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HB

Hanover Bancorp, Inc. /NY (HNVR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered margin expansion and record non-interest income: net interest margin rose to 2.53% (vs 2.37% in Q3 and 2.40% in Q4’23) and non-interest income reached $4.2M, supporting diluted EPS of $0.52 and net income of $3.9M .
  • Strong liquidity and deposit mix: undrawn liquidity sources were $713.1M (≈283% of uninsured deposits), and insured/collateralized deposits were ~87% of total; core deposits increased 5.36% YoY .
  • Strategic progress: continued loan diversification (C&I up 56.5% YoY; CRE concentration ratio down to 385% of capital), and a core system conversion to FIS Horizon in mid-February 2025 to enhance efficiency and digital capabilities .
  • Potential stock catalysts: further FOMC rate decreases benefiting liability-sensitive balance sheet, operational efficiencies from the core conversion, and potential Russell 2000 qualification improving liquidity and institutional ownership .
  • Wall Street consensus from S&P Global was unavailable for Q4 2024; estimate comparisons are not included due to data access limitations (see Estimates Context) .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and earnings: net interest margin increased to 2.53% and net interest income rose to $13.8M; diluted EPS was $0.52 (vs $0.48 in Q3) .
  • Record, diversified fee generation: non-interest income of $4.2M driven by gains on sale of SBA loans ($2.5M on $30.9M sold, 9.06% premiums) and residential loan flow program ($0.5M gains on $19.1M sold) .
  • Strategic positioning: CEO highlighted “well-rounded conclusion” to 2024 with improved CRE concentration and strong pipelines across C&I, SBA and Residential, plus the pending core conversion to deliver “tangible operational efficiencies” .

What Went Wrong

  • Expense pressure: non-interest expense increased to $12.4M, with higher compensation and benefits (lower deferred loan origination costs offset by lower incentive comp) .
  • Asset quality slightly weaker QoQ: non-performing loans rose to $16.4M (0.82% of loans) vs $15.4M in Q3; ACL/loans slipped to 1.15% from 1.17% .
  • Sequential loan balances moderated: total loans declined 1.01% QoQ to $1.99B, reflecting emphasis on originate-for-sale in residential and government-guaranteed lending rather than portfolio growth .

Financial Results

Quarterly performance vs prior periods and YoY

MetricQ2 2024Q3 2024Q4 2024
Net Interest Income ($USD Millions)$13.247 $13.102 $13.808
Non-Interest Income ($USD Millions)$3.622 $3.954 $4.187
Total Net Revenue ($USD Millions, NII+Non-Interest Income)$16.869 (=13.247+3.622) $17.056 (=13.102+3.954) $17.995 (=13.808+4.187)
Diluted EPS ($USD)$0.11 $0.48 $0.52
Net Interest Margin (%)2.46% 2.37% 2.53%
Return on Average Assets (%)0.44% (6M) 0.62% 0.70%
Return on Avg Tangible Equity (%)5.80% (6M) 8.19% 8.87%
MetricQ4 2023Q4 2024
Net Interest Income ($USD Millions)$12.659 $13.808
Non-Interest Income ($USD Millions)$3.254 $4.187
Diluted EPS ($USD)$0.51 $0.52
Net Interest Margin (%)2.40% 2.53%

Segment/Balance Mix Highlights

Loans ($USD Millions)Q2 2024Q3 2024Q4 2024
Residential Mortgages$733.0 $719.0 $702.8
Multifamily$562.5 $557.6 $550.6
Commercial Real Estate (Investor/Owner-Occ)$549.7 $529.9 $536.3
Commercial & Industrial$139.2 $171.9 $168.9
Home Equity$28.0 $26.8 $26.4
Consumer$0.5 $0.5 $0.5
Total Loans$2,013.0 $2,005.8 $1,985.5

KPIs and Capital

KPIQ2 2024Q3 2024Q4 2024
Liquidity Sources ($USD Millions)$648.2 $637.1 $713.1
Insured/Collateralized Deposits (% total)~87% ~86% ~87%
Core Deposits / Total Deposits (%)76.10% 74.25% 74.53%
Total Deposits ($USD Billions)$1.942 $1.958 $1.954
NPLs ($USD Millions)$15.8 $15.4 $16.4
NPLs / Loans (%)0.79% 0.77% 0.82%
ACL / Loans (%)1.17% 1.17% 1.15%
Tangible Book Value / Share ($)$23.05 $23.28 $23.86
CRE Concentration Ratio (% of capital)403% 397% 385%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Cash Dividend ($/share)Q1 2025 payable 2/19/2025 (record 2/12/2025)$0.10 (Q3 paid 11/13/2024) $0.10 Maintained
Core System Conversion (to FIS Horizon)On/around Feb 15, 2025N/AConversion expected; “immediate and tangible benefits” on better financial terms New operational guidance
Financial Guidance (Revenue, EPS, Margin, OpEx/Tax)2025None disclosedNone disclosedNo formal guidance provided

Earnings Call Themes & Trends

Note: No earnings call transcript was available for Q4 2024; themes reflect management press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Technology initiativesN/AN/ACore conversion to FIS Horizon; improved functionality and efficiency on better financial terms Increasing tech focus
Macro rates / balance sheet sensitivityMargin recovery; deposit costs rising from rate environment NIM compression vs Q2 due to deposit costs and no interest recovery NIM expansion from recent Fed funds reductions; liability-sensitive balance sheet benefits Improving
Product performance (SBA/Residential flow)Record continuing non-interest income; SBA gains $2.5M (9.80% premiums); residential flow started Record non-interest income; SBA gains $2.4M; residential flow gains $0.4M Record non-interest income; SBA gains $2.5M (9.06% premiums); residential flow gains $0.5M Sustained strength
Regional/branch strategyHauppauge center deposits $73M; pipelines strong; Port Jefferson planned Hauppauge deposits $96M; Port Jefferson approved; opening expected Q1’25 Hauppauge deposits $96.4M at YE; pipelines robust; Port Jefferson launch pending Expansion
Regulatory/LegalCECL enhancements raised provision Solid asset quality; ACL 1.17% incl. individually analyzed loan allowance Solid asset quality; ACL 1.15%; NPLs 0.82% Stable
CRE/Office exposureOffice $46M, 1.8x DSCR, 56% LTV; non-performing note sold with no loss Office $45.5M, <1% in Manhattan; improved CRE concentration Office $49M, 1.28x DSCR, 53% LTV; improved CRE concentration Mixed (slightly higher balance, strong metrics)

Management Commentary

  • “Notable increases in net interest margin, tangible book value, returns on average assets and average tangible equity complemented further improvement in our CRE concentration ratio and sound credit quality, bringing 2024 to a well-rounded conclusion.” — Michael P. Puorro, Chairman & CEO .
  • “Ongoing performance will be enhanced by our pending core system conversion... and could be positively impacted by further FOMC rate decreases, an improved yield curve, a favorable banking environment and potential qualification for the Russell 2000.” — Michael P. Puorro .
  • On Q3 setup for Q4: “Strategic expansion of our C&I banking and government guaranteed lending initiatives continue to deliver sustained results... The continued decline in interest rates forecast by many economists is expected to provide sustained net interest margin expansion.” — Michael P. Puorro .

Q&A Highlights

  • No Q4 2024 earnings call transcript or Q&A was available in the document catalog; therefore, no Q&A highlights or clarifications can be provided .

Estimates Context

  • Wall Street consensus estimates (EPS and Revenue) via S&P Global were unavailable due to daily request limit constraints; as a result, no estimate comparisons are included for Q4 2024 .
  • Investors should monitor consensus revisions post-print given margin trajectory and fee income strength; the absence of published guidance suggests estimates will anchor to observed NIM expansion and fee momentum .

Key Takeaways for Investors

  • Margin inflection: liability-sensitive balance sheet and recent Fed cuts drove NIM to 2.53%; further rate normalization could support additional margin gains and earnings leverage .
  • Durable fee engines: record non-interest income from SBA and residential flow sales provides diversified revenue to complement NII, reducing reliance on spread income alone .
  • Risk posture: asset quality remains sound (NPLs 0.82% of loans; ACL/loans 1.15%); CRE concentration ratio fell to 385%, and office exposure is modest with favorable DSCR/LTV metrics .
  • Capital and book value: tangible book value/share rose to $23.86; continued deposit mix optimization and liquidity strength (undrawn sources $713.1M) provide resilience .
  • Operational catalyst: imminent core system conversion to FIS Horizon should enhance efficiency and digital capabilities—watch for OpEx trajectory and potential service improvements post-conversion .
  • Near-term trading setup: positive narrative (margin expansion, fee strength, tech conversion) plus potential Russell 2000 qualification could attract incremental buyers; monitor rate path and deposit betas .
  • Medium-term thesis: scaling C&I/SBA/residential flow while maintaining disciplined liquidity and capital management should drive improved ROA/ROTCE through cycle .