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Hanover Bancorp, Inc. /NY (HNVR)·Q1 2025 Earnings Summary

Executive Summary

  • Adjusted EPS beat but GAAP EPS compressed on one-time core conversion costs: adjusted EPS $0.55* vs S&P Global consensus $0.475* (beat), while GAAP diluted EPS was $0.20 due to $3.18M pre-tax ($2.57M after-tax; ~$0.34/share) conversion expenses . Values retrieved from S&P Global.
  • Net interest income rose 6% QoQ to $14.6M as NIM expanded 15 bps QoQ to 2.68% (liability-sensitive balance sheet benefiting from lower funding costs); non-interest income was $3.7M .
  • Credit improved: NPLs fell 28.5% QoQ to 0.60% of loans (driven by sale of ~$5.0M NPLs, net of $0.3M charge-off); ACL/loans rose to 1.17% .
  • Deposits dipped 0.9% QoQ (core mix slightly lower), but liquidity remained strong with undrawn sources at 322% of uninsured deposits; TBVPS stable at $23.62 after one-time conversion costs; dividend maintained at $0.10 .
  • Strategic catalysts: successful FIS Horizon core conversion in Feb-2025 and continued reduction in CRE concentration to 369% of capital; management flagged potential Russell 2000 qualification as a medium-term liquidity catalyst .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin and NII momentum: NIM rose to 2.68% (from 2.53% in Q4), lifting NII to $14.6M (+5.95% QoQ, +13.1% YoY); management attributed expansion to lower cost of interest-bearing liabilities in a liability-sensitive balance sheet amid late-2024 Fed cuts .
  • Credit quality improvement: NPLs declined to $11.7M (0.60% of loans) from $16.4M (0.82%) in Q4, aided by sale of ~$5.0M NPLs (net $0.3M charge-off); ACL/loans increased to 1.17% .
  • Execution on tech stack: core processing conversion to FIS Horizon completed in Feb-2025, with expected operational efficiencies and enhanced digital capabilities; CEO: “a significant achievement that is expected to deliver tangible operational efficiencies and customer benefits” .

What Went Wrong

  • GAAP earnings pressure from one-time costs: diluted EPS fell to $0.20 (from $0.52 in Q4) due to $3.18M pre-tax conversion expenses; adjusted EPS held at $0.55 .
  • Softer SBA sale economics and timing: SBA premiums/closings were below plan due to first-quarter market turmoil, SOP administrative changes, and state permitting delays; gains on SBA loan sales were $1.9M vs $2.5M YoY .
  • Deposits modestly lower QoQ and core mix down: total deposits decreased $17.8M (-0.91% QoQ); core deposits/total deposits fell to 73.24% (from 74.53% in Q4) .

Financial Results

EPS, NIM vs prior periods and estimates

MetricQ3 2024Q4 2024Q1 2025
Diluted EPS (GAAP)$0.48 $0.52 $0.20
Adjusted Diluted EPS (Non-GAAP)——$0.55
Net Interest Margin (%)2.37% 2.53% 2.68%
Wall St. Consensus vs Actual (S&P Global)ConsensusActual# Estimates
Primary EPS (Q1 2025)$0.475*$0.55*2*
Revenue (Q1 2025)$18.80M*$17.76M*1*
Values retrieved from S&P Global.

P&L detail

Metric ($, millions)Q3 2024Q4 2024Q1 2025
Net Interest Income13.10 13.81 14.63
Non-Interest Income3.95 4.19 3.73
Provision for Credit Losses0.20 0.40 0.60
Net Income (GAAP)3.54 3.90 1.52

Balance sheet and capital KPIs

KPIQ3 2024Q4 2024Q1 2025
Loans ($B)$2.006 $1.986 $1.961
Deposits ($B)$1.958 $1.954 $1.936
Loan/Deposit Ratio (%)102% 102% 101%
Undrawn Liquidity / Uninsured Deposits240% 283% 322%
Tangible Book Value/Share$23.28 $23.86 $23.62

Asset quality trends

KPIQ3 2024Q4 2024Q1 2025
NPLs ($M)15.37 16.37 11.70
NPLs / Loans (%)0.77% 0.82% 0.60%
ACL / Loans (%)1.17% 1.15% 1.17%
Net (Charge-offs)/Recoveries ($M)(0.44) (1.03) (0.45)

Mix and concentration

  • CRE concentration ratio: 397% (Q3) → 385% (Q4) → 369% (Q1) of capital .
  • Office exposure: 2.45% of loans/$48.7M (Q4) → 2.23%/$43.8M (Q1); Manhattan exposure <1% .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Effective Tax Rate (normalized run-rate)FY2025n/a~25% (management expectation) New
Quarterly DividendOngoing$0.10/share (Q4 declaration) $0.10/share (Q1 declaration) Maintained
Operating Platform2025Core conversion pending (Q4 outlook) FIS Horizon conversion completed (Feb 2025) Achieved (execution milestone)

Earnings Call Themes & Trends

Note: We did not find a Q1 2025 earnings call transcript; themes below reflect management communications in the 8‑K press release and related company releases.

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
NIM/Balance sheet sensitivityNIM 2.37%; positioned for rate cuts to aid NIM NIM 2.53%; liability sensitive; Fed cuts supportive NIM 2.68%; lower cost of interest-bearing liabilities drove expansion Improving
Credit qualityNPLs 0.77%; ACL 1.17% NPLs 0.82%; ACL 1.15% NPLs 0.60%; NPL sales executed; ACL 1.17% Improving
CRE concentration397% of capital 385% of capital 369% of capital De-risking
Technology/digitalConversion pending; digital-forward focus Conversion expected Feb-2025 FIS Horizon conversion completed; expected efficiencies; logo refresh Executed
SBA/residential flowRecord non-interest income; SBA gains strong Record non-interest income; flow gains SBA gains lower due to premiums/SOP/permit delays; expect recovery; residential flow continues Mixed near-term; constructive outlook
Liquidity/depositsLiquidity 240% of uninsured; core deposit growth YTD Liquidity 283%; insured/collateralized 87% Liquidity 322%; insured/collateralized 89% Strong/Stable

Management Commentary

  • “We are pleased with our first quarter performance which reflected sizable improvements in Net Interest Income and Net Interest Margin… Building on this positive momentum were improved credit metrics and the completion of our core banking system conversion… Moving forward, we remain committed to disciplined development of our core business verticals… and the upcoming potential qualification for the Russell 2000” — Michael P. Puorro, Chairman & CEO .
  • On Q4 momentum entering 2025: “Notable increases in net interest margin, tangible book value… improved CRE concentration ratio and sound credit quality… Ongoing performance will be enhanced by our pending core system conversion…” .

Q&A Highlights

  • No earnings call transcript was available at the time of writing; therefore, specific Q&A themes and clarifications are unavailable.

Estimates Context

  • EPS: Adjusted EPS of $0.55* exceeded S&P Global Primary EPS consensus of $0.475* for Q1 2025 (2 estimates)*. GAAP diluted EPS was $0.20 due to one-time core conversion expenses, which analysts typically exclude from “primary/adjusted” EPS tracking . Values retrieved from S&P Global.
  • Revenue: S&P Global “Revenue (Total)” actual $17.76M* vs $18.80M* consensus (1 estimate)* for Q1 2025; note that for banks, revenue definitions vary versus reported NII + non-interest income of $18.36M (14.63 + 3.73) reported by the company . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core earnings power tracking higher: NIM expansion to 2.68% and NII growth (+6% QoQ) point to improving run-rate profitability as funding costs decline in a liability-sensitive balance sheet .
  • Credit risk moderating: NPL ratio fell to 0.60% on NPL sales; ACL/loans steady-to-up at 1.17%, providing reserve coverage while CRE concentration continues to decline to 369% of capital .
  • One-time conversion costs largely behind: GAAP EPS impact (~$0.34/share after-tax) from the FIS Horizon core conversion should roll off, supporting operating leverage from expected efficiency gains in coming quarters .
  • Deposit mix and liquidity are sound: modest QoQ deposit decline offset by robust liquidity (322% coverage of uninsured) and high insured/collateralized mix (89%), reducing funding risk .
  • Noninterest income variability near term: SBA gain-on-sale softer in Q1 due to market/SOP/permit timing; management expects volumes/premiums to improve as conditions normalize during 2025 .
  • Capital and TBVPS resilient: TBVPS $23.62 after one-time costs; dividend maintained at $0.10, signaling confidence in capital and earnings trajectory .
  • Watch list of catalysts: continued NIM tailwinds if rates drift lower, execution on C&I/SBA/residential flow pipelines, and any index inclusion that could enhance liquidity and institutional ownership .

Appendix: Prior Quarters Snapshot (for trajectory)

  • Q3 2024: EPS $0.48; NII $13.10M; NIM 2.37%; liquidity 240% of uninsured; core deposits $1.45B .
  • Q4 2024: EPS $0.52; NII $13.81M; NIM 2.53%; liquidity 283%; insured/collateralized deposits 87% .

Citations:

  • Q1 2025 press release and 8-K:
  • Q4 2024 press release and 8-K:
  • Q3 2024 press release and 8-K:
  • Other Q1 2025 press releases: core conversion (Feb completion) ; logo refresh

S&P Global estimates disclaimer: Asterisked values (*) are retrieved from S&P Global.