Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File No. 001-41384 HANOVER BANCORP, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction ...

Hanover Bancorp, Inc. (HNVR) came out with quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.57 per share. This compares to earnings of $0.11 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -42.11%. A quarter ago, it was expected that this company would post earnings of $0.51 per share when it actually produced earnings of $0.55, delivering a surprise of +7.84%.Over the last four quarters, the c ...

FOR IMMEDIATE RELEASE Investor and Press Contact: Lance P. Burke Chief Financial Officer (516) 548-8500 Hanover Bancorp, Inc. Reports Second Quarter 2025 Results Highlighted by Strong Demand Deposit Growth, Continued Margin Expansion and Its Inclusion in the Russell 2000 Index Second Quarter Performance Highlights ● Net Income: Net income for the quarter ended June 30, 2025 totaled $2.4 million or $0.33 per diluted share (including Series A preferred shares). ● Pre-Provision Net Revenue: Pre-provision net r ...

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]

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited statements show Q1 2025 net income fell to $1.5 million due to a one-time expense, while total assets remained stable at $2.3 billion Consolidated Statement of Financial Condition Highlights (unaudited) | (In thousands) | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $2,291,527 | $2,312,110 | ($20,583) | | Loans, net | $1,937,749 | $1,962,745 | ($24,996) | | Total Deposits | $1,936,438 | $1,954,283 | ($17,845) | | Total Liabilities | $2,094,884 | $2,115,472 | ($20,588) | | Total Stockholders' Equity | $196,643 | $196,638 | $5 | Consolidated Statement of Income Highlights (unaudited) | (In thousands, except EPS) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $14,629 | $12,935 | $1,694 | | Provision for credit losses | $600 | $300 | $300 | | Total Non-Interest Income | $3,732 | $3,576 | $156 | | Total Non-Interest Expense | $15,996 | $10,804 | $5,192 | | **Net Income** | **$1,521** | **$4,061** | **($2,540)** | | **Diluted EPS** | **$0.20** | **$0.55** | **($0.35)** | - The company incurred a significant one-time, non-recurring expense of approximately **$3.2 million** in Q1 2025 related to its core data processing system conversion to FIS Horizon[23](index=23&type=chunk) [Note 3. Securities](index=12&type=section&id=Note%203.%20Securities) The securities portfolio grew to $96.8 million, with no credit loss allowance deemed necessary for unrealized losses Securities Portfolio Summary (in thousands) | Security Type | March 31, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--- | :--- | :--- | | Available for sale | $93,197 | $83,755 | | Held to maturity | $3,556 | $3,609 | - No allowance for credit losses was recorded on the securities portfolio as management believes the unrealized losses are **not credit-related**[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 4. Loans](index=17&type=section&id=Note%204.%20Loans) Total loans decreased slightly to $1.96 billion, while the allowance for credit losses increased and nonaccrual loans significantly declined Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Residential real estate | $733,563 | $729,254 | | Multi-family | $535,429 | $550,570 | | Commercial real estate | $512,823 | $522,805 | | Commercial and industrial | $170,442 | $168,909 | | Total loans | $1,960,674 | $1,985,524 | Allowance for Credit Losses Activity (in thousands) | | Three Months Ended March 31, 2025 | | :--- | :--- | | Beginning balance | $22,779 | | Charge-offs | ($471) | | Recoveries | $17 | | Provision for credit losses | $600 | | **Ending balance** | **$22,925** | - **Nonaccrual loans significantly decreased** from $16.4 million at year-end 2024 to $11.7 million at March 31, 2025[40](index=40&type=chunk) [Note 6. Regulatory Matters](index=27&type=section&id=Note%206.%20Regulatory%20Matters) The Bank remains categorized as 'well capitalized' and exceeds all minimum regulatory capital requirements Bank Capital Ratios | Ratio | March 31, 2025 | Well Capitalized Minimum | | :--- | :--- | :--- | | Total capital to risk weighted assets | 14.62% | 10.00% | | Tier 1 capital to risk weighted assets | 13.37% | 8.00% | | Common equity tier 1 capital | 13.37% | 6.50% | | Tier 1 capital to average total assets | 8.95% | 5.00% | - As of March 31, 2025, the Bank was categorized as **well capitalized**, the highest regulatory classification[71](index=71&type=chunk)[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes a Q1 net income drop to a one-time expense, while highlighting improved net interest margin and asset quality Q1 Financial Performance Summary | (dollars in thousands, except per share data) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $1,521 | $4,061 | | Net income per share - diluted | $0.20 | $0.55 | | Return on average assets | 0.27% | 0.74% | | Return on average stockholders' equity | 3.11% | 8.70% | - The **$2.5 million decrease in net income** compared to Q1 2024 was primarily driven by a $5.2 million increase in non-interest expenses, which included **$3.2 million in one-time core system conversion costs**[129](index=129&type=chunk) - The company completed its core processing system conversion to FIS Horizon in February 2025, aiming to become a more technologically advanced and digitally-focused bank[118](index=118&type=chunk) [Financial Condition](index=47&type=section&id=Financial%20Condition) Total assets were stable at $2.3 billion, supported by a strong core and municipal deposit base, with improved CRE concentration - The loan portfolio is primarily composed of real estate loans, with **commercial real estate at 53.9%** and **residential loans at 37.4%** of the total $2.0 billion portfolio[135](index=135&type=chunk) - Municipal deposits grew to **$517.1 million**, representing **26.7% of total deposits** and providing a stable, lower-cost funding source[136](index=136&type=chunk) - The Bank's exposure to the Office property market is minor, accounting for only **2.23% of the total loan portfolio** with a total balance of $43.8 million[144](index=144&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with $679.0 million in undrawn sources and robust capital ratios exceeding regulatory minimums - At March 31, 2025, undrawn liquidity sources totaled **$679.0 million**, including cash, unencumbered securities, and secured/unsecured funding capacity[145](index=145&type=chunk) - The Board of Directors approved a **$0.10 per share cash dividend** payable on May 14, 2025[159](index=159&type=chunk) Capital Ratios (Bank Level) | Ratio | March 31, 2025 | | :--- | :--- | | Tier 1 leverage ratio | 8.95% | | Common equity tier 1 risk-based | 13.37% | | Total risk-based capital ratio | 14.62% | [Results of Operations](index=55&type=section&id=Results%20of%20Operations) Net interest income grew due to an improved margin, but a surge in non-interest expense from a one-time cost impacted overall results - **Net interest margin improved to 2.68%** in Q1 2025 from 2.41% in Q1 2024, as the cost of interest-bearing liabilities fell 32 basis points[164](index=164&type=chunk) Non-Interest Expense Breakdown (in thousands) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Salaries and employee benefits | $7,232 | $5,562 | | Conversion expenses | $3,180 | $0 | | Other expenses | $4,784 | $4,242 | | **Total non-interest expense** | **$15,996** | **$10,804** | [Asset Quality](index=60&type=section&id=Asset%20Quality) Asset quality improved significantly with a marked decrease in non-accrual loans and stronger coverage by the credit loss allowance - The allowance for credit losses as a percentage of non-accrual loans **increased to 196%** at March 31, 2025, up from 139% at December 31, 2024, indicating stronger coverage of problem loans[178](index=178&type=chunk) Non-Performing Assets (in thousands) | Metric | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Non-accrual loans | $11,697 | $16,368 | | Non-accrual loans as a % of total loans | 0.60% | 0.82% | [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk and is positioned to benefit from falling rates, with NII projected to increase by 5.4% in a -100 bps scenario Interest Rate Sensitivity Analysis (at March 31, 2025) | Rate Shock (bps) | Estimated Change in EVE (%) | Estimated Change in NII (%) | | :--- | :--- | :--- | | +200 | (15.9)% | (10.3)% | | +100 | (8.0)% | (5.0)% | | -100 | +7.3% | +5.4% | | -200 | +21.0% | +10.4% | [Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - The Company's principal executive officer and principal financial officer concluded that **disclosure controls and procedures are effective**[191](index=191&type=chunk) - There were **no changes in internal controls** over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[192](index=192&type=chunk) [PART II - OTHER INFORMATION](index=64&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is not subject to any material legal proceedings that would adversely impact its financial condition - The Company is **not subject to any material legal proceedings**[194](index=194&type=chunk) [Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been made to the risk factors disclosed in the company's most recent Annual Report - **No material changes** to the risk factors from the most recent Form 10-K are reported[195](index=195&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock repurchase program remains authorized, but no shares have been repurchased as of the reporting date - The Company has a stock repurchase program authorizing the buyback of up to 366,050 shares; **no shares were repurchased** under this program as of March 31, 2025[196](index=196&type=chunk) [Exhibits](index=66&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required officer certifications and XBRL data

Core Viewpoint - Hanover Bancorp, Inc. reported quarterly earnings of $0.55 per share, exceeding the Zacks Consensus Estimate of $0.51 per share, with a year-over-year comparison showing no change in earnings [1][2] Financial Performance - The company posted revenues of $18.36 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.58%, compared to revenues of $16.51 million a year ago [2] - Over the last four quarters, Hanover Bancorp has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Hanover Bancorp shares have declined approximately 7.6% since the beginning of the year, while the S&P 500 has seen a decline of 10.1% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.54 on revenues of $18.4 million, and for the current fiscal year, it is $2.33 on revenues of $75.3 million [7] - The estimate revisions trend for Hanover Bancorp has been unfavorable ahead of the earnings release [6] Industry Context - The Banks - Northeast industry, to which Hanover Bancorp belongs, is currently ranked in the top 23% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Financial Performance - Net income for Q1 2025 was $1.5 million or $0.20 per diluted share, while adjusted net income increased to $4.1 million or $0.55 per diluted share[1][3] - Net income for Q1 2025 was $1,521,000, a decrease of 62.5% from $4,061,000 in Q1 2024[34] - Basic earnings per share (EPS) for Q1 2025 was $0.20, down from $0.55 in Q1 2024, representing a decline of 63.6%[34] - Adjusted net income for Q1 2025, after accounting for conversion expenses, was $4,093,000, unchanged from Q1 2024[39] - The return on average assets decreased to 0.27% in Q1 2025 from 0.74% in Q1 2024[40] Income and Revenue - Interest income for Q1 2025 was $32,837,000, a slight increase from $32,432,000 in Q1 2024[34] - Net interest income after provision for credit losses rose to $14,029,000 in Q1 2025, compared to $12,635,000 in Q1 2024, reflecting a growth of 11.0%[34] - Non-interest income increased to $3,732,000 in Q1 2025, up from $3,576,000 in Q1 2024, marking a growth of 4.4%[34] - Net interest income for Q1 2025 was $14,629,000, an increase from $12,935,000 in Q1 2024, representing a growth of 13.1%[49] Asset Quality - Non-performing loans decreased by 28.5% to $11.7 million, representing 0.60% of the total loan portfolio[1][1] - The Bank's non-performing loans decreased to $11.7 million, down from $16.4 million at December 31, 2024, representing a reduction of $4.7 million[23] - Non-performing loans decreased to $11,697,000 in Q1 2025, down from $16,368,000 in Q4 2024, indicating improved asset quality[45] Loans and Deposits - Demand deposits increased by $12.6 million or 6.23% from March 31, 2024, and $3.9 million or 1.85% from December 31, 2024[1][9] - The loan portfolio decreased by $24.9 million to $1.96 billion, primarily due to the management of commercial real estate and multifamily loan concentrations[1][14] - Total deposits were $1.94 billion, a decrease of $17.8 million or 0.91% from December 31, 2024[1][9] - Total deposits decreased to $1.936 billion at March 31, 2025, from $1.954 billion at December 31, 2024[33] - Total loans decreased to $1,960,674,000 in Q1 2025, a sequential decline of 1.25% from $1,985,524,000 in Q4 2024[47] Capital and Equity - The company's tangible book value per share was $23.62 at March 31, 2025, down from $23.86 at December 31, 2024[1][12] - Stockholders' equity increased to $198,479,000 in Q1 2025, up from $187,693,000 in Q1 2024, reflecting a growth of 5.5%[49] - Tangible common equity ratio improved to 7.80% in Q1 2025 from 7.73% in Q4 2024, indicating stronger capital efficiency[48] - Book value per share decreased to $26.21 in Q1 2025 from $26.48 in Q4 2024, reflecting changes in equity value[45] Operational Efficiency - The operating efficiency ratio for Q1 2025 was reported at 87.12%, significantly higher than 65.44% in Q1 2024[39] - Total adjustments after income taxes for Q1 2025 amounted to $2,572,000, contributing to the adjusted operating efficiency ratio of 69.80%[39] Credit Losses - The allowance for credit losses increased to $22.9 million at March 31, 2025, compared to $22.8 million at December 31, 2024, with the allowance as a percentage of total loans at 1.17%[24] - Provision for credit losses on loans increased to $600,000 in Q1 2025 from $400,000 in Q4 2024, reflecting a significant rise in credit loss provisions[45] Future Plans - The core banking system conversion was completed in February 2025, expected to enhance operational efficiencies and customer benefits[1][6] - The Bank plans to open a new branch in Port Jefferson, New York, in mid-2025, expanding its market presence[26]

Core Insights - Hanover Bancorp, Inc. reported a net income of $1.5 million or $0.20 per diluted share for the quarter ended March 31, 2025, a decrease from $4.1 million or $0.55 per diluted share in the same quarter of 2024 [3][4][36] - The company declared a cash dividend of $0.10 per share on both common and Series A preferred shares, payable on May 14, 2025 [2][4] - Adjusted net income, excluding core system conversion expenses, was $4.1 million or $0.55 per diluted share for the quarter ended March 31, 2025, unchanged from the prior year [3][41] Financial Performance - Net interest income increased to $14.6 million for the quarter, up $1.7 million or 13.10% from the comparable quarter in 2024 [4][6] - The net interest margin expanded to 2.68% from 2.41% in the same quarter of 2024 [4][27] - The company's effective tax rate decreased to 13.8% in the first quarter of 2025 from 24.9% in the same quarter of 2024 [5] Asset Quality and Loan Portfolio - Non-performing loans decreased by 28.5% to $11.7 million, representing 0.60% of the total loan portfolio [4][25] - The allowance for credit losses increased to 1.17% of total loans as of March 31, 2025 [26] - The loan portfolio decreased by $24.9 million to $1.96 billion from December 31, 2024, primarily due to the management of commercial real estate and multifamily loan concentrations [14] Balance Sheet Highlights - Total assets were $2.29 billion as of March 31, 2025, compared to $2.31 billion at December 31, 2024 [8] - Total deposits decreased by $17.8 million or 0.91% from December 31, 2024, but increased by $19.2 million or 1.00% from March 31, 2024 [9] - Demand deposits increased by $12.6 million or 6.23% from March 31, 2024 [4][9] Strategic Initiatives - The company completed its core processing system conversion to FIS Horizon in February 2025, aimed at enhancing operational efficiencies and customer benefits [4][7] - Hanover continues to focus on niche residential, SBA, and C&I lending, with a loan pipeline of approximately $255 million as of March 31, 2025 [14][15] - The company is exploring opportunities for commercial real estate lending with an emphasis on relationship-based lending [4][7]

Core Banking System Upgrade - Hanover Bank has successfully completed its conversion to a new core banking system on February 18, 2025, aimed at enhancing the banking experience for clients and streamlining operations for employees [1][3][5] - The upgrade is part of Hanover Bank's evolution into a more business-focused financial institution, enabling the provision of digitally forward business banking solutions [2][5] Customer Experience and Service Enhancement - The new system is designed to improve customer experience by offering better functionality, enhanced user interfaces, and digital banking tools, which will increase convenience and responsiveness [7][8] - Comprehensive training has been provided to employees to maximize the capabilities of the new system, allowing for faster and more accurate service delivery [4][5] Security and Customization - The upgraded core banking system features state-of-the-art security protocols to safeguard client data and transactions, addressing the growing importance of security in digital banking [7] - It allows for customizable business solutions, enabling tailored product offerings and integrated banking solutions for clients [7] Operational Efficiency and Profitability - The new core system is expected to improve operational efficiency by better resource management, reducing operational costs, and enhancing profitability, positioning the bank for continued growth [8] - Enhanced reporting tools will provide real-time insights, supporting informed decision-making and business strategies [8]