Hanover Bancorp, Inc. Announces \$35 Million Private Placement of Subordinated Notes

Key Points of the Transaction

• Hanover Bancorp, Inc. (NASDAQ: HNVR) has successfully completed a private placement of \$35 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2036.
• The notes were placed with qualified institutional buyers and accredited investors, strengthening the Company’s capital position and financial flexibility.
• Interest Rate Structure:
  • Initial rate of 7.25% per annum, payable semi-annually, until March 15, 2031.
  • From March 15, 2031, onwards, the interest rate resets quarterly to the current three-month SOFR (Secured Overnight Financing Rate) plus 386 basis points.
• The notes have received a BBB+ rating from Egan-Jones Ratings Company and are intended to qualify as Tier 2 capital for regulatory purposes.
• Use of Proceeds: The net proceeds will be used to redeem the Company’s outstanding \$25 million in subordinated notes and for general corporate purposes, including contributing equity capital to Hanover Community Bank, its wholly owned subsidiary.
• Transaction Advisors:
  • Piper Sandler & Co. acted as lead placement agent.
  • Hovde Group, LLC acted as co-placement agent.
  • Kilpatrick Townsend & Stockton LLP served as legal counsel to Hanover.
  • Luse Gorman, PC served as legal counsel to the placement agents.

Potentially Price-Sensitive Information for Shareholders

• The new capital will allow Hanover Bancorp to retire its existing subordinated notes at a lower interest rate, effectively reducing its interest expense and improving its profitability.
• This move enhances the company’s capital base, supports balance sheet growth, and further strengthens its business model, positioning Hanover to execute its longer-term strategic goals.
• The improvement in regulatory capital and reduced interest expense could have a positive impact on future earnings and shareholder value.
• The BBB+ rating of the notes and the intention to use proceeds for capital growth are generally viewed as positive for credit quality and financial stability, potentially affecting the Company’s share price favorably.
• The transaction comes after a strategic credit cleanup implemented during the fourth quarter of 2025, suggesting ongoing efforts to improve asset quality and risk management.

About Hanover Community Bank and Hanover Bancorp, Inc.

Hanover Bancorp, Inc. is the holding company for Hanover Community Bank, a commercial bank focused on highly personalized services and products tailored to client needs in the metro-New York area. Backed by state-of-the-art technology, Hanover offers a comprehensive suite of consumer, commercial, and municipal banking products, including multifamily and commercial mortgages, residential loans, business loans, lines of credit, and 24-hour ATM service with no fees, free checking with interest, telephone banking, advanced mobile and internet banking, safe deposit boxes, and more.

The Company has a corporate administrative office and full-service branch in Mineola, New York, with additional branches in Garden City Park, Hauppauge, Port Jefferson, Forest Hills, Flushing, Sunset Park, Rockefeller Center, Bowery (New York), and Freehold (New Jersey). Hanover Community Bank is a member of the FDIC and an Equal Housing and Equal Opportunity Lender.

Forward-Looking Statements

This release contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements may involve estimates regarding Hanover Bancorp’s financial condition, results of operations, and business. Actual results may differ materially from those expressed or implied due to various factors, including but not limited to: impacts from health crises, competitive pressures, changes in interest rates, loan origination volatility, unfavorable economic conditions, political and regulatory developments, integration challenges from acquisitions, reputation risk, and regulatory/legal proceedings. For more information, refer to the Company’s Annual Report on Form 10-K under Item 1A – Risk Factors and subsequent SEC filings.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell securities. Investors should carefully review all public filings and consult their own advisors before making any investment decisions.

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