Third Calendar Quarter and Fiscal Year Performance Highlights

• Net Income: GAAP Net income for the quarter ended September 30, 2020 totaled $1.5 million or $0.37 per diluted common share, versus $1.4 million or $0.32 per diluted common share recorded in the same period a year ago. The Company recorded core (non-GAAP) net income of $1.7 million in the quarter ended September 30, 2020 versus core net income of $1.8 million in the comparable 2019 quarter. The Company recorded GAAP net income for the fiscal year ended September 30, 2020 of $5.0 million or $1.18 per diluted common share compared with $8.1 million or $2.05 per diluted common share in the 2019 fiscal year. The Company recorded core (non-GAAP) net income of $5.9 million for the fiscal year ended ended September 30, 2020 versus core net income of $8.7 million in the 2019 fiscal year.
• Balance Sheet: Assets totaled $851.6 million at September 30, 2020, up $13.6 million from June 30, 2020 and up $2.8 million from September 30, 2019.
• Continued Capital Strength: The Bank’s Tier 1 capital ratio was 11.22% and its Total Risk-Based capital ratio was 20.75% at September 30, 2020, 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 7.7% to $18.23 at September 30, 2020 from $16.92 at the comparable 2019 date.
• Year-Over-Year Loan Growth: Total loans outstanding at September 30, 2020 were $725.0 million or 85.1% of total assets, an increase of $4.7 million from June 30, 2020 and up $4.6 million from September 30, 2019.
• Excellent Asset Quality: At September 30, 2020, the Bank’s asset quality remained pristine with non-performing loans representing only 0.13% of the total portfolio.
• Record Net Interest Income: Net interest income was $7.4 million for the quarter ended September 30, 2020, an increase of $1.0 million, or 16.4%, versus the comparable 2019 quarter.
• Record Net Interest Margin: The Company’s net interest margin increased significantly during the quarter ended September 30, 2020 to 3.73% versus 3.13% in the quarter ended June 30, 2020 and 3.24% in the quarter ended September 30, 2019.
• Continued Growth Through Acquisition: On August 27, 2020, the Company announced that it had entered into a definitive agreement to acquire Savoy Bank (“Savoy”). Savoy is a community commercial bank with total assets of $588 million, total loans of $547 million and total deposits of $334 million at September 30, 2020. Savoy operates one branch in midtown Manhattan. This transaction is expected to be completed in the first half of 2021, subject to regulatory approvals and other customary closing conditions.
  

MINEOLA, N.Y., Oct. 23, 2020 (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 September 30, 2020, highlighted by strong capital, excellent asset quality and record levels of net interest income and net interest margin.

Earnings Summary for the Quarter Ended September 30, 2020

The Company reported GAAP net income for the quarter ended September 30, 2020 of $1.5 million or $0.37 per diluted common share, versus $1.4 million or $0.32 per diluted common share in the comparable year ago period, representing an increase of $136 thousand or 9.6%.

The improvement in GAAP net income recorded in the third calendar quarter of 2020 resulted from a $1.0 million or 16.4% increase in net interest income coupled with a reduction in the Company’s effective tax rate to 15.6% in 2020 from 32.4% a year ago. Partially offsetting these positive factors was a $785 thousand decrease in noninterest income due to a lower gain on sale of loans held-for-sale in 2020 and a $758 thousand increase in total operating expenses principally resulting from growth in compensation and benefits and occupancy and equipment, due largely to growth in personnel and branch facilities as a result of the acquisition of Chinatown Federal Savings Bank (“CFSB”) in August 2019. The year-over-year growth in net interest income was due to a substantial widening of the Company’s net interest margin to 3.73% in 2020 from 3.24% in the comparable 2019 quarter. The margin improvement resulted principally from a 68 basis point reduction in the cost of interest-bearing liabilities to 1.46% in 2020 coupled with a 44.0% increase in average noninterest-bearing demand deposit balances in the third calendar quarter of 2020.

Excluding merger-related charges recorded in the third calendar quarter of 2020, core (non-GAAP) operating net income was $1.7 million or $0.41 per diluted common share, down $67 thousand or 3.7% versus 2019 core operating net income. Third calendar quarter returns on average total assets and average stockholders’ equity, excluding merger-related charges in each period, were 0.84% and 8.90%, respectively in 2020, versus 0.89% and 10.11% a year ago.

Earnings Summary for the Fiscal Year Ended September 30, 2020

For the fiscal year ended September 30, 2020, the Company reported GAAP net income of $5.0 million or $1.18 per diluted common share versus $8.1 million or $2.05 per diluted common share a year ago.  

The reduction in earnings in 2020 resulted from a $4.8 million increase in total operating expenses, principally due to growth in personnel and branch facilities as a result of the CFSB acquisition, a $3.4 million decrease in non-interest income and a $600 thousand increase in the provision for loan losses due to economic concerns primarily related to the COVID-19 pandemic. Partially offsetting these factors was a $4.7 million improvement in net interest income and a reduction in the Company’s effective income tax rate to 20.2% in 2020 from 24.5% in 2019.

Michael P. Puorro, Chairman and Chief Executive Officer, commented on the Company’s results: “Given the ongoing challenges posed by a combination of near zero interest rates and the continued economic uncertainty facing many of our clients, I am extremely pleased with Hanover’s third calendar quarter 2020 financial results which produced record levels of net interest income and net interest margin despite reduced balance sheet growth while we continue to err on the side of caution when extending credit until the economy shows signs of sustained improvement. We are working diligently with our borrowers who have been granted loan forbearances and have had great success to date in returning the vast majority of these borrowers back to regular payment status. I am also very excited about our recently announced strategic merger with Savoy Bank that we are confident will create one of the premier community banks in the metro New York City area with under $5 billion in total assets. We have highly complementary lending niches and we believe that Savoy’s funding profile will benefit greatly from Hanover’s rapid progress in building out several niche core deposit businesses. I am also looking forward to working closely with Mac Wilcox, Savoy’s President and CEO who will join Hanover as Senior Executive Vice President, Head of Commercial Lending and Chief Revenue Officer. The merger is expected to close in the first half of 2021, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by Savoy’s shareholders.”

“I am also pleased to report that, on October 7, 2020, we completed a $25 million private placement of fixed-to-floating rate subordinated notes. The notes will initially bear an interest rate of 5.00% per annum until October 15, 2025. After that date, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month secured overnight funding rate plus 487.4 basis points. A portion of the proceeds were used to pay off the Company’s $15 million, 5.85% fixed rate line of credit. The balance of the proceeds will be used for acquisition financing and general corporate purposes, including contributing equity capital to Hanover Community Bank.”

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 growth in tangible book value per share which increased by $1.31, or 7.7%, to $18.23 per share at September 30, 2020 versus the comparable 2019 date.”

Balance Sheet Growth

Total assets for the period ended September 30, 2020 were $851.6 million versus $848.8 million at the comparable 2019 date. Total deposits at the same date increased by 2.2% to $664.8 million when compared to September 30, 2019, the result of growth in core deposits (Demand, N.O.W., Savings and Money Market) of $5.2 million. Management reduced usage of its Federal Home Loan Bank (“FHLB”) borrowing capacity in the third calendar quarter of 2020 as other lower cost funding options were utilized to replace maturing FHLB advances. FHLB borrowings can be used to enhance both the Bank’s liquidity position and its interest rate risk profile when the need arises. Total borrowings at September 30, 2020 were $85.2 million, including $16.2 million in Federal Reserve Bank Paycheck Protection (“PPP”) Liquidity Facility advances, with a weighted average rate and term of 1.17% and 24 months, respectively. At September 30, 2020, the Bank had $58.5 million of additional borrowing capacity from the FHLB.

Stockholders’ equity increased by $6.1 million to $78.0 million at September 30, 2020 from the comparable 2019 date resulting in an 7.7% increase in tangible book value per share over the past twelve months to $18.23 at September 30, 2020. Insiders have made significant investments of their own capital into Hanover Bancorp, Inc. Insider ownership represented approximately 24% of total shares outstanding at September 30, 2020.

The Company’s average cost of interest-bearing liabilities decreased to 1.46% for the calendar quarter ended September 30, 2020, from 2.14% a year ago and declined from 1.79% on a linked quarter basis. Partially offsetting the improvement in the Company’s average cost of interest-bearing liabilities from the September 2019 quarter was an 11 basis point reduction in the average yield on interest-earning assets to 4.94% during the third calendar quarter of 2020, primarily driven by lower average loan yields (down 13 basis points in 2020) resulting principally from the lower interest rate environment in 2020.

Strong Loan Portfolio and Excellent Asset Quality

For the twelve months ended September 30, 2020, the Bank’s loan portfolio, net of sales, grew by $4.6 million, or 0.6%. Year over year growth was concentrated primarily in PPP and commercial real estate loans. Earlier this year, management made a decision to reduce residential loan originations and maintain additional liquidity until the impact of the COVID-19 pandemic became clearer. Although the local economy has shown preliminary signs of improvement, management continues to cautiously consider opportunities to expand the loan portfolio. At September 30, 2020, the Company’s residential loan portfolio amounted to $453.8 million, with an average loan balance of $430 thousand and a weighted average loan-to-value ratio of 52%. Commercial real estate loans totaled $250.5 million at September 30, 2020, with an average loan balance of $722 thousand and a weighted average loan-to-value ratio of 49%. The Company’s commercial real estate concentration ratio was 246% of capital at September 30, 2020 versus 265% of capital at the comparable 2019 date.

Historically, 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. The loan sale market was negatively impacted by the COVID-19 pandemic during the past few quarters although current indications are that it continues to improve and may be close to normalizing. During the quarter ended September 30, 2020, the Company sold $3.4 million in performing loans at par versus recognizing a gain of $15 thousand in the quarter ended June 30, 2020 and a gain of $818 thousand in the quarter ended September 30, 2019. During the twelve months ended September 30, 2020, the Company sold $34.4 million in performing loans held-for-sale and recorded cumulative gains of $917 thousand.

The Bank’s asset quality ratios continue to remain strong and among the best in its peer group of community banks. At September 30, 2020, the Company reported $953 thousand in non-performing loans which represented 0.13% of total loans outstanding. During the third calendar quarter of 2020, the Bank recorded a provision for loan losses expense of $100 thousand. The September 30, 2020 allowance for loan losses balance was $7.9 million versus $7.1 million a year ago. The allowance for loan losses as a percent of total loans was 1.09% at September 30, 2020 versus 1.11% at June 30, 2020 and 0.99% at September 30, 2019. The allowance for loan losses as a percent of total originated loans was 1.22% at September 30, 2020.

Record Net Interest Margin

The Bank’s net interest margin improved to a record 3.73% during the third calendar quarter of 2020, versus 3.24% in the comparable 2019 quarter and 3.13% in the quarter ended June 30, 2020. The 49 basis point increase in the Bank’s net interest margin versus 2019 was primarily attributable to a 68 basis point reduction in the yield on average interest-bearing liabilities to 1.46% from 2.14% a year ago. The lower cost of funds in 2020 was the result of a significant reduction in the cost of interest-bearing deposits in 2020 (down 73 basis points), accompanied by a shift in the Company’s deposit mix to a greater concentration of non-interest-bearing demand deposit balances. Also contributing to the wider margin in the third calendar quarter of 2020 was a decrease in lower-yielding average interest-bearing cash on the balance sheet (down $26.9 million). Partially offsetting the positive impact of the foregoing factors, the average rate on total interest-earning assets declined by 11 basis points to 4.94% in the third calendar quarter of 2020 versus the comparable 2019 period. This reduction in yield was largely the result of a 13 basis point decrease in the average loan yield to 5.25% in 2020.

Operating Efficiency Ratio

The Bank’s GAAP operating efficiency ratio was 74.3% in the third calendar quarter of 2020 versus 71.3% a year ago. The third calendar quarter 2020 core operating efficiency ratio, which excludes merger-related charges, was 71.4%.

Continued Growth Through Acquisition

On August 27, 2020, the Company announced that it had entered into a definitive agreement to acquire Savoy Bank (“Savoy”) in a stock and cash transaction valued at approximately $63 million. Savoy is a community commercial bank with total assets of $588 million, total loans of $547 million and total deposits of $334 million at September 30, 2020. Savoy operates one branch in midtown Manhattan. This transaction is expected to be completed in the first half of 2021, subject to regulatory approvals and other customary closing conditions.

The merger combines two complementary banking platforms to create one of the premier sub- $5 billion asset sized community banks serving the greater New York City metro market. The combined company will be uniquely positioned to capitalize on market opportunities due to recent and ongoing consolidation and broaden the channels and customers it serves through increased scale, expanded product offerings and employment of digital initiatives. The combined company will have approximately $1.6 billion in assets, $1.1 billion in total deposits and 8 branches, including 6 branches in the New York City market, with the expectation that an additional branch in New Jersey will be opened prior to closing. Hanover will continue to operate Savoy’s single midtown Manhattan branch office and it will become the focal point and headquarters for Hanover’s business development efforts in the New York City market.

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 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, 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 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. 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.

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

HANOVER BANCORP, INC.
STATEMENTS OF CONDITION - (unaudited)
(dollars in thousands)
	September 30,				June 30,				September 30,
	2020				2020				2019
Assets
Cash and cash equivalents	$	80,209			$	68,965			$	87,831
Securities-available for sale, at fair value		6,035				5,980				911
Investments-held to maturity		10,727				11,178				12,030
Loans held for sale		-				3,204				-
Loans, net of deferred loan fees and costs		725,019				720,315				720,442
Less: allowance for loan losses		(7,869	)			(7,993	)			(7,143	)
Loans, net		717,150				712,322				713,299
Goodwill		1,901				1,577				1,482
Premises & fixed assets		14,156				14,188				14,406
Other assets		21,428				20,600				18,877
Assets	$	851,606			$	838,014			$	848,836
Liabilities and stockholders' equity
Core deposits	$	270,007			$	256,072			$	264,772
Time deposits		394,753				403,260				385,514
Total deposits		664,760				659,332				650,286
Borrowings		85,154				78,766				100,745
Note payable		14,984				14,983				14,981
Other liabilities		8,665				8,777				10,874
Liabilities		773,563				761,858				776,886
Stockholders' equity		78,043				76,156				71,950
Liabilities and stockholders' equity	$	851,606			$	838,014			$	848,836

HANOVER BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(dollars in thousands, except per share data)
	Three Months Ended						Fiscal Year Ended
	9/30/2020			9/30/2019			9/30/2020			9/30/2019
Interest income	$	9,751		$	9,888		$	40,133		$	34,497
Interest expense		2,385			3,558			13,011			12,058
Net interest income		7,366			6,330			27,122			22,439
Provision for loan losses		100			-			1,250			650
Net interest income after provision for loan losses		7,266			6,330			25,872			21,789
Loan fees and service charges		111			39			301			186
Service charges on deposit accounts		12			30			62			46
Gain on sale of investments		-			-			-			-
Gain on sale of loans held-for-sale		-			818			917			4,361
Other operating income		12			33			84			159
Non-interest income		135			920			1,364			4,752
Compensation and benefits		3,020			2,813			11,182			9,041
Occupancy and equipment		1,169			940			4,462			2,835
Data processing		234			235			911			662
Marketing and advertising		16			112			296			487
Professional fees		438			210			1,362			775
Other operating expenses		479			288			1,615			1,231
Non-interest expense		5,356			4,598			19,828			15,031
Income before income taxes		2,045			2,652			7,408			11,510
Income tax expense		318			858			1,497			2,819
Core operating net income (1)		1,727			1,794			5,911			8,691
Litigation, proxy-related expenses and other
non-recurring charges, net of tax		-			-			573			90
Merger-related expenses, net of tax		181			384			364			516
Net income	$	1,546		$	1,410		$	4,974		$	8,085
Basic earnings per share - GAAP	$	0.38		$	0.33		$	1.20		$	2.10
Diluted earnings per share - GAAP	$	0.37		$	0.32		$	1.18		$	2.05
Basic earnings per share - Core	$	0.41		$	0.44		$	1.42		$	2.25
Diluted earnings per share - Core	$	0.41		$	0.43		$	1.40		$	2.21
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 (“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 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
	9/30/2020			6/30/2020			3/31/2020			12/31/2019			9/30/2019
Interest income	$	9,751		$	9,665		$	10,281		$	10,436		$	9,888
Interest expense		2,385			3,163			3,764			3,699			3,558
Net interest income		7,366			6,502			6,517			6,737			6,330
Provision for loan losses		100			150			1,000			-			-
Net interest income after provision for loan losses		7,266			6,352			5,517			6,737			6,330
Loan fees and service charges		111			53			57			80			39
Service charges on deposit accounts		12			13			17			20			30
Gain on sale of loans held-for-sale		-			15			339			563			818
Other operating income		12			18			25			29			33
Non-interest income		135			99			438			692			920
Compensation and benefits		3,020			2,688			2,886			2,588			2,813
Occupancy and equipment		1,169			1,078			1,083			1,132			940
Data processing		234			211			250			216			235
Marketing and advertising		16			63			111			106			112
Professional fees		438			290			327			307			210
Other operating expenses		479			339			437			360			288
Non-interest expense		5,356			4,669			5,094			4,709			4,598
Income before income taxes		2,045			1,782			861			2,720			2,652
Income tax expense		318			374			198			607			858
Core operating net income (1)		1,727			1,408			663			2,113			1,794
Litigation, proxy-related expenses and other non-recurring charges, net of tax		-			-			413			160			-
Merger-related expenses, net of tax		181			-			-			183			384
Net income	$	1,546		$	1,408		$	250		$	1,770		$	1,410
Basic earnings per share - GAAP	$	0.38		$	0.34		$	0.06		$	0.43		$	0.33
Diluted earnings per share - GAAP	$	0.37		$	0.33		$	0.06		$	0.42		$	0.32
Basic earnings per share - Core	$	0.41		$	0.34		$	0.16		$	0.51		$	0.44
Diluted earnings per share - Core	$	0.41		$	0.33		$	0.16		$	0.50		$	0.43
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 per share data)
	9/30/2020				6/30/2020				3/31/2020				12/31/2019
Asset quality:
Allowance for loan losses	$	7,869			$	7,993			$	7,843			$	7,143
Allowance for loan losses to total loans (1)		1.09	%			1.11	%			1.13	%			0.99	%
Allowance for loan losses to originated loans (1)		1.22	%			1.25	%			1.29	%			1.12	%
Non-performing loans	$	953			$	3,172			$	1,730			$	1,062
Non-performing loans/total loans		0.13	%			0.44	%			0.25	%			0.15	%
Non-performing loans/total assets		0.11	%			0.38	%			0.19	%			0.12	%
Allowance for loan losses/non-performing loans		825.71	%			251.99	%			453.35	%			672.60	%
Capital (Bank only):
Tier 1 Capital	$	89,275			$	87,829			$	86,211			$	85,514
Tier 1 leverage ratio		11.22	%			10.21	%			9.76	%			10.11	%
Common equity tier 1 capital ratio		19.49	%			19.04	%			19.26	%			18.43	%
Tier 1 risk based capital ratio		19.49	%			19.04	%			19.26	%			18.43	%
Total risk based capital ratio		20.75	%			20.29	%			20.52	%			19.68	%
Equity data:
Common shares outstanding		4,175,144				4,169,269				4,162,269				4,141,902
Stockholders' equity	$	78,043			$	76,156			$	74,513			$	73,896
Book value per common share		18.69				18.27				17.90				17.84
Tangible common equity		76,120				74,556				72,947				72,389
Tangible book value per common share		18.23				17.88				17.53				17.48
(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								Fiscal Year Ended
	9/30/2020				9/30/2019				9/30/2020				9/30/2019
Profitability:
Return on average assets		0.84	%	(1)		0.89	%	(3)		0.69	%	(5)		1.25	%	(7)
Return on average equity		8.90	%	(1)		10.11	%	(3)		7.88	%	(5)		13.67	%	(7)
Yield on average interest-earning assets		4.94	%			5.05	%			4.87	%			5.07	%
Cost of average interest-bearing liabilities		1.46	%			2.14	%			1.87	%			2.07	%
Net interest rate spread (9)		3.48	%			2.91	%			3.00	%			3.00	%
Net interest margin (10)		3.73	%			3.24	%			3.29	%			3.30	%
Non-interest expense to average assets		2.62	%	(2)		2.28	%	(4)		2.33	%	(6)		2.15	%	(8)
Operating efficiency ratio		71.40	%	(2)		63.42	%	(4)		69.61	%	(6)		55.28	%	(8)
Average balances:
Interest-earning assets	$	785,486			$	776,087			$	824,247			$	680,413
Interest-bearing liabilities		648,285				661,106				697,040				582,573
Loans		720,730				686,532				717,834				616,353
Deposits		638,354				600,100				669,497				508,329
Borrowings		90,313				116,823				99,550				120,376
(1) Calculation excludes the non-recurring after tax merger-related, litigation and proxy contest expense of $181,000.
(2) Calculation excludes the non-recurring pre-tax merger-related, litigation and proxy contest expense of $214,000.
(3) Calculation excludes the non-recurring after tax merger-related $384,000.
(4) Calculation excludes the non-recurring pre-tax merger-related expense of $568,000.
(5) Calculation excludes the non-recurring after tax merger-related, litigation and proxy contest expense of $937,000.
(6) Calculation excludes the non-recurring pre-tax merger-related, litigation and proxy contest expense of $1,192,000.
(7) Calculation excludes the non-recurring after tax write down of $90,000 and merger-related expense of $516,000.
(8) Calculation excludes the non-recurring pre-tax asset write down of $119,000 and merger-related expense of $737,000.
(9) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(10) 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)
	9/30/2020				6/30/2020				3/31/2020				12/31/2019
Loan distribution (1):
Residential mortgages	$	432,988			$	439,996			$	441,173			$	461,034
Multifamily		136,737				125,597				121,307				131,474
Commercial real estate		113,758				110,948				103,461				104,951
Commercial & industrial		20,737				23,680				6,842				7,472
Home equity		20,772				20,056				19,287				17,809
Consumer		27				38				44				500
Total loans	$	725,019			$	720,315			$	692,114			$	723,240
Sequential quarter growth rate		0.65	%			4.07	%			-4.30	%			0.39	%
Loans sold during the quarter	$	5,326			$	1,721			$	9,898			$	20,198
Funding distribution :
Demand	$	82,350			$	84,049			$	65,841			$	73,018
N.O.W		34,086				33,364				32,943				42,432
Savings		43,218				42,469				40,208				41,249
Money market		110,353				96,190				102,828				101,680
Total core deposits		270,007				256,072				241,820				258,379
Time		394,753				403,260				475,276				411,144
Total deposits		664,760				659,332				717,096				669,523
Borrowings		85,154				78,766				81,446				95,086
Note payable		14,984				14,983				14,982				14,982
Total funding sources	$	764,898			$	753,081			$	813,524			$	779,591
Sequential quarter growth rate - total deposits		0.82	%			-8.06	%			7.11	%			2.96	%
Period-end core deposits/total deposits ratio		40.62	%			38.84	%			33.72	%			38.59	%
Period-end demand deposits/total deposits ratio		12.39	%			12.75	%			9.18	%			10.91	%
(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
	9/30/2020						6/30/2020						3/31/2020						12/31/2019
Net income, GAAP	$	1,546					$	1,408					$	250					$	1,770
Adjustments, net of tax:
Merger-related expense		181						-						-						183
Litigation and proxy contest expenses		-						-						413						160
Core operating net income	$	1,727					$	1,408					$	663					$	2,113
	Three Months Ended
	9/30/2020						6/30/2020						3/31/2020						12/31/2019
Net-interest income, GAAP	$	7,366					$	6,502					$	6,517					$	6,737
Adjustments:		-						-						-						-
Core net interest income		7,366						6,502						6,517						6,737
Non-interest income, GAAP		135						99						438						692
Adjustments:		-						-						-						-
Core non-interest income		135						99						438						692
Core total revenue	$	7,501					$	6,601					$	6,955					$	7,429
Operating expenses, GAAP	$	5,570					$	4,669					$	5,630					$	5,151
Adjustments:
Litigation and proxy contest expenses		-						-						536						206
Merger-related expenses		214						-						-						236
Core operating expenses	$	5,356					$	4,669					$	5,094					$	4,709
GAAP operating efficiency ratio		74.26	%					70.73	%					80.95	%					69.34	%
Core operating efficiency ratio		71.40	%					70.73	%					73.24	%					63.39	%
	Three Months Ended
	9/30/2020						6/30/2020						3/31/2020						12/31/2019
Net interest income / margin	$	7,366		3.73	%		$	6,502		3.13	%		$	6,517		3.06	%		$	6,737		3.27	%

HANOVER BANCORP, INC.
NON-GAAP DISCLOSURE (unaudited)
(dollars in thousands)
Reconciliation of As Reported (GAAP) and Non-GAAP Financial Measures
	Fiscal Year Ended						Fiscal Year Ended
	9/30/2020						9/30/2019
Net income, GAAP	$	4,974					$	8,085
Adjustments:
Merger-related expenses		450						737
Litigation and proxy contest expenses		742
Non-recurring asset writedown		-						119
Total adjustments, before income taxes		1,192						856
Adjustment for reported effective tax rate		255						250
Total adjustments, after income taxes	$	937					$	606
Core operating net income	$	5,911					$	8,691
	Fiscal Year Ended						Fiscal Year Ended
	9/30/2020						9/30/2019
Net-interest income, GAAP	$	27,122					$	22,439
Non-interest income, GAAP		1,364						4,752
Core total revenue	$	28,486					$	27,191
Operating expenses, GAAP	$	21,020					$	15,887
Adjustments:
Merger-related expenses		450						737
Litigation and proxy contest expenses		742						-
Non-recurring asset writedown		-						119
Core Operating expenses	$	19,828					$	15,031
GAAP operating efficiency ratio		73.79	%					58.43	%
Core operating efficiency ratio		69.61	%					55.28	%
	Fiscal Year Ended						Fiscal Year Ended
	9/30/2020						9/30/2019
Net interest income / margin	$	27,122		3.29	%		$	22,439		3.30	%

HANOVER BANCORP, INC.
(unaudited, dollars in thousands)
Net Interest Income Analysis
For the Three Months Ended September 30, 2020 and 2019
	2020									2019
	Average						Average			Average						Average
	Balance			Interest			Rate			Balance			Interest			Rate
Assets:
Interest-earning assets:
Loans	$	720,730		$	9,516		5.25	%		$	686,532		$	9,309		5.38	%
Investment securities		16,895			177		4.17	%			13,025			104		3.17	%
Interest-earning cash		44,103			10		0.09	%			70,969			387		2.16	%
FHLB stock and other investments		3,758			48		5.08	%			5,561			88		6.28	%
Total interest-earning assets		785,486			9,751		4.94	%			776,087			9,888		5.05	%
Non interest-earning assets:
Cash and due from banks		4,645									4,953
Other assets		23,946									17,787
Total assets	$	814,077								$	798,827
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings, N.O.W and money market deposits	$	176,428		$	138		0.31	%		$	186,960		$	680		1.44	%
Time deposits		381,544			1,758		1.83	%			357,323			2,171		2.41	%
Total savings and time deposits		557,972			1,896		1.35	%			544,283			2,851		2.08	%
Fed funds purchased & FHLB & FRB advances		75,330			264		1.39	%			101,843			482		1.88	%
Note payable		14,983			225		5.97	%			14,980			225		5.96	%
Total interest-bearing liabilities		648,285			2,385		1.46	%			661,106			3,558		2.14	%
Demand deposits		80,382									55,817
Other liabilities		8,286									11,475
Total liabilities		736,953									728,398
Stockholders' equity		77,124									70,429
Total liabilities & stockholders' equity	$	814,077								$	798,827
Net interest rate spread							3.48	%								2.91	%
Net interest income/margin				$	7,366		3.73	%					$	6,330		3.24	%

HANOVER BANCORP, INC.
(unaudited, dollars in thousands)
Net Interest Income Analysis
For the Fiscal Year Ended September 30, 2020 and 2019
	2020									2019
	Average						Average			Average						Average
	Balance			Interest			Rate			Balance			Interest			Rate
Assets:
Interest-earning assets:		0.00									0.00
Loans	$	717,834		$	38,640		5.38	%		$	616,353		$	32,660		5.30	%
Investment securities		13,907			523		3.76	%			12,851			427		3.32	%
Interest-earning cash		87,828			693		0.79	%			45,598			1,044		2.29	%
FHLB stock and other investments		4,678			277		5.92	%			5,611			366		6.52	%
Total interest-earning assets		824,247			40,133		4.87	%			680,413			34,497		5.07	%
Non interest-earning assets:
Cash and due from banks		5,588									4,320
Other assets		22,219									13,133
Total assets	$	852,054								$	697,866
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings, N.O.W and money market deposits	$	179,106		$	1,445		0.81	%		$	160,073		$	2,510		1.57	%
Time deposits		418,384			9,180		2.19	%			302,124			6,707		2.22	%
Total savings and time deposits		597,490			10,625		1.78	%			462,197			9,217		1.99	%
Fed funds purchased & FHLB & FRB advances		84,568			1,491		1.76	%			105,397			1,949		1.85	%
Note payable		14,982			895		5.97	%			14,979			892		5.96	%
Total interest-bearing liabilities		697,040			13,011		1.87	%			582,573			12,058		2.07	%
Demand deposits		72,007									46,132
Other liabilities		8,031									5,573
Total liabilities		777,078									634,278
Stockholders' equity		74,976									63,588
Total liabilities & stockholders' equity	$	852,054								$	697,866
Net interest rate spread							3.00	%								3.00	%
Net interest income/margin				$	27,122		3.29	%					$	22,439		3.30	%