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Randolph Bancorp, Inc. Announces Third Quarter and Year-to-Date 2020 Financial Results, Announces Share Buyback Program

Randolph Bancorp, Inc.
·31 min read

STOUGHTON, Mass., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Randolph Bancorp, Inc. (the “Company”) (NASDAQ Global Market: RNDB), the holding company for Envision Bank (the “Bank”), today announced net income of $10.3 million, or $2.01 per basic and diluted share, for the three months ended September 30, 2020 compared to net income of $1.1 million, or $0.21 per basic and diluted share, for the three months ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $14.7 million, or $2.86 per basic and diluted share, compared to net income of $2.6 million, or $0.48 per basic and diluted share, for the nine months ended September 30, 2019. Excluding one-time charges of $1.4 million related to the retirement of senior executives and operating expenses of $229,000 related to addressing the COVID-19 pandemic, earnings were $16.3 million, or $3.17 per share, for the nine months ended September 30, 2020.

The Company also announced today that its Board of Directors has approved a share repurchase program to purchase up to 552,000 shares of its common stock, representing approximately 10.0% of the Company’s outstanding common stock.

Repurchases under this program may be made in open market transactions. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program does not obligate the Company to purchase any particular number of shares. The repurchase program will expire on October 29, 2021, and may be suspended or terminated at any time.

At September 30, 2020, total assets amounted to $723.0 million, compared to $724.0 million at June 30, 2020, a decrease of $1.0 million, or 0.1%. An increase in loans held for sale of $26.1 million was offset by a decrease in cash and cash equivalents of $26.9 million relative to the prior quarter.

William M. Parent, President and Chief Executive Officer, stated, “The third quarter was another strong quarter in earnings for our Company. We are very pleased with our performance, especially our mortgage banking operations, which maintained high levels of loans closed, loans sold, and net revenue from loan sales and origination activity. We continue to focus on maintaining a strong balance sheet during these unprecedented times, while the announcement of our new buyback program will enable our Company to deploy excess capital in the most effective manner.”

Third Quarter Operating Results
Net interest income increased by $96,000, or 2.1%, to $4.7 million for the three months ended September 30, 2020 from $4.6 million the same period in the prior year. This increase was primarily due to an increase in the proportion of non-maturity deposits and a decline in the proportion of term certificates from the same period in the prior year. The average balance of savings accounts at the Company increased $63.0 million, or 58.5%, from September 30, 2019 and the average balance of term certificates decreased $51.0 million, or 28.0%, from September 2019, contributing to an 83 basis point decrease in the cost of interest-bearing liabilities. The net interest margin decreased in the third quarter of 2020 to 2.81%, from 2.89% in the third quarter of 2019, due to deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.

The Company recognized a provision for loan losses of $546,000 for the quarter ended September 30, 2020. The allowance for loan losses was 1.34% and 0.90% of total loans at September 30, 2020 and December 31, 2019, respectively, and was 67.2% and 131.4% of non-performing assets at September 30, 2020 and December 31, 2019, respectively. Nonperforming assets include $2.8 million of credits which were paid in early October. Excluding these loans with payoffs, the allowance for loan losses would have been 92.3% of non-performing assets at September 30, 2020.

Non-interest income increased $13.6 million, or 215.3%, to $19.9 million for the quarter ended September 30, 2020 from $6.3 million in the quarter ended September 30, 2019, principally due to an increase of $12.3 million in the net gain on loan origination and sale activities. Sold mortgage loans reached a volume of $410.4 million in the third quarter of 2020. The increase in the gain on loan origination and sale activities was accompanied by an increase in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $1.1 million, given a recent stabilization of interest rates from the first half of the year. Net mortgage servicing fees for the quarter ended September 30, 2019 included a negative fair valuation adjustment of $522,000.

Non-interest expenses increased $1.3 million to $11.1 million in the quarter ended September 30, 2020 from $9.7 million in the quarter ended September 30, 2019. The increase is principally due to an increase in salaries and employee benefits of $901,000, mainly related to higher commissions and incentives associated with increased residential loan production.

Occupancy and equipment expenses increased $186,000 in the quarter ended September 30, 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $22,000, in addition to increased depreciation of furniture, fixtures and equipment that are expected to be retired as the Company looks to consolidate its office space in light of prolonged remote working arrangements.

Other non-interest expenses comprising professional fees, marketing, FDIC insurance and other non-interest expenses increased by $246,000 in the quarter ended September 30, 2020 versus the prior year period, as elevated mortgage loan production costs and the expiration of an FDIC deposit insurance credit were partially offset by a decrease in discretionary marketing expenses.

Income tax expense of $2.7 million for the quarter ended September 30, 2020 consists of both federal and state tax expenses. The Company’s net operating loss carryforward of $10.8 million from prior years was fully absorbed during the period.

Year-to-Date Operating Results
Net interest income increased by $385,000, or 2.9%, for the nine months ended September 30, 2020 compared to the same period in the prior year. This increase was driven by an increase in the proportion of non-maturity deposits, and a decline in the proportion of term certificates from the prior year. The net interest margin decreased in the first nine months of 2020 to 2.86%, from 2.94% in the first nine months of 2019, due to deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.

The Company recognized a provision for loan losses of $2.3 million for the nine months ended September 30, 2020 compared to a credit of $144,000 in the prior year period.

Non-interest income increased $24.3 million, or 155.8%, to $39.8 million for the nine months ended September 30, 2020 from $15.6 million in the nine months ended September 30, 2019, principally due to an increase of $26.2 million in the net gain on loan origination and sale activities. Mortgage loans sold were $1.1 billion for the first nine months of 2020. The increase in the gain on loan origination and sale activities was partially offset by a decrease in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $2.0 million in the nine months ended September 30, 2020, given expectations of higher prepayments. The fair value adjustment for mortgage servicing rights was $636,000 in the nine months ended September 30, 2019.

Non-interest expenses increased $6.9 million, or 26.2%, to $33.4 million for the nine months ended September 30, 2020 from $26.5 million for the nine months ended September 30, 2019. Non-interest expenses in the first nine months of 2020 included one-time charges of $1.4 million related to the retirement of senior executives as well as $229,000 of COVID-19 pandemic-related expenses.

In the first nine months of 2020, salaries and employee benefits increased $5.9 million, including one-time charges of $1.4 million for the retirement of senior executives, higher commissions and incentives associated with higher residential loan production, and COVID-19 pandemic-related compensation of $101,000 for front-line and quarantined employees.

Occupancy and equipment expenses increased $423,000 in the first nine months of 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $125,000, as well as increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space in light of prolonged remote working arrangements for certain back-office staff.

Professional fees in the first nine months of 2020 increased $69,000 over the prior year period, primarily related to management succession planning costs. Spending on marketing during the first nine months of 2020 was $186,000 less than in the prior year period, due to fewer marketing campaigns while communities were subject to a stay-at-home order. The increase of $652,000 in other non-interest expenses during the first nine months of 2020 was driven mainly by costs related to higher mortgage loan production.

Income tax expense of $3.3 million for the nine months ended September 30, 2020 consists of both federal and state income taxes, as the Company’s net operating loss carryforward of $12.0 million from prior years was fully absorbed during the period.

Balance Sheet
At September 30, 2020, total assets amounted to $723.0 million compared to $631.0 million at December 31, 2019, an increase of $92.0 million, or 14.6%. Contributing to asset growth was a $15.4 million increase in net loans, mainly driven by the issuance of Paycheck Protection Program loans (“SBA PPP Loans”) for $15.4 million. Cash and cash equivalents increased by $40.8 million during the first nine months of 2020, mainly as a result of strong core growth in deposits and the timing of cash proceeds from loan sales. Loans held for sale increased by $25.0 million to $87.8 million at September 30, 2020 from $62.8 million at December 31, 2019.

The increase in total assets was funded by deposit growth. Non-brokered deposits totaled $485.0 million at September 30, 2020, increasing by $78.8 million, or 19.4%, during the first nine months of 2020. Driving the growth in non-brokered deposits were customers’ receipt of government stimulus, SBA PPP Loans proceeds which were deposited with us, and our focus on deposit gathering prior to the onset of the COVID-19 pandemic. Brokered deposits declined by $53.6 million to $37.3 million at September 30, 2020, from $90.9 million at December 31, 2019. Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank advances increased by $37.8 million to $82.2 million at September 30, 2020, from $44.4 million at December 31, 2019, as a result of the funding of our SBA PPP Loans and other loans with FHLB and Federal Reserve Bank advances.

Total stockholders’ equity was $94.9 million at September 30, 2020 compared to $78.5 million at December 31, 2019. The increase of $16.5 million relates mainly to net income in the period of $14.7 million and an increase in the fair value of available-for-sale securities, net of taxes, of $1.6 million. In addition, the Company repurchased $1.2 million of shares during the first nine months of 2020, and equity adjustments related to the stock benefit plan and the employee stock ownership plan amounted to $1.5 million during the period.

COVID-19 Impact
In response to the impact of the COVID-19 pandemic on our customers and our business, the Company implemented a series of measures through the date of this release, including participation in the Small Business Administration’s Paycheck Protection Program, for which we funded $15.4 million of SBA PPP Loans through September 30, 2020, and granting payment deferrals for residential mortgage, home equity and certain commercial borrowers who were current in their payments at the time the deferral was requested. Depending on the circumstances of the borrowers, the forbearance calls for a reduced or full deferral of payment. Please refer to the Loan Payment Deferrals and COVID-19 Most Impacted Sectors for statistics on loan payment deferrals and the commercial loan sectors we believe could be exposed to the economic impact of the COVID-19 pandemic.

About Randolph Bancorp, Inc.
Randolph Bancorp, Inc. is the holding company for Envision Bank and its Envision Mortgage Division. Envision Bank is a full-service community bank with five retail branch locations, lending and operations centers in Stoughton, North Attleboro and Andover, Massachusetts, six loan production offices located throughout Massachusetts and one loan production office in Southern New Hampshire.

Forward Looking Statements
Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the negative impacts and disruptions of the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of economic contraction as a result of the COVID-19 pandemic; the effects of continued deterioration in employment levels, general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in consumer behavior due to changing political, business and economic conditions or legislative or regulatory initiatives; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; and the risk factors described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as return on average assets, return on average equity, non-interest income to total income, the efficiency ratio, tangible book value per share and, where applicable, as adjusted for non-recurring items. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of on-going business activities, and to enhance comparability with peers across the financial services sector.

Randolph Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)

September 30,

December 31,

2020

2019

Assets

Cash and due from banks

$

5,335

$

4,371

Interest-bearing deposits

43,756

3,881

Total cash and cash equivalents

49,091

8,252

Certificates of deposit

-

490

Securities available for sale, at fair value

55,551

57,503

Loans held for sale, at fair value

87,805

62,792

Loans, net of allowance for loan losses of $6,597 in 2020 and $4,280 in 2019

484,548

469,131

Federal Home Loan Bank of Boston stock, at cost

3,797

2,417

Accrued interest receivable

1,654

1,393

Mortgage servicing rights, net

10,944

8,556

Premises and equipment, net

5,133

5,748

Bank-owned life insurance

8,577

8,441

Foreclosed real estate, net

132

-

Other assets

15,736

6,281

Total assets

$

722,968

$

631,004

Liabilities and Stockholders' Equity

Deposits:

Non-interest bearing

$

93,352

$

61,603

Interest bearing

391,660

344,581

Brokered

37,273

90,858

Total deposits

522,285

497,042

Federal Reserve Bank advances

15,318

-

Federal Home Loan Bank of Boston advances

66,903

44,403

Mortgagors' escrow accounts

1,959

2,052

Post-employment benefit obligations

2,289

2,464

Other liabilities

19,276

6,581

Total liabilities

628,030

552,542

Stockholders' Equity:

Common stock

55

56

Additional paid-in capital

51,201

51,127

Retained earnings

46,415

31,757

ESOP-Unearned compensation

(3,803

)

(3,944

)

Accumulated other comprehensive income (loss), net of tax

1,070

(534

)

Total stockholders' equity

94,938

78,462

Total liabilities and stockholders' equity

$

722,968

$

631,004


Randolph Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Interest and dividend income:

Loans

$

5,337

$

6,144

$

16,680

$

17,791

Other interest and dividend income

311

397

1,080

1,221

Total interest and dividend income

5,648

6,541

17,760

19,012

Interest expense

979

1,968

3,933

5,570

Net interest income

4,669

4,573

13,827

13,442

Provision (credit) for loan losses

546

-

2,338

(144

)

Net interest income after provision for loan losses

4,123

4,573

11,489

13,586

Non-interest income:

Customer service fees

330

363

902

1,053

Gain on loan origination and sale activities, net

18,102

5,782

39,616

13,438

Mortgage servicing fees, net

1,180

(181

)

(1,428

)

362

Other

262

339

734

718

Total non-interest income

19,874

6,303

39,824

15,571

Non-interest expenses:

Salaries and employee benefits

7,911

7,010

24,439

18,514

Occupancy and equipment

859

673

2,395

1,972

Professional fees

253

264

888

819

Marketing

154

275

458

644

FDIC insurance

41

(55

)

136

91

Other non-interest expenses

1,833

1,551

5,073

4,421

Total non-interest expenses

11,051

9,718

33,389

26,461

Income before income taxes

12,946

1,158

17,924

2,696

Income tax expense

2,661

14

3,266

97

Net income

$

10,285

$

1,144

$

14,658

$

2,599

Net income per share:

Basic

$

2.01

$

0.21

$

2.86

$

0.48

Diluted

$

2.01

$

0.21

$

2.86

$

0.48

Weighted average shares outstanding:

Basic

5,120,367

5,345,786

5,123,705

5,429,339

Diluted

5,120,367

5,345,786

5,126,077

5,429,339


Randolph Bancorp, Inc.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)

For the Three Months Ended September 30,

2020

2019

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

(Dollars in thousands)

Balance

Paid

Rate

Balance

Paid

Rate

Interest-earning assets:

Loans (1)

$

559,370

$

5,337

3.82

%

$

573,899

$

6,144

4.28

%

Investment securities(2) (3)

57,211

305

2.13

%

53,947

377

2.80

%

Interest-earning deposits

48,949

7

0.06

%

4,881

23

1.88

%

Total interest-earning assets

665,530

5,649

3.40

%

632,727

6,544

4.14

%

Noninterest-earning assets

41,037

14,757

Total assets

$

706,567

$

647,484

Interest-bearing liabilities:

Savings accounts

170,762

172

0.40

%

107,764

149

0.55

%

NOW accounts

57,646

41

0.28

%

38,697

47

0.49

%

Money market accounts

72,369

75

0.41

%

64,058

251

1.57

%

Term certificates

131,053

442

1.35

%

182,073

918

2.02

%

Total interest-bearing deposits

431,830

730

0.68

%

392,592

1,365

1.39

%

FHLBB and FRB advances

82,639

249

1.21

%

101,933

603

2.37

%

Total interest-bearing liabilities

514,469

979

0.76

%

494,525

1,968

1.59

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

88,394

62,456

Other noninterest-bearing liabilities

12,724

10,138

Total liabilities

615,587

567,119

Total stockholders' equity

90,980

80,365

Total liabilities and stockholders' equity

$

706,567

$

647,484

Net interest income

$

4,670

$

4,576

Interest rate spread(4)

2.64

%

2.55

%

Net interest-earning assets(5)

$

151,061

$

138,202

Net interest margin(6)

2.81

%

2.89

%

Ratio of interest-earning assets to interest-bearing liabilities

129.36

%

127.95

%

(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $1,000 and $3,000 for the three months ended September 30, 2020 and 2019, respectively.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.


Randolph Bancorp, Inc.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)

For the Nine Months Ended September 30,

2020

2019

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

(Dollars in thousands)

Balance

Paid

Rate

Balance

Paid

Rate

Interest-earning assets:

Loans (1)

$

555,838

$

16,680

4.00

%

$

549,665

$

17,791

4.32

%

Investment securities(2) (3)

58,201

1,016

2.33

%

54,350

1,154

2.83

%

Interest-earning deposits

30,177

68

0.30

%

5,132

77

2.00

%

Total interest-earning assets

644,216

17,764

3.68

%

609,147

19,022

4.16

%

Noninterest-earning assets

37,509

21,228

Total assets

$

681,725

$

630,375

Interest-bearing liabilities:

Savings accounts

154,736

689

0.59

%

104,530

337

0.43

%

NOW accounts

54,185

142

0.35

%

39,466

144

0.49

%

Money market accounts

70,712

394

0.74

%

65,609

712

1.45

%

Term certificates

159,540

2,012

1.68

%

171,827

2,552

1.98

%

Total interest-bearing deposits

439,173

3,237

0.98

%

381,432

3,745

1.31

%

FHLBB and FRB advances

69,672

696

1.33

%

98,817

1,825

2.46

%

Total interest-bearing liabilities

508,845

3,933

1.03

%

480,249

5,570

1.55

%

Noninterest-bearing liabilities:

Noninterest-bearing deposits

76,397

62,194

Other noninterest-bearing liabilities

11,996

8,681

Total liabilities

597,238

551,124

Total stockholders' equity

84,487

79,251

Total liabilities and stockholders' equity

$

681,725

$

630,375

Net interest income

$

13,831

$

13,452

Interest rate spread(4)

2.65

%

2.61

%

Net interest-earning assets(5)

$

135,371

$

128,898

Net interest margin(6)

2.86

%

2.94

%

Ratio of interest-earning assets to interest-bearing liabilities

126.60

%

126.84

%

(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock.
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $4,000 and $10,000 for the nine months ended September 30, 2020 and 2019, respectively.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.


Randolph Bancorp, Inc.
Rate/Volume Analysis
(Dollars in thousands)
(Unaudited)

Three Months Ended

September 30, 2020 vs. 2019

Increase (Decrease)

Total

Due to Changes in

Increase

Volume

Rate

(Decrease)

Interest-earning assets:

Loans

$

(154

)

$

(653

)

$

(807

)

Investment securities

22

(94

)

(72

)

Interest-earning deposits

27

(41

)

(14

)

Total interest-earning assets

(105

)

(788

)

(893

)

Interest-bearing liabilities:

Savings accounts

71

(48

)

23

NOW accounts

18

(24

)

(6

)

Money market accounts

29

(205

)

(176

)

Term certificates

(218

)

(258

)

(476

)

Total interest-bearing deposits

(100

)

(535

)

(635

)

FHLBB and FRB advances

(99

)

(255

)

(354

)

Total interest-bearing liabilities

(199

)

(790

)

(989

)

Change in net interest income

$

94

$

2

$

96


Nine Months Ended

September 30, 2020 vs. 2019

Increase (Decrease)

Total

Due to Changes in

Increase

Volume

Rate

(Decrease)

Interest-earning assets:

Loans

$

(29

)

$

(1,080

)

$

(1,109

)

Investment securities

(1

)

(136

)

(137

)

Interest-earning deposits

30

(37

)

(7

)

Total interest-earning assets

-

(1,253

)

(1,253

)

Interest-bearing liabilities:

Savings accounts

197

154

351

NOW accounts

15

(17

)

(2

)

Money market accounts

(12

)

(306

)

(318

)

Term certificates

(173

)

(367

)

(540

)

Total interest-bearing deposits

27

(536

)

(509

)

FHLBB and FRB advances

(441

)

(688

)

(1,129

)

Total interest-bearing liabilities

(414

)

(1,224

)

(1,638

)

Change in net interest income

$

414

$

(29

)

$

385


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

For the Three Months Ended September 30, 2020

Envision Bank

Envision Mortgage

Consolidated Total

Net interest income

$

4,032

$

637

$

4,669

Provision for loan losses

546

-

546

Net interest income after provision for loan losses

3,486

637

4,123

Non-interest income:

Customer service fees

309

21

330

Gain on loan origination and sale activities, net (1)

-

18,459

18,459

Mortgage servicing fees, net

(98

)

1,278

1,180

Other

93

169

262

Total non-interest income

304

19,927

20,231

Non-interest expenses:

Salaries and employee benefits

1,959

5,952

7,911

Occupancy and equipment

437

422

859

Other non-interest expenses

1,084

1,197

2,281

Total non-interest expenses

3,480

7,571

11,051

Income (loss) before income taxes and elimination of inter-segment profit

$

310

$

12,993

13,303

Elimination of inter-segment profit

(357

)

Income before income taxes

12,946

Income tax expense

2,661

Net income

$

10,285

(1) Before elimination of inter-segment profit.

The information above was derived from the internal management reporting system used to measure performance of the segments.


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

For the Three Months Ended September 30, 2019

Envision Bank

Envision Mortgage

Consolidated Total

Net interest income

$

3,781

$

792

$

4,573

Credit for loan losses

-

-

-

Net interest income after credit for loan losses

3,781

792

4,573

Non-interest income:

Customer service fees

331

32

363

Gain on loan origination and sale activities, net (1)

-

6,010

6,010

Mortgage servicing fees, net

(93

)

(88

)

(181

)

Other

242

97

339

Total non-interest income

480

6,051

6,531

Non-interest expenses:

Salaries and employee benefits

1,966

5,044

7,010

Occupancy and equipment

367

306

673

Other non-interest expenses

1,184

851

2,035

Total non-interest expenses

3,517

6,201

9,718

Income before income taxes and elimination of inter-segment profit

$

744

$

642

1,386

Elimination of inter-segment profit

(228

)

Loss before income taxes

1,158

Income tax expense

14

Net income

$

1,144

(1) Before elimination of inter-segment profit.

The information above was derived from the internal management reporting system used to measure performance of the segments.


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

For the Nine Months Ended September 30, 2020

Envision Bank

Envision Mortgage

Consolidated Total

Net interest income

$

11,970

$

1,857

$

13,827

Provision for loan losses

2,338

-

2,338

Net interest income after provision for loan losses

9,632

1,857

11,489

Non-interest income:

Customer service fees

827

75

902

Gain on loan origination and sale activities, net (1)

-

40,667

40,667

Mortgage servicing fees, net

(281

)

(1,147

)

(1,428

)

Other

318

416

734

Total non-interest income

864

40,011

40,875

Non-interest expenses:

Salaries and employee benefits (2)

6,983

17,456

24,439

Occupancy and equipment

1,305

1,090

2,395

Other non-interest expenses

3,286

3,269

6,555

Total non-interest expenses

11,574

21,815

33,389

Income (loss) before income taxes and elimination of inter-segment profit

$

(1,078

)

$

20,053

18,975

Elimination of inter-segment profit

(1,051

)

Income before income taxes

17,924

Income tax expense

3,266

Net income

$

14,658

(1) Before elimination of inter-segment profit.

(2) Salaries and benefits include the severance and vested stock acceleration costs related to the retirement of the CEO and CFO of the Bank. The total cost of this event was $1.38 million, of which $1.03 million was allocated to the Bank segment and the remainder, $344,000, was allocated to the mortgage segment.


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

For the Nine Months Ended September 30, 2019

Envision Bank

Envision Mortgage

Consolidated Total

Net interest income

$

12,123

$

1,319

$

13,442

Credit for loan losses

(144

)

-

(144

)

Net interest income after credit for loan losses

12,267

1,319

13,586

Non-interest income:

Customer service fees

947

106

1,053

Gain on loan origination and sale activities, net (1)

-

14,043

14,043

Mortgage servicing fees, net

(273

)

635

362

Other

465

253

718

Total non-interest income

1,139

15,037

16,176

Non-interest expenses:

Salaries and employee benefits

5,292

13,222

18,514

Occupancy and equipment

1,137

835

1,972

Other non-interest expenses

3,436

2,539

5,975

Total non-interest expenses

9,865

16,596

26,461

Income (loss) before income taxes and elimination of inter-segment profit

$

3,541

$

(240

)

3,301

Elimination of inter-segment profit

(605

)

Income before income taxes

2,696

Income tax expense

97

Net income

$

2,599

(1) Before elimination of inter-segment profit.


Randolph Bancorp, Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(in thousands)
(Unaudited)

Quarter Ended

September 30, 2020

Income Before Taxes

Provision for Income Taxes

Net Income

Earnings per Common Share (diluted)

GAAP basis

$

12,946

$

2,661

$

10,285

$

2.01

Non-interest expense adjustments:

COVID-19 related expenses

22

4

18

$

0.00

Non-GAAP basis

$

12,968

$

2,665

$

10,303

$

2.01

Quarter Ended

September 30, 2019

Income Before Taxes

Provision for Income Taxes

Net Income

Earnings per Common Share (diluted)

GAAP basis

$

1,158

$

14

$

1,144

$

0.21

Non-GAAP basis

$

1,158

$

14

$

1,144

$

0.21

Year-to-Date

September 30, 2020

Income Before Taxes

Provision for Income Taxes

Net Income

Earnings per Common Share (diluted)

GAAP basis

$

17,924

$

3,266

$

14,658

$

2.86

Non-interest expense adjustments:

Retirement salary and benefits compensation

692

126

566

0.11

Accelerated vesting of stock-based compensation

683

124

559

0.11

COVID-19 related expenses

229

42

187

0.04

Non-GAAP basis

$

19,528

$

3,558

$

15,970

$

3.12

Year-to-Date

September 30, 2019

Income Before Taxes

Provision for Income Taxes

Net Income

Earnings per Common Share (diluted)

GAAP basis

$

2,696

$

97

$

2,599

$

0.48

Non-GAAP basis

$

2,696

$

97

$

2,599

$

0.48


Randolph Bancorp, Inc.
Selected Financial Highlights
(Unaudited)

At or for the

At or for the

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Return on average assets: (1, 5)

GAAP

5.82

%

0.71

%

2.87

%

0.55

%

Non-GAAP (2)

5.83

%

0.71

%

3.12

%

0.55

%

Return on average equity: (1, 6)

GAAP

45.22

%

5.69

%

23.13

%

4.37

%

Non-GAAP (2)

45.30

%

5.69

%

25.20

%

4.37

%

Net interest margin

2.81

%

2.89

%

2.86

%

2.94

%

Non-interest income to total income:

GAAP

80.98

%

49.07

%

74.23

%

45.03

%

Efficiency ratio: (7)

GAAP

45.03

%

89.35

%

62.23

%

91.20

%

Non-GAAP (2)

44.94

%

89.35

%

59.24

%

91.20

%

Tier 1 capital to average assets (3)

13.28

%

12.28

%

13.28

%

12.28

%

Nonperforming assets as a percentage of total assets (4)

1.38

%

0.54

%

1.38

%

0.54

%

Allowance for loan losses as a percentage of total loans (4)

1.34

%

0.90

%

1.34

%

0.90

%

Allowance for loan losses as a percentage of total loans, excluding SBA PPP Loans (4)

1.39

%

0.90

%

1.39

%

0.90

%

Allowance for loan losses as a percentage of non-performing assets

67.21

%

120.20

%

67.21

%

120.20

%

Allowance for loan losses as a percentage of non-performing loans

66.31

%

120.20

%

66.31

%

120.20

%

Tangible book value per share

$

17.18

$

13.95

$

17.18

$

13.95

Outstanding Shares

5,524,390

5,701,152

5,524,390

5,701,152

(1) Annualized for quarterly periods presented.

(2) See page 14 – Reconciliation of GAAP to Non-GAAP Net Income.

(3) Average assets calculated on a quarterly basis for all periods presented.

(4) Total loans exclude loans held for sale but includes net deferred loan costs and fees.

(5) This non-GAAP measure represents net income divided by average total assets.

(6) This non-GAAP measure represents net income divided by average stockholders’ equity.

(7) This non-GAAP measure represents total non-interest expenses divided by net interest income and non-interest income.


Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)

Loan Payment Deferrals

As of October 19, 2020

Commercial loans

Residential loans

Residential loans serviced for others

(Dollars in thousands)

Balance outstanding

$

169,940

$

362,176

$

1,629,169

COVID-19 related loan payment deferrals: (1)

Loans in COVID-19-related loan payment deferral

$

11,320

$

5,884

$

22,228

Loans in deferral as a percentage of category loans

6.7

%

1.6

%

1.4

%

Loans with suspended payment

$

11,320

$

4,588

$

13,296

Loans with reduced payment

-

1,296

8,932

Loans which obtained a COVID-19-related payment deferral but

have since resumed payment

$

25,600

$

11,934

$

44,543

Loans reinstated (borrower paid any unpaid principal and interest)

-

2,746

9,427

Loans on a repayment plan

-

-

1,376

Loans which resumed payment but deferred principal and/or

interest payments to maturity (2)

20,950

8,381

31,330

Loans which were paid off completely (3)

4,650

807

1,582

Other loans

-

-

828

(1) Includes commercial loans that have been approved for loan payment deferral but for which documentation is closing or pending.

(2) Includes commercial loan for which maturity was extended.

(3) Includes the payment from one commercial loan relationship for $2.8 million that was listed on nonaccrual status at September 30, 2020.


Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)

COVID-19 Highly Impacted Sectors

As of September 30, 2020

Exposure Balance

Exposure by Risk Weighting

Balance

Real

Commercial

with

Estate

&

Deferred

Industry (1)

Total

Secured

Industrial

Construction

Pass

Criticized (4)

Payments

(Dollars in thousands)

Group home/care facility

$

1,103

$

1,103

$

-

$

-

$

1,103

$

-

$

-

Hotels/hospitality

12,592

12,559

33

-

-

12,592

8,317

Restaurants/food service

2,858

1,610

1,248

-

2,858

-

-

Retail/shopping center

24,719

20,044

-

4,675

24,082

637

2,060

Other sectors (2)

2,185

2,185

-

-

1,545

640

640

Total loans in COVID-19 impacted sectors

$

43,457

$

37,501

$

1,281

$

4,675

$

29,588

$

13,869

$

11,017

Percentage of commercial loans outstanding

24.7

%

26.4

%

6.3

%

34.0

%

Commercial loans outstanding

$

176,000

$

141,862

$

20,388

$

13,750

Loan to value secured by real estate (3)

40.9

%

75.0

%

(1) This disclosure focuses on industries with balances that are significant to the portfolio at September 30, 2020 and omits industries affected by the COVID-19 pandemic (oil and gas, transportation, etc.) to which the Company has minimal or no exposure. This disclosure also excludes SBA PPP Loans, given their government guarantee.

(2) Includes customers operating in various sectors which have been impacted by COVID-19.

(3) Loan to value secured by real estate equals the exposure balance divided by the most recent appraised value.

(4) Includes one loan relationship for $2.8 million that was listed on nonaccrual status at September 30, 2020, and was subsequently paid off in early October.


Category: Earnings

Source: Randolph Bancorp, Inc. and Envision Bank

CONTACT:

Envision Bank
William M. Parent
President and Chief Executive Officer
617.925.1955
wparent@envisionbank.com