Hanover Bancorp, Inc. Reports Third Fiscal Quarter Net Income of $5.3 million, Announces New Jersey Expansion and Plans for Long Island Expansion and Declares $0.10 Quarterly Cash Dividend

Jul 27th, 2022 12:00 EST

Third Fiscal Quarter Highlights

  • Initial Public Offering: The Company completed its Initial Public Offering (“IPO”) and began trading on the Nasdaq Global Select Market under the symbol HNVR on May 11, 2022. Gross proceeds of $30.8 million (including underwriters’ overallotment option, which was exercised in full) were raised at an offering price of $21.00 per share.
  • Net Income: Net income for the quarter ended June 30, 2022 totaled $5.3 million or $0.80 per diluted common share, versus $221 thousand or $0.05 per diluted common share in the same period a year ago. The Company recorded adjusted (non-GAAP) net income (excluding merger-related charges) of $5.5 million or $0.83 per diluted common share in the quarter ended June 30, 2022, versus adjusted (non-GAAP) net income of $3.3 million or $0.68 per diluted common share in the comparable 2021 quarter. The Company recorded net income for the nine months ended June 30, 2022 of $17.7 million or $2.92 per diluted common share, compared to $3.8 million or $0.85 per diluted common share in the comparable 2021 nine-month period. The Company recorded adjusted (non-GAAP) net income (primarily excluding merger-related charges) of $17.9 million or $2.95 per diluted common share for the nine months ended June 30, 2022, versus adjusted (non-GAAP) net income of $7.2 million or $1.61 per diluted common share in the comparable 2021 nine-month period.
  • Quarterly Cash Dividend: The Company’s Board of Directors approved a $0.10 per common share cash dividend payable on August 16, 2022 to stockholders of record on August 9, 2022.
  • Financial Performance Metrics: Returns on average total assets and average stockholders’ equity were 1.41% and 14.05%, respectively, in the quarter ended June 30, 2022, versus 0.08% and 0.92% in the comparable 2021 period. Adjusted (non-GAAP) returns on average total assets and average stockholders’ equity were 1.46% and 14.57%, respectively, in the quarter ended June 30, 2022, versus 1.14% and 13.71% in the comparable 2021 period. The Company’s return on average tangible common equity was 16.12% in the quarter ended June 30, 2022.
  • Net Interest Income: Net interest income was $14.8 million for the quarter ended June 30, 2022, an increase of $4.4 million, or 41.8%, versus the comparable 2021 quarter.
  • Net Interest Margin: The Company’s net interest margin during the quarter ended June 30, 2022 was 4.05% versus 4.26% in the quarter ended March 31, 2022 and 3.74% in the quarter ended June 30, 2021. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 3.94% in the quarter ended June 30, 2022, 3.86% in the quarter ended March 31, 2022 and 3.55% in the quarter ended June 30, 2021.
  • Balance Sheet: Assets totaled $1.61 billion at June 30, 2022 versus $1.48 billion at September 30, 2021 and $1.54 billion at June 30, 2021.
  • Capital Strength: The Bank’s Tier 1 leverage ratio was 11.64% and its Total Risk-Based capital ratio was 17.32% at June 30, 2022, each significantly above the regulatory minimums for a well-capitalized institution. The Company’s Tangible Common Equity ratio was 9.29% at June 30, 2022, 7.02% at September 30, 2021, and 6.35% at June 30, 2021.
  • Tangible Book Value Per Share: Tangible book value per common share increased to $20.26 at June 30, 2022 from $18.49 at September 30, 2021 and $17.40 at June 30, 2021.
  • Strong Lending Activity: On a linked quarter basis, the Company exhibited net loan growth, excluding Paycheck Protection Program (“PPP”) loans, of $144.1 million, which would result in a 46.1% increase on an annualized basis. At June 30, 2022, the Company’s loan pipeline was approximately $428 million.
  • Further Expansion into Long Island and New Jersey Markets: The Company recently announced that it is once again expanding its geographic footprint with the opening of an office in Hauppauge, New York. Earlier this year Hanover Bank opened an office located in Freehold, New Jersey. Like Freehold, Hanover will build its lending and support teams in Hauppauge with local banking talent and operate a full-service, high-tech branch which has already received the required regulatory approvals. The Bank expects this site to be fully operational by year-end 2022.

MINEOLA, N.Y., July 27, 2022 (GLOBE NEWSWIRE) -- Hanover Bancorp, Inc. (“Hanover” or “the Company”), the holding company for Hanover Community Bank (“the Bank”), today reported significant performance achievements for the quarter ended June 30, 2022 highlighted by strong levels of net income, net interest income and net interest margin. Further, the Company’s Board of Directors approved the payment of a $0.10 per common share cash dividend payable on August 16, 2022 to stockholders of record on August 9, 2022. This is the Company’s third cash dividend.

Earnings Summary for the Quarter Ended June 30, 2022

The Company reported net income for the quarter ended June 30, 2022 of $5.3 million or $0.80 per diluted common share, versus $221 thousand or $0.05 per diluted common share in the comparable year ago period, representing an increase of $5.1 million The Company recorded adjusted (non-GAAP) net income (excluding merger-related charges) of $5.5 million or $0.83 per diluted common share in the quarter ended June 30, 2022 versus adjusted (non-GAAP) net income of $3.3 million or $0.68 per diluted common share in the comparable 2021 quarter. Returns on average assets and average stockholders’ equity were 1.41% and 14.05%, respectively, in the quarter ended June 30, 2022, versus 0.08% and 0.92% in the comparable 2021 quarter. Adjusted (non-GAAP) returns on average total assets and average stockholders’ equity were 1.46% and 14.57%, respectively, in the quarter ended June 30, 2022, versus 1.14% and 13.71% in the comparable 2021 period.

The improvement in net income recorded in the third fiscal quarter of 2022 resulted from a $4.4 million or 41.8% increase in net interest income coupled with a $1.2 million improvement in non-interest income and a $2.0 million decrease in total operating expenses, primarily due to the decline in acquisition costs from the May 2021 acquisition of Savoy Bank (“Savoy”). Partially offsetting these positive factors was a $1.0 million increase in the provision for loan losses expense due to growth in the loan portfolio in the third fiscal quarter of 2022, coupled with a $1.4 million increase in income tax expense. The year-over-year growth in net interest income was due to an increase in average interest-earning assets of $347.1 million in 2022, primarily related to the acquisition of Savoy, coupled with a 31 basis point widening of the Company’s net interest margin to 4.05% in 2022 from 3.74% in the comparable 2021 quarter. The margin improvement resulted principally from a 14 basis point improvement in average yield on interest-earning assets to 4.45% coupled with a 20 basis point reduction in the cost of interest-bearing liabilities to 0.50% in 2022 from 0.70% in the third fiscal quarter of 2021.

Earnings Summary for the Nine Months Ended June 30, 2022

For the nine months ended June 30, 2022, the Company reported net income of $17.7 million or $2.92 per diluted common share versus $3.8 million or $0.85 per diluted common share a year ago. The Company recorded adjusted (non-GAAP) net income (primarily excluding merger-related charges) of $17.9 million or $2.95 per diluted common share for the nine months ended June 30, 2022, versus adjusted (non-GAAP) net income of $7.2 million or $1.61 per diluted common share in the comparable 2021 nine-month period.

The improved level of earnings in 2022 resulted from a $19.3 million or 75.3% increase in net interest income, principally due to a 54 basis point widening of the Company’s net interest margin to 4.23% in the nine months ended June 30, 2022, and a $5.2 million increase in non-interest income, primarily from gains on the sale of loans held for sale. Partially offsetting these positive factors was a $4.3 million increase in total operating expenses, principally resulting from growth in compensation and benefits related to increased headcount, coupled with an increase in the Company’s effective tax rate to 22.8% in 2022 from 21.9% in the comparable year ago period. 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, coupled with an increase in personnel from the May 2021 acquisition of Savoy.

Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s quarterly results: “I am very pleased to report that the underwriters for the Company’s Initial Public Offering exercised their overallotment option in full, increasing our gross capital proceeds raised to $30.8 million ($27.7 million net of the underwriting discount and estimated offering expenses). The IPO may be the Company’s singular most important achievement since the Bank’s doors were opened in 2009. The difficult economic environment in 2022, highlighted by continued record inflation, rapid growth in interest rates and ongoing equity market turbulence were difficult obstacles to navigate. While I’m incredibly proud of the team that made this happen, I’m aware that the difficult part starts now: using this capital profitably and effectively to support the continued growth and expansion of the Company.

I am very happy to report our solid operating results across the board during the third fiscal quarter of 2022 - our first as a publicly traded company. We recorded adjusted (non-GAAP) net income of $5.5 million, adjusted earnings per diluted common share of $0.83, and adjusted returns on average assets and average stockholders’ equity of 1.46% and 14.57%, respectively, and most importantly, continued growth in book value per common share to $20.26 during the quarter ended June 30, 2022. Our adjusted non-GAAP operating efficiency ratio during the quarter was 50.9%. These ratios place us in the upper echelon of our community bank peer group. We now possess the ability to build our earning asset base across multiple highly profitable operating verticals funded by strong deposit generating businesses. Further, we continue to explore several Fintech-related partnerships that, if completed, would benefit us in generating additional fee income and additional low-cost deposit funding.”

Balance Sheet Highlights

Total assets at June 30, 2022 were $1.61 billion versus $1.48 billion at September 30, 2021, and $1.54 billion at June 30, 2021. Total deposits at June 30, 2022 increased to $1.35 billion compared to $1.16 billion at September 30, 2021, and June 30, 2021, the result of growth in core deposits (Demand, N.O.W., Savings and Money Market) of $264.5 million from fiscal year end and $352.5 million from June 30, 2021. The quarter over quarter increase resulted from significant growth in the Company’s N.O.W., Savings and municipal deposit portfolios.

The Company had $444.6 million in total municipal deposits at June 30, 2022, at a rate of 0.47% versus $350.5 million at September 30, 2021, and $247.9 million at June 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.

Borrowings at June 30, 2022 were $57.0 million, including $18.9 million in Federal Reserve Paycheck Protection Program Liquidity Facility advances, with a weighted average rate and term of 0.98% and 30 months, respectively. At June 30, 2022, the Bank had $37.9 million of FHLB advances outstanding versus $51.7 million a year ago. The Company also had $183.3 million in additional borrowing capacity from the FHLB at June 30, 2022, in addition to $55 million in Federal funds lines of credit from correspondent banks.

Stockholders’ equity increased to $167.4 million at June 30, 2022 from $122.5 million at September 30, 2021, and $115.2 million at the comparable 2021 date, resulting in an increase in tangible book value per share over the past twelve months to $20.26 at June 30, 2022, from $18.49 at September 30, 2021 and $17.40 at the comparable 2021 date. This increase was primarily due to a $27.7 million increase in common stock and surplus from net proceeds from the public offering of our common stock in May 2022. Common shares outstanding were 7,296,624 and 5,552,457 at June 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 $144.1 million, which would result in a 46.1% increase on an annualized basis. For the twelve months ended June 30, 2022, the Bank’s loan portfolio grew to $1.42 billion. Year over year growth was concentrated primarily in multi-family and commercial real estate loans. At June 30, 2022, the Company’s residential loan portfolio (including home equity) amounted to $431.8 million, with an average loan balance of $443 thousand and a weighted average loan-to-value ratio of 55%. Commercial real estate and multifamily loans totaled $927.0 million at June 30, 2022, with an average loan balance of $1.31 million and a weighted average loan-to-value ratio of 62%. The Company’s commercial real estate concentration ratio was 400% of capital at June 30, 2022, versus 355% and 331% of capital at September 30, 2021, and June 30, 2021, respectively. At June 30, 2022, the Company’s loan pipeline was approximately $428 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 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 expect a decrease in secondary market sales on a year-over-year basis. During the quarter ended June 30, 2022, the Company sold $9.5 million in SBA loans and recorded gains on the sale of loans held-for-sale of $849 thousand. The Company recorded gains of $212 thousand on the sale of performing loans in the quarter ended June 30, 2021.

During the third fiscal quarter of 2022, the Bank recorded a provision for loan losses expense of $1.0 million. The June 30, 2022, allowance for loan losses balance was $10.9 million versus $7.9 million a year ago. The allowance for loan losses as a percent of total loans was 0.77% at June 30, 2022, versus 0.69% at September 30, 2021, and 0.61% at June 30, 2021. The allowance for loan losses as a percent of total loans excluding acquired loans (“originated loans”) was 1.0% at June 30, 2022. At June 30, 2022, non-performing loans totaled $13.7 million of which $9.6 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 $4.1 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 4.05% during the third fiscal quarter of 2022 versus 3.74% in the comparable 2021 quarter and 4.26% in the linked 2022 quarter. Excluding the impact of net purchase accounting accretion, the Company’s net interest margin was 3.94% and 3.55% in the quarters ended June 30, 2022, and 2021, respectively, and 3.86% in the linked 2022 quarter.

Operating Efficiency Ratio

The Bank’s operating efficiency ratio was 52.4% in the third fiscal quarter of 2022 versus 96.7% a year ago. Excluding merger-related charges in each year, these ratios were 50.9% and 61.2%, respectively, in the quarters ended June 30, 2022, and 2021.Further Expansion into Long Island and New Jersey Markets

The Company recently announced that it is once again expanding the Company’s geographic footprint with the opening of an office at 410 Motor Parkway, Hauppauge, New York. Earlier this year Hanover Bank opened an office located in Freehold, New Jersey, answering the demand for lending and commercial banking products to small and medium sized businesses, including Small Business Administration (“SBA”) financing, to the highly attractive Central New Jersey market. Like Freehold, Hanover will build its lending and support teams in Hauppauge with local banking talent and operate a full-service, high-tech branch which has already received the required regulatory approvals. The Bank expects this site to be fully operational by year-end 2022.

Moving eastward to Suffolk County Long Island strategically supports the growth of Hanover’s commercial, municipal, and retail banking verticals. It also will assist in scaling up many of the Company’s other business lines, while simultaneously creating new opportunities for growth, profitability, and development. The office is located in a newly constructed state of the art, Class A, commercial building located next to the Long Island Innovation Park at Hauppauge (LIIPH), the largest industrial park in the Northeast. Logistically, this location will allow the Company to further service the Long Island business community with commercial, municipal, and retail banking products. This area is particularly void of institutional banking choices due to the ongoing, robust consolidation activity within our industry. By strategically expanding our geographic footprint, we are also simultaneously increasing profitability and market share to bring greater value to our shareholders.

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 comparable 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)      
        
        
  June 30, September 30, June 30, 
   2022   2021   2021  
Assets       
Cash and cash equivalents$133,974  $166,544  $170,934  
Securities-available for sale, at fair value 6,740   7,747   7,777  
Investments-held to maturity 4,509   8,611   8,987  
Loans held for sale -   -   3,883  
        
Loans, net of deferred loan fees and costs 1,415,777   1,247,125   1,293,262  
Less: allowance for loan losses (10,886)  (8,552)  (7,852) 
Loans, net 1,404,891   1,238,573   1,285,410  
        
Goodwill  19,168   19,168   18,100  
Premises & fixed assets 14,691   15,003   14,606  
Other assets 25,784   28,995   31,746  
 Assets$1,609,757  $1,484,641  $1,541,443  
        
Liabilities and stockholders' equity      
Core deposits$1,051,277  $786,826  $698,733  
Time deposits 298,272   377,836   460,689  
Total deposits 1,349,549   1,164,662   1,159,422  
        
Borrowings 56,963   159,642   228,625  
Subordinated debentures 24,554   24,513   24,498  
Other liabilities 11,300   13,295   13,660  
 Liabilities 1,442,366   1,362,112   1,426,205  
        
Stockholders' equity 167,391   122,529   115,238  
 Liabilities and stockholders' equity$1,609,757  $1,484,641  $1,541,443  
        

HANOVER BANCORP, INC.        
CONSOLIDATED STATEMENTS OF INCOME (unaudited)       
(dollars in thousands, except per share data)        
          
  Three Months Ended Nine Months Ended 
  6/30/2022 6/30/2021 6/30/2022 6/30/2021 
          
Interest income$16,259 $12,038 $48,816 $30,915 
Interest expense 1,439  1,590  3,983  5,338 
 Net interest income 14,820  10,448  44,833  25,577 
Provision for loan losses 1,000  -  2,400  300 
 Net interest income after provision for loan losses 13,820  10,448  42,433  25,277 
          
Loan servicing and fee income 779  401  2,203  623 
Service charges on deposit accounts 60  34  169  66 
Gain on sale of loans held-for-sale 849  212  3,916  688 
Gain on sale of investments -  -  105  240 
Other operating income 140  3  483  11 
 Non-interest income 1,828  650  6,876  1,628 
          
Compensation and benefits 4,843  3,923  15,400  10,299 
Occupancy and equipment 1,394  1,300  4,177  3,680 
Data processing 374  419  1,133  934 
Marketing and advertising 112  18  298  85 
Acquisition costs 250  3,937  250  4,233 
Professional fees 579  369  1,718  1,089 
Other operating expenses 1,178  766  3,376  1,727 
 Non-interest expense 8,730  10,732  26,352  22,047 
          
 Income before income taxes 6,918  366  22,957  4,858 
Income tax expense 1,585  145  5,227  1,063 
          
 Net income$5,333 $221 $17,730 $3,795 
          
Earnings per common share ("EPS"):        
Basic$0.81 $0.05 $2.97 $0.87 
Diluted$0.80 $0.05 $2.92 $0.85 
          
Average common shares outstanding for basic EPS 6,596,505  4,731,949  5,970,288  4,368,809 
Average common shares outstanding for diluted EPS 6,695,567  4,816,260  6,069,494  4,452,938 
          
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 
  6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 
            
Interest income$16,259 $15,941 $16,616 $17,760 $12,038 
Interest expense 1,439  1,197  1,347  1,629  1,590 
 Net interest income 14,820  14,744  15,269  16,131  10,448 
Provision for loan losses 1,000  500  900  700  - 
 Net interest income after provision for loan losses 13,820  14,244  14,369  15,431  10,448 
            
Loan servicing and fee income 779  734  690  584  401 
Service charges on deposit accounts 60  46  63  61  34 
Gain on sale of loans held-for-sale 849  1,575  1,492  619  212 
Gain on sale of investments -  105  -  -  - 
Other operating income 140  212  130  457  3 
 Non-interest income 1,828  2,672  2,375  1,721  650 
            
Compensation and benefits 4,843  5,618  4,939  4,463  3,923 
Occupancy and equipment 1,394  1,370  1,413  1,298  1,300 
Data processing 374  392  366  346  419 
Marketing and advertising 112  153  33  33  18 
Acquisition costs 250  -  -  197  3,937 
Professional fees 579  640  499  616  369 
Other operating expenses 1,178  1,184  1,014  1,005  766 
 Non-interest expense 8,730  9,357  8,264  7,958  10,732 
            
 Income before income taxes 6,918  7,559  8,480  9,194  366 
Income tax expense 1,585  1,699  1,943  2,138  145 
            
 Net income$5,333 $5,860 $6,537 $7,056 $221 
            
Earnings per common share ("EPS"):          
Basic $0.81 $1.02 $1.18 $1.27 $0.05 
Diluted $0.80 $1.00 $1.16 $1.25 $0.05 
            
Average common shares outstanding for basic EPS 6,596,505  5,753,513  5,562,939  5,559,818  4,731,949 
Average common shares outstanding for diluted EPS 6,695,567  5,849,842  5,658,428  5,649,048  4,816,260 
            
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 Nine Months Ended
 6/30/2022 6/30/2021 6/30/2022 6/30/2021
        
ADJUSTED NET INCOME:       
Net income, as reported$5,333  $221  $17,730  $3,795 
Adjustments:       
Merger-related expenses 250   3,937   250   4,233 
Debt extinguishment charges -   -   -   54 
Total adjustments, before income taxes 250   3,937   250   4,287 
Adjustment for reported effective income tax rate 53   860   53   932 
Total adjustments, after income taxes 197   3,077   197   3,355 
Adjusted net income$5,530  $3,298  $17,927  $7,150 
Basic earnings per share - adjusted$0.84  $0.70  $3.00  $1.64 
Diluted earnings per share - adjusted$0.83  $0.68  $2.95  $1.61 
        
ADJUSTED NET INTEREST INCOME:       
Net interest income, as reported$14,820  $10,448  $44,833  $25,577 
Adjustments:       
Debt extinguishment charges -   -   -   54 
Adjusted net interest income$14,820  $10,448  $44,833  $25,631 
        
ADJUSTED NET INTEREST MARGIN:       
Net interest margin, as reported 4.05%   3.74%   4.23%   3.69% 
Adjustments:       
Debt extinguishment charges -   -   -   0.01% 
Adjusted net interest margin 4.05%   3.74%   4.23%   3.70% 
        
ADJUSTED OPERATING EFFICIENCY RATIO(2):        
Operating efficiency ratio, as reported 52.43%   96.70%   51.07%   81.76% 
Adjustments:       
Merger-related expenses -1.50%   -35.47%   -0.48%   -15.70% 
Debt extinguishment charges -   -   -   -0.24% 
Adjusted operating efficiency ratio 50.93%   61.23%   50.59%   65.82% 
        
ADJUSTED RETURN ON AVERAGE ASSETS 1.46%   1.14%   1.63%   1.00% 
ADJUSTED RETURN ON AVERAGE EQUITY 14.57%   13.71%   17.46%   11.18% 
        
(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 Nine Months Ended 
 6/30/2022 6/30/2021 6/30/2022 6/30/2021 
Profitability:        
Return on average assets 1.41%   0.08%   1.61%   0.53%  
Return on average equity 14.05%   0.92%   17.27%   5.93%  
Return on average tangible equity 16.12%   1.00%   20.15%   6.22%  
Yield on average interest-earning assets 4.45%   4.31%   4.60%   4.46%  
Cost of average interest-bearing liabilities 0.50%   0.70%   0.47%   0.95%  
Net interest rate spread (1) 3.95%   3.61%   4.13%   3.51%  
Net interest margin (2) 4.05%   3.74%   4.23%   3.69%  
Non-interest expense to average assets 2.30%   3.70%   2.39%   3.07%  
Operating efficiency ratio (3) 52.43%   96.70%   51.07%   81.76%  
         
Average balances:        
Interest-earning assets$1,467,131  $1,120,009  $1,417,742  $925,944  
Interest-bearing liabilities 1,149,705   914,422   1,123,649   753,832  
Loans 1,323,482   988,836   1,283,856   818,467  
Deposits 1,269,123   888,188   1,206,207   746,647  
Borrowings 89,758   167,884   117,737   118,175  
         
         
(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  
 6/30/2022 3/31/2022 12/31/2021 9/30/2021  
Asset quality:         
Provision for loan losses$1,000  $500  $900  $700   
Net (charge-offs)/recoveries -   -   (66)  -   
Allowance for loan losses 10,886   9,886   9,386   8,552   
Allowance for loan losses to total loans (1) 0.77%   0.77%   0.73%   0.69%   
Allowance for loan losses to originated loans (1)(5) 1.00%   1.04%   1.08%   1.13%   
Non-performing loans (2)(3)(4)$13,729  $11,953  $8,616  $9,547   
Non-performing loans/total loans 0.97%   0.93%   0.67%   0.77%   
Non-performing loans/total assets 0.85%   0.81%   0.59%   0.64%   
Allowance for loan losses/non-performing loans 79.29%   82.71%   108.94%   89.58%   
          
Capital (Bank only):         
Tier 1 Capital$171,753  $139,959  $132,006  $123,666   
Tier 1 leverage ratio 11.64%   10.06%   9.92%   9.45%   
Common equity tier 1 capital ratio 16.27%   14.76%   14.44%   14.54%   
Tier 1 risk based capital ratio 16.27%   14.76%   14.44%   14.54%   
Total risk based capital ratio 17.32%   15.85%   15.52%   15.59%   
          
Equity data:         
Common shares outstanding 7,296,624   5,829,569   5,562,799   5,563,426   
Stockholders' equity$167,391  $134,768  $129,379  $122,529   
Book value per common share 22.94   23.12   23.26   22.02   
Tangible common equity 147,805   115,162   109,752   102,881   
Tangible book value per common share 20.26   19.75   19.73   18.49   
Tangible common equity ("TCE") ratio 9.29%   7.90%   7.63%   7.02%   
          
(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 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 9/30/21 and 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)       
          
  6/30/2022 3/31/2022 12/31/2021 9/30/2021 
          
Loan distribution (1):        
Residential mortgages$407,328  $400,686  $411,664  $420,445  
Multifamily  479,366   389,262   358,831   266,715  
Commercial real estate 447,618   402,780   372,282   364,178  
Commercial & industrial 56,932   72,501   109,718   172,077  
Home equity 24,520   23,810   24,908   23,697  
Consumer  13   2   31   13  
          
  Total loans$ 1,415,777  $ 1,289,041  $ 1,277,434  $ 1,247,125  
          
Sequential quarter growth rate 9.83%   0.91%   2.43%   -3.57%  
          
Loans sold during the quarter$9,490  $16,233  $35,212  $13,997  
          
Funding distribution:        
Demand $220,357  $197,118  $190,723  $191,537  
N.O.W.  542,391   508,841   437,920   353,978  
Savings  104,826   65,530   58,526   60,163  
Money market 183,703   172,506   162,699   181,148  
Total core deposits 1,051,277   943,995   849,868   786,826  
Time  298,272   286,247   326,883   377,836  
Total deposits 1,349,549   1,230,242   1,176,751   1,164,662  
Borrowings 56,713   75,823   113,274   159,642  
Subordinated debentures 24,554   24,541   24,504   24,513  
          
  Total funding sources$ 1,430,816  $ 1,330,606  $ 1,314,529  $ 1,348,817  
          
Sequential quarter growth rate - total deposits 9.70%   4.55%   1.04%   0.45%  
          
Period-end core deposits/total deposits ratio 77.90%   76.73%   72.22%   67.56%  
          
Period-end demand deposits/total deposits ratio 16.33%   16.02%   16.21%   16.45%  
          
(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)       
           
           
 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 
Tangible common equity          
Total equity$167,391  $134,768  $129,379  $122,529  $115,238  
Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (18,100) 
Less: core deposit intangible (418)  (438)  (459)  (480)  (502) 
Tangible common equity$147,805  $115,162  $109,752  $102,881  $96,636  
           
Tangible common equity ("TCE") ratio         
Tangible common equity$147,805  $115,162  $109,752  $102,881  $96,636  
Total assets 1,609,757   1,476,681   1,458,180   1,484,641   1,541,443  
Less: goodwill (19,168)  (19,168)  (19,168)  (19,168)  (18,100) 
Less: core deposit intangible (418)  (438)  (459)  (480)  (502) 
Tangible assets$1,590,171  $1,457,075  $1,438,553  $1,464,993  $1,522,841  
TCE ratio 9.29%   7.90%   7.63%   7.02%   6.35%  
           
Tangible book value per share          
Tangible common equity$147,805  $115,162  $109,752  $102,881  $96,636  
Common shares outstanding 7,296,624   5,829,569   5,562,799   5,563,426   5,552,457  
Tangible book value per share$20.26  $19.75  $19.73  $18.49  $17.40  
           
(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 June 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$1,323,482 $15,842 4.80% $988,836 $11,798 4.79% 
Investment securities 10,752  98 3.66%  16,754  168 4.02% 
Interest-earning cash 128,669  272 0.85%  109,603  21 0.08% 
FHLB stock and other investments 4,228  47 4.46%  4,816  51 4.25% 
Total interest-earning assets 1,467,131  16,259 4.45%  1,120,009  12,038 4.31% 
Non interest-earning assets:            
Cash and due from banks 10,035      9,829     
Other assets 44,858      33,964     
Total assets$1,522,024     $1,163,802     
             
Liabilities and stockholders' equity:            
Interest-bearing liabilities:            
Savings, N.O.W. and money market deposits$778,751 $579 0.30% $377,084 $269 0.29% 
Time deposits 281,196  427 0.61%  369,454  760 0.83% 
Total savings and time deposits 1,059,947  1,006 0.38%  746,538  1,029 0.55% 
Fed funds purchased & FHLB & FRB advances 65,213  100 0.62%  143,395  232 0.65% 
Note payable -  - -   -  - -  
Subordinated debentures 24,545  333 5.44%  24,489  329 5.39% 
Total interest-bearing liabilities 1,149,705  1,439 0.50%  914,422  1,590 0.70% 
Demand deposits 209,176      141,650     
Other liabilities 10,863      11,264     
Total liabilities 1,369,744      1,067,336     
Stockholders' equity 152,280      96,466     
Total liabilities & stockholders' equity$1,522,024     $1,163,802     
Net interest rate spread    3.95%     3.61% 
Net interest income/margin  $ 14,820 4.05%   $ 10,448 3.74% 
             

HANOVER BANCORP, INC.            
NET INTEREST INCOME ANALYSIS            
For the Nine Months Ended June 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$1,283,856 $47,972 5.00% $818,467$30,189 4.93% 
Investment securities 12,659  358 3.78%  16,953  523 4.12% 
Interest-earning cash 116,709  356 0.41%  86,373  61 0.09% 
FHLB stock and other investments 4,518  130 3.85%  4,151  142 4.57% 
Total interest-earning assets 1,417,742  48,816 4.60%  925,944  30,915 4.46% 
Non interest-earning assets:            
Cash and due from banks 8,901      6,702     
Other assets 47,044      27,351     
Total assets$1,473,687     $959,997     
             
Liabilities and stockholders' equity:            
Interest-bearing liabilities:            
Savings, N.O.W. and money market deposits$694,429 $1,290 0.25% $270,216$543 0.27% 
Time deposits 311,483  1,319 0.57%  365,441  3,129 1.14% 
Total savings and time deposits 1,005,912  2,609 0.35%  635,657  3,672 0.77% 
Fed funds purchased & FHLB & FRB advances 93,213  376 0.54%  93,787  632 0.90% 
Note payable -  - -   439  74 22.54%(1)
Subordinated debentures 24,524  998 5.44%  23,949  960 5.36% 
Total interest-bearing liabilities 1,123,649  3,983 0.47%  753,832  5,338 0.95% 
Demand deposits 200,295      110,990     
Other liabilities 12,456      9,650     
Total liabilities 1,336,400      874,472     
Stockholders' equity 137,287      85,525     
Total liabilities & stockholders' equity$1,473,687     $959,997     
Net interest rate spread    4.13%     3.51% 
Net interest income/margin  $ 44,833 4.23%   $ 25,577 3.69% 
             
(1) Includes impact of debt extinguishment charges. Excluding the impact of these charges, the average rate was 5.79%.     
             

Investor and Press Contacts:Brian K. FinneranPresident

Lance P. BurkeChief Financial Officer(516) 548-8500

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