset%20Quality%20and%20Allowance%20for%20Credit%20Losses) The Bank maintained solid asset quality metrics, with a notable decrease in non-performing loans and a slight reduction in the allowance for credit losses. Net charge-offs were primarily driven by a specific reserve on an individually evaluated commercial loan | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :---------------- | :------------------ | :------- | | Non-Performing Loans | $12.7 million | $16.4 million | -$3.7 million | | Non-Performing Loans % of Total Loans | 0.64% | 0.82% | -0.18% | | Allowance for Credit Losses (ACL) | $21.6 million | $22.8 million | -$1.2 million | | ACL % of Total Loans | 1.10% | 1.15% | -0.05% | | Provision for Credit Losses (Q2 2025) | $2.4 million | - | - | | Net Charge-offs (Q2 2025) | $3.5 million | - | - | - The decrease in non-performing loans resulted from proactive sales, satisfactions, and the charge-off of a specific reserve on an individually evaluated commercial loan[28](index=28&type=chunk) - Of the **$3.5 million** in net charge-offs during Q2 2025, **$2.5 million** was attributable to the charge-off of a specific reserve on an individually evaluated commercial loan[29](index=29&type=chunk) [Company Information & Disclosures](index=8&type=section&id=Company%20Information%20%26%20Disclosures) This section provides background on Hanover Community Bank, clarifies the use of non-GAAP financial measures, and outlines the nature of forward-looking statements within the report [About Hanover Community Bank and Hanover Bancorp, Inc.](index=8&type=section&id=5.1%20About%20Hanover%20Community%20Bank%20and%20Hanover%20Bancorp%2C%20Inc.) Hanover Bancorp, Inc. is the holding company for Hanover Community Bank, a community commercial bank focused on personalized services and products for the metro-New York area. It offers a full range of consumer, commercial, and municipal banking services, supported by advanced technology and a network of branches - Hanover Community Bank provides highly personalized and efficient services, including multi-family and commercial mortgages, residential loans, business loans, lines of credit, and various deposit products[32](index=32&type=chunk) - The Bank operates a corporate administrative office in Mineola, New York, along with additional branch locations in Garden City Park, Hauppauge, Port Jefferson, Forest Hills, Flushing, Sunset Park, Rockefeller Center, Chinatown, New York, and Freehold, New Jersey[32](index=32&type=chunk) [Non-GAAP Disclosure](index=8&type=section&id=5.2%20Non-GAAP%20Disclosure) The report includes non-GAAP financial measures such as adjusted net income and tangible common equity ratios, which management believes provide a greater understanding of operating results and trends. These measures are not intended to be a substitute for or more important than U.S. GAAP results - Non-GAAP measures include adjusted net income, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity, tangible common equity (TCE) ratio, TCE, tangible assets, tangible book value per share, return on average tangible equity, and efficiency ratio[34](index=34&type=chunk) - Management uses non-GAAP measures to analyze performance and believes they offer greater comparability across time periods, but they should not be considered in isolation from or as a substitute for U.S. GAAP figures[34](index=34&type=chunk) [Forward-Looking Statements](index=9&type=section&id=5.3%20Forward-Looking%20Statements) This section contains forward-looking statements, which are subject to risks and uncertainties, including those detailed in the company's SEC filings. Hanover Bancorp, Inc. does not commit to updating these statements - Forward-looking statements are identified by words such as 'may,' 'believe,' 'expect,' 'anticipate,' 'should,' 'plan,' 'estimate,' 'predict,' 'continue,' and 'potential' or comparable terminology[36](index=36&type=chunk) - These statements are subject to inaccurate assumptions and known or unknown risks and uncertainties, including those discussed in the Annual Report on Form 10-K under Item 1A - Risk Factors[36](index=36&type=chunk) [Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated statements of condition and income, offering a comprehensive view of the company's financial position and performance over various periods [Statements of Condition (Balance Sheet)](index=10&type=section&id=6.1%20Statements%20of%20Condition%20%28Balance%20Sheet%29) The unaudited Statements of Condition provide a snapshot of the company's assets, liabilities, and stockholders' equity at key reporting dates, showing overall stability in total assets and deposits HANOVER BANCORP, INC. STATEMENTS OF CONDITION (unaudited) (dollars in thousands) | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | | **Assets** | | | | | Cash and cash equivalents | $164,535 | $160,234 | $162,857 | | Securities-available for sale, at fair value | 102,636 | 93,197 | 83,755 | | Loans, net | 1,944,881 | 1,937,749 | 1,962,745 | | Total Assets | $2,311,976 | $2,291,527 | $2,312,110 | | **Liabilities and stockholders' equity** | | | | | Total deposits | 1,951,281 | 1,936,438 | 1,954,283 | | Borrowings | 107,805 | 107,805 | 107,805 | | Total Liabilities | 2,113,091 | 2,094,884 | 2,115,472 | | Stockholders' equity | 198,885 | 196,643 | 196,638 | | Total Liabilities and stockholders' equity | $2,311,976 | $2,291,527 | $2,312,110 | [Consolidated Statements of Income (Quarterly & Six Months)](index=11&type=section&id=6.2%20Consolidated%20Statements%20of%20Income%20%28Quarterly%20%26%20Six%20Months%29) The unaudited Consolidated Statements of Income present the company's financial performance for the three and six months ended June 30, 2025, and 2024, highlighting growth in net interest income and net income for the quarter, but a decrease in net income for the six-month period due to higher non-interest expenses HANOVER BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) (dollars in thousands, except per share data) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $32,049 | $33,420 | $64,886 | $65,852 | | Interest expense | 17,254 | 20,173 | 35,462 | 39,670 | | Net interest income | 14,795 | 13,247 | 29,424 | 26,182 | | Provision for credit losses | 2,357 | 4,040 | 2,957 | 4,340 | | Non-interest income | 3,561 | 3,622 | 7,293 | 7,198 | | Non-interest expense | 12,616 | 11,670 | 28,612 | 22,474 | | Income before income taxes | 3,383 | 1,159 | 5,148 | 6,566 | | Income tax expense | 940 | 315 | 1,184 | 1,661 | | Net income | $2,443 | $844 | $3,964 | $4,905 | | Basic EPS | $0.33 | $0.11 | $0.53 | $0.66 | | Diluted EPS | $0.33 | $0.11 | $0.53 | $0.66 | [Consolidated Statements of Income (Quarterly Trend)](index=12&type=section&id=6.3%20Consolidated%20Statements%20of%20Income%20%28Quarterly%20Trend%29) This section provides a quarterly trend of the Consolidated Statements of Income, illustrating the sequential changes in key financial metrics over the past five quarters, including a significant increase in net income from Q1 2025 to Q2 2025 HANOVER BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (unaudited) QUARTERLY TREND (dollars in thousands, except per share data) | | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | :------ | | Interest income | $32,049 | $32,837 | $33,057 | $34,113 | $33,420 | | Interest expense | 17,254 | 18,208 | 19,249 | 21,011 | 20,173 | | Net interest income | 14,795 | 14,629 | 13,808 | 13,102 | 13,247 | | Provision for credit losses | 2,357 | 600 | 400 | 200 | 4,040 | | Non-interest income | 3,561 | 3,732 | 4,187 | 3,954 | 3,622 | | Non-interest expense | 12,616 | 15,996 | 12,400 | 12,238 | 11,670 | | Income before income taxes | 3,383 | 1,765 | 5,195 | 4,618 | 1,159 | | Income tax expense | 940 | 244 | 1,293 | 1,079 | 315 | | Net income | $2,443 | $1,521 | $3,902 | $3,539 | $844 | | Basic EPS | $0.33 | $0.20 | $0.53 | $0.48 | $0.11 | | Diluted EPS | $0.33 | $0.20 | $0.52 | $0.48 | $0.11 | [Supplemental Financial Data & Reconciliations (Unaudited)](index=13&type=section&id=Supplemental%20Financial%20Data%20%26%20Reconciliations%20%28Unaudited%29) This section provides additional financial data, including non-GAAP reconciliations, profitability metrics, asset quality, capital ratios, and detailed net interest income analysis [Non-GAAP Financial Information](index=13&type=section&id=7.1%20Non-GAAP%20Financial%20Information) This section provides a reconciliation of GAAP to non-GAAP financial measures, specifically adjusted net income and related performance ratios, for both quarterly and six-month periods. It highlights the impact of conversion expenses on reported results HANOVER BANCORP, INC. CONSOLIDATED NON-GAAP FINANCIAL INFORMATION (1) (unaudited) (dollars in thousands, except per share data) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income, as reported | $2,443 | $844 | $3,964 | $4,905 | | Conversion expenses (before tax) | — | — | 3,180 | — | | Total adjustments, after income taxes | — | — | 2,572 | — | | Adjusted net income | $2,443 | $844 | $6,536 | $4,905 | | Basic earnings per share - adjusted | $0.33 | $0.11 | $0.87 | $0.66 | | Diluted earnings per share - adjusted | $0.33 | $0.11 | $0.87 | $0.66 | | Operating efficiency ratio, as reported | 68.73% | 69.18% | 77.93% | 67.33% | | Adjusted operating efficiency ratio | 68.73% | 69.18% | 69.27% | 67.33% | | Adjusted return on average assets | 0.44% | 0.15% | 0.59% | 0.44% | | Adjusted return on average equity | 4.93% | 1.77% | 6.63% | 5.20% | | Adjusted return on average tangible equity | 5.46% | 1.97% | 7.35% | 5.80% | [Selected Financial Data (Profitability, Averages)](index=14&type=section&id=7.2%20Selected%20Financial%20Data%20%28Profitability%2C%20Averages%29) This section presents key profitability ratios and average balance sheet figures for the three and six months ended June 30, 2025, and 2024, illustrating trends in returns, yields, costs, and average asset/liability levels HANOVER BANCORP, INC. SELECTED FINANCIAL DATA (unaudited) (dollars in thousands) | Profitability: | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Return on average assets | 0.44% | 0.15% | 0.36% | 0.44% | | Return on average equity (1) | 4.93% | 1.77% | 4.02% | 5.20% | | Pre-provision net revenue return on assets | 1.04% | 0.94% | 0.73% | 0.99% | | Yield on average interest-earning assets | 5.98% | 6.22% | 5.99% | 6.12% | | Cost of average interest-bearing liabilities | 3.94% | 4.48% | 3.98% | 4.41% | | Net interest rate spread (2) | 2.04% | 1.74% | 2.01% | 1.71% | | Net interest margin (3) | 2.76% | 2.46% | 2.72% | 2.43% | | Operating efficiency ratio (4) | 68.73% | 69.18% | 77.93% | 67.33% | | Average balances: | | | | | | Interest-earning assets | $2,148,782 | $2,162,250 | $2,182,757 | $2,162,543 | | Loans | 1,978,535 | 2,014,820 | 1,984,135 | 1,999,448 | | Deposits | 1,838,947 | 1,773,205 | 1,878,969 | 1,807,924 | [Selected Financial Data (Asset Quality, Capital, Equity)](index=15&type=section&id=7.3%20Selected%20Financial%20Data%20%28Asset%20Quality%2C%20Capital%2C%20Equity%29) This section provides detailed asset quality, capital, and equity data, including non-performing loan trends, allowance for credit losses, and regulatory capital ratios, demonstrating the Bank's solid financial health and capital adequacy HANOVER BANCORP, INC. SELECTED FINANCIAL DATA (unaudited) (dollars in thousands, except share and per share data) | Asset quality: | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | | :-------------------------------- | :------------ | :------------- | :---------------- | :----------------- | | Provision for credit losses - loans | $2,170 | $600 | $400 | $200 | | Net (charge-offs)/recoveries | (3,524) | (454) | (1,027) | (438) | | Allowance for credit losses | 21,571 | 22,925 | 22,779 | 23,406 | | Allowance for credit losses to total loans | 1.10% | 1.17% | 1.15% | 1.17% | | Non-performing loans | $12,651 | $11,697 | $16,368 | $15,365 | | Non-performing loans/total loans | 0.64% | 0.60% | 0.82% | 0.77% | | Allowance for credit losses/non-performing loans | 170.51% | 195.99% | 139.17% | 152.33% | | Capital (Bank only): | | | | | | Tier 1 leverage ratio | 9.29% | 8.95% | 9.13% | 8.85% | | Common equity tier 1 capital ratio | 13.16% | 13.37% | 13.32% | 12.99% | | Total risk based capital ratio | 14.41% | 14.62% | 14.58% | 14.24% | | Equity data: | | | | | | Stockholders' equity | $198,885 | $196,643 | $196,638 | $192,339 | | Book value per share | 26.52 | 26.21 | 26.48 | 25.89 | | Tangible book value per share | 23.94 | 23.62 | 23.86 | 23.28 | | Tangible common equity ("TCE") ratio | 7.83% | 7.80% | 7.73% | 7.49% | [Statistical Summary (Loan & Funding Distribution)](index=16&type=section&id=7.4%20Statistical%20Summary%20%28Loan%20%26%20Funding%20Distribution%29) This summary provides a quarterly trend of the Bank's loan and funding distribution, detailing the composition of its loan portfolio by type and its funding sources, including core deposits and borrowings HANOVER BANCORP, INC. STATISTICAL SUMMARY QUARTERLY TREND (unaudited, dollars in thousands, except share data) | Loan distribution (1): | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | | Residential mortgages | $715,418 | $708,649 | $702,832 | $719,037 | | Multifamily | 539,573 | 535,429 | 550,570 | 557,634 | | Commercial real estate - OO | 267,223 | 264,855 | 261,223 | 246,458 | | Commercial real estate - NOO | 271,552 | 280,345 | 298,517 | 305,536 | | Commercial & industrial | 148,907 | 146,050 | 145,457 | 149,853 | | Total loans | $1,966,452 | $1,960,674 | $1,985,524 | $2,005,813 | | CRE concentration ratio | 368% | 369% | 385% | 397% | | Funding distribution: | | | | | | Demand | $243,664 | $215,569 | $211,656 | $206,327 | | Total core deposits | 1,439,656 | 1,418,209 | 1,456,513 | 1,453,444 | | Total deposits | 1,951,281 | 1,936,438 | 1,954,283 | 1,957,544 | | Borrowings | 107,805 | 107,805 | 107,805 | 125,805 | | Period-end core deposits/total deposits ratio | 73.78% | 73.24% | 74.53% | 74.25% | | Period-end demand deposits/total deposits ratio | 12.49% | 11.13% | 10.83% | 10.54% | [Reconciliation of Non-GAAP Financial Measures (Tangible Equity)](index=17&type=section&id=7.5%20Reconciliation%20of%20Non-GAAP%20Financial%20Measures%20%28Tangible%20Equity%29) This section provides a detailed reconciliation of GAAP equity measures to non-GAAP tangible equity measures, including tangible common equity, tangible assets, and tangible book value per share, for the past five quarters HANOVER BANCORP, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1) (unaudited) (dollars in thousands, except share and per share amounts) | | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | :------ | | Total equity (2) | $198,885 | $196,643 | $196,638 | $192,339 | $190,072 | | Less: goodwill | (19,168) | (19,168) | (19,168) | (19,168) | (19,168) | | Less: core deposit intangible | (222) | (236) | (250) | (265) | (279) | | Tangible common equity (2) | $179,495 | $177,239 | $177,220 | $172,906 | $170,625 | | Total assets | 2,311,976 | 2,291,527 | 2,312,110 | 2,327,814 | 2,331,098 | | Less: goodwill | (19,168) | (19,168) | (19,168) | (19,168) | (19,168) | | Less: core deposit intangible | (222) | (236) | (250) | (265) | (279) | | Tangible assets | $2,292,586 | $2,272,123 | $2,292,692 | $2,308,381 | $2,311,651 | | TCE ratio (2) | 7.83% | 7.80% | 7.73% | 7.49% | 7.38% | | Tangible book value per share | $23.94 | $23.62 | $23.86 | $23.28 | $23.05 | [Net Interest Income Analysis (Three Months)](index=18&type=section&id=7.6%20Net%20Interest%20Income%20Analysis%20%28Three%20Months%29) This table provides a detailed analysis of net interest income for the three months ended June 30, 2025, and 2024, breaking down average balances, interest earned/paid, and yields/costs for interest-earning assets and interest-bearing liabilities HANOVER BANCORP, INC. NET INTEREST INCOME ANALYSIS For the Three Months Ended June 30, 2025 and 2024 (unaudited, dollars in thousands) | Assets: | 2025 Average Balance | 2025 Interest | 2025 Yield/Cost | 2024 Average Balance | 2024 Interest | 2024 Yield/Cost | | :-------------------------------- | :------------------- | :------------ | :-------------- | :------------------- | :------------ | :-------------- | | Loans | $1,978,535 | $29,785 | 6.04% | $2,014,820 | $31,124 | 6.21% | | Total interest-earning assets | 2,148,782 | 32,049 | 5.98% | 2,162,250 | 33,420 | 6.22% | | Total assets | $2,208,164 | | | $2,221,335 | | | | Liabilities and stockholders' equity: | | | | | | | | Total interest-bearing liabilities | 1,756,316 | 17,254 | 3.94% | 1,809,991 | 20,173 | 4.48% | | Total liabilities & stockholders' equity | $2,208,164 | | | $2,221,335 | | | | Net interest rate spread | | | 2.04% | | | 1.74% | | Net interest income/margin | | $14,795 | 2.76% | | $13,247 | 2.46% | [Net Interest Income Analysis (Six Months)](index=19&type=section&id=7.7%20Net%20Interest%20Income%20Analysis%20%28Six%20Months%29) This table provides a detailed analysis of net interest income for the six months ended June 30, 2025, and 2024, breaking down average balances, interest earned/paid, and yields/costs for interest-earning assets and interest-bearing liabilities HANOVER BANCORP, INC. NET INTEREST INCOME ANALYSIS For the Six Months Ended June 30, 2025 and 2024 (unaudited, dollars in thousands) | Assets: | 2025 Average Balance | 2025 Interest | 2025 Yield/Cost | 2024 Average Balance | 2024 Interest | 2024 Yield/Cost | | :-------------------------------- | :------------------- | :------------ | :-------------- | :------------------- | :------------ | :-------------- | | Loans | $1,984,135 | $59,769 | 6.07% | $1,999,448 | $60,861 | 6.12% | | Total interest-earning assets | 2,182,757 | 64,886 | 5.99% | 2,162,543 | 65,852 | 6.12% | | Total assets | $2,242,047 | | | $2,221,028 | | | | Liabilities and stockholders' equity: | | | | | | | | Total interest-bearing liabilities | 1,798,958 | 35,462 | 3.98% | 1,810,195 | 39,670 | 4.41% | | Total liabilities & stockholders' equity | $2,242,047 | | | $2,221,028 | | | | Net interest rate spread | | | 2.01% | | | 1.71% | | Net interest income/margin | | $29,424 | 2.72% | | $26,182 | 2.43% |

Core Insights - Hanover Bancorp, Inc. reported a net income of $2.4 million or $0.33 per diluted share for the quarter ended June 30, 2025, a significant increase from $0.8 million or $0.11 per diluted share in the same quarter of 2024 [3][5][39] - The company declared a cash dividend of $0.10 per share on both common and Series A preferred shares, payable on August 13, 2025 [2][4] Financial Performance - Pre-provision net revenue for the quarter was $5.7 million, marking the highest level since Q1 2023 [4][10] - Net interest income increased to $14.8 million, up $1.5 million or 11.69% from the same quarter in 2024, driven by an improved net interest margin of 2.76% [4][6][31] - Demand deposits grew by $28.1 million or 13.03% from the previous quarter, indicating strong performance in C&I and Municipal banking verticals [4][10] Asset Quality and Loan Portfolio - Non-performing loans decreased to $12.7 million, representing 0.64% of the total loan portfolio, down from 0.82% at the end of 2024 [29][30] - The company actively managed its loan diversification strategy, reducing the commercial real estate concentration ratio to 368% of capital [4][16] - The residential loan portfolio amounted to $738.8 million, with a weighted average loan-to-value ratio of 57% [16] Strategic Developments - The company opened its tenth branch in Port Jefferson, New York, as part of its strategic expansion into underserved markets [4][10] - Hanover Bancorp was added to the Russell 2000 Index in late June 2025, enhancing its visibility among institutional investors [4][11] Balance Sheet Highlights - Total assets were reported at $2.31 billion, with total deposits at $1.95 billion as of June 30, 2025 [11][12] - The company maintained a strong liquidity position with undrawn liquidity sources totaling $686.5 million, approximately 274% of uninsured deposit balances [4][11] Non-Interest Expenses - Non-interest expenses increased, particularly in compensation and benefits, due to staffing for the new branch and expansion of the C&I banking teams [5][8] - The effective tax rate for the quarter was 27.8%, slightly up from 27.2% in the comparable quarter of 2024 [5][8]

Core Insights - Hanover Community Bank has opened its tenth branch in Port Jefferson, New York, marking a significant step in its strategic growth and commitment to serving the Long Island region [1][4] - The new branch offers a full range of commercial banking services and robust consumer banking services, catering to both businesses and individual consumers [2][4] Company Expansion - The Port Jefferson branch is strategically located to serve the thriving Suffolk County area and is Hanover Bank's second branch in this county [2][4] - This expansion is part of Hanover Bank's broader strategy to deliver tailored, community-focused financial support across Long Island and the New York metropolitan area [4] Services Offered - The new branch provides commercial lending, treasury management, cash flow solutions, checking and savings accounts, personal loans, and digital banking tools [2][4] - Hanover Bank emphasizes a relationship-focused banking approach, aiming to empower local residents and businesses while contributing to long-term economic development [3][4] Community Engagement - The bank is committed to hiring professionals from the communities it serves, reinforcing its dedication to understanding local needs [5] - A formal Grand Opening event will be held to engage with business leaders, residents, and community stakeholders [6] Company Background - Hanover Bancorp, Inc. is the holding company for Hanover Community Bank, which focuses on personalized and efficient banking services [7] - The bank offers a complete suite of financial products, including multi-family and commercial mortgages, residential loans, and business lines of credit [7]