GARDEN CITY PARK, N.Y.--(BUSINESS WIRE)--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 March 31, 2017, highlighted by the Bank’s strong operating and cash earnings, continued momentum in year-over-year loan growth, excellent asset quality, and strong net interest income.
Strong Operating Earnings on both Cash and GAAP Basis
The Bank’s cash earnings were strong at $1.1 million, or $0.43 per share, for the quarter ended March 31, 2017, which represents an increase of $165 thousand, or 17.0% from the quarter ended March 31, 2016. On a GAAP basis, net income for the quarter ended March 31, 2017 was $554 thousand, or $0.21 per share, compared with net income of $409 thousand or $0.15 per share, for the quarter ended March 31, 2016, representing an increase of 40.0%. Due to the significant deferred tax asset recognized at December 31, 2014, the Bank is not required to pay federal income taxes until the Bank fully utilizes its remaining deferred tax asset related to a net operating loss carryforward. As such, significantly all of the federal income tax expense on the income statement is considered a non-cash expense.
Michael P. Puorro, Chairman, President and Chief Executive Officer, reflected on the Bank’s results, “Our operating and cash earnings continues to be driven by exceptional asset growth which yielded another quarter of strong net interest income. In the past year, we have been able to achieve a 40% increase in earnings-per-share while we continue to invest into the Company’s future through talent acquisition and franchising. Further, we have achieved net income growth of 35.5%, loan growth of 28.8% and deposit growth of 30.3% growth. We remain steadfastly selective in our loan underwriting, and our growth story continues to be highlighted by industry leading asset quality. At quarter-end, we possess no delinquent loans and for the ninth consecutive quarter, our loan portfolio has no non-performing loans. We are also extremely pleased that our new Forest Hills branch location is open for business and we have had immediate success with deposit growth.”
Paul D. Hagan, Executive Vice President and Chief Financial Officer, noted, “Hanover continues to build shareholder value in calendar 2017 by delivering continued strong earnings and solid loan growth. In the most recent quarter, our cash earnings were $1.1 million for the quarter ended March 31, 2017, representing year over year growth of $165 thousand, or 17.0%, as we prudently grew interest earning assets. As we have grown the balance sheet, we continue to increase our book value per share which increased $0.98 per share, or 8.4%, year over year, to $12.69 per share.”
Robust Balance Sheet Growth
Total assets for the quarter ended March 31, 2017 increased by $31.8 million to $412.7 million as the Bank continued to grow its loan and to a lesser extent, its investment portfolios. As interest rates have risen from historically low levels, the Bank has begun to build a modest investment portfolio for future liquidity purposes. On a year-over-year basis, total assets grew by $120.7 million, or 41.3%, driven by the Bank’s robust loan originations. Total loan portfolio growth at March 31, 2017 increased by $76.0 million, or 28.8%, from the loan balance at March 31, 2016. This strong loan growth contributed to net interest income of $3.0 million during the quarter ended March 31, 2017, an increase of $646 thousand, or 27.3%, from the $2.4 million recorded in the prior year quarter.
Funding for asset growth during the fiscal quarter ended March 31, 2017 was derived primarily from deposits and borrowings. Total deposits at March 31, 2017 totaled $311.6 million, representing deposit growth of $72.4 million, or 30.3% from March 31, 2016. The Bank has also used borrowings from the FHLB to fund loan growth. The Bank continues to be successful in obtaining borrowing capacity from the Federal Home Loan Bank of New York (“FHLB”) which is strategically utilized to enhance the Bank’s liquidity position and interest-rate-risk profile by allowing it the flexibility to strategically borrow from the FHLB with terms greater than 3 years. At times, the Bank will be pro-active in securing longer-term advances from the FHLB at current favorable rates as management believes it will better protect and enhance future earnings during the anticipated rising interest rate cycle in the years ahead. Total FHLB borrowings for the quarter ended March 31, 2017 was $54.9 million and these borrowings possessed a weighted rate and term of 1.38% and 37 months, respectively. Currently, the Bank has approximately $45 million of additional borrowing capacity from the FHLB.
The Bank’s overall average cost of interest bearing liabilities increased to 1.39% for the quarter ended March 31, 2017, from 1.32% for the quarter ended March 31, 2016. The higher cost of interest bearing liabilities primarily relates to the Bank obtaining longer term certificates of deposit funding in anticipation of higher rates expected in the future. However, on a linked quarter basis, the Bank’s overall average cost of interest bearing liabilities decreased 3 basis points from 1.42% for the quarter ended December 31, 2016.
Management has been pro-active in securing longer-term certificates of deposit in the current low interest rate environment to better position the interest-rate-risk profile of the Bank in anticipation of higher rates in the upcoming years. While this strategy of securing current longer-term funding at current rates is more costly than shorter-term funding, management believes it will better protect and enhance future earnings during the anticipated rising interest rate cycle in the years ahead.
Strong Loan Portfolio and Industry Leading Asset Quality
For the twelve month period ended March 31, 2017, the Bank’s loan portfolio grew by $76.0 million, or 28.8%, with the growth concentrated primarily in adjustable-rate two-to-four family residential loans, multi-family loans, and mixed-use commercial real estate loans. Management continues to employ a strategy of concentrating its loan growth in these products with short 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 twelve months, originations of the adjustable-rate specialty residential product amounted to $91.6 million with an average loan balance of approximately $520 thousand and a weighted average loan-to-value ratio of 55.32%. At March 31, 2017, the entire residential loan portfolio, including loans held for sale, amounted to $186.7 million, with an average loan balance of $357 thousand and a weighted average loan-to-value ratio of 52.09%. During the same twelve month period, the Bank originated $76.4 million in commercial real estate loans, inclusive of multi-family loans, with an average loan balance of approximately $1.56 million and a weighted average loan-to-value ratio of 64.43%. The balance of this portfolio at March 31, 2017 was $165.8 million, with an average loan balance of $984 thousand and a weighted average loan-to-value ratio of 59.31%.
As a result of the Bank’s robust 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 in certain transactions, retaining servicing rights. The Bank expects that it will continue to originate, for its own portfolio and others, which will result in a continued increase in interest income while also realizing gains on sale of loans to others and servicing income.
The Bank’s asset quality ratios are pristine and class leading among its peer group of community banks. At quarter-end, the portfolio possesses no delinquent loans and for the ninth consecutive quarter, no non-performing loans. During the quarter ended March 31, 2017, the Bank’s provision for loan losses was $225,000 and its total allowance for loan losses at March 31, 2017 was $3.9 million. The Bank increased its provision for loan losses due to the growth of the loan portfolio during the quarter. The allowance for loan losses as a percent of gross loans was 1.14% for the most recent quarter end.
2017 Capital Raise
Late in the quarter-ended March 31, 2017, the Company launched its third common stock capital raise since the successful completion of its 2013 Recapitalization. The Company's current share offering price in the 2017 common stock capital raise of $16.25 per share, represents a 116.7% price appreciation since the completion of our Recapitalization in 2013, which was transacted at $7.50 per share. Shareholders who invested in the Company's 2014 capital raise, which was at $10.00 per share, have had a price appreciation of 62.5%. The 2015 common stock capital raise at a price of $13.00 per share represents price appreciation of 25.0% in approximately eighteen months of time.
The Bank’s executive team and Board remain focused on continuing to enhance shareholder value through prudent growth, tight expense control and further business opportunities. The Company believes the price appreciation to-date is a testament to management’s ability to create shareholder value and we remain confident that the 2017 common stock capital raise will be successful and support the growth projected in our business plan.
The Company’s executive team and Board continue to make significant investments of their own capital into Hanover Bancorp, Inc. which represents approximately 30% of shares outstanding.
Strong Net Interest Margin
The Bank’s net interest margin remained strong for the quarter ended March 31, 2017 at 3.21%. The increase in the Bank’s net interest margin for the quarter ended March 31, 2017 from the prior quarter ended December 31, 2016 was primarily attributable to the Bank leveraging its capital into higher rate loan products. The Company had previously down-streamed $7.0 million of proceeds from a holding company debt instrument to the Bank as capital. This capital continues to be leveraged into additional interest earning assets which has increased net interest income and the net interest margin.
Successful Branch Opening and New Corporate Headquarters
The Company is extremely pleased to report the opening of our new branch location in Forest Hills, Queens, N.Y. The Bank has obtained approximately $5 million of new deposit accounts since its mid-March 2017 opening. In this immediate area of Queens, N.Y., there is approximately $4.1 billion of deposits of which $3.1 billion is in commercial banks and $1.0 billion is in savings banks, which represents an excellent opportunity for Hanover to expand its deposit base.
In May of this year, we will open our new Corporate Headquarters facility in Mineola, N.Y., which will also offer another full service branch location.
About Hanover Community Bank and Hanover Bancorp, Inc.
With assets of approximately $412.7 million, Hanover Community Bank is the sole subsidiary of Hanover Bancorp, Inc., a privately held stock bank holding company. Hanover Community Bank is a locally owned and operated 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 modern 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 customers 24-hour ATM service with no fees attached, free checking with interest, telephone banking, the most advanced technologies in mobile and internet banking for our consumer and business customers, safe deposit boxes and much more. Hanover Community Bank maintains its corporate offices in Garden City Park, New York where it currently operates a full service branch location along with a branch location in Forest Hills, Queens.
Hanover Community Bank is a member of the Federal Deposit Insurance Corporation and is an Equal Housing/Equal Opportunity Lender. For further information, call 516-248-4868 or visit the Bank’s state-of-the-art website at www.hanovercommunitybank.com.
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.
| HANOVER BANCORP, INC. | |||||||||||||||||||
| STATEMENTS OF CONDITION - (unaudited) | |||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||||
| 2017 | 2016 | 2016 | |||||||||||||||||
| ASSETS | |||||||||||||||||||
| Cash and cash equivalents | $ | 24,998 | $ | 34,144 | $ | 16,458 | |||||||||||||
| Investments-Held to Maturity | 14,311 | 12,415 | 1,500 | ||||||||||||||||
| Loans Held for Sale | 17,773 | 4,334 | - | ||||||||||||||||
| Loans, net of deferred loan fees and costs | 340,469 | 316,442 | 264,435 | ||||||||||||||||
| Less: allowance for loan losses | (3,870 | ) | (3,645 | ) | (2,730 | ) | |||||||||||||
| Loans, net | 336,599 | 312,797 | 261,705 | ||||||||||||||||
| Other assets | 19,009 | 17,211 | 12,310 | ||||||||||||||||
| Total Assets | $ | 412,690 | $ | 380,901 | $ | 291,973 | |||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
| Total Deposits | $ | 311,572 | $ | 284,840 | $ | 239,132 | |||||||||||||
| Borrowings | 63,296 | 60,293 | 19,890 | ||||||||||||||||
| Other Liabilities | 2,943 | 3,176 | 2,014 | ||||||||||||||||
| Total Liabilities | 377,811 | 348,309 | 261,036 | ||||||||||||||||
| Total Shareholders' Equity | 34,879 | 32,592 | 30,937 | ||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 412,690 | $ | 380,901 | $ | 291,973 | |||||||||||||
| HANOVER BANCORP, INC. | ||||||
| STATEMENTS OF INCOME - (unaudited) | ||||||
| (dollars in thousands, except per share data) | ||||||
| Quarter Ended | Quarter Ended | |||||
| 3/31/2017 | 3/31/2016 | |||||
| Total interest income | $ | 4,189 | $ | 3,083 | ||
| Total interest expense | 1,173 | 713 | ||||
| Net interest income | 3,016 | 2,370 | ||||
| Provision for loan losses | 225 | 300 | ||||
| Net interest income after provision for loan loss | 2,791 | 2,070 | ||||
| Loan fees and service charges | 6 | 27 | ||||
| Service charges on deposit accounts | 5 | 5 | ||||
| Gain on sale of loans held-for-sale | 228 | - | ||||
| Total non-interest income | 239 | 32 | ||||
| Compensation and benefits | 1,267 | 866 | ||||
| Occupancy and equipment | 297 | 178 | ||||
| Data processing | 100 | 89 | ||||
| Advertising | 58 | 15 | ||||
| Professional fees | 201 | 129 | ||||
| Other operating expenses | 229 | 192 | ||||
| Total non-interest expense | 2,152 | 1,469 | ||||
| Income before income taxes | 878 | 633 | ||||
| Income tax expense | 324 | 224 | ||||
| Net income | $ | 554 | $ | 409 | ||
| Basic Earnings per Share-GAAP basis | $ | 0.21 | $ | 0.15 | ||
| Diluted Earnings per Share-GAAP basis | $ | 0.21 | $ | 0.15 | ||
| Supplementary Information: | ||||||
| Net income | $ | 554 | $ | 409 | ||
| Add back non-cash charges: | ||||||
| Provision for loan losses | 225 | 300 | ||||
| Provision for federal income taxes | 305 | 212 | ||||
| Depreciation expense | 49 | 47 | ||||
| Cash Net income | $ | 1,133 | $ | 968 | ||
| Basic Earnings per Share- Cash basis | $ | 0.43 | $ | 0.37 | ||
| Diluted Earnings per Share- Cash basis | $ | 0.43 | $ | 0.37 | ||
| Note: Prior period quarterly information has been adjusted to conform to current period presentation. | ||||||
| Per share earnings data has been adjusted for the 5-1 reverse stock split | ||||||
| HANOVER BANCORP, INC. | ||||||||||||||||
| STATEMENTS OF QUARTERLY INCOME - (unaudited) | ||||||||||||||||
| (dollars in thousands, except per share data) | ||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 3/31/2017 | 12/31/2016 | 9/30/2016 | 6/30/2016 | |||||||||||||
| Total interest income | $ | 4,189 | $ | 3,913 | $ | 3,834 | $ | 3,412 | ||||||||
| Total interest expense | 1,173 | 1,133 | 938 | 832 | ||||||||||||
| Net interest income | 3,016 | 2,780 | 2,896 | 2,580 | ||||||||||||
| Provision for loan losses | 225 | 225 | 375 | 300 | ||||||||||||
| Net interest income after provision for loan loss | 2,791 | 2,555 | 2,521 | 2,280 | ||||||||||||
| Loan fees and service charges | 6 | 12 | 12 | 23 | ||||||||||||
| Mortgage servicing income | - | 76 | 74 | - | ||||||||||||
| Service charges on deposit accounts | 5 | 3 | 3 | 4 | ||||||||||||
| Gain on sale of loans held-for-sale | 228 | 285 | 313 | 205 | ||||||||||||
| Total non-interest income | 239 | 376 | 402 | 232 | ||||||||||||
| Compensation and benefits | 1,267 | 1,158 | 1,234 | 998 | ||||||||||||
| Occupancy and equipment | 297 | 267 | 247 | 199 | ||||||||||||
| Data processing | 100 | 92 | 92 | 91 | ||||||||||||
| Advertising | 58 | 64 | 19 | 14 | ||||||||||||
| Professional fees | 201 | 227 | 169 | 162 | ||||||||||||
| Other operating expenses | 229 | 309 | 246 | 258 | ||||||||||||
| Total non-interest expense | 2,152 | 2,117 | 2,007 | 1,722 | ||||||||||||
| Income before income taxes | 878 | 814 | 916 | 790 | ||||||||||||
| Income tax expense | 324 | 300 | 323 | 279 | ||||||||||||
| Net income | $ | 554 | $ | 514 | $ | 593 | $ | 511 | ||||||||
| Basic Earnings per Share-GAAP basis | $ | 0.21 | $ | 0.19 | $ | 0.22 | $ | 0.19 | ||||||||
| Diluted Earnings per Share-GAAP basis | $ | 0.21 | $ | 0.19 | $ | 0.22 | $ | 0.19 | ||||||||
| Supplementary Information: | ||||||||||||||||
| Net income | $ | 554 | $ | 514 | $ | 593 | $ | 511 | ||||||||
| Add back non-cash charges: | ||||||||||||||||
| Provision for loan losses | 225 | 225 | 375 | 300 | ||||||||||||
| Provision for federal income taxes | 305 | 281 | 311 | 266 | ||||||||||||
| Depreciation expense | 49 | 49 | 49 | 49 | ||||||||||||
| Cash Net income | $ | 1,133 | $ | 1,069 | $ | 1,328 | $ | 1,126 | ||||||||
| Basic Earnings per Share- Cash basis | $ | 0.43 | $ | 0.40 | $ | 0.50 | $ | 0.43 | ||||||||
| Diluted Earnings per Share- Cash basis | $ | 0.43 | $ | 0.40 | $ | 0.50 | $ | 0.43 | ||||||||
| Note: Prior period quarterly information has been adjusted to conform to current period presentation |
| Per share earnings data has been adjusted for the 5-1 reverse stock split |
| HANOVER BANCORP, INC. | ||||||||||||
| SELECTED FINANCIAL DATA - (unaudited) | ||||||||||||
| (dollars in thousands) | ||||||||||||
| Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||
| 3/31/2017 | 12/31/2016 | 3/31/2016 | ||||||||||
| Asset Quality: | ||||||||||||
| Allowance for Loan Losses | $ | 3,870 | $ | 3,645 | $ | 2,730 | ||||||
| Allowance for Loan Losses to Total Loans (1) | 1.14 | % | 1.15 | % | 1.03 | % | ||||||
| Non-Performing Loans | $ | - | $ | - | $ | - | ||||||
| Nonperforming Loans/Total Loans | N/A | N/A | N/A | |||||||||
| Nonperforming Loans/Total Assets | N/A | N/A | N/A | |||||||||
| Allowance for Loan Losses/ Nonperforming Loans | N/A | N/A | N/A | |||||||||
| Capital (Bank Only): (dollars in thousands) | ||||||||||||
| Tier 1 Capital | $ | 41,320 | $ | 38,689 | $ | 28,774 | ||||||
| Tier 1 Leverage Ratio | 10.54 | % | 10.37 | % | 10.43 | % | ||||||
| Common Equity Tier 1 Capital Ratio | 15.63 | % | 17.69 | % | 16.28 | % | ||||||
| Tier 1 Risk Based Capital Ratio | 15.63 | % | 17.69 | % | 16.28 | % | ||||||
| Total Risk Based Capital Ratio | 16.89 | % | 18.95 | % | 17.54 | % | ||||||
| Other: (in thousands) | ||||||||||||
| Average Interest-Earnings Assets | $ | 372,602 | $ | 354,971 | $ | 262,593 | ||||||
| Average Interest-Bearing Liabilities | 334,375 | 315,985 | 217,418 | |||||||||
| Average Deposits and Borrowings | 356,257 | 338,336 | 244,513 | |||||||||
| Share Data: | ||||||||||||
|
Common Shares Outstanding |
2,747,779 | 2,641,995 | 2,641,995 | |||||||||
| Book Value per Share | $ | 12.69 | $ | 12.34 | $ | 11.71 | ||||||
| Quarter Ended | Quarter Ended | Quarter Ended | ||||||||||
| 3/31/2017 | 12/31/2016 | 3/31/2016 | ||||||||||
| Profitability: | ||||||||||||
| Return on Average Assets | 0.56 | % | 0.55 | % | 0.59 | % | ||||||
| Return on Average Equity | 6.65 | % | 6.27 | % | 5.35 | % | ||||||
| Yield on Average Interest Earning Assets | 4.46 | % | 4.37 | % | 4.72 | % | ||||||
| Cost of Average Interest Bearing Liabilities | 1.39 | % | 1.42 | % | 1.32 | % | ||||||
| Cost of Funds | 1.31 | % | 1.33 | % | 1.17 | % | ||||||
| Net Interest Rate Spread (2) | 3.07 | % | 2.95 | % | 3.40 | % | ||||||
| Net Interest Margin (3) | 3.21 | % | 3.11 | % | 3.63 | % | ||||||
| Non-Interest Expense to Average Assets | 2.12 | % | 2.22 | % | 2.05 | % | ||||||
| Efficiency Ratio | 66.12 | % | 67.08 | % | 61.15 | % | ||||||
| (1) Calculation excludes loans held for sale. | ||
|
(2) Net interest rate spread represents the difference between the average yield on average interest-earnings assets and the average cost of average interest-bearing liabilities. |
||
| (3) Net interest margin represents net interest income divided by average interest bearing liabilities. | ||
| Note: Prior period quarterly information has been adjusted to conform to current period presentation | ||
| Share Data has been adjusted for the 5-1 reverse stock split | ||
|
N/A: Such ratios are not applicable as the Bank has no non-performing loans and assets |
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