Hanover Bancorp (HNVR) risk factors, FY2024 10-K

Other

1. 01If we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, we may experience a material adverse effect on our financial condition and results of operations
2. 02A substantial portion of our business is in the New York metro area, therefore, our business is particularly vulnerable to an economic downturn in our primary market area
3. 03We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability
4. 04Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, other real estate owned and repossessed personal property may not accurately describe the net value of the asset
5. 05Other aspects of our business may be adversely affected by unfavorable economic, market, and political conditions
6. 06The non-guaranteed portion of SBA loans that we retain on our balance sheet as well as the guaranteed portion of SBA loans that we sell could expose us to various credit and default risks
7. 07We are expanding the geographic scope of our SBA, and other government guaranteed lending, and this may expose us to greater and additional risks than lending in our primary trade area
8. 08The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions
9. 09Imposition of limits by bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings
10. 10The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and more risky
11. 11Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations
12. 12We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses
13. 13Our emphasis on one- to four- family residential mortgage loans involves risks that could adversely affect our financial condition and results of operations
14. 14Our niche lending products may expose us to greater risk than traditional lending products
15. 15The small- to medium-sized businesses that we lend to may have fewer resources to weather adverse business developments, which may impair our borrowers’ ability to repay loans
16. 16Our allowance for credit losses may not be adequate to cover actual losses
17. 17If our non-performing assets increase, our earnings will be adversely affected
18. 18The use of statistical and quantitative models, and other quantitative and qualitative analyses, is necessary for bank decision-making, and the employment of such analyses is becoming increasingly widespread in our operations
19. 19If we do not manage our liquidity effectively, our business could suffer
20. 20Our growth strategy may require us to raise additional capital in the future to fund such growth, and the unavailability of additional capital on terms acceptable to us could adversely affect us or our growth

STRATEGIC RISKS

1. 21If we do not effectively execute our strategic plans, we will not achieve our growth objectives and our business and results of operations may be negatively affected
2. 22Any failure by us to manage acquisitions and other significant transactions successfully may have a material adverse effect on our results of operations, financial condition, and cash flows
3. 23We have grown and may continue to grow through acquisitions
4. 24Attractive acquisition opportunities may not be available to us in the future
5. 25Competition in originating loans and attracting deposits may adversely affect our profitability
6. 26We need to invest in innovation, and the inability or failure to do so may affect our business and earnings negatively
7. 27We rely heavily on our executive management team and other key personnel for our successful operation, and we could be adversely affected by the unexpected loss of their services
8. 28If we are not able to attract, retain and motivate other key personnel, our business could be negatively affected

REGULATORY AND COMPLIANCE RISKS

1. 29We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them, could adversely affect us and our future growth
2. 30Federal and State banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations could adversely affect us
3. 31Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations
4. 32Increases in FDIC insurance premiums could adversely affect our earnings and results of operations
5. 33Changes in tax laws and regulations, or changes in the interpretation of existing tax laws and regulations, may have a material adverse effect on our business, financial condition, results of operations and growth prospects
6. 34Failure to comply with stringent capital requirements could result in regulatory criticism, requirements and restrictions
7. 35Financial institutions, such as the Bank, face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations
8. 36We are subject to numerous laws and regulations of certain regulatory agencies, such as the Consumer Financial Protection Bureau, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions
9. 37The FRB may require us to commit capital resources to support the Bank, and we may not have sufficient access to such capital resources
10. 38Our deposit services for businesses in the state licensed cannabis industry could expose us to liabilities and regulatory compliance costs

TECHNOLOGY RISKS

1. 39Cyber-attacks or other security breaches could adversely affect our operations, net income or reputation
2. 40If this confidential or proprietary information were to be mishandled, misused or lost, we could be exposed to significant regulatory consequences, reputational damage, civil litigation and financial loss

OPERATIONAL RISKS

1. 41Many types of operational risks can affect our earnings negatively
2. 42Our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance
3. 43We are subject to certain operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors
4. 44We may be subject to environmental liabilities in connection with the real properties we own and the foreclosure on real estate assets securing our loan portfolio
5. 45Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations
6. 46Pandemics, natural disasters, global climate change, acts of terrorism and global conflicts may have a negative impact on our business and operations
7. 47Legal and regulatory proceedings and related matters could adversely affect us
8. 48Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers

COMMON STOCK AND TRADING RISKS

1. 49The price of our common stock could be volatile
2. 50The holders of our existing and future debt obligations will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest
3. 51Our dividend policy may change without notice and our future ability to pay dividends is subject to restrictions