Hanover Bancorp, Inc. Reports Fourth Quarter 2019 Results

Tuesday, 28. January 2020 22:27

 Fourth Quarter Performance Highlights

  • Net Income: GAAP net income for the quarter ended December 31, 2019 amounted to $1.8 million or $0.42 per diluted common share, versus $2.3 million or $0.61 per diluted common share recorded in the same period a year ago. The Company recorded core (non-GAAP) net income of $2.0 million in the quarter ended December 31, 2019 versus core net income of $2.5 million in the comparable 2018 quarter.  Core diluted earnings per common share were $0.46 and $0.66 per share, respectively, in the 2019 and 2018 quarterly periods.  Core net income excludes merger-related and other non-recurring charges, net of tax, recorded in each period.
  • Balance Sheet: Assets totaled a record $861.6 million at December 31, 2019, up $12.7 million from September 30, 2019 and up $210.1 million from December 31, 2018.  The growth in assets from year-end 2018 was due principally to the Chinatown Federal Savings Bank (“CFSB”) acquisition, which added approximately $125 million in total assets during the third quarter of 2019. Continued loan growth also contributed to the total asset expansion.
  • Capital Strength: The Bank’s Tier 1 capital ratio was 10.11% and its Total Risk based capital ratio was 19.68% at December 31, 2019, each significantly above the regulatory minimums for a well-capitalized institution.
  • Increase in Tangible Book Value Per Share:  Tangible book value per common share increased by 9.7% to $17.48 at December 31, 2019 from $15.93 at the comparable 2018 date.
  • Strong Year-Over-Year Loan Growth: Total loans outstanding at December 31, 2019 were $723.2 million or 83.9% of total assets, an increase of $2.8 million from September 30, 2019 and up $157.1 million from December 31, 2018.  The Bank added approximately $94 million in loans as part of the CFSB acquisition during the third quarter of 2019. The growth in loans recorded during the fourth calendar quarter of 2019 is also net of $20.2 million in sales of performing credits during that period. 
  • Excellent Asset Quality: At December 31, 2019, the Bank’s asset quality was excellent with non-performing loans representing only 0.15% of the total portfolio.
  • Net Interest Income Growth: Net interest income was $6.7 million in the December 31, 2019 calendar quarter, an increase of $1.2 million, or 21.7%, versus the comparable 2018 quarter.
  • Net Interest Margin: The Company’s net interest margin for the quarter ended December 31, 2019 was 3.25% versus 3.24% in the quarter ended September 30, 2019 and 3.42% in the quarter ended December 31, 2018.

MINEOLA, N.Y., Jan. 28, 2020 (GLOBE NEWSWIRE) -- Hanover Bancorp, Inc. (“Hanover” or “the Company”), the holding company for Hanover Community Bank (“the Bank”) today reported results for the quarter ended December 31, 2019, highlighted by record levels of total assets, total loans, total deposits, stockholders’ equity and tangible book value per share.

Earnings Summary for the Quarter Ended December 31, 2019

The Company reported net income for the quarter ended December 31, 2019 of $1.8 million or $0.42 per diluted common share, versus $2.3 million or $0.61 per diluted common share from the comparable year ago period, representing a year over year reduction of 23.9%.

The decline in fourth quarter 2019 net income resulted from a $1.6 million increase in pre-tax operating expenses ($683 thousand related to the CFSB acquisition) resulting from growth in compensation and benefits (up $613 thousand), occupancy and equipment (up $532 thousand) and professional fees (up $296 thousand), a $657 thousand reduction in noninterest income due to a $697 thousand decline in the gains on sale of loans held-for-sale during the fourth calendar quarter of 2019 and $183 thousand in after-tax merger-related expenses.  The Company used its enhanced liquidity from the new CFSB branches and the Company’s Flushing branch to retain more of its new loan originations in portfolio rather than selling them in the secondary market which would produce increased gains on sale but not expand our interest-earning asset base which benefits net interest income on an ongoing basis.  A $1.2 million improvement in net interest income and a $225 thousand reduction in the provision for loan losses in 2019 versus the comparable 2018 quarter partially offset the aforementioned factors. An increase in average interest-earning assets of $178.1 million (up 27.7%) resulting from growth in average total loans of $142.9 million, or 24.2%, coupled with a 16 basis point increase in the average loan portfolio yield to 5.39% in the fourth calendar quarter of 2019, accounted for the year-over-year improvement in net interest income.

Excluding merger-related charges recorded in the fourth quarter of 2019, core (non-GAAP) operating net income was $2.0 million or $0.46 per diluted common share, down 22.3% versus 2018. Fourth quarter returns on average total assets and average stockholders’ equity, excluding merger-related and other non-recurring charges in each period, were 0.92% and 10.65%, respectively in 2019, versus 1.52% and 17.29% a year ago.

Michael P. Puorro, Chairman, President and Chief Executive Officer, commented on the Company’s results: “I am very pleased with our fourth quarter 2019 results, including the excellent reception that we have received in both Chinatown and Sunset Park as a result of our recent acquisition of Chinatown Federal Savings Bank (CFSB). We completed our acquisition of CFSB in August, converted their core operating system to Hanover’s Fiserv platform in September and have recorded over ten percent growth in deposit balances at the former CFSB offices since they joined the Hanover family.  We are excited about the long-term potential for these three branch locations in Manhattan and Brooklyn for both their deposit and loan generation capabilities.  As I’ve noted in previous quarters, we continue to generate non-interest income through sales of high quality performing loans, though at a lesser rate than in the previous quarters as we have elected to retain more of our loan originations in portfolio. Deposit growth during the fourth calendar quarter of 2019, also in large part due to the success of our Flushing branch coupled with deposits acquired from CFSB, allowed us to again retain a greater portion of our new loan production on the Company’s balance sheet. 

Mr. Puorro also noted, “Growth in shareholder value is always our number one priority at Hanover Bancorp. This hallmark of our success continues to be reflected by robust growth in tangible book value per share which increased by $1.55, or 9.7%, to $17.48 per share at December 31, 2019 versus the comparable year ago date.”

Balance Sheet Growth

Total assets for the quarter ended December 31, 2019 amounted to a record $861.6 million, an increase of $210.1 million or 32.2% from the comparable 2018 date. The year-over-year balance sheet growth was funded by growth in total deposits (up $202.9 million) and stockholders’ equity (up $14.3 million).

Total deposits at December 31, 2019 increased by 43.5% to a record $669.5 million when compared to December 31, 2018, the result of significant growth in both core (Demand, N.O.W., Savings and Money Market) deposits (up $72.6 million) and time deposits (up $130.3 million). Management also continues to utilize its Federal Home Loan Bank (“FHLB”) borrowing capacity to enhance both the Bank’s liquidity position and its interest rate risk profile. FHLB borrowings are used selectively to supplement management’s ongoing effort to build low cost core deposit balances through relationship banking at each of its branch locations. Total borrowings at December 31, 2019 were $95.1 million with a weighted average rate and term of 1.89% and 11 months, respectively. At December 31, 2019, the Bank had $70.3 million of additional borrowing capacity from the FHLB.

Stockholders’ equity increased by $14.3 million to $73.9 million at December 31, 2019 from the comparable 2018 date resulting in a 9.7% increase in tangible book value per share over the past twelve months to $17.48 at December 31, 2019.  Continued enhancement of shareholder value through prudent asset growth, effective expense management and the development of long-term customer relationships in its primary markets remains the primary focus of the Company’s executive management team and Board of Directors at all times.  Insiders have made significant investments of their own capital into Hanover Bancorp, Inc. Insider ownership represented approximately 29% of total shares outstanding at December 31, 2019.

The Company’s average cost of interest-bearing liabilities increased to 2.12% for the quarter ended December 31, 2019, from 1.92% a year ago but declined from 2.14% on a linked quarter basis.  Although average savings, N.O.W. and money market deposits grew by $48.0 million or 34.6% in 2019 versus the comparable 2018 period, a 46 basis point increase in the average rate paid on time deposits more than offset this improvement and contributed to the increase in the average cost of interest-bearing liabilities in 2019. The average yield on interest-earning assets declined by one basis point to 5.05% during the fourth quarter of 2019, primarily driven by a $35.6 million increase in low-yielding average interest-earning cash balances, resulting from a combination of loan sales, deposits generated at the Flushing branch and liquidity acquired in the CFSB acquisition, coupled with a 68 basis point decline in the yield on these investments in the fourth quarter of 2019 versus the year ago period.

Strong Loan Portfolio and Excellent Asset Quality

For the twelve months ended December 31, 2019, the Bank’s loan portfolio, net of sales, grew by $157.1 million, or 27.8%, with the growth due to a combination of new loan originations and loans acquired in the CFSB transaction. Organic loan growth was concentrated primarily in adjustable-rate two-to-four family residential loans. Management employs a strategy of concentrating its loan growth in these products with shorter average durations, which provides the Bank with traditionally safe credit quality at acceptable credit spreads, greater liquidity and an enhanced interest-rate-risk profile. Over the past year, originations of our niche adjustable-rate residential product amounted to $224 million with an average loan balance of approximately $550 thousand and a weighted average loan-to-value ratio of 58%. At December 31, 2019, the Company’s residential loan portfolio amounted to $478.8 million, with an average loan balance of $417 thousand and a weighted average loan-to-value ratio of 53%. Commercial real estate loans totaled $236.4 million at December 31, 2019, with an average loan balance of $663 thousand and a weighted average loan-to-value ratio of 52%. The Company’s commercial real estate concentration ratio was 247% of capital at December 31, 2019 versus 208% of capital at the comparable 2018 date.

Through its well-developed asset generation capabilities, the Bank has been able to generate 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. During the quarter ended December 31, 2019, the Company sold $20.2 million in performing loans and recorded gains on the sale of loans held-for-sale of $561 thousand versus gains of $818 thousand in the quarter ended September 30, 2019 and gains of $1.3 million in the quarter ended December 31, 2018.  During the twelve months ended December 31, 2019, the Company sold $154.7 million in performing loans held-for-sale and recorded cumulative gains of $3.7 million.

The Bank’s asset quality ratios continue to remain strong and among the best in its peer group of community banks. At December 31, 2019, the Company reported $1.1 million in non-performing loans which represented 0.15% of total loans outstanding. The December 31, 2019 allowance for loan losses balance was $7.1 million versus $6.7 million a year ago. The allowance for loan losses as a percent of total loans was 0.99% at both December 31, 2019 and September 30, 2019 and 1.19% at December 31, 2018. The allowance for loan losses as a percent of total originated loans was 1.12% at December 31, 2019. During the fourth calendar quarter of 2019, the Bank did not record a provision for loan losses expense.

Net Interest Margin

The Bank’s net interest margin declined to 3.25% during the fourth calendar quarter of 2019, versus 3.42% in the comparable 2018 quarter but expanded from 3.24% in the quarter ended September 30, 2019. The 17 basis point decrease in the Bank’s calendar fourth quarter net interest margin versus 2018 was primarily attributable to a reduction in loan prepayment income in 2019 coupled with a 20 basis point increase in the yield on average interest-bearing liabilities to 2.12% from 1.92% a year ago.  The reduction in prepayment income reduced the calendar fourth quarter net interest margin by 11 basis points when compared to the year ago period. The higher cost of funds in 2019 resulted from continued competition for deposits in the Company’s market area, principally for certificates of deposit, along with a shift in the Company’s deposit mix to a greater concentration of high yield money market accounts. As previously noted, also contributing to margin compression in the fourth quarter of 2019 was a $35.6 million increase in lower-yielding average interest-bearing cash on the balance sheet ($69.1 million average balance at 1.67%) resulting from a combination of loan sales, deposits generated at the  Flushing branch and liquidity acquired in the CFSB acquisition. Partially offsetting the impact of the foregoing factors, the average rate on the company’s loan portfolio improved by 16 basis points to 5.39% in the fourth quarter of 2019 versus the comparable 2018 period. Year-over-year growth in average core deposits, coupled with an increase in average stockholders’ equity (up $15.2 million), partially mitigated the higher cost of funds in the 2019 calendar fourth quarter.

Operating Efficiency Ratio

The Bank’s GAAP operating efficiency ratio was 69.3% in the fourth calendar quarter of 2019 versus 45.1% a year ago.  The fourth quarter 2019 core operating efficiency ratio, which excludes merger-related and other non-recurring charges, was 66.2%, due in part to expenses related to the CFSB franchise.

About Hanover Community Bank and Hanover Bancorp, Inc.

Hanover Bancorp, Inc., is a locally owned and operated privately held stock bank holding company for Hanover Community Bank, a community commercial bank focusing on highly personalized and efficient services and products responsive to local 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 and commercial banking products and services, including multi-family and commercial mortgages, residential loans, business loans and lines of credit. Hanover also offers 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, and Chinatown, New York.

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 of the Company’s core operating earnings, core net interest margin, core returns on average assets and shareholders’ equity, and core 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.  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 core operating net income, core net interest income, core net interest margin and core 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 Hanover Bancorp, Inc. might make or by known or unknown risks and uncertainties. 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.

Investor and Press Contact:
Brian K. Finneran
Chief Financial Officer
(516) 548-8500



HANOVER BANCORP, INC.     
STATEMENTS OF CONDITION - (unaudited)     
(dollars in thousands)     
       
       
  December 31, September 30, December 31,
   2019   2019   2018 
Assets      
Cash and cash equivalents$98,415  $87,831  $55,437 
Securities-available for sale, at fair value 914   911   170 
Investments-held to maturity 11,768   12,030   12,714 
       
Loans, net of deferred loan fees and costs 723,241   720,442   566,117 
Less: allowance for loan losses (7,143)  (7,143)  (6,717)
Loans, net  716,098   713,299   559,400 
       
Goodwill  1,482   1,482   - 
Premises & fixed assets 14,396   14,406   13,956 
Other assets 18,502   18,877   9,826 
 Assets$861,575  $848,836  $651,503 
       
Liabilities and stockholders' equity     
Core deposits$258,379  $264,772  $185,760 
Time deposits 411,144   385,514   280,843 
Total deposits 669,523   650,286   466,603 
       
Borrowings  95,086   100,745   104,100 
Note payable 14,982   14,981   14,979 
Other liabilities 8,088   10,874   6,232 
 Liabilities 787,679   776,886   591,914 
       
Stockholders' equity 73,896   71,950   59,589 
 Liabilities and stockholders' equity$861,575  $848,836  $651,503 
       



HANOVER BANCORP, INC.   
CONSOLIDATED STATEMENTS OF INCOME - (unaudited)   
(dollars in thousands, except per share data)   
     
     
  Three Months
Ended
 Three Months
Ended
  12/31/19 12/31/18
     
Interest income$10,436 $8,182
Interest expense 3,712  2,657
 Net interest income 6,724  5,525
Provision for loan losses -  225
 Net interest income after provision for loan losses 6,724  5,300
     
     
Loan fees and service charges 80  53
Service charges on deposit accounts 33  10
Gain on sale of loans held-for-sale 561  1,258
Other operating income 31  41
 Non-interest income 705  1,362
     
Compensation and benefits 2,588  1,975
Occupancy and equipment 1,132  600
Data processing 216  118
Marketing and advertising 106  158
Professional fees 505  209
Other operating expenses 368  293
 Non-interest expense 4,915  3,353
     
 Core operating income before income taxes 2,514  3,309
Income tax expense 561  794
 Core operating net income (1) 1,953  2,515
     
Merger charges and other non-recurring expenses, net of tax 183  189
     
 Net income$1,770 $2,326
     
Basic earnings per share-GAAP basis$0.43 $0.63
Diluted earnings per share-GAAP basis$0.42 $0.61
     
Basic earnings per share-Core$0.47 $0.67
Diluted earnings per share-Core$0.46 $0.66
     
Note: Prior period information has been adjusted to conform to current period presentation.
     
(1)  Core operating earnings is a non-GAAP financial measure. 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 of America (“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 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 GAAP or considered to be more important than financial results determined in accordance with GAAP.
 



HANOVER BANCORP, INC.         
CONSOLIDATED STATEMENTS OF INCOME (unaudited)        
QUARTERLY TREND          
(dollars in thousands, except per share data)         
           
           
  Three Months Ended
  12/31/19 9/30/19 6/30/19 3/31/19 12/31/18
           
Interest income$10,436 $9,888 $8,444 $7,983 $8,182
Interest expense 3,712  3,559  3,096  2,764  2,657
 Net interest income 6,724  6,329  5,348  5,219  5,525
Provision for loan losses -  -  225  200  225
 Net interest income after provision for loan losses 6,724  6,329  5,123  5,019  5,300
           
Loan fees and service charges 80  39  57  37  53
Service charges on deposit accounts 33  31  12  11  10
Gain on sale of loans held-for-sale 561  818  918  1,367  1,258
Other operating income 31  33  37  48  41
 Non-interest income 705  921  1,024  1,463  1,362
           
Compensation and benefits 2,588  2,813  2,134  2,119  1,975
Occupancy and equipment 1,132  940  682  613  600
Data processing 216  235  176  133  118
Marketing and advertising 106  112  108  109  158
Professional fees 505  210  205  151  209
Other operating expenses 368  288  385  265  293
 Non-interest expense 4,915  4,598  3,690  3,390  3,353
           
 Income before income taxes 2,514  2,652  2,457  3,092  3,309
Income tax expense 561  858  413  754  794
 Core operating net income (1) 1,953  1,794  2,044  2,338  2,515
           
Merger-related expenses and other         
  non-recurring charges, net of tax 183  384  33  -  189
           
 Net income$1,770 $1,410 $2,011 $2,338 $2,326
           
Basic earnings per share - GAAP$0.43 $0.33 $0.51 $0.62 $0.63
Diluted earnings per share - GAAP$0.42 $0.32 $0.51 $0.61 $0.61
           
Basic earnings per share - Core$0.47 $0.44 $0.52 $0.62 $0.67
Diluted earnings per share - Core$0.46 $0.43 $0.52 $0.61 $0.66
           
Note: Prior period information has been adjusted to conform to current period presentation.    
           
(1)  Core operating earnings is a non-GAAP financial measure. 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 of America (“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 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 GAAP or considered to be more important than financial results determined in accordance with GAAP.  
           



HANOVER BANCORP, INC.       
SELECTED FINANCIAL DATA (unaudited)       
(dollars in thousands, except share and per share data)      
        
        
 12/31/19 9/30/19 6/30/19 3/31/19
Asset quality:       
Allowance for loan losses$7,143  $7,143  $7,143  $6,917 
Allowance for loan losses to total loans (1) 0.99%  0.99%  1.16%  1.18%
Allowance for loan losses to originated loans (1) 1.12%  1.13%  1.16%  1.18%
Non-performing loans$1,062  $2,242  $634  $- 
Non-performing loans/total loans 0.15%  0.31%  0.10%  N/A 
Non-performing loans/total assets 0.12%  0.26%  0.09%  N/A 
Allowance for loan losses/non-performing loans 672.60%  318.60%  1126.66%  N/A 
        
Capital (Bank only):       
Tier 1 Capital$85,514  $83,423  $79,100  $76,833 
Tier 1 leverage ratio 10.11%  10.47%  11.50%  11.88%
Common equity tier 1 capital ratio 18.43%  17.81%  21.35%  21.64%
Tier 1 risk based capital ratio 18.43%  17.81%  21.35%  21.64%
Total risk based capital ratio 19.68%  19.07%  22.61%  22.90%
        
Equity data:       
Common shares outstanding 4,141,902   4,162,904   3,968,248   3,837,265 
Stockholders' equity$73,896  $71,950  $66,123  $63,442 
Book value per common share 17.84   17.28   16.66   16.53 
Tangible common equity 72,389   70,442   66,123   63,442 
Tangible book value per common share 17.48   16.92   16.66   16.53 
        
(1) Calculation excludes loans held for sale.       
        
Note: Prior period information has been adjusted to conform to current period presentation  
   



HANOVER BANCORP, INC.    
SELECTED FINANCIAL DATA (unaudited)    
(dollars in thousands, except per share data)    
     
     
 Three Months Ended  
 12/31/19 12/31/18 
Profitability:    
Return on average assets 0.92%(1) 1.52%(3)
Return on average equity 10.65%(1) 17.29%(3)
Yield on average interest-earning assets 5.05%  5.06% 
Cost of average interest-bearing liabilities 2.12%  1.92% 
Net interest rate spread (5) 2.93%  3.14% 
Net interest margin (6) 3.25%  3.42% 
Non-interest expense to average assets 2.31%(2) 2.03%(4)
Operating efficiency ratio 66.16%(2) 48.69%(4)
     
Average balances:    
Interest-earning assets$819,884  $641,825  
Interest-bearing liabilities 693,632   549,417  
Loans 732,567   589,698  
Deposits 652,850   469,470  
Borrowings 113,285   123,785  
     
     
(1) Calculation excludes the non-recurring after tax merger-related expense of $183,000.  
(2) Calculation excludes the non-recurring pre-tax merger-related expense of $236,000.  
(3) Calculation excludes the non-recurring after tax write down of $90,000 and merger-related expense of $99,000. 
(4) Calculation excludes the non-recurring pre-tax asset write down of $119,000 and merger-related expense of $131,000.
(5) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. 
(6) Net interest margin represents net interest income divided by average interest-earning assets. 
     



HANOVER BANCORP, INC.       
STATISTICAL SUMMARY       
QUARTERLY TREND        
(unaudited,dollars in thousands, except share data)      
         
         
   
  12/31/19 9/30/19 6/30/19 3/31/19
         
Loan distribution (1):       
Residential mortgages$461,034  $448,834  $418,646  $391,742 
Multifamily  131,474   139,685   127,558   129,225 
Commercial real estate 104,951   108,302   50,757   47,243 
Commercial & industrial 7,473   7,377   7,614   7,135 
Home equity 17,809   15,739   12,404   8,600 
Consumer  500   505   498   18 
         
Total loans$ 723,241  $ 720,442  $ 617,477  $ 583,963 
         
Sequential quarter growth rate 0.39%  16.68%  5.74%  3.15%
         
Loans sold during the quarter$20,198  $25,806  $40,135  $68,593 
         
Funding distribution :       
Demand $73,018  $69,606  $41,174  $42,229 
N.O.W  42,432   53,564   42,237   35,446 
Savings  41,249   39,548   18,336   20,520 
Money market 101,680   102,054   108,432   102,664 
Total core deposits 258,379   264,772   210,179   200,859 
Time  411,144   385,514   306,159   271,823 
Total deposits 669,523   650,286   516,338   472,682 
Borrowings 95,086   100,745   104,245   115,745 
Note payable 14,982   14,981   14,980   14,980 
         
Total funding sources$ 779,591  $ 766,012  $ 635,563  $ 603,407 
         
Sequential quarter growth rate - total deposits 2.96%  25.94%  9.24%  1.30%
         
Period-end core deposits/total deposits ratio 38.59%  40.72%  40.71%  42.49%
         
Period-end demand deposits/total deposits ratio 10.91%  10.70%  7.97%  8.93%
         
         
 (1) Excluding loans held for sale       
         



HANOVER BANCORP, INC.           
NON-GAAP DISCLOSURE (unaudited)           
(dollars in thousands)           
Reconciliation of As Reported (GAAP) and Non-GAAP Financial Measures       
             
             
  Three Months Ended 
  12/31/19  9/30/19  6/30/19  3/31/19 
             
Net income, GAAP$1,770   $1,410   $2,011   $2,338  
             
Adjustments, net of tax:           
Merger-related expense 183    384    33    -  
             
Core operating net income$ 1,953   $ 1,794   $ 2,044   $ 2,338  
             
  Three Months Ended 
  12/31/19  9/30/19  6/30/19  3/31/19 
             
Net-interest income, GAAP$6,724   $6,329   $5,348   $5,219  
Adjustments: -    -    -    -  
Core net interest income 6,724    6,329    5,348    5,219  
             
Non-interest income, GAAP 705    921    1,024    1,463  
Adjustments: -    -    -    -  
Core non-interest income 705    921    1,024    1,463  
             
Core total revenue$7,429   $7,250   $6,372   $6,682  
             
Operating expenses, GAAP$5,151   $5,166   $3,728   $3,390  
Adjustments:           
Merger-related expenses (236)   (568)   (38)   -  
Core operating expenses$4,915   $4,598   $3,690   $3,390  
             
GAAP operating efficiency ratio 69.34%   71.26%   58.51%   50.73% 
Core operating efficiency ratio 66.16%   63.42%   57.91%   50.73% 
             
  Three Months Ended
  12/31/19 9/30/19 6/30/19 3/31/19
             
Net interest income / margin$6,724 3.26% $6,329 3.24% $5,348 3.19% $5,219 3.36%
Adjustments: - 0.00%  - 0.00%  - 0.00%  - 0.00%
             
Core net interest income / margin$ 6,724 3.26% $ 6,329 3.24% $ 5,348 3.19% $ 5,219 3.36%
             



HANOVER BANCORP, INC.     
NON-GAAP DISCLOSURE (unaudited)     
(dollars in thousands)     
Reconciliation of As Reported (GAAP) and Non-GAAP Financial Measures   
       
  Three Months
Ended
  Three Months
Ended
 
  12/31/19  12/31/18 
       
Net income, GAAP$1,770   $2,326  
Adjustments:     
Merger-related expenses 236    131  
Non-recurring asset writedown -    119  
 Total adjustments, before income taxes 236    250  
Adjustment for reported effective tax rate 53    61  
 Total adjustments, after income taxes$183   $189  
       
Core operating net income$ 1,953   $ 2,515  
       
  Three Months
Ended
  Three Months
Ended
 
  12/31/19  12/31/18 
       
Net-interest income, GAAP$6,724   $5,525  
Adjustments:     
Core net interest income 6,724    5,525  
       
Non-interest income, GAAP 705    1,362  
Adjustments:     
Core non-interest income 705    1,362  
       
Core total revenue$7,429   $6,887  
       
Operating expenses, GAAP$5,151   $3,103  
Adjustments:     
Merger-related expenses (236)   (131) 
Non-recurring asset writedown -    (119) 
Core Operating expenses$4,915   $3,353  
       
GAAP operating efficiency ratio 69.34%   45.06% 
Core operating efficiency ratio 66.16%   48.69% 
       
  Three Months
Ended
Three Months
Ended
  12/31/1912/31/18
       
Net interest income / margin$6,724 3.26% $5,525 3.42%
Non-recurring debt restructuring charge - 0.00%  - 0.00%
       
Core net interest income / margin$ 6,724 3.26% $ 5,525 3.42%
       



HANOVER BANCORP, INC.         
(unaudited, dollars in thousands)         
          
  Net Interest Income Analysis
For the Three Months Ended December 31, 2019 and 2018
   
   
  2019   2018 
 Average  AverageAverage  Average
 BalanceInterest Rate BalanceInterest Rate
          
Assets:         
Interest-earning assets:         
Loans$732,567$9,946 5.39% $589,698$7,778 5.23%
Investment securities 12,761 110 3.42%  12,974 109 3.33%
Interest-earning cash 69,108 291 1.67%  33,461 198 2.35%
FHLB stock and other investments 5,448 89 6.48%  5,692 97 6.76%
Total interest-earning assets 819,884 10,436 5.05%  641,825 8,182 5.06%
Non interest-earning assets:         
Cash and due from banks 6,380     3,687   
Other assets 21,325     11,392   
Total assets$847,589     $656,904    
          
Liabilities and stockholders' equity:         
Interest-bearing liabilities:         
Savings, N.O.W and money market deposits$186,524$636 1.35% $138,548$531 1.52%
Time deposits 393,823 2,383 2.40%  287,084 1,403 1.94%
Total savings and time deposits 580,347 3,019 2.06%  425,632 1,934 1.80%
Fed funds purchased & FHLB advances 98,304 468 1.89%  108,807 498 1.82%
Note payable 14,981 225 5.96%  14,978 225 5.96%
Total interest-bearing liabilities 693,632 3,712 2.12%  549,417 2,657 1.92%
Demand deposits 72,503     43,838   
Other liabilities 8,525     5,958   
          
Total liabilities 774,660     599,213   
Stockholders' equity 72,929     57,691   
Total liabilities & stockholders' equity$847,589     $656,904    
Net interest rate spread   2.93%    3.14%
Net interest income/margin $ 6,724 3.25%  $ 5,525 3.42%
          

 


 

 

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