Hanover Bancorp(HNVR) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights This section provides an overview of Hanover Bancorp, Inc.'s strong second-quarter 2025 performance, key announcements, and CEO insights Second Quarter Performance Highlights 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] - 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] General Announcement & Dividend Declaration 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][6] - Hanover Bancorp, Inc. was added to the Russell 2000 Index in late June 2025, enhancing its visibility among investment managers and institutional investors[6] - 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] CEO Commentary 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] - The company is pleased with the Port Jefferson branch opening and plans continued opportunistic expansion into underserved markets of Eastern Long Island[10] - 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] Financial Performance Analysis 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 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] Earnings Summary - Six Months Ended June 30, 2025 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][8] - 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] Net Interest Income & Margin Analysis 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][31] - 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] Balance Sheet & Loan Portfolio 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 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] - The loan-to-deposit ratio improved to 101% at June 30, 2025, from 102% at December 31, 2024[12] Loan Portfolio Overview 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] - 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] Commercial Real Estate Statistics 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 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] - 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] Multi-Family Rental Breakdown 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] Office Property Exposure 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 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 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] - 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] Company Information & Disclosures 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. 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] - 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] Non-GAAP Disclosure 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] - 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] Forward-Looking Statements 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] - 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] Consolidated Financial Statements (Unaudited) 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) 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) 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) 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) 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 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) 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) 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) 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) 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) 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) 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% |