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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File No. 001-41384

HANOVER BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	81-3324480
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

80 East Jericho Turnpike, Mineola, NY 11501

(Address of Principal Executive Offices) (Zip Code)

(516) 548-8500

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock	HNVR	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, $0.01 par value		7,215,194 Shares
(Title of Class)		(Outstanding as of July 31, 2025)

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HANOVER BANCORP, INC.

Form 10-Q

Table of Contents


		Page
	PART I

Item 1.	Financial Statements	3

	Consolidated Statements of Financial Condition as of June 30, 2025 (unaudited) and December 31, 2024	3

	Consolidated Statements of Income (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	4

	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	5

	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2025 and 2024	6

	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2025 and 2024	8

	Notes to Unaudited Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	52

	PART II

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	52

Item 3.	Defaults Upon Senior Securities	52

Item 4.	Mine Safety Disclosures	52

Item 5.	Other Information	52

Item 6.	Exhibits	53

	Signatures	54

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PART I

ITEM 1. – FINANCIAL STATEMENTS

HANOVER BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollars in thousands, except share and per share amounts)


	June 30, 2025		December 31, 2024
ASSETS	(unaudited)
Cash and non-interest-bearing deposits due from banks	$	12,339	$	12,768
Interest-bearing deposits due from banks		152,196		150,089
Total cash and cash equivalents		164,535		162,857
Securities held to maturity, fair value of $3,498 at June 30, 2025 and $3,609 at December 31, 2024 (net of allowance for credit losses of $0 at June 30, 2025 and December 31, 2024)		3,594		3,758
Securities available for sale, at fair value (net of allowance for credit losses of $0 at June 30, 2025 and December 31, 2024)		102,636		83,755
Loans held for sale		10,593		12,404
Loans		1,966,452		1,985,524
Allowance for credit losses		(21,571)		(22,779)
Loans, net		1,944,881		1,962,745
Premises and equipment, net		14,388		15,337
Operating lease assets		10,890		8,337
Accrued interest receivable		11,665		11,849
Prepaid post retirement plan		3,312		3,377
Stock in Federal Home Loan Bank ("FHLB"), at cost		7,869		7,885
Goodwill		19,168		19,168
Other intangible assets		222		250
Loan servicing rights		6,449		6,016
Deferred income taxes		1,524		1,569
Other assets		10,250		12,803
TOTAL ASSETS	$	2,311,976	$	2,312,110
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest-bearing demand	$	243,664	$	211,656
Savings, NOW and money market		1,195,992		1,244,857
Time		511,625		497,770
Total deposits		1,951,281		1,954,283
Borrowings		107,805		107,805
Subordinated debentures ($25,000 face amount less unamortized debt issuance costs of $284 and $311 at June 30, 2025 and December 31, 2024, respectively)		24,716		24,689
Operating lease liabilities		11,565		9,025
Accrued interest payable		1,473		1,532
Other liabilities		16,251		18,138
TOTAL LIABILITIES		2,113,091		2,115,472
COMMITMENTS AND CONTINGENT LIABILITIES		—		—
STOCKHOLDERS' EQUITY
Preferred stock, Series A (par value $0.01; 15,000,000 shares authorized; issued and outstanding 275,000 at June 30, 2025 and December 31, 2024, respectively)		5,041		5,041
Common stock (par value $0.01; 17,000,000 shares authorized; issued and outstanding 7,224,243 and 7,152,127 at June 30, 2025 and December 31, 2024, respectively)		72		72
Surplus		124,624		124,937
Retained earnings		70,375		67,922
Accumulated other comprehensive loss, net of tax		(1,227)		(1,334)
TOTAL STOCKHOLDERS' EQUITY		198,885		196,638
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,311,976	$	2,312,110

See accompanying notes to unaudited consolidated financial statements.

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HANOVER BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
INTEREST INCOME
Loans	$	29,785	$	31,124	$	59,769	$	60,861
Taxable securities		1,433		1,534		2,619		2,991
Other interest income		831		762		2,498		2,000
Total interest income		32,049		33,420		64,886		65,852
INTEREST EXPENSE
Savings, NOW and money market deposits		10,649		12,667		22,104		25,600
Time deposits		5,058		4,910		10,378		9,872
Borrowings		1,547		2,596		2,980		4,198
Total interest expense		17,254		20,173		35,462		39,670
Net interest income		14,795		13,247		29,424		26,182
Provision for credit losses		2,357		4,040		2,957		4,340
Net interest income after provision for credit losses		12,438		9,207		26,467		21,842
NON-INTEREST INCOME
Loan servicing and fee income		1,083		836		2,164		1,749
Service charges on deposit accounts		162		114		279		210
Gain on sale of loans held-for-sale		2,298		2,586		4,650		5,092
Gain on sale of securities available-for-sale		—		4		—		4
Other income		18		82		200		143
Total non-interest income		3,561		3,622		7,293		7,198
NON-INTEREST EXPENSE
Salaries and employee benefits		7,003		6,499		14,235		12,061
Conversion expenses		—		—		3,180		—
Occupancy and equipment		1,910		1,843		3,746		3,613
Data processing		508		495		1,101		1,013
Professional fees		878		717		1,665		1,535
Federal deposit insurance premiums		365		365		702		683
Other expenses		1,952		1,751		3,983		3,569
Total non-interest expense		12,616		11,670		28,612		22,474
Income before income tax expense		3,383		1,159		5,148		6,566
Income tax expense		940		315		1,184		1,661
NET INCOME	$	2,443	$	844	$	3,964	$	4,905
Earnings per share:
BASIC	$	0.33	$	0.11	$	0.53	$	0.67
DILUTED	$	0.33	$	0.11	$	0.53	$	0.66

See accompanying notes to unaudited consolidated financial statements.

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HANOVER BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net income	$	2,443	$	844	$	3,964	$	4,905
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on investment securities available for sale:
Change in unrealized gain (loss) on securities available for sale arising during the period, net of tax of $58, ($56), $107 and $20, respectively		201		(201)		377		70
Reclassification adjustment for gains realized in net income, net of tax of $0, $1, $0 and $1, respectively		—		(3)		—		(3)
Net change in unrealized gains (losses) on securities available for sale		201		(204)		377		67
Unrealized (losses) gains on cash flow hedges:
Change in unrealized (loss) gain on cash flow hedges arising during the period, net of tax of ($9), $46, ($77) and $291, respectively		(32)		170		(270)		1,056
Total other comprehensive income (loss), net of tax		169		(34)		107		1,123
Total comprehensive income, net of tax	$	2,612	$	810	$	4,071	$	6,028

See accompanying notes to unaudited consolidated financial statements.

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HANOVER BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands, except share and per share data)


	For the Three and Six Months Ended June 30, 2025
	Common									Accumulated Other		Total
	Stock	Preferred		Common				Retained		Comprehensive		Stockholders’
	(Shares)	Stock		Stock		Surplus		Earnings		Loss, Net		Equity
Balance at January 1, 2025	7,152,127	$	5,041	$	72	$	124,937	$	67,922	$	(1,334)	$	196,638
Net income	—		—		—		—		1,521		—		1,521
Other comprehensive loss, net of tax	—		—		—		—		—		(62)		(62)
Cash dividends declared ($0.10 per share)	—		—		—		—		(759)		—		(759)
Stock-based compensation	—		—		—		494		—		—		494
Stock awards granted, net of forfeitures	49,750		—		—		—		—		—		—
Shares issued for performance stock units	27,848		—		—		—		—		—		—
Shares received related to tax withholding	(15,326)		—		—		(721)		—		—		(721)
Exercise of stock options, net	14,332		—		—		(468)		—		—		(468)
Balance at March 31, 2025	7,228,731	$	5,041	$	72	$	124,242	$	68,684	$	(1,396)	$	196,643

Net income	—		—		—		—		2,443		—		2,443
Other comprehensive income, net of tax	—		—		—		—		—		169		169
Cash dividends declared ($0.10 per share)	—		—		—		—		(752)		—		(752)
Stock-based compensation	—		—		—		392		—		—		392
Stock awards granted, net of forfeitures	(4,060)		—		—		—		—		—		—
Shares received related to tax withholding	(428)		—		—		(10)		—		—		(10)
Balance at June 30, 2025	7,224,243	$	5,041	$	72	$	124,624	$	70,375	$	(1,227)	$	198,885


	For the Three and Six Months Ended June 30, 2024
	Common									Accumulated Other		Total
	Stock	Preferred		Common				Retained		Comprehensive		Stockholders’
	(Shares)	Stock		Stock		Surplus		Earnings		Loss, Net		Equity
Balance at January 1, 2024	7,195,012	$	2,963	$	72	$	125,694	$	58,551	$	(2,450)	$	184,830
Net income	—		—		—		—		4,061		—		4,061
Other comprehensive income, net of tax	—		—		—		—		—		1,157		1,157
Cash dividends declared ($0.10 per share)	—		—		—		—		(741)		—		(741)
Stock-based compensation	—		—		—		381		—		—		381
Stock awards granted, net of forfeitures	52,491		—		—		—		—		—		—
Shares received related to tax withholding	(8,292)		—		—		(145)		—		—		(145)
Exercise of stock options, net	3,201		—		—		—		—		—		—
Balance at March 31, 2024	7,242,412	$	2,963	$	72	$	125,930	$	61,871	$	(1,293)	$	189,543

Net income	—		—		—		—		844		—		844
Other comprehensive loss, net of tax	—		—		—		—		—		(34)		(34)
Cash dividends declared ($0.10 per share)	—		—		—		—		(744)		—		(744)
Stock-based compensation	—		—		—		401		—		—		401
Stock awards granted, net of forfeitures	3,147		—		—		—		—		—		—
Shares received related to tax withholding	(453)		—		—		(8)		—		—		(8)
Preferred stock issued in exchange for common stock	(125,000)		2,078		(1)		(2,077)						—
Exercise of stock options, net	7,057						70						70

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Balance at June 30, 2024

7,127,163

5,041

124,316

61,971

(1,327)

190,072

See accompanying notes to unaudited consolidated financial statements.

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HANOVER BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities:
Net income	$	3,964	$	4,905
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		2,957		4,340
Depreciation and amortization		974		1,097
Amortization of right-of-use assets		1,053		544
Net gain on sale of securities available-for-sale		—		(4)
Stock-based compensation		886		782
Net gain on sale of loans		(4,650)		(5,092)
Net amortization of premiums, discounts and loan fees and costs		913		637
Amortization of intangible assets		28		32
Amortization of debt issuance costs		27		27
Loan servicing rights valuation adjustments		518		281
Payments on operating leases		(1,066)		(548)
Origination of loans held for sale		(45,816)		(4,692)
Proceeds from loans held for sale		42,597		3,005
Decrease (increase) in accrued interest receivable		184		(563)
Decrease (increase) in other assets		1,628		(3,043)
Decrease in accrued interest payable		(59)		(83)
Decrease in other liabilities		(2,086)		(1,132)
Net cash provided by operating activities		2,052		493
Cash flows from investing activities:
Purchases of securities available-for-sale		(98,156)		(398,256)
Repayments (purchases) of restricted securities, net		16		(954)
Proceeds from sales of securities available-for-sale		—		868
Principal repayments of securities held to maturity		163		137
Maturities, prepayments and calls of securities available-for-sale		79,926		360,023
Proceeds from loans held for sale previously classified as portfolio loans		60,344		63,167
Net increase in loans		(36,652)		(115,734)
Purchases of premises and equipment		(318)		(1,752)
Net cash provided by (used in) investing activities		5,323		(92,501)
Cash flows from financing activities:
Net (decrease) increase in deposits		(2,999)		37,476
Repayments of term FHLB advances		—		(5,000)
Proceeds from Federal Reserve Bank borrowings		—		20,000
Repayments of Federal Reserve Bank borrowings		—		(20,000)
Proceeds of other short-term borrowings, net		—		25,000
Payments related to tax withholding for equity awards		(731)		(153)
Cash dividends paid		(1,499)		(1,477)
Proceeds from exercise of stock options, net		(468)		70
Net cash (used in) provided by financing activities		(5,697)		55,916
Increase (decrease) in cash and cash equivalents		1,678		(36,092)
Cash and cash equivalents, beginning of period		162,857		177,207
Cash and cash equivalents, end of period	$	164,535	$	141,115
Supplemental cash flow information:
Interest paid	$	35,521	$	39,753
Income taxes paid		1,161		2,604
Supplemental non-cash disclosure:
Transfers from portfolio loans to loans held-for-sale	$	50,664	$	59,099
Preferred stock issued in exchange for common stock		—		2,078
Lease liabilities arising from obtaining right-of-use assets		3,606		—

See accompanying notes to unaudited consolidated financial statements.

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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Hanover Bancorp, Inc., a Maryland corporation (the “Company”), is the holding company for Hanover Community Bank (the “Bank”). On June 25, 2025, the Company consummated the transactions contemplated by that certain Agreement and Plan of Merger by and between the Company and Hanover Bancorp, Inc., a New York corporation (“Legacy Hanover”), with the Company as the surviving entity. The Company was created at the direction of the Board of Directors of Legacy Hanover in order to facilitate the foregoing transactions so as to change its state of incorporation from New York to Maryland (the “Reincorporation”). Such change was approved by the Company’s shareholders at the annual shareholder meeting held on March 5, 2024, by the Federal Reserve Bank of New York on July 5, 2024, and the New York State Department of Financial Services on November 20, 2024. Accordingly, the Company is incorporated in the State of Maryland.

The Bank, headquartered in Mineola, New York, is a New York State chartered bank. The Bank commenced operations on November 4, 2008 and is a full-service bank providing personal and business lending and deposit services. As a New York State chartered, non-Federal Reserve member bank, the Bank is subject to regulation by the New York State Department of Financial Services (“DFS”) and the Federal Deposit Insurance Corporation (“FDIC”). The Company is subject to regulation and examination by the Board of Governors of the Federal Reserve System (the “FRB”).

Basis of Presentation

In the opinion of the Company’s management, the preceding unaudited interim consolidated financial statements contain all adjustments, consisting of normal accruals, necessary for a fair presentation of the Company’s consolidated statement of financial condition as of June 30, 2025, its consolidated statements of income for the three and six months ended June 30, 2025 and 2024, its consolidated statements of comprehensive income for the three and six months ended June 30, 2025 and 2024, its consolidated statements of changes in stockholders’ equity for the three and six months ended June 30, 2025 and 2024 and its consolidated statements of cash flows for the six months ended June 30, 2025 and 2024. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had an immaterial effect on the Company’s consolidated financial statements and had no effect on prior period net income or stockholders’ equity.

In addition, the preceding unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X, as well as in accordance with predominant practices within the banking industry. They do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of results for any other interim period or of the results for the full fiscal year 2025. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to the Company’s significant accounting policies since December 31, 2024.

All material intercompany accounts and transactions have been eliminated in consolidation. Unless the context otherwise requires, references herein to the Company include the Company and the Bank on a consolidated basis.

The Company completed its core data processing system conversion to FIS Horizon in February 2025. In connection with the conversion, the Company incurred non-recurring expenses of approximately $3.2 million, which was comprised of $2.2 million in consulting and audit fees, $0.7 million in deconversion fees to previous provider, and $0.3 million in training and other related charges.

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2. EARNINGS PER SHARE

The two-class method is used in the calculation of basic and diluted earnings per share (“EPS”). Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared and participation rights in undistributed earnings. The restricted stock awards granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities.

The Company’s basic and diluted EPS calculations for the three and six months ended June 30, 2025 and 2024 are as follows. There were no stock options that were antidilutive for the three and six months ended June 30, 2025 and 2024.


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share and per share data)	2025		2024		2025		2024

Net income available to common stockholders	$	2,443	$	844	$	3,964	$	4,905
Less: Dividends paid and earnings allocated to participating securities		(64)		(21)		(111)		(155)
Income attributable to common stock	$	2,379	$	823	$	3,853	$	4,750
Weighted average common shares outstanding, including participating securities		7,500,871		7,399,816		7,482,307		7,388,021
Less: Weighted average participating securities		(213,634)		(244,434)		(226,709)		(251,100)
Weighted average common shares outstanding		7,287,237		7,155,382		7,255,598		7,136,921
Basic EPS	$	0.33	$	0.11	$	0.53	$	0.67

Income attributable to common stock	$	2,379	$	823	$	3,853	$	4,750
Weighted average common shares outstanding		7,287,237		7,155,382		7,255,598		7,136,921
Weighted average common equivalent shares outstanding		5,713		49,294		5,919		50,213
Weighted average common and equivalent shares outstanding		7,292,950		7,204,676		7,261,517		7,187,134
Diluted EPS	$	0.33	$	0.11	$	0.53	$	0.66

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3. SECURITIES

The following tables summarize the amortized cost, fair value and allowance for credit losses of securities available for sale and securities held to maturity at June 30, 2025 and December 31, 2024 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:


	June 30, 2025
			Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for Credit
(in thousands)	Cost		Gains		Losses		Losses		Fair Value
Available for sale:
U.S. GSE residential mortgage-backed securities	$	13,995	$	19	$	(211)	$	—	$	13,803
U.S. GSE residential collateralized mortgage obligations		13,991		28		(3)		—		14,016
U.S. GSE commercial mortgage-backed securities		3,965		23		—		—		3,988
Collateralized loan obligations		42,263		141		(47)		—		42,357
Corporate bonds		29,267		133		(928)		—		28,472
Total available for sale securities	$	103,481	$	344	$	(1,189)	$	—	$	102,636

			Gross		Gross				Allowance
	Amortized		Unrecognized		Unrecognized				for Credit
	Cost		Gains		Losses		Fair Value		Losses
Held to maturity:
U.S. GSE residential mortgage-backed securities	$	1,128	$	—	$	(54)	$	1,074	$	—
U.S. GSE commercial mortgage-backed securities		2,466		—		(42)		2,424		—
Total held to maturity securities	$	3,594	$	—	$	(96)	$	3,498	$	—


	December 31, 2024
			Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for Credit
(in thousands)	Cost		Gains		Losses		Losses		Fair Value
Available for sale:
U.S. Treasury securities	$	19,995	$	5	$	—	$	—	$	20,000
U.S. GSE residential mortgage-backed securities		11,016		—		(371)		—		10,645
U.S. GSE commercial mortgage-backed securities		1,520		—		(17)		—		1,503
Collateralized loan obligations		32,271		206		—		—		32,477
Corporate bonds		20,282		65		(1,217)		—		19,130
Total available for sale securities	$	85,084	$	276	$	(1,605)	$	—	$	83,755

			Gross		Gross				Allowance
	Amortized		Unrecognized		Unrecognized				for Credit
	Cost		Gains		Losses		Fair Value		Losses
Held to maturity:
U.S. GSE residential mortgage-backed securities	$	1,259	$	—	$	(81)	$	1,178	$	—
U.S. GSE commercial mortgage-backed securities		2,499		—		(68)		2,431		—
Total held to maturity securities	$	3,758	$	—	$	(149)	$	3,609	$	—

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The amortized cost and fair value of investment securities at June 30, 2025, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single date are shown separately.


	June 30, 2025
	Amortized		Fair
(in thousands)	Cost		Value
Securities available for sale:
Due after one year through five years	$	2,958	$	2,981
Five to ten years		49,864		49,167
Beyond ten years		18,708		18,681
U.S. GSE residential mortgage-backed securities		13,995		13,803
U.S. GSE residential collateralized mortgage obligations		13,991		14,016
U.S. GSE commercial mortgage-backed securities		3,965		3,988
Total securities available for sale		103,481		102,636
Securities held to maturity:
U.S. GSE residential mortgage-backed securities		1,128		1,074
U.S. GSE commercial mortgage-backed securities		2,466		2,424
Total securities held to maturity		3,594		3,498
Total investment securities	$	107,075	$	106,134

At June 30, 2025 and December 31, 2024, investment securities with a carrying amount of $40.1 million and $28.9 million, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

There were no sales of securities during the three and six months ended June 30, 2025. For the three and six months ended June 30, 2024, proceeds from sales of securities available for sale totaled $0.9 million, with an associated gross realized gain of $4 thousand.

There were no holdings of securities of any one issuer in an amount greater than 10% of stockholders' equity other than U.S. government and its agencies at June 30, 2025 and December 31, 2024.

The following tables summarize securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded at June 30, 2025 and December 31, 2024, aggregated by major security type and length of time in a continuous unrealized loss position:


	June 30, 2025
	Less than Twelve Months				Twelve Months or Longer				Total
			Gross				Gross					Gross
			Unrealized				Unrealized		Number of			Unrealized
(in thousands, except number of securities)	Fair Value		Losses		Fair Value		Losses		Securities	Fair Value		Losses
Available-for-sale:
U.S. GSE residential mortgage-backed securities	$	8,730	$	(90)	$	1,100	$	(121)	8	$	9,830	$	(211)
U.S. GSE residential collateralized mortgage obligations		—		—		21		(3)	1		21		(3)
Collateralized loan obligations		14,678		(47)		—		—	3		14,678		(47)
Corporate bonds		3,452		(20)		10,592		(908)	9		14,044		(928)
Total available-for-sale	$	26,860	$	(157)	$	11,713	$	(1,032)	21	$	38,573	$	(1,189)

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	December 31, 2024
	Less than Twelve Months				Twelve Months or Longer				Total
			Gross				Gross					Gross
			Unrealized				Unrealized		Number of			Unrealized
(in thousands, except number of securities)	Fair Value		Losses		Fair Value		Losses		Securities	Fair Value		Losses
Available-for-sale:
U.S. GSE residential mortgage-backed securities	$	9,523	$	(227)	$	1,122	$	(144)	12	$	10,645	$	(371)
U.S. GSE commercial mortgage-backed securities		1,503		(17)		—		—	1		1,503		(17)
Corporate bonds		2,823		(56)		10,338		(1,161)	9		13,161		(1,217)
Total available-for-sale	$	13,849	$	(300)	$	11,460	$	(1,305)	22	$	25,309	$	(1,605)

Assessment of Available for Sale Debt Securities for Credit Risk

Management assesses the decline in fair value of investment securities periodically. Unrealized losses on debt securities may occur from current market conditions, increases in interest rates since the time of purchase, a structural change in an investment, volatility of earnings of a specific issuer, or deterioration in credit quality of the issuer. Management evaluates both qualitative and quantitative factors to assess whether an impairment exists. The following is a discussion of the credit quality characteristics of portfolio segments carrying unrealized losses at June 30, 2025 and December 31, 2024.

Obligations of U.S. Government agencies and sponsored entities

The mortgage-backed securities and collateralized mortgage obligations held by the Company were issued by U.S government-sponsored entities and agencies. The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. The Company does not have the intent to sell these mortgage-backed securities and collateralized mortgage obligations and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company considers these securities to carry zero loss estimates and no allowance for credit losses was recorded at June 30, 2025 and December 31, 2024.

Corporate bonds

The Company’s corporate bond portfolio is comprised of subordinated debt issues of community and regional banks. Management considers the credit quality of each individual investment. Management reviewed the collectibility of these investments, taking into account such factors as the financial condition of the issuers, reported regulatory capital ratios, and credit ratings, when available, and other factors. All corporate bond debt securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers. The Company considers the potential credit risk of the issuers to be immaterial and has not allocated an allowance for credit losses on its corporate bond portfolio as of June 30, 2025 and December 31, 2024.

Collateralized loan obligations (“CLO”)

The Company’s CLO portfolio is comprised of an actively managed portfolio of senior secured Class A Notes. Management considers the credit quality of each individual investment. Management reviewed the collectibility of these investments, taking into account such factors as the financial condition of the issuers and credit ratings, when available and other factors. All CLO securities continue to accrue interest and make payments as expected with no defaults or deferrals on the part of the issuers. The Company considers the potential credit risk of the issuers to be immaterial and has not allocated an allowance for credit losses on its CLO portfolio as of June 30, 2025.

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4. LOANS

The following table sets forth the classification of the Company’s loans by loan portfolio segment for the periods presented.


(in thousands)	June 30, 2025		December 31, 2024
Residential real estate	$	738,779	$	729,254
Multi-family		539,573		550,570
Commercial real estate		530,567		546,257
Commercial and industrial		148,907		145,457
Construction and land development		8,208		13,483
Consumer		418		503
Total loans		1,966,452		1,985,524
Allowance for credit losses		(21,571)		(22,779)
Total loans, net	$	1,944,881	$	1,962,745

At June 30, 2025 and December 31, 2024, the Company was servicing approximately $373.6 million and $338.8 million, respectively, of loans for others. The Company had $5.0 million and $11.0 million of SBA loans held for sale at June 30, 2025 and December 31, 2024, respectively. The Company had $5.6 million and $1.4 million of residential real estate loans held for sale at June 30, 2025 and December 31, 2024, respectively.

For the three months ended June 30, 2025 and 2024, the Company sold loans totaling approximately $46.0 million and $35.3 million, respectively, recognizing net gains of $2.3 million and $2.6 million, respectively. For the six months ended June 30, 2025 and 2024, the Company sold loans totaling approximately $92.7 million and $62.0 million, respectively, recognizing net gains of $4.7 million and $5.1 million, respectively.

The following tables summarize the activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30, 2025
							Commercial		Construction
	Residential		Multi-		Commercial		and		and Land
	Real Estate		Family		Real Estate		Industrial		Development		Consumer
	Loans		Loans		Loans		Loans		Loans		Loans		Total
(in thousands)
Allowance for credit losses:
Beginning balance	$	6,551	$	4,999	$	5,379	$	5,860	$	113	$	23	$	22,925
Charge-offs		—		—		—		(3,534)		—		—		(3,534)
Recoveries		—		—		—		10		—		—		10
Provision for credit losses ⁽¹⁾		141		(1,081)		23		3,050		38		(1)		2,170
Ending balance	$	6,692	$	3,918	$	5,402	$	5,386	$	151	$	22	$	21,571

(1)	Additional provision related to off-balance sheet exposure was a debit of $187 thousand for the three months ended June 30, 2025.


	Three Months Ended June 30, 2024
							Commercial		Construction
	Residential		Multi-		Commercial		and		and Land
	Real Estate		Family		Real Estate		Industrial		Development		Consumer
	Loans		Loans		Loans		Loans		Loans		Loans		Total
(in thousands)
Allowance for credit losses:
Beginning balance	$	5,277	$	4,217	$	8,579	$	1,643	$	97	$	60	$	19,873
Charge-offs		—		—		—		(86)		—		—		(86)
Recoveries		—		—		—		7		—		—		7
Provision for credit losses ⁽¹⁾		719		49		463		2,613		1		5		3,850
Ending balance	$	5,996	$	4,266	$	9,042	$	4,177	$	98	$	65	$	23,644

(1)	Additional provision related to off-balance sheet exposure was a debit of $190 thousand, including a reclassification of $140 thousand from other expenses, for the three months ended June 30, 2024.

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	Six Months Ended June 30, 2025
							Commercial		Construction
	Residential		Multi-		Commercial		and		and Land
	Real Estate		Family		Real Estate		Industrial		Development		Consumer
	Loans		Loans		Loans		Loans		Loans		Loans		Total
(in thousands)
Allowance for credit losses:
Beginning balance	$	6,236	$	5,284	$	5,605	$	5,447	$	180	$	27	$	22,779
Charge-offs		—		(33)		(305)		(3,667)		—		—		(4,005)
Recoveries		—		—		—		27		—		—		27
Provision for credit losses ⁽¹⁾		456		(1,333)		102		3,579		(29)		(5)		2,770
Ending balance	$	6,692	$	3,918	$	5,402	$	5,386	$	151	$	22	$	21,571

(1)	Additional provision related to off-balance sheet exposure was a debit of $187 thousand for the six months ended June 30, 2025.


	Six Months Ended June 30, 2024
							Commercial		Construction
	Residential		Multi-		Commercial		and		and Land
	Real Estate		Family		Real Estate		Industrial		Development		Consumer
	Loans		Loans		Loans		Loans		Loans		Loans		Total
(in thousands)
Allowance for credit losses:
Beginning balance	$	5,001	$	4,671	$	8,390	$	1,419	$	122	$	55	$	19,658
Charge-offs		—		—		(30)		(146)		—		—		(176)
Recoveries		—		—		—		12		—		—		12
Provision for credit losses ⁽¹⁾		995		(405)		682		2,892		(24)		10		4,150
Ending balance	$	5,996	$	4,266	$	9,042	$	4,177	$	98	$	65	$	23,644

(1)	Additional provision related to off-balance sheet exposure was a debit of $190 thousand for the six months ended June 30, 2024.

Allowance for Credit Losses on Unfunded Commitments

The Company has recorded an ACL for unfunded credit commitments, which is recorded in other liabilities. The provision for credit losses on unfunded commitments is recorded within the provision for credit losses on the Company’s income statement. The following table presents the allowance for credit losses for unfunded commitments for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Balance at beginning of period	$	314	$	264	$	314	$	124
Provision for credit losses		187		50		187		190
Balance at end of period	$	501	$	314	$	501	$	314

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The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of June 30, 2025 and December 31, 2024:


	June 30, 2025
	Nonaccrual				Loans Past
	With No				Due Over
	Allowance				89 Days
(in thousands)	for Credit Loss		Nonaccrual		Still Accruing
Residential real estate	$	4,407	$	4,407	$	—
Multi-family		—		—		—
Commercial real estate		2,576		3,457		4,677
Commercial and industrial		2,368		4,787		—
Construction and land development		—		—		—
Consumer		—		—		—
Total	$	9,351	$	12,651	$	4,677


	December 31, 2024
	Nonaccrual				Loans Past
	With No				Due Over
	Allowance				89 Days
(in thousands)	for Credit Loss		Nonaccrual		Still Accruing
Residential real estate	$	5,497	$	5,497	$	—
Multi-family		864		864		—
Commercial real estate		5,300		5,325		—
Commercial and industrial		1,567		4,682		—
Construction and land development		—		—		—
Consumer		—		—		—
Total	$	13,228

Hanover Bancorp, Inc. /NY 10-Q