Hanover Community Bank makes changes under FDIC deal

One of Long Island's newer banks recently raised $10 million in capital and is in the process of stabilizing its leadership, in response to a consent order it reached with the Federal Deposit Insurance Corp.

Hanover Community Bank, a one-branch bank in Garden City Park with assets of $59 million, attracted the FDIC's attention because of its lack of profitability so far, Sangeeta Kishore, the bank's acting president and chief executive, said Friday.

She noted, however, that the bank was founded less than two years ago, in January 2009, and that it is not unusual for new banks to take some time before making money.

The consent order, signed last month, required the bank to raise capital and to come up with a plan for becoming profitable within three years.

Kishore said the bank has already raised $10 million from investors, meeting the FDIC's concerns.

"We are a well-capitalized institution," she said, noting Hanover's absence of any bad loans on its books. "We are strong. . . . Our loan portfolio is pristine."

The consent order also requires the bank to hire a chief executive and other senior managers with experience in similar roles. Since the bank's first president and chief executive, James Jacovatos, resigned last year, Kishore and Robert Long, another senior bank official, have had turns filling the role temporarily.

Kishore said Hanover has a candidate for the bank presidency and is awaiting regulatory approval for him. She would not identify the candidate.

The consent order also requires the bank to solidify its loan underwriting and to take steps to insulate itself from interest-rate risk. Banks can be vulnerable to such risk if the spread becomes too narrow between what they pay for funds - either to depositors or on their own borrowing - and what they earn on investments and loans they make.