Hanover Bancorp reported higher third-quarter earnings, record net interest income and continued loan growth, with profitability improving from both the prior quarter and a year earlier. The Long Island-based bank also declared a $0.10-per-share cash dividend on its common and Series A preferred shares.
The quarter’s results reflected stronger net interest income and lower expenses than in the second quarter. Compared with a year earlier, higher net interest income and a lower credit-loss provision lifted earnings, partly offset by lower non-interest income and higher expenses.
Key details
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Earnings increased: Net income was $4.3 million, or $0.60 per diluted share, compared with $4.1 million, or $0.55 per share, in the second quarter of 2026 and $3.5 million, or $0.47 per share, in the third quarter of 2025. Per-share figures include Series A preferred shares.
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Net interest income reached a record: It rose 1.5% from the prior quarter to $17.0 million, up 11.8% from a year earlier. Net interest income is the difference between what a bank earns on loans and investments and what it pays for deposits and other funding.
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Pre-provision earnings were the strongest in nearly four years: Pre-provision net revenue, a non-GAAP measure of earnings before credit-loss provisions and taxes, was $6.9 million, or 1.18% of average assets. That was up from $5.9 million, or 1.06%, in the second quarter and $6.0 million, or 1.05%, a year earlier. Hanover said this was its highest level since the fourth quarter of 2022.
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Loans and assets expanded: Total loans were $2.1 billion at Sept. 30, up $86.8 million, or 4.34%, from June 30, and up $83.9 million, or 4.19%, from year-end 2025. Growth was driven mainly by niche residential lending and relationship-based commercial real estate and commercial and industrial lending. Loan production reached $178.7 million in the quarter, 69.7% higher than in the prior quarter. Total assets were $2.4 billion, up 4.5% from June 30 and 2.46% from Dec. 31.
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Profitability and cost efficiency improved: Return on average assets was 0.75%, compared with 0.73% in the prior quarter and 0.61% a year earlier. Return on average tangible equity rose to 9.32%, from 8.85% and 7.63%, respectively. The efficiency ratio — a measure of operating costs relative to revenue, where lower is generally better — improved to 64.3%, from 69.8% in the second quarter and 66.7% a year earlier. The sequential improvement reflected a $1.3 million, or 9.18%, drop in non-interest expenses.
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Drivers of the earnings comparisons differed: Against the year-earlier quarter, higher net interest income and a lower provision for credit losses were partly offset by lower non-interest income, higher operating expenses and higher income taxes. Compared with the second quarter, higher net interest income and lower expenses were partly offset by weaker non-interest income, higher credit-loss provisions and higher taxes. The decrease in non-interest income included lower gains from loan sales; versus the year-earlier quarter, Hanover cited lower SBA loan-sale volume.
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Demand deposits reached a record: They increased $7.3 million, or 2.96%, from year-end 2025 to $255.1 million. Hanover attributed the growth to commercial banking relationships and municipal operating accounts.
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Book value rose, while the tangible-capital ratio declined: Book value per share, including preferred shares, was $27.95 at quarter-end, up from $27.66 at June 30 and $27.02 at year-end 2025. Tangible book value per share was $25.29, versus $25.02 and $24.41. The tangible common equity-to-assets ratio was 7.58%, down from 7.91% in the prior quarter and 7.65% at year-end. Hanover attributed the quarterly decline mainly to a $1.8 million after-tax increase in unrealized losses on its investment portfolio and $2.2 million in common-stock repurchases.
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New branches are building deposits: The Hauppauge branch had $149.1 million in deposits at Sept. 30, with a 1.64% cost of funds; Port Jefferson had $52.1 million, with a 1.85% cost of funds. Hanover opened a full-service branch in downtown Riverhead on Sept. 30 to serve the East End of Long Island.
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Dividend declared: The board approved a $0.10-per-share cash dividend on both common and Series A preferred shares. It is payable Nov. 18 to shareholders of record on Nov. 11.