Hanover Bancorp (HNVR) risk factors, FY2025 10-K

Other

1. 01Inflationary pressures and rising prices may affect our results of operations and financial conditionNew
2. 02If 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
3. 03A 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
4. 04The performance of our New York multifamily real estate loans could be adversely impacted by regulationNew
5. 05We have a significant number of loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability
6. 06Appraisals 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
7. 07Other aspects of our business may be adversely affected by unfavorable economic, market, and political conditions
8. 08The 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
9. 09We have expanded 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
10. 10The recognition of gains on the sale of loans and servicing asset valuations reflect certain assumptions
11. 11Imposition of limits by bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings29% rewritten
12. 12The residential mortgage loans that we originate consist primarily of non-conforming residential mortgage loans which may be considered less liquid and riskier
13. 13Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations
14. 14We may not be able to measure and limit our credit risk adequately, which could lead to unexpected losses
15. 15Our emphasis on one- to four- family residential mortgage loans involves risks that could adversely affect our financial condition and results of operations25% rewritten
16. 16Our niche lending products may expose us to greater risk than traditional lending products41% rewritten
17. 17The 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
18. 18Our allowance for credit losses may not be adequate to cover actual losses
19. 19If our non-performing assets increase, our earnings will be adversely affected
20. 20The 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
21. 21If we do not manage our liquidity effectively, our business could suffer
22. 22Our 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
23. 23Municipal deposits are an important source of funds for us and a reduced level of such deposits may hurt our profitsNew

STRATEGIC RISKS

1. 24If 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. 25Any 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. 26We have grown and may continue to grow through acquisitions
4. 27Attractive acquisition opportunities may not be available to us in the future
5. 28Competition in originating loans and attracting deposits may adversely affect our profitability
6. 29We need to invest in innovation, and the inability or failure to do so may affect our business and earnings negatively
7. 30We 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. 31If we are not able to attract, retain and motivate other key personnel, our business could be negatively affected

REGULATORY AND COMPLIANCE RISKS

1. 32We 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. 33Federal 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. 34Legislative 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. 35Increases in FDIC insurance premiums could adversely affect our earnings and results of operations
5. 36Changes 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 prospects62% rewritten
6. 37Failure to comply with stringent capital requirements could result in regulatory criticism, requirements and restrictions
7. 38Financial 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. 39We 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. 40The FRB may require us to commit capital resources to support the Bank, and we may not have sufficient access to such capital resources
10. 41Our deposit services for businesses in the state licensed cannabis industry could expose us to liabilities and regulatory compliance costs

TECHNOLOGY RISKS

1. 42Cyber-attacks or other security breaches could adversely affect our operations, net income or reputation
2. 43If 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. 44Many types of operational risks can affect our earnings negatively
2. 45Our 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. 46We 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. 47We 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. 48Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations
6. 49Pandemics, natural disasters, global climate change, acts of terrorism and global conflicts may have a negative impact on our business and operations
7. 50Legal and regulatory proceedings and related matters could adversely affect us
8. 51Societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers

COMMON STOCK AND TRADING RISKS

1. 52The price of our common stock could be volatile
2. 53The 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. 54Our dividend policy may change without notice and our future ability to pay dividends is subject to restrictions
4. 55The inability to receive dividends from our subsidiary bank could impact our ability to maintain or increase the current level of cash dividends we pay to our stockholdersNew