A Mineola Bank Sold 63 Percent Fewer SBA Loans, and Is Still Opening in Riverhead

Hanover Bancorp, the Mineola holding company that owns Hanover Community Bank, filed a Form 8-K with the Securities and Exchange Commission on September 10 and attached the slide deck its executives were presenting to investors that day. Two facts sit in it that a Long Island business owner should read together, because they point in opposite directions.

The first is that the bank is still building out Suffolk County. It opened a business banking center in Hauppauge in May 2023 and a branch in Port Jefferson on June 25, 2025, and the deck lists a Riverhead branch as planned to open this month. The second is that the same bank has been approving far less of the small business credit it is best known for.

The number that moved

Hanover is a Top 100 lender by volume in the Small Business Administration's 7(a) program, a position it took on with its 2021 purchase of Savoy Bank. In the quarter ended June 30, 2026, it sold about 8.3 million dollars of government guaranteed SBA loans into the secondary market. In the same quarter a year earlier it sold 22.3 million. Gains on those sales fell from 1.8 million dollars to 700,000.

That is a 63 percent drop in a single year in the volume moving through one of the busiest SBA desks operating on Long Island. The bank's own explanation, published in its July 23 quarterly release, is plain about the cause: a less favorable economic outlook for many business owners, combined with what it calls its ongoing prudent decision to tighten credit. It says the result has been lower loan volume, lower approval levels, and less gain on sale income.

Approval levels is the phrase to carry away. Volume can fall because fewer businesses apply. Approval levels fall because the bank says no more often to the ones that do.

What the bank is buying instead

A lender that pulls back in one place usually leans in somewhere else, and Hanover's pipeline shows where. At June 30 it held a loan pipeline of roughly 223 million dollars. About half of that was niche residential lending plus SBA and USDA product. Another 22 percent was conventional commercial and industrial lending and commercial real estate occupied by the owner.

Owner occupied is the distinction worth understanding. A loan against a building the borrower operates out of is underwritten against the business and the real estate together, and the bank can look at a rent roll of one, namely the borrower. That is a more forgiving file than an unsecured line of credit and a less exposed one than an investor property. Hanover's commercial real estate concentration has been coming down for two years, from 470 percent of total capital at its peak to 346 percent at June 30, and its office exposure is now 40.2 million dollars, about 2 percent of the loan book.

Some of that discipline is the product of losses already taken. In the fourth quarter of 2025 the bank ran what it describes as a strategic credit cleanup and charged off 9.6 million dollars. The single largest piece was a 4 million dollar partial charge off on a commercial and industrial loan to a borrower whose business had been hurt by tariffs and other economic pressures, against which the bank set aside a further 1 million dollar reserve.

Non-performing loans have kept climbing since. They stood at 28.3 million dollars on June 30, up from 21.6 million at the end of 2025, which is 1.42 percent of total loans against 1.08 percent. Stripping out the portion carried by the SBA guarantee leaves 21.3 million. Most of the quarterly increase came from one 3.6 million dollar relationship originated in 2018 by Savoy, made up of a commercial real estate loan and an SBA loan, which the bank says is well collateralized and expected to repay in full.

The Suffolk build is real money

None of that has slowed the expansion east. The two Suffolk locations already open produced 21.5 million dollars of commercial and industrial originations in the June quarter and held roughly 168 million dollars in deposits between them, with a business loan pipeline of 48 million. Riverhead is the third location. The bank runs 10 branches in total against 2.34 billion dollars in assets, which is a deliberately thin branch network by design, so adding one is a larger commitment for Hanover than it would be for a bank with a hundred offices.

A member should read the branch and the credit box as one strategy rather than two. The bank wants deposit relationships and operating accounts from Suffolk businesses, and it wants to lend against buildings those businesses occupy. It is being far more selective about writing a 7(a) loan to a business that has neither.

What it means for members

If an SBA backed purchase, buyout or expansion is anywhere in your next twelve months, start the conversation now and start it with more than one lender. The approval rate at a Top 100 SBA lender in this market has come down by the bank's own account, and a file that would have cleared in 2024 is not guaranteed to clear in 2026. Give yourself the runway to be turned down once without losing the deal.

And if you own the building you operate from, that is now your strongest card at this lender rather than an incidental detail. Owner occupied commercial real estate is a fifth of what Hanover wants to write. Lead with it.