[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 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][37] - 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][7] - The net interest margin improved to 2.68% from 2.41% in the same quarter of 2024, driven by a decrease in the cost of interest-bearing liabilities [4][27] - The company recorded a provision for credit losses of $0.6 million, with the allowance for credit losses at 1.17% of total loans [26][37] Asset Quality - Non-performing loans decreased by 28.5% to $11.7 million, representing 0.60% of the total loan portfolio [25][4] - The allowance for credit losses increased to $22.9 million, compared to $22.8 million at the end of 2024 [26][4] Balance Sheet Highlights - Total assets were $2.29 billion, a slight decrease from $2.31 billion at the end of 2024 [9][34] - 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 [10][34] - The loan-to-deposit ratio improved to 101% at March 31, 2025, from 102% at December 31, 2024 [10][4] Loan Portfolio - 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 [15][4] - The residential loan portfolio amounted to $733.6 million, with an average loan balance of $486 thousand and a weighted average loan-to-value ratio of 57% [15][4] Strategic Initiatives - The company completed its core processing system conversion to FIS Horizon in February 2025, which is expected to enhance operational efficiencies and customer benefits [4][8] - Hanover Bancorp is focusing on disciplined development of its core business verticals, including niche residential, SBA, and C&I lending [8][4]

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]

Core Insights - Hanover Bank has introduced a new logo as part of a brand identity refresh, aiming to position itself as a leader in digital banking solutions while maintaining a commitment to exceptional service [1][2][3] Company Overview - Hanover Bancorp, Inc. operates Hanover Community Bank, which focuses on personalized and efficient banking services tailored to client needs [6] - The bank offers a comprehensive range of financial services, including consumer, commercial, and municipal banking products, as well as advanced mobile and internet banking technologies [6] Brand Identity and Vision - The new logo symbolizes a forward-thinking vision that emphasizes trust, stability, and progress, reflecting the bank's core values since its establishment in 2009 [2][5] - The refreshed identity is part of a broader initiative to enhance the banking experience for both individuals and businesses, with updates being implemented across various platforms [4] Leadership Perspective - The Chairman and CEO of Hanover Bank, Michael P. Puorro, highlighted the importance of the new logo in reinforcing the bank's commitment to innovation and client-focused services in a rapidly evolving financial landscape [3][5]

Financial Performance - For calendar 2024, the company recognized net income of $12.3 million, or $1.66 per diluted share, compared to net income of $15.2 million, or $2.05 per diluted share for fiscal 2023, reflecting a decrease in net interest income and an increase in the provision for credit losses [236]. - The company’s return on average equity for calendar 2024 was 6.45%, down from 8.10% in the previous year [239]. - The effective income tax rate for 2024 was 24.6%, slightly down from 24.9% in 2023, reflecting lower net income [252]. - The Company reported net income of $12.3 million for the year ended December 31, 2024, offset by $2.9 million in dividends declared [300]. - The net income for the three months ended December 31, 2024, was $12,346, compared to $3,763 for the same period in 2023, showing a significant increase of approximately 228.5% [323]. - Total comprehensive income for the three months ended December 31, 2024, was $13,462 thousand, up from $2,635 thousand in the prior year, reflecting a growth of 411% [327]. Asset and Liability Management - As of December 31, 2024, the company reported total assets of $2.31 billion, total stockholders' equity of $196.6 million, total loans of $1.99 billion, and total deposits of $1.95 billion [228]. - Total assets reached $2,233 million in 2024, compared to $1,976 million in 2023, marking an increase of 13.0% [242]. - The company's total liabilities as of December 31, 2024, were $2,115,472, an increase from $2,085,230 as of December 31, 2023, representing a growth of about 1.45% [320]. - Total deposits increased to $1.95 billion at December 31, 2024, up by $49.7 million from $1.90 billion at December 31, 2023 [284]. - Average total deposits for 2024 were $1,840,378 thousand with an average interest rate of 3.94% [286]. Interest Income and Expense - Net interest income for calendar 2024 was $53.1 million, a decrease of 2.6% from $54.5 million for fiscal 2023, with a net interest margin of 2.44%, down 41 basis points from 2.85% [241]. - Total interest income increased by $28.0 million, or 26.6%, with an average yield on interest-earning assets of 6.12%, up 63 basis points from 5.49% for fiscal 2023 [241]. - Total interest expense rose by $29.4 million, or 58.1%, with an average cost of interest-bearing liabilities at 4.40%, an increase of 122 basis points from 3.18% for fiscal 2023 [241]. - Total interest expense rose to $79.9 million in 2024, up from $50.6 million in 2023, driven by increased costs in deposits and borrowings [246]. Credit Losses and Provisions - The provision for credit losses increased to $4.0 million in June 2024, primarily due to an allowance for credit losses on an individually evaluated loan of $2.5 million [236]. - Provision for credit losses increased to $4.9 million in 2024 from $3.4 million in 2023, with total net charge-offs remaining stable at $1.6 million [248]. - The allowance for credit losses increased to $22.8 million at December 31, 2024, up from $19.7 million at December 31, 2023, with a ratio of 1.15% to total portfolio loans [277]. - The provision for credit losses for the three months ended December 31, 2024, was $4,940, significantly higher than $200 for the same period in 2023, reflecting a substantial increase in credit loss provisions [323]. Non-Interest Income and Expenses - The company’s total non-interest income for the three months ended December 31, 2024, was $15.3 million, compared to $3.3 million for the same period in 2023 [239]. - Non-interest income rose to $15.3 million in 2024, an increase of $6.5 million from $8.8 million in 2023, primarily driven by higher net gains on loan sales [249]. - Non-interest expense for 2024 was $47.1 million, an increase of $7.4 million from $39.7 million in 2023, mainly due to additional staffing [251]. Branch Expansion and Regulatory Approvals - The company expects to open a new full-service branch in Port Jefferson, New York, with operations anticipated to begin in the first half of 2025 [227]. - The company has received regulatory approval for the new branch, and business development staff have already joined in anticipation of the opening [227]. Investment Securities - The total investment securities available-for-sale amounted to $85.084 million with a fair value of $83.755 million as of December 31, 2024, compared to $63.292 million and $61.419 million respectively at December 31, 2023 [259]. - The weighted average yield on available-for-sale investment securities was 5.45% as of December 31, 2024, compared to 6.56% at December 31, 2023 [262]. - The total unrealized losses on available-for-sale securities were $1.605 million, with $13.849 million in gross unrealized losses for securities in a continuous unrealized loss position [414]. Loan Portfolio - As of December 31, 2024, the company's loan portfolio totaled $1.99 billion, an increase of $28.3 million from $1.96 billion at December 31, 2023, with growth concentrated in residential, SBA, and C&I loans [263]. - Loans as interest-earning assets amounted to $2,005 million in 2024, with an interest yield of 6.13%, compared to $1,772 million and 5.51% in 2023 [242]. - The total outstanding loans in the Multi-Family Market Rent Portfolio amount to $347.6 million, with an average outstanding loan size of $2.4 million and an average interest rate of 4.30% [270]. - The Company sold approximately $159.1 million of loans in the year ended December 31, 2024, recognizing gains of $10.9 million, compared to $51.8 million and $4.1 million in gains for the year ended September 30, 2023 [421]. Risk Management and Credit Quality - The Company categorizes loans into risk categories based on borrowers' ability to service their debt, using indicators such as current financial information and historical payment experience [424]. - The Company continuously monitors the credit quality of its loan receivables through assigned credit risk ratings by loan segment [422]. - The Company engages a third-party independent loan reviewer for semi-annual reviews of a sample of loans to validate credit risk ratings [423]. Changes in Accounting Standards - The company adopted ASC 326 for credit loss accounting effective October 1, 2023, changing its methodology for calculating credit losses [312]. - The Company recognized a one-time cumulative effect adjustment to retained earnings of $4.0 million, or $3.2 million net of tax effects, due to the adoption of ASU 2016-13 on October 1, 2023 [405]. - The Company adopted ASU 2022-02 concurrently with ASU 2016-13, which eliminates creditor accounting guidance for troubled debt restructurings [406].

Group 1: Earnings Performance - Hanover Bancorp, Inc. reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.49 per share, but down from $0.54 per share a year ago, representing an earnings surprise of 6.12% [1] - The company posted revenues of $18 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 2.83%, compared to year-ago revenues of $15.91 million [2] - Over the last four quarters, Hanover Bancorp has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Hanover Bancorp shares have increased approximately 14.1% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $17.8 million, and for the current fiscal year, it is $2.36 on revenues of $75.3 million [7] Group 3: Industry Context - The Zacks Industry Rank indicates that the Banks - Northeast industry is currently in the top 9% of over 250 Zacks industries, suggesting a favorable environment for stocks in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Hanover Bancorp is currently mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]

Financial Performance - Net income for Q4 2024 totaled $3.9 million, or $0.52 per diluted share, compared to $3.8 million, or $0.51 per diluted share in Q4 2023[4]. - Net income for the year ended December 31, 2024, was $12,346 thousand, a decrease of 9.14% from $13,589 thousand in 2023[35]. - Basic earnings per share (EPS) for the three months ended December 31, 2024, was $0.53, compared to $0.51 in the same period of 2023, reflecting a growth of 3.92%[35]. Income and Revenue - Record non-interest income of $4.2 million in Q4 2024, an increase of 5.89% from Q3 2024 and 28.67% from Q4 2023[1]. - Non-interest income for the year ended December 31, 2024, was $15,339 thousand, an increase of 43.36% from $10,691 thousand in 2023[35]. - Net interest income was $13.8 million in Q4 2024, up $1.1 million or 9.08% from Q4 2023, with a net interest margin of 2.53%[6]. - For Q4 2024, Hanover Bancorp reported net interest income of $13,808,000, an increase from $12,659,000 in Q4 2023, reflecting a margin of 2.53% compared to 2.40%[51]. - For the full year 2024, net interest income was $53,092,000, compared to $51,887,000 in 2023, with a margin of 2.44% versus 2.59%[52]. Assets and Deposits - Total assets increased to $2.31 billion at December 31, 2024, compared to $2.27 billion at December 31, 2023[12]. - Total deposits increased by $49.7 million or 2.61% year-over-year, reaching $1.95 billion at December 31, 2024[13]. - Total deposits reached $1,954,283 thousand as of December 31, 2024, compared to $1,904,595 thousand a year earlier, marking an increase of 2.62%[34]. - Total deposits slightly decreased to $1,954,283,000 in Q4 2024, with a sequential quarter growth rate of (0.17)%[48]. Loans and Credit Quality - The Bank's loan portfolio grew to $1.99 billion, an increase of $28.3 million or 1.45% for the year ended December 31, 2024[17]. - Total loans decreased to $1,985,524,000 in Q4 2024, reflecting a sequential quarter growth rate of (1.01)%[48]. - Non-performing loans totaled $16.4 million, representing 0.82% of total loans outstanding as of December 31, 2024[26]. - The allowance for credit losses was 1.15% of total loans, with non-performing loans totaling $16.4 million, representing 0.82% of the total loan portfolio[3]. - Provision for credit losses on loans increased to $400,000 in Q4 2024 from $200,000 in Q3 2024, while net charge-offs were $(1,027,000) in Q4 2024[44]. Equity and Book Value - Stockholders' equity rose to $196.6 million at December 31, 2024, an increase of $11.8 million from the previous year[16]. - The Company reported a tangible book value per share of $23.86 at December 31, 2024, a 9.97% annualized increase from $23.28 at September 30, 2024[3]. - Book value per share increased to $26.48 in Q4 2024, compared to $25.89 in Q3 2024[44]. - Tangible common equity (TCE) ratio improved to 7.73% in Q4 2024, up from 7.49% in Q3 2024[50]. Operational Efficiency and Future Outlook - The Company expects to complete a core processing system conversion by February 15, 2025, aimed at improving operational efficiency and customer experience[10]. - The Company expects the volume of SBA loan activity to increase in 2025, focusing on originations for sale over portfolio growth[19]. - The Company's loan pipeline with executed term sheets at December 31, 2024, is approximately $237 million, with 89% being niche-residential, conventional C&I, and SBA & USDA lending opportunities[17].