Hanover Bancorp (HNVR) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $0.8 million ($0.11 per diluted share), down from $4.1 million in Q1 2024 and $3.1 million in Q2 2023, mainly due to higher provision for credit losses and increased non-interest expense, partially offset by higher non-interest income and lower tax expense.

• Total assets stood at $2.3 billion, total deposits at $1.9 billion, and total stockholders' equity at $190.1 million as of June 30, 2024.

• The bank continues to focus on flow originations and secondary market sales, especially SBA and residential loans, to complement portfolio growth.

• Non-interest income reached a record for continuing revenues, up 1.3% sequentially and 83.5% year-over-year, driven by gains on SBA loan sales.

• Board declared a $0.10 per share cash dividend on both common and Series A preferred shares, payable August 14, 2024.

Financial highlights

• Net interest income for Q2 2024 was $13.2 million, up 2.4% sequentially but down 1.9% year-over-year; net interest margin compressed to 2.46% from 2.68%.

• Provision for credit losses rose to $4.0 million in Q2 2024, mainly due to a single loan and CECL enhancements, with allowance for credit losses at 1.17% of total loans.

• Non-interest income increased by $1.6 million, driven by a $1.5 million gain on sale of SBA loans.

• Non-interest expense increased by $1.1 million, mainly due to higher salaries and benefits.

• Return on average assets was 0.15% and return on average equity was 1.77% for Q2 2024, both down significantly year-over-year.

Outlook and guidance

• Management expects increased activity in flow originations and secondary market sales, with a continued focus on liquidity, capital management, and efficiency.

• Cost-cutting measures and strategic hiring are in place to support growth.

• Anticipates further expansion with a new branch in Port Jefferson, NY, expected to open in Q4 2024.