Hanover Bancorp, Inc. (NASDAQ: HNVR) (“Hanover” or “the Company”), parent company of Hanover Community Bank, is pleased to announce that the Company has completed the private placement of $35 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2036 (the “Notes”) to certain qualified institutional buyers and accredited investors.
The Notes will initially bear interest, payable semi-annually, at the rate of 7.25% per annum, until March 15, 2031. From and including March 15, 2031, to but excluding the maturity date or early redemptions date, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month secured overnight financing rate (SOFR) plus 386 basis points. The Notes received a BBB+ rating from Egan-Jones Ratings Company and are intended to qualify as Tier 2 capital for regulatory capital purposes for the Company.
The Company intends to use the net proceeds to redeem the Company’s outstanding $25 million in aggregate principal amount of subordinated notes and for general corporate purposes, including contributing equity capital to Hanover Community Bank, the Company’s wholly owned commercial bank subsidiary.
“We are pleased with the success of this transaction which enhances our financial flexibility and positions us to continue to compete in an exciting marketplace and to execute upon our longer-term strategic goals,” said Michael Puorro, Hanover’s Chairman and CEO. “This new capital will allow us to retire our existing subordinated notes at a lower interest rate, enhance our capital base, support balance sheet growth and further strengthen our business model.”
Piper Sandler & Co. acted as lead placement agent, with Hovde Group, LLC acting as co-placement agent. Kilpatrick Townsend & Stockton LLP served as legal counsel to Hanover and Luse Gorman, PC served as legal counsel to the placement agents.
