Hanover Bancorp, Inc. Reports Earnings for the Third Calendar Quarter and Fiscal Year 2022 and Declares $0.10 Quarterly Cash Dividend

Third Calendar Quarter and Fiscal Year Performance Highlights

  • Net Income: Net income for the quarter ended September 30, 2022 totaled $5.8 million or $0.79 per diluted common share, versus $7.1 million or $1.25 per diluted common share in the same period a year ago. Excluding the impact of net purchase accounting accretion, the Company’s net income was $5.4 million or $0.74 per diluted common share in the quarter ended September 30, 2022 versus net income of $4.4 million or $0.79 per diluted common share in the comparable 2021 quarter. In connection with the Company’s initial public offering in May 2022, average common shares outstanding increased to 7,287,622 in the 2022 period from 5,559,818 in the comparable period of 2021. The Company recorded net income for the fiscal year ended September 30, 2022 of $23.6 million or $3.68 per diluted common share, compared to $10.9 million or $2.28 per diluted common share in the comparable 2021 fiscal year. The Company recorded adjusted (non-GAAP) net income (primarily excluding merger-related charges) of $23.8 million or $3.71 per diluted common share for the fiscal year ended September 30, 2022, versus adjusted (non-GAAP) net income of $14.4 million or $3.02 per diluted common share in the comparable 2021 fiscal year.
  • Pre-Provision Net Revenue: Pre-provision net revenue was $9.6 million or 2.28% of average assets for the quarter ended September 30, 2022 versus $9.9 million or 2.64% of average assets in the comparable 2021 quarter and $7.9 million or 2.09% of average assets in the prior linked quarter of 2022.
  • Quarterly Cash Dividend: The Company’s Board of Directors approved a $0.10 per common share cash dividend payable on November 15, 2022 to stockholders of record on November 8, 2022.
  • Financial Performance Metrics: Returns on average total assets and average stockholders’ equity were 1.39% and 13.45%, respectively, in the quarter ended September 30, 2022, versus 1.88% and 23.45% in the comparable 2021 period. Adjusted (non-GAAP) returns on average total assets and average stockholders’ equity (primarily excluding merger-related charges) were 1.39% and 13.45%, respectively, in the quarter ended September 30, 2022, versus 1.92% and 23.95% in the comparable 2021 period. The Company’s return on average tangible common equity was 15.18% in the quarter ended September 30, 2022.
  • Net Interest Income: Net interest income was $16.4 million for the quarter ended September 30, 2022, an increase of $291 thousand, or 1.8%, versus the comparable 2021 quarter, and an increase of $1.6 million, or 10.8% versus the prior linked quarter of 2022.
  • Net Interest Margin: The Company’s net interest margin during the quarter ended September 30, 2022 was 4.04% versus 4.05% in the quarter ended June 30, 2022 and 4.51% in the quarter ended September 30, 2021. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 3.93% in the quarter ended September 30, 2022, 3.94% in the quarter ended June 30, 2022 and 3.76% in the quarter ended September 30, 2021.
  • Balance Sheet: Assets totaled $1.84 billion at September 30, 2022 versus $1.61 billion at June 30, 2022 and $1.48 billion at September 30, 2021.
  • Capital Strength: The Bank’s Tier 1 leverage ratio was 10.90% and its Total Risk-Based capital ratio was 16.32% at September 30, 2022, each significantly above the regulatory minimums for a well-capitalized institution. The Company’s Tangible Common Equity ratio was 8.41% at September 30, 2022, 9.29% at June 30, 2022, and 7.02% at September 30, 2021.
  • Tangible Book Value Per Share: Tangible book value per common share increased to $21.00 at September 30, 2022 from $20.26 at June 30, 2022 and $18.49 at September 30, 2021.
  • Strong Lending Activity: On a linked quarter basis, the Company exhibited net loan growth, excluding Paycheck Protection Program (“PPP”) loans, of $217.9 million, a 62.5% increase on an annualized basis. At September 30, 2022, the Company’s loan pipeline was approximately $315 million.

MINEOLA, N.Y., Oct. 26, 2022 (GLOBE NEWSWIRE) -- Hanover Bancorp, Inc. (“Hanover” or “the Company” – NASDAQ: HNVR), the holding company for Hanover Community Bank (“the Bank”), today reported significant performance achievements for the quarter ended September 30, 2022 highlighted by strong loan growth in addition to record levels of assets, loans, deposits, net interest income and tangible book value per common share. Further, the Company’s Board of Directors approved the payment of a $0.10 per common share cash dividend payable on November 15, 2022 to stockholders of record on November 8, 2022. This is the Company’s fourth consecutive cash dividend.

Earnings Summary for the Quarter Ended September 30, 2022

The Company reported net income for the quarter ended September 30, 2022 of $5.8 million or $0.79 per diluted common share, versus $7.1 million or $1.25 per diluted common share in the comparable year ago period, representing a decrease of $1.2 million or 17.5%. Excluding the impact of net purchase accounting accretion, the Company’s net income was $5.4 million or $0.74 per diluted common share in the quarter ended September 30, 2022 versus net income of $4.4 million or $0.79 per diluted common share in the comparable 2021 period. Returns on average assets and average stockholders’ equity were 1.39% and 13.45%, respectively, in the quarter ended September 30, 2022, versus 1.88% and 23.45% in the comparable 2021 quarter. Adjusted (non-GAAP) returns on average total assets and average stockholders’ equity were 1.39% and 13.45%, respectively, in the quarter ended September 30, 2022, versus 1.92% and 23.95% in the comparable 2021 period.

The decline in net income recorded in the third calendar quarter of 2022 versus the comparable 2021 quarter resulted primarily from an increase in the provision for loan losses expense due to growth in the loan portfolio in the third calendar quarter of 2022, an increase in other operating expenses and a decrease in purchase accounting accretion.

Earnings Summary for the Fiscal Year Ended September 30, 2022

For the fiscal year ended September 30, 2022, the Company reported net income of $23.6 million or $3.68 per diluted common share versus $10.9 million or $2.28 per diluted common share a year ago. The Company recorded adjusted (non-GAAP) net income (primarily excluding merger-related charges) of $23.8 million or $3.71 per diluted common share for the fiscal year ended September 30, 2022, versus adjusted (non-GAAP) net income of $14.4 million or $3.02 per diluted common share in the comparable 2021 fiscal year.

The improved level of earnings in 2022 resulted from a $19.5 million or 46.9% increase in net interest income, principally due to growth in average interest-earning assets of $416.8 million coupled with a 21 basis point widening of the Company’s net interest margin to 4.18% in the fiscal year ended September 30, 2022, and a $5.5 million increase in non-interest income, primarily from gains on the sale of loans held for sale and loan servicing and fee income. Partially offsetting these positive factors was a $3.5 million increase in the provision for loan losses expense due to growth in the loan portfolio, and a $5.2 million increase in total operating expenses, principally resulting from growth in compensation and benefits related to increased headcount. The increase in headcount has resulted from several factors including organic growth, the need to create the infrastructure required for a public reporting company, the opportunistic addition of experienced executives to implement new product initiatives such as expanded commercial real estate and commercial and industrial lending, and an increase in personnel from the May 2021 acquisition of Savoy. The effective tax rate was 22.8% in each of 2022 and 2021.

Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s quarterly results: “We again demonstrated solid operating results across the board during the third calendar quarter of 2022 - our second as a publicly traded company. Strong organic growth in loans and deposits yielded net income of $5.8 million, earnings per diluted common share of $0.79, and returns on average assets and average stockholders’ equity of 1.39% and 13.45%, respectively, and most importantly, continued growth in tangible book value per common share to $21.00 during the quarter ended September 30, 2022, an increase of 13.6% versus the comparable 2021 date. Our operating efficiency ratio during the quarter was 48.0%, an excellent ratio for a high-growth company. These financial performance metrics place us in the upper echelon of our community bank peer group. We have shown that we possess the ability to build our earning asset base across multiple highly profitable operating verticals funded by strong deposit generating businesses. We are confident that our Freehold branch and our planned Hauppauge location, projected to open in the first quarter of 2023, will each meaningfully contribute to future commercial and industrial and SBA loan growth and low-cost core deposit expansion.”

Balance Sheet Highlights

Total assets at September 30, 2022 were $1.84 billion versus $1.48 billion at September 30, 2021. Total deposits at September 30, 2022 increased to $1.53 billion compared to $1.16 billion at September 30, 2021, the result of growth in core deposits (Demand, N.O.W., Savings and Money Market) of $402.2 million (51.1%) from September 30, 2021.

The Company had $416.9 million in total municipal deposits at September 30, 2022, at a weighted average rate of 1.19% versus $350.5 million at September 30, 2021. The Company’s municipal deposit program is built on long-standing relationships developed in the local marketplace. This core deposit business will continue to provide a stable source of funding for the Company’s lending products at costs significantly lower than both consumer deposits and market-based borrowings.

Total borrowings at September 30, 2022 were $101.8 million with a weighted average rate and term of 2.29% and 11 months, respectively. At September 30, 2022, the Bank had $37.8 million of term FHLB advances outstanding versus $42.0 million at September 30, 2021. At September 30, 2022, the Company had $55.0 million in FHLB overnight borrowings outstanding at a rate of 3.29%. There were no overnight borrowings outstanding at September 30, 2021. The Company’s Paycheck Protection Program Liquidity Facility advances declined to $9.0 million at September 30, 2022, versus $117.7 million at the comparable 2021 date, as the Company’s PPP loans were forgiven or repaid. The Company also had $183.6 million in additional borrowing capacity from the FHLB at September 30, 2022, and $65 million in Federal funds lines of credit available from correspondent banks.

Stockholders’ equity increased to $172.6 million at September 30, 2022 from $122.5 million at September 30, 2021, resulting in an increase in tangible book value per share over the past twelve months to $21.00 at September 30, 2022 from $18.49 at the comparable 2021 date. This increase was primarily due to a $27.7 million increase in common stock and surplus from the net proceeds from the public offering of our common stock in May 2022, coupled with net income earned during fiscal year 2022. Common shares outstanding were 7,285,648 and 5,563,426 at September 30, 2022, and 2021, respectively.

Loan Portfolio Growth and Allowance for Loan Losses

On a linked quarter basis, the Company exhibited net loan growth, excluding PPP loans, of $217.9 million, a 62.5% increase on an annualized basis. For the twelve months ended September 30, 2022, the Bank’s loan portfolio grew to $1.62 billion. Year over year growth was concentrated primarily in multi-family, commercial real estate and residential loans. At September 30, 2022, the Company’s residential loan portfolio (including home equity) amounted to $516.3 million, with an average loan balance of $484 thousand and a weighted average loan-to-value ratio of 56%. Commercial real estate and multifamily loans totaled $1.06 billion at September 30, 2022, with an average loan balance of $1.45 million and a weighted average loan-to-value ratio of 61%. The Company’s commercial real estate concentration ratio was 453% of capital at September 30, 2022 versus 355% of capital at September 30, 2021. At September 30, 2022, the Company’s loan pipeline was approximately $315 million.

Historically, the Bank has generated additional income by strategically originating and selling its primary lending products to other financial institutions at premiums, while also retaining servicing rights in some sales. The Bank expects that it will continue to originate loans, for its own portfolio and for sale, which will result in continued growth in interest income while also realizing gains on sale of loans to others and recording servicing income. With respect to the Bank’s current residential growth strategy, management expects to originate more loans to retain in its portfolio as opposed to selling into the secondary market due to the continued projected increase in interest rates. Accordingly, we continue to expect a decrease in secondary market sales on a year-over-year basis in the current interest rate environment. During the quarter ended September 30, 2022, the Company sold $19.3 million in SBA loans and recorded gains on the sale of loans held-for-sale of $1.2 million. The Company recorded gains of $619 thousand on the sale of performing residential and SBA loans in the quarter ended September 30, 2021.

During the third calendar quarter of 2022, the Bank recorded a provision for loan losses expense of $2.1 million. The September 30, 2022, allowance for loan losses balance was $12.8 million versus $8.6 million at September 30, 2021. The allowance for loan losses as a percent of total loans was 0.79% at September 30, 2022 versus 0.69% at September 30, 2021. The allowance for loan losses as a percent of total loans excluding acquired loans (“originated loans”) was 0.94% at September 30, 2022. At September 30, 2022, non-performing loans totaled $13.5 million of which $9.7 million represented legacy Savoy originated loans that were either written down to fair value at the acquisition date or are 100% guaranteed by the SBA. The remaining $3.8 million of non-performing loans represent primarily Hanover originated residential credits with a weighted average loan-to-value ratio of 55%.

Net Interest Margin

The Bank’s net interest margin was 4.04% during the third calendar quarter of 2022 versus 4.51% in the comparable 2021 quarter and 4.05% in the linked 2022 quarter. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 3.93% and 3.76% in the quarters ended September 30, 2022, and 2021, respectively, and 3.94% in the linked 2022 quarter.

Operating Efficiency Ratio

The Bank’s operating efficiency ratio was 48.0% in the third calendar quarter of 2022 versus 44.6% a year ago. Excluding merger-related charges in each year, these ratios were 48.0% and 43.5%, respectively, in the quarters ended September 30, 2022, and 2021.

Expansion into Suffolk County, Long Island

The Company’s recently announced plans to expand its geographic footprint with the opening of an office at 410 Motor Parkway, Hauppauge, New York, continues to move forward. Hanover plans to build its lending and support teams in Hauppauge with local banking talent and operate a full-service, high-tech branch. Lending and support staff have already joined the Company in anticipation of the opening of this flagship location. The Bank expects this site to be fully operational in late first calendar quarter of 2023.

About Hanover Community Bank and Hanover Bancorp, Inc.

Hanover Bancorp, Inc. (NASDAQ: HNVR), is a bank holding company for Hanover Community Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to client needs. Management and the Board of Directors are comprised of a select group of successful local businessmen and women who are committed to the success of the Bank by knowing and understanding the metro-New York area’s financial needs and opportunities. Backed by state-of-the-art technology, Hanover offers a full range of financial services. Hanover employs a complete suite of consumer, commercial, and municipal banking products and services, including multi-family and commercial mortgages, residential loans, business loans and lines of credit. Hanover also offers its customers access to 24-hour ATM service with no fees attached, free checking with interest, telephone banking, advanced technologies in mobile and internet banking for our consumer and business customers, safe deposit boxes and much more. The Company’s corporate administrative office is located in Mineola, New York where it also operates a full-service branch office along with additional branch locations in Garden City Park, Forest Hills, Flushing, Sunset Park, Rockefeller Center and Chinatown, New York, and Freehold, New Jersey.

Hanover Community Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, call (516) 548-8500 or visit the Bank’s website at www.hanoverbank.com.

Non-GAAP Disclosure

This discussion includes non-GAAP financial measures, including the Company’s adjusted operating earnings, adjusted net interest margin, adjusted returns on average assets and shareholders’ equity, and adjusted operating efficiency ratio. A non-GAAP financial measure is a numerical measure of historical or future performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes that the presentation of non-GAAP financial measures provides both management and investors with a greater understanding of the Company’s operating results and trends in addition to the results measured in accordance with GAAP, and provides greater comparability across time periods. While management uses non-GAAP financial measures in its analysis of the Company’s performance, this information is not meant to be considered in isolation or as a substitute for the numbers prepared in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP. The Company’s non-GAAP financial measures may not be comparable to similarly titled measures used by other financial institutions.

With respect to the calculations of adjusted operating net income, adjusted net interest income, adjusted net interest margin, and adjusted operating efficiency ratio for the periods presented in this discussion, reconciliations to the most comparable U.S. GAAP measures are provided in the tables that follow.

Forward-Looking Statements

This release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may be identified by the use of such words as "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Hanover Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Hanover Bancorp, Inc. may turn out to be incorrect. They can be affected by inaccurate assumptions that Hanover Bancorp, Inc. might make or by known or unknown risks and uncertainties, including those discussed in our Annual Report on Form 10-K under Item 1A - Risk Factors, as updated by our subsequent filings with the Securities and Exchange Commission. Further, the adverse effect of the COVID-19 pandemic on the Company, its customers, and the communities where it operates may adversely affect the Company’s business, results of operations and financial condition for an indefinite period of time. Consequently, no forward-looking statement can be guaranteed. Hanover Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release or to conform these statements to actual events.

HANOVER BANCORP, INC.          
STATEMENTS OF CONDITION (unaudited)          
(dollars in thousands)          
             
             
    September 30,   June 30,   September 30,
    2022   2022   2021
Assets            
Cash and cash equivalents $ 149,947     $ 133,974     $ 166,544  
Securities-available for sale, at fair value   12,285       6,740       7,747  
Investments-held to maturity   4,414       4,509       8,611  
             
Loans, net of deferred loan fees and costs   1,623,531       1,415,777       1,247,125  
Less: allowance for loan losses   (12,844 )     (10,886 )     (8,552 )
Loans, net   1,610,687       1,404,891       1,238,573  
             
Goodwill     19,168       19,168       19,168  
Premises & fixed assets   14,462       14,691       15,003  
Other assets   29,095       25,784       28,995  
  Assets $ 1,840,058     $ 1,609,757     $ 1,484,641  
             
Liabilities and stockholders' equity          
Core deposits $ 1,189,033     $ 1,051,277     $ 786,826  
Time deposits   339,073       298,272       377,836  
Total deposits   1,528,106       1,349,549       1,164,662  
             
Borrowings   101,752       56,963       159,642  
Subordinated debentures   24,568       24,554       24,513  
Other liabilities   13,048       11,300       13,295  
  Liabilities   1,667,474       1,442,366       1,362,112  
             
Stockholders' equity   172,584       167,391       122,529  
  Liabilities and stockholders' equity $ 1,840,058     $ 1,609,757     $ 1,484,641  
             

 

HANOVER BANCORP, INC.              
CONSOLIDATED STATEMENTS OF INCOME (unaudited)            
(dollars in thousands, except per share data)              
                 
    Three Months Ended   Fiscal Year Ended
    9/30/2022   9/30/2021   9/30/2022   9/30/2021
                 
Interest income $ 19,613   $ 17,760   $ 68,429   $ 48,675
Interest expense   3,191     1,629     7,175     6,967
  Net interest income   16,422     16,131     61,254     41,708
Provision for loan losses   2,050     700     4,450     1,000
  Net interest income after provision for loan losses   14,372     15,431     56,804     40,708
                 
Loan servicing and fee income   681     584     2,885     1,207
Service charges on deposit accounts   63     61     232     127
Gain on sale of loans held-for-sale   1,227     619     5,143     1,307
Gain on sale of investments   -     -     105     240
Other operating income   24     457     507     468
  Non-interest income   1,995     1,721     8,872     3,349
                 
Compensation and benefits   4,265     4,463     19,665     14,761
Occupancy and equipment   1,457     1,298     5,633     4,978
Data processing   496     346     1,629     1,280
Marketing and advertising   50     33     348     118
Acquisition costs   -     197     250     4,430
Professional fees   850     616     2,568     1,706
Other operating expenses   1,713     1,005     5,088     2,732
  Non-interest expense   8,831     7,958     35,181     30,005
                 
  Income before income taxes   7,536     9,194     30,495     14,052
Income tax expense   1,712     2,138     6,939     3,201
                 
  Net income $ 5,824   $ 7,056   $ 23,556   $ 10,851
                 
Earnings per common share ("EPS"):              
Basic $ 0.80   $ 1.27   $ 3.74   $ 2.32
Diluted $ 0.79   $ 1.25   $ 3.68   $ 2.28
                 
Average common shares outstanding for basic EPS   7,287,622     5,559,818     6,302,328     4,669,009
Average common shares outstanding for diluted EPS   7,380,638     5,649,048     6,395,305     4,758,669
                 
Note: Prior period information has been adjusted to conform to current period presentation.        
                 

 

HANOVER BANCORP, INC.                  
CONSOLIDATED STATEMENTS OF INCOME (unaudited)                
QUARTERLY TREND                  
(dollars in thousands, except per share data)                  
                     
    Three Months Ended
    9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
                     
Interest income $ 19,613   $ 16,259   $ 15,941   $ 16,616   $ 17,760
Interest expense   3,191     1,439     1,197     1,347     1,629
  Net interest income   16,422     14,820     14,744     15,269     16,131
Provision for loan losses   2,050     1,000     500     900     700
  Net interest income after provision for loan losses   14,372     13,820     14,244     14,369     15,431
                     
Loan servicing and fee income   681     779     734     690     584
Service charges on deposit accounts   63     60     46     63     61
Gain on sale of loans held-for-sale   1,227     849     1,575     1,492     619
Gain on sale of investments   -     -     105     -     -
Other operating income   24     140     212     130     457
  Non-interest income   1,995     1,828     2,672     2,375     1,721
                     
Compensation and benefits   4,265     4,843     5,618     4,939     4,463
Occupancy and equipment   1,457     1,394     1,370     1,413     1,298
Data processing   496     374     392     366     346
Marketing and advertising   50     112     153     33     33
Acquisition costs   -     250     -     -     197
Professional fees   850     579     640     499     616
Other operating expenses   1,713     1,178     1,184     1,014     1,005
  Non-interest expense   8,831     8,730     9,357     8,264     7,958
                     
  Income before income taxes   7,536     6,918     7,559     8,480     9,194
Income tax expense   1,712     1,585     1,699     1,943     2,138
                     
  Net income $ 5,824   $ 5,333   $ 5,860   $ 6,537   $ 7,056
                     
Earnings per common share ("EPS"):                  
Basic $ 0.80   $ 0.81   $ 1.02   $ 1.18   $ 1.27
Diluted $ 0.79   $ 0.80   $ 1.00   $ 1.16   $ 1.25
                     
Average common shares outstanding for basic EPS   7,287,622     6,596,505     5,753,513     5,562,939     5,559,818
Average common shares outstanding for diluted EPS   7,380,638     6,695,567     5,849,842     5,658,428     5,649,048
                     
Note: Prior period information has been adjusted to conform to current period presentation.            
                     

 

HANOVER BANCORP, INC.              
CONSOLIDATED NON-GAAP FINANCIAL INFORMATION (1) (unaudited)        
(dollars in thousands, except per share data)              
               
  Three Months Ended   Fiscal Year Ended
  9/30/2022   9/30/2021   9/30/2022   9/30/2021
               
ADJUSTED NET INCOME:              
Net income, as reported $ 5,824     $ 7,056     $ 23,556     $ 10,851  
Adjustments:              
Merger-related expenses   -       197       250       4,430  
Debt extinguishment charges   -       -       -       54  
Total adjustments, before income taxes   -       197       250       4,484  
Adjustment for reported effective income tax rate   -       46       53       978  
Total adjustments, after income taxes   -       151       197       3,506  
Adjusted net income $ 5,824     $ 7,207     $ 23,753     $ 14,357  
Basic earnings per share - adjusted $ 0.80     $ 1.30     $ 3.77     $ 3.07  
Diluted earnings per share - adjusted $ 0.79     $ 1.28     $ 3.71     $ 3.02  
               
ADJUSTED NET INTEREST INCOME:              
Net interest income, as reported $ 16,422     $ 16,131     $ 61,254     $ 41,708  
Adjustments:              
Debt extinguishment charges   -       -       -       54  
Adjusted net interest income $ 16,422     $ 16,131     $ 61,254     $ 41,762  
               
ADJUSTED NET INTEREST MARGIN:              
Net interest margin, as reported   4.04 %     4.51 %     4.18 %     3.97 %
Adjustments:              
Debt extinguishment charges   -       -       -       0.01 %
Adjusted net interest margin   4.04 %     4.51 %     4.18 %     3.98 %
               
ADJUSTED OPERATING EFFICIENCY RATIO(2):              
Operating efficiency ratio, as reported   47.95 %     44.58 %     50.25 %     66.95 %
Adjustments:              
Merger-related expenses   0.00 %     -1.10 %     -0.36 %     -9.87 %
Debt extinguishment charges   -       -       -       -0.08 %
Adjusted operating efficiency ratio   47.95 %     43.48 %     49.89 %     57.00 %
               
ADJUSTED RETURN ON AVERAGE ASSETS   1.39 %     1.92 %     1.56 %     1.31 %
ADJUSTED RETURN ON AVERAGE EQUITY   13.45 %     23.95 %     16.27 %     15.26 %
               
(1)  A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with U.S. GAAP. While management uses non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP.
               
(2) Excludes gain on sale of securities available for sale.

 

HANOVER BANCORP, INC.              
SELECTED FINANCIAL DATA (unaudited)            
(dollars in thousands)              
               
               
  Three Months Ended   Fiscal Year Ended
  9/30/2022   9/30/2021   9/30/2022   9/30/2021
Profitability:              
Return on average assets   1.39 %     1.88 %     1.55 %     0.99 %
Return on average equity   13.45 %     23.45 %     16.14 %     11.53 %
Return on average tangible equity   15.18 %     27.76 %     18.64 %     12.56 %
Pre-provision net revenue to average assets   2.28 %     2.64 %     2.30 %     1.38 %
Yield on average interest-earning assets   4.82 %     4.97 %     4.66 %     4.63 %
Cost of average interest-bearing liabilities   1.01 %     0.55 %     0.62 %     0.81 %
Net interest rate spread (1)   3.81 %     4.42 %     4.04 %     3.82 %
Net interest margin (2)   4.04 %     4.51 %     4.18 %     3.97 %
Non-interest expense to average assets   2.10 %     2.12 %     2.31 %     2.75 %
Operating efficiency ratio (3)   47.95 %     44.58 %     50.25 %     66.95 %
               
Average balances:              
Interest-earning assets $ 1,613,481     $ 1,419,148     $ 1,467,079     $ 1,050,259  
Interest-bearing liabilities   1,257,504       1,174,266       1,157,387       859,803  
Loans   1,523,936       1,277,091       1,344,369       934,066  
Deposits   1,407,629       1,128,956       1,256,976       843,009  
Borrowings   74,725       225,929       106,895       145,334  
               
               
(1) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Represents net interest income divided by average interest-earning assets.        
(3) Excludes gain on sale of securities available for sale.            

 

HANOVER BANCORP, INC.              
SELECTED FINANCIAL DATA (unaudited)              
(dollars in thousands, except share and per share data)            
               
  At or For the Three Months Ended
  9/30/2022   6/30/2022   3/31/2022   12/31/2021
Asset quality:              
Provision for loan losses $ 2,050     $ 1,000     $ 500     $ 900  
Net (charge-offs)/recoveries   (92 )     -       -       (66 )
Allowance for loan losses   12,844       10,886       9,886       9,386  
Allowance for loan losses to total loans (1)   0.79 %     0.77 %     0.77 %     0.73 %
Allowance for loan losses to originated loans (1)(5)   0.94 %     1.00 %     1.04 %     1.08 %
Non-performing loans (2)(3)(4) $ 13,512     $ 13,729     $ 11,953     $ 8,616  
Non-performing loans/total loans   0.83 %     0.97 %     0.93 %     0.67 %
Non-performing loans/total assets   0.73 %     0.85 %     0.81 %     0.59 %
Allowance for loan losses/non-performing loans   95.06 %     79.29 %     82.71 %     108.94 %
               
Capital (Bank only):              
Tier 1 Capital $ 178,340     $ 171,753     $ 139,959     $ 132,006  
Tier 1 leverage ratio   10.90 %     11.64 %     10.06 %     9.92 %
Common equity tier 1 capital ratio   15.21 %     16.27 %     14.76 %     14.44 %
Tier 1 risk based capital ratio   15.21 %     16.27 %     14.76 %     14.44 %
Total risk based capital ratio   16.32 %     17.32 %     15.85 %     15.52 %
               
Equity data:              
Common shares outstanding   7,285,648       7,296,624       5,829,569       5,562,799  
Stockholders' equity $ 172,584     $ 167,391     $ 134,768     $ 129,379  
Book value per common share   23.69       22.94       23.12       23.26  
Tangible common equity   153,017       147,805       115,162       109,752  
Tangible book value per common share   21.00       20.26       19.75       19.73  
Tangible common equity ("TCE") ratio   8.41 %     9.29 %     7.90 %     7.63 %
               
(1) Calculation excludes loans held for sale.              
(2) Includes $1.2 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.2 million of loans fully guaranteed by the SBA at 9/30/22 and 6/30/22.
(3) Includes $1.5 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.5 million of loans fully guaranteed by the SBA at 3/31/22.
(4) Includes $2.5 million of Purchased Credit Impaired loans 90 days past due and still accruing and $0.5 million of loans fully guaranteed by the SBA at 12/31/21.
(5) Calculation excludes acquired loans.              
               
Note: Prior period information has been adjusted to conform to current period presentation        

 

HANOVER BANCORP, INC.              
STATISTICAL SUMMARY              
QUARTERLY TREND              
(unaudited,dollars in thousands, except share data)            
               
  9/30/2022   6/30/2022   3/31/2022   12/31/2021
               
Loan distribution (1):              
Residential mortgages $ 488,692     $ 407,328     $ 400,686     $ 411,664  
Multifamily   575,061       479,366       389,262       358,831  
Commercial real estate   485,891       447,618       402,780       372,282  
Commercial & industrial   46,285       56,932       72,501       109,718  
Home equity   27,566       24,520       23,810       24,908  
Consumer   36       13       2       31  
               
  Total loans $ 1,623,531     $ 1,415,777 $ 1,289,041     $ 1,277,434  
               
Sequential quarter growth rate   14.67 %     9.83 %     0.91 %     2.43 %
               
Loans sold during the quarter $ 19,342     $ 9,490     $ 16,233     $ 35,212  
               
Funding distribution:              
Demand $ 219,225     $ 220,357     $ 197,118     $ 190,723  
N.O.W.   582,457       542,391       508,841       437,920  
Savings   128,927       104,826       65,530       58,526  
Money market   258,424       183,703       172,506       162,699  
Total core deposits   1,189,033       1,051,277       943,995       849,868  
Time   339,073       298,272       286,247       326,883  
Total deposits   1,528,106       1,349,549       1,230,242       1,176,751  
Borrowings   101,752       56,963       75,823       113,274  
Subordinated debentures   24,568       24,554       24,541       24,504  
               
  Total funding sources $ 1,654,426     $ 1,431,066     $ 1,330,606     $ 1,314,529  
               
Sequential quarter growth rate - total deposits   13.23 %     9.70 %     4.55 %     1.04 %
               
Period-end core deposits/total deposits ratio   77.81 %     77.90 %     76.73 %     72.22 %
               
Period-end demand deposits/total deposits ratio   14.35 %     16.33 %     16.02 %     16.21 %
               
(1) Excluding loans held for sale              
               

 

HANOVER BANCORP, INC.                  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1) (unaudited)        
(dollars in thousands, except share and per share amounts)            
                   
                   
  9/30/2022   6/30/2022   3/31/2022   12/31/2021   9/30/2021
Tangible common equity                  
Total equity $ 172,584     $ 167,391     $ 134,768     $ 129,379     $ 122,529  
Less: goodwill   (19,168 )     (19,168 )     (19,168 )     (19,168 )     (19,168 )
Less: core deposit intangible   (399 )     (418 )     (438 )     (459 )     (480 )
Tangible common equity $ 153,017     $ 147,805     $ 115,162     $ 109,752     $ 102,881  
                   
Tangible common equity ("TCE") ratio                
Tangible common equity $ 153,017     $ 147,805     $ 115,162     $ 109,752     $ 102,881  
Total assets   1,840,058       1,609,757       1,476,681       1,458,180       1,484,641  
Less: goodwill   (19,168 )     (19,168 )     (19,168 )     (19,168 )     (19,168 )
Less: core deposit intangible   (399 )     (418 )     (438 )     (459 )     (480 )
Tangible assets $ 1,820,491     $ 1,590,171     $ 1,457,075     $ 1,438,553     $ 1,464,993  
TCE ratio   8.41 %     9.29 %     7.90 %     7.63 %     7.02 %
                   
Tangible book value per share                  
Tangible common equity $ 153,017     $ 147,805     $ 115,162     $ 109,752     $ 102,881  
Common shares outstanding   7,285,648       7,296,624       5,829,569       5,562,799       5,563,426  
Tangible book value per share $ 21.00     $ 20.26     $ 19.75     $ 19.73     $ 18.49  
                   
(1)  A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with U.S. GAAP. While management uses non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with U.S. GAAP or considered to be more important than financial results determined in accordance with U.S. GAAP.
                   

 

HANOVER BANCORP, INC.                      
NET INTEREST INCOME ANALYSIS                      
For the Three Months Ended September 30, 2022 and 2021                  
(unaudited, dollars in thousands)                      
                       
                       
  2022   2021
  Average       Average Average       Average
  Balance   Interest   Rate   Balance   Interest   Rate
                       
Assets:                      
Interest-earning assets:                      
Loans $ 1,523,936   $ 19,033   4.96 %   $ 1,277,091   $ 17,496   5.44 %
Investment securities   13,171     126   3.80 %     16,526     162   3.89 %
Interest-earning cash   72,136     386   2.12 %     120,080     47   0.16 %
FHLB stock and other investments   4,238     68   6.37 %     5,451     55   4.00 %
Total interest-earning assets   1,613,481     19,613   4.82 %     1,419,148     17,760   4.97 %
Non interest-earning assets:                      
Cash and due from banks   9,945             18,494        
Other assets   43,421             49,718        
Total assets $ 1,666,847           $ 1,487,360        
                       
Liabilities and stockholders' equity:                      
Interest-bearing liabilities:                      
Savings, N.O.W. and money market deposits $ 863,551   $ 1,876   0.86 %   $ 523,257   $ 360   0.27 %
Time deposits   319,228     889   1.10 %     425,080     693   0.65 %
Total savings and time deposits   1,182,779     2,765   0.93 %     948,337     1,053   0.44 %
Borrowings   50,165     92   0.73 %     201,425     249   0.49 %
Subordinated debentures   24,560     334   5.40 %     24,504     327   5.29 %
Total interest-bearing liabilities   1,257,504     3,191   1.01 %     1,174,266     1,629   0.55 %
Demand deposits   224,850             180,619        
Other liabilities   12,730             13,096        
Total liabilities   1,495,084             1,367,981        
Stockholders' equity   171,763             119,379        
Total liabilities & stockholders' equity $ 1,666,847           $ 1,487,360        
Net interest rate spread         3.81 %           4.42 %
Net interest income/margin     $ 16,422   4.04 %       $ 16,131   4.51 %
                       

 

HANOVER BANCORP, INC.                      
NET INTEREST INCOME ANALYSIS                      
For the Fiscal Years Ended September 30, 2022 and 2021                    
(unaudited, dollars in thousands)                      
                       
                       
  2022   2021
  Average       Average Average       Average
  Balance   Interest   Rate   Balance   Interest   Rate
                       
Assets:                      
Interest-earning assets:                      
Loans $ 1,344,369   $ 67,005   4.98 %   $ 934,066   $ 47,685   5.11 %
Investment securities   12,788     484   3.78 %     16,845     685   4.07 %
Interest-earning cash   105,474     742   0.70 %     94,869     111   0.12 %
FHLB stock and other investments   4,448     198   4.45 %     4,479     194   4.33 %
Total interest-earning assets   1,467,079     68,429   4.66 %     1,050,259     48,675   4.63 %
Non interest-earning assets:                      
Cash and due from banks   9,164             9,674        
Other assets   46,131             33,001        
Total assets $ 1,522,374           $ 1,092,934        
                       
Liabilities and stockholders' equity:                      
Interest-bearing liabilities:                      
Savings, N.O.W. and money market deposits $ 737,057   $ 3,166   0.43 %   $ 333,996   $ 903   0.27 %
Time deposits   313,435     2,209   0.70 %     380,473     3,822   1.00 %
Total savings and time deposits   1,050,492     5,375   0.51 %     714,469     4,725   0.66 %
Borrowings   82,362     469   0.57 %     121,246     955   0.79 %
Subordinated debentures   24,533     1,331   5.43 %     24,088     1,287   5.34 %
Total interest-bearing liabilities   1,157,387     7,175   0.62 %     859,803     6,967   0.81 %
Demand deposits   206,484             128,540        
Other liabilities   12,526             10,519        
Total liabilities   1,376,397             998,862        
Stockholders' equity   145,977             94,072        
Total liabilities & stockholders' equity $ 1,522,374           $ 1,092,934        
Net interest rate spread         4.04 %           3.82 %
Net interest income/margin     $ 61,254   4.18 %       $ 41,708   3.97 %
                       

Investor and Press Contacts:
Brian K. Finneran
President

Lance P. Burke
Chief Financial Officer
(516) 548-8500


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Source: Hanover Bancorp, Inc