Hanover Bancorp(US:HNVR)2025-03-14 21:22Financial 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].