Hanover Bancorp, Inc.
−Removed: (“Hanover”) is a New York corporation which is the holding company for Hanover Community Bank (the “Bank”), a New York chartered community commercial bank focusing on highly personalized and efficient services and products responsive to local needs.
+Added: (“Hanover”) is currently a New York corporation which is the holding company for Hanover Community Bank (the “Bank”), a New York chartered community commercial bank focusing on highly personalized and efficient services and products responsive to local needs.
+Added: In 2024, our Board and shareholders approved a proposal to redomicile the Company in Maryland, and the Company is in the process of completing the change in its state of incorporation from New York to Maryland.
The Bank operates as a locally headquartered, community-oriented bank serving customers throughout the New York metro area from offices in Nassau, Suffolk, Queens, Kings (Brooklyn) and New York (Manhattan) Counties, New York, and Freehold, Monmouth County, New Jersey.
We opened the Bank’s Hauppauge Business Banking Center in Hauppauge, Suffolk County, New York in May 2023.
−Removed: As of September 30, 2023, we had total assets of $2.15 billion, total loans of $1.87 billion, total deposits of $1.74 billion and total stockholders’ equity of $185.9 million.
+Added: In addition, we have recently received regulatory approval to open a new branch in Port Jefferson, Suffolk County, New York, which we expect to open in early 2025.
+Added: As of December 31, 2024, we had total assets of $2.31 billion, total loans of $1.99 billion, total deposits of $1.95 billion and total stockholders’ equity of $196.6 million.
The Bank was originally organized in 2009, with a focus on serving the South Asian community in Nassau County.
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In October 2023, the Company’s Board of Directors approved a change in the Company’s fiscal year end from September 30 to December 31.
−Removed: Accordingly, the Company will report a transition quarter that runs from October 1, 2023 through December 31, 2023 (the “Stub Period”).
−Removed: The Company’s next full fiscal year will be the calendar year January 1, 2024 through December 31, 2024.
−Removed: All references in Part I of this report to a quarter or year are to the Company’s historical fiscal quarter or fiscal year unless otherwise stated.
+Added: Accordingly, the Company reported a transition quarter that ran from October 1, 2023 through December 31, 2023 (“transition period”).
+Added: The Company’s current full fiscal year is the calendar year January 1, 2024 through December 31, 2024 (“calendar 2024”).
Our one- to four-family residential mortgage segment has a particular niche focus on non-conforming loans, primarily secured by owner-occupied and investment properties.
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Additionally, we have expanded our deposit products to include a full line of municipal banking accounts, which has allowed us to capture additional customers in our operating footprint.
−Removed: During the fourth calendar quarter of 2023, we have begun offering business banking services to the legal, licensed cannabis industry in New York state.
+Added: During the fourth calendar quarter of 2023, we began offering business banking services to the legal, licensed cannabis industry, initially in New York state.
+Added: We now offer these services in New Jersey and may in the future consider opening accounts for licensed entities in other states.
Lending Activities
−Removed: Our lending strategy is to maintain a broadly diversified loan portfolio based on the type of customer (i.e., businesses versus individuals), type of loan product (e.g., owner occupied commercial real estate, commercial loans, etc.), geographic location and industries in which our business customers are engaged (e.g., manufacturing, retail, hospitality, etc.).
+Added: Our lending strategy is to maintain a broadly diversified loan portfolio based on the type of customer (i.e., businesses versus individuals), type of loan product (e.g., owner occupied commercial real estate, commercial loans, etc.), geographic location and industries in which our business customers are engaged (e.g., manufacturing, retail, hospitality, wholesale distribution, construction, etc.).
We offer personal and business loans on a secured and unsecured basis, SBA and USDA guaranteed loans, revolving lines of credit, commercial mortgage loans, and one- to four-family non-qualified mortgages secured by primary and secondary residences that may be owner occupied or investment properties, home equity loans, bridge loans and other personal purpose loans.
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Single-family residential mortgage loans held for sale are generally sold with the servicing rights released.
−Removed: However, due to the pace of interest rate increases since 2022, the Bank’s secondary market sale activity remains less active, and the Bank continues originating residential loans for its own portfolio.
+Added: However, with higher market interest rates experienced in recent years, the appetite among the Bank’s purchasers of residential loans for pools of loans declined, eliminating the Bank’s ability to sell residential loans in its portfolio on desirable terms.
+Added: Commencing in late 2023, the Bank initiated a flow origination program under which the Bank originates individual loans for sale to specific buyers, thereby positioning the Bank to resume residential loan sales.
Commercial real estate .
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We focus on what we believe to be high quality credits with acceptable loan-to-value ratios, income- producing properties with strong cash flow and collateral profiles.
−Removed: The weighted average LTV was 60% for this portfolio as of September 30, 2023.
+Added: The weighted average LTV was 59% for this portfolio as of December 31, 2024.
Within the commercial real estate portfolio, multi-family loans are secured primarily by rent controlled/stabilized multi-family properties located in New York City.
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Owner-occupied properties comprise a wide variety of property types, including offices, warehouses, retail centers, and hotels.
−Removed: Our construction portfolio is small, representing only $13.0 million in total balances at September 30, 2023.
+Added: Our construction portfolio is small, representing only $13.5 million in total balances at December 31, 2024.
Our construction and land development loans are comprised of commercial construction and land acquisition and development loans.
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These loans are typically Prime-based and have maturities of fewer than 18 months.
−Removed: As of September 30, 2023, 100% of our real estate construction loan portfolio was secured by commercial properties.
+Added: As of December 31, 2024, 100% of our real estate construction loan portfolio was secured by commercial properties.
Commercial and industrial .
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We expect C&I lending to be a key component of our growth going forward.
−Removed: As of September 30, 2023, our commercial and industrial loans comprised $87.6 million, or 4.7%, of total loans held for investment.
+Added: As of December 31, 2024, our commercial and industrial loans comprised $168.9 million, or 8.5%, of total loans held for investment.
Small Business Administration Loans .
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Time deposits consist of certificates of deposit, including those held in IRA accounts, and brokered certificates of deposit.
−Removed: We also have a municipal banking business, which we believe has produced a significant level of deposits at cost-effective rates.
+Added: We also have a municipal banking business, which has produced a significant level of deposits at cost-effective rates.
The business provides banking services to public municipalities, including counties, cities, towns, and school districts, throughout the Long Island area.
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The team and relationships we have allow us to compete throughout the Long Island market without the expense constraints of multiple physical locations.
−Removed: As of September 30, 2023, we had $313.2 million in municipal deposits at an average rate of 4.53%.
−Removed: Deposits serve as the primary source of funding for our interest-earning assets, but also generate non-interest revenue through insufficient funds fees, stop payment fees, safe deposit rental fees, foreign ATM fees and debit card interchange and other miscellaneous fees.
+Added: As of December 31, 2024, we had $509.3 million in municipal deposits at a weighted average rate of 3.72%.
+Added: Deposits serve as the primary source of funding for our interest-earning assets, but also generate non-interest revenue through insufficient funds fees, stop payment fees, safe deposit rental fees, ATM fees and debit card interchange and other miscellaneous fees.
Employees and Human Capital Resources
−Removed: As of September 30, 2023, we employed 176 full-time employees.
+Added: As of December 31, 2024, we employed 185 full-time employees.
None of these employees are covered by a collective bargaining agreement.
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Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
−Removed: As of September 30, 2023, the Bank was a “well-capitalized” bank, as defined by its primary federal regulator.
+Added: As of December 31, 2024, the Bank was a “well-capitalized” bank, as defined by its primary federal regulator.
Each of the bank regulatory agencies have issued rules that amend their capital guidelines for interest rate risk and require such agencies to consider in their evaluation of a bank’s capital adequacy, the exposure of a bank’s capital and economic value to changes in interest rates.
These rules do not establish an explicit supervisory threshold.
−Removed: The agencies intend, at a subsequent date, to incorporate explicit minimum requirements for interest rate risk into their risk-based capital standards and have proposed a supervisory model to be used together with bank internal models to gather data and propose, at a later date, explicit minimum requirements.
+Added: The agencies have indicated that they intend, at a subsequent date, to incorporate explicit minimum requirements for interest rate risk into their risk-based capital standards and have proposed a supervisory model to be used together with bank internal models to gather data and propose, at a later date, explicit minimum requirements.
The United States is a member of the Basel Committee on Banking Supervision (the “Basel Committee”) that provides a forum for regular international cooperation on banking supervisory matters.
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In addition, such a failure could result in a restriction on our ability to pay certain cash bonuses to executive officers, negatively impacting our ability to retain key personnel.
−Removed: As of September 30, 2023, the Bank’s current capital levels exceeded the applicable minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III capital rules.
+Added: As of December 31, 2024, the Bank’s current capital levels exceeded the applicable minimum capital requirements, including the capital conservation buffer, as prescribed in the Basel III capital rules.
As a result of the Economic Growth Act, banking regulatory agencies adopted a revised definition of “well capitalized” for financial institutions and holding companies with assets of less than $10 billion that are not determined to be ineligible by their primary federal regulator due to their risk profile, which is referred to as a Qualifying Community Bank.
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The banking regulatory agencies have recently substantially amended their regulations implementing the CRA to, among other things, move away from standards based upon the location of a bank’s branches and toward a focus on the location of its loans.
−Removed: These regulations are not yet effect, and management has not yet determined the impact of these new regulations on the Bank.
+Added: These regulations have staggered effective dates, and management has not yet determined the impact of these new regulations as a whole on the Bank.
New York State Regulation
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● A heightened level of review for certain high-risk customers or accounts.
−Removed: The USA PATRIOT Act also includes prohibitions on correspondent accounts for foreign shell banks and requires compliance with record keeping obligations with respect to correspondent accounts of foreign banks.
+Added: The USA PATRIOT Act also includes prohibitions on maintaining correspondent accounts for foreign shell banks and requires compliance with record keeping obligations with respect to correspondent accounts of foreign banks.
The bank regulatory agencies have increased the regulatory scrutiny of the BSA and anti-money laundering programs maintained by financial institutions.
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● The Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;
−Removed: ● The Coronavirus Aid, Relief and Economic Security Act;
● The rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.