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Section 1: 10-Q (Q3 2017 10-Q)

rndb-10q_20170930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

 

Commission File Number: 001-37780

 

Randolph Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

Massachusetts

81-1844402

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

10 Cabot Place

 

Stoughton, Massachusetts

02072

(Address of principal executive offices)

(Zip Code)

 

(781) 963-2100

(Registrant's telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrants has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of

the Securities Exchange act of 1934.

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial account standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of November 7, 2017, there were 5,868,544 shares of the registrant’s common stock outstanding.

 

 

 

 


 

Table of Contents

 

 

Page

PART I - Financial Information

 

Item 1. Financial Statements (Unaudited)

 

 

Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016

1

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016

2

 

Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and 2016

3

 

Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2017 and 2016

4

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016

5

 

Notes to Consolidated Financial Statements

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3. Quantitative and Qualitative Disclosures About Market Risk

38

Item 4. Controls and Procedures

38

PART II—OTHER INFORMATION

38

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

38

Item 3. Defaults Upon Senior Securities

38

Item 4. Mine Safety Disclosures

38

Item 5. Other Information

38

Item 6. Exhibits

39

SIGNATURE

40

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (Unaudited)

(In thousands)

 

 

 

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

3,741

 

 

$

4,370

 

Interest-bearing deposits

 

 

4,414

 

 

 

10,479

 

Total cash and cash equivalents

 

 

8,155

 

 

 

14,849

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

2,940

 

 

 

3,675

 

Securities available for sale, at fair value

 

 

65,141

 

 

 

68,637

 

Loans held for sale, at fair value

 

 

26,541

 

 

 

30,452

 

Loans, net of allowance for loan losses of $3,545 in 2017 and $3,271 in 2016

 

 

372,777

 

 

 

332,991

 

Federal Home Loan Bank stock, at cost

 

 

2,909

 

 

 

2,478

 

Accrued interest receivable

 

 

1,307

 

 

 

1,163

 

Mortgage servicing rights, net

 

 

6,039

 

 

 

8,486

 

Premises and equipment, net

 

 

7,755

 

 

 

6,280

 

Bank-owned life insurance

 

 

7,999

 

 

 

7,884

 

Other assets

 

 

3,949

 

 

 

4,329

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

505,512

 

 

$

481,224

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing

 

$

59,954

 

 

$

59,646

 

Interest bearing

 

 

298,947

 

 

 

291,533

 

Total deposits

 

 

358,901

 

 

 

351,179

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

 

56,935

 

 

 

38,667

 

Mortgagors' escrow accounts

 

 

1,311

 

 

 

1,572

 

Post-employment benefit obligations

 

 

2,723

 

 

 

2,886

 

Other liabilities

 

 

2,402

 

 

 

3,618

 

Total liabilities

 

 

422,272

 

 

 

397,922

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

 

Preferred stock, no par value; authorized: 1,000,000 shares; issued: none

 

 

 

 

 

 

Common stock, $.01 par value; authorized: 15,000,000 shares;

 

 

 

 

 

 

 

 

issued and outstanding: 5,868,544 shares at September 30, 2017

 

 

 

 

 

 

 

 

and 5,868,726 shares at December 31, 2016

 

 

59

 

 

 

59

 

Additional paid-in capital

 

 

56,443

 

 

 

56,373

 

Retained earnings

 

 

32,113

 

 

 

32,661

 

ESOP-Unearned compensation

 

 

(4,366

)

 

 

(4,507

)

Accumulated other comprehensive loss, net of tax

 

 

(1,009

)

 

 

(1,284

)

Total stockholders' equity

 

 

83,240

 

 

 

83,302

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

505,512

 

 

$

481,224

 

See accompanying notes to consolidated financial statements.

 

1


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands except per share amounts)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

3,936

 

 

$

3,434

 

 

$

11,049

 

 

$

8,982

 

Securities-taxable

 

 

339

 

 

 

282

 

 

 

1,065

 

 

 

908

 

Securities-tax exempt

 

 

87

 

 

 

90

 

 

 

264

 

 

 

277

 

Interest-bearing deposits and certificates of deposit

 

 

27

 

 

 

70

 

 

 

70

 

 

 

124

 

Total interest and dividend income

 

 

4,389

 

 

 

3,876

 

 

 

12,448

 

 

 

10,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

406

 

 

 

388

 

 

 

1,123

 

 

 

1,033

 

Federal Home Loan Bank advances

 

 

167

 

 

 

67

 

 

 

335

 

 

 

185

 

Total interest expense

 

 

573

 

 

 

455

 

 

 

1,458

 

 

 

1,218

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

3,816

 

 

 

3,421

 

 

 

10,990

 

 

 

9,073

 

Provision (credit) for loan losses

 

 

 

 

 

(160

)

 

 

335

 

 

 

(98

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision (credit) for loan losses

 

 

3,816

 

 

 

3,581

 

 

 

10,655

 

 

 

9,171

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

359

 

 

 

369

 

 

 

1,109

 

 

 

1,122

 

Net gain on sales of mortgage loans

 

 

2,705

 

 

 

5,401

 

 

 

7,263

 

 

 

7,140

 

Mortgage servicing fees, net

 

 

199

 

 

 

(95

)

 

 

1,149

 

 

 

74

 

Gain on sales/calls of securities

 

 

 

 

 

100

 

 

 

 

 

 

162

 

Increase in cash surrender value of life insurance

 

 

38

 

 

 

36

 

 

 

114

 

 

 

140

 

Gain on life insurance settlement

 

 

 

 

 

 

 

 

 

 

 

486

 

Bargain purchase gain

 

 

 

 

 

1,451

 

 

 

 

 

 

 

1,451

 

Other

 

 

270

 

 

 

98

 

 

 

780

 

 

 

173

 

Total non-interest income

 

 

3,571

 

 

 

7,360

 

 

 

10,415

 

 

 

10,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,668

 

 

 

5,348

 

 

 

14,059

 

 

 

9,931

 

Occupancy and equipment

 

 

682

 

 

 

691

 

 

 

1,957

 

 

 

1,448

 

Data processing

 

 

179

 

 

 

209

 

 

 

540

 

 

 

595

 

Professional fees

 

 

348

 

 

 

393

 

 

 

1,019

 

 

 

983

 

Marketing

 

 

277

 

 

 

135

 

 

 

624

 

 

 

307

 

Foreclosed real estate, net

 

 

 

 

 

5

 

 

 

 

 

 

162

 

Charitable foundation contribution

 

 

 

 

 

2,275

 

 

 

 

 

 

2,275

 

Merger and integration costs

 

 

7

 

 

 

514

 

 

 

531

 

 

 

664

 

Other

 

 

1,048

 

 

 

1,082

 

 

 

3,036

 

 

 

2,542

 

Total non-interest expenses

 

 

7,209

 

 

 

10,652

 

 

 

21,766

 

 

 

18,907

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

178

 

 

 

289

 

 

 

(696

)

 

 

1,012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

129

 

 

 

 

 

 

(148

)

 

 

3

 

Net income (loss)

 

$

49

 

 

$

289

 

 

$

(548

)

 

$

1,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and diluted)

 

 

5,429,564

 

 

 

5,403,923

 

 

 

5,427,262

 

 

N/A

 

Earnings (loss) per common share (basic and diluted)

 

$

0.01

 

 

$

0.05

 

 

$

(0.10

)

 

N/A

 

See accompanying notes to consolidated financial statements.

2


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income (loss)

 

$

49

 

 

$

289

 

 

$

(548

)

 

$

1,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses)

 

 

(334

)

 

 

(257

)

 

 

465

 

 

 

792

 

Reclassification adjustment for net gains realized in income

 

 

 

 

 

(100

)

 

 

 

 

 

(162

)

Net unrealized gains

 

 

(334

)

 

 

(357

)

 

 

465

 

 

 

630

 

Related tax effects

 

 

129

 

 

 

 

 

 

(151

)

 

 

 

Net-of-tax amount

 

 

(205

)

 

 

(357

)

 

 

314

 

 

 

630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental retirement plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses

 

 

10

 

 

 

7

 

 

 

28

 

 

 

25

 

Prior service credits recognized

 

 

(22

)

 

 

(4

)

 

 

(67

)

 

 

(17

)

 

 

 

(12

)

 

 

3

 

 

 

(39

)

 

 

8

 

Related tax effects

 

 

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

(12

)

 

 

3

 

 

 

(39

)

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

(217

)

 

 

(354

)

 

 

275

 

 

 

638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

(168

)

 

$

(65

)

 

$

(273

)

 

$

1,647

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

3


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Nine Months Ended September 30, 2017 and 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Unearned

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Compensation

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

ESOP

 

 

Income (Loss)

 

 

Equity

 

 

 

(Dollars in thousands)

 

Balance at December 31, 2015

 

 

 

 

$

 

 

$

 

 

$

32,198

 

 

$

 

 

$

261

 

 

$

32,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,009

 

 

 

 

 

 

 

 

 

1,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

638

 

 

 

638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for initial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

public offering, net of expenses of $2,367

 

 

5,686,750

 

 

 

57

 

 

 

54,444

 

 

 

 

 

 

 

 

 

 

 

 

54,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock to the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Randolph Savings Charitable Foundation

 

 

181,976

 

 

 

2

 

 

 

1,818

 

 

 

 

 

 

 

 

 

 

 

 

1,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock purchased by ESOP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,695

)

 

 

 

 

 

(4,695

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

94

 

 

 

 

 

 

120

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2016

 

 

5,868,726

 

 

$

59

 

 

$

56,288

 

 

$

33,207

 

 

$

(4,601

)

 

$

899

 

 

$

85,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2016

 

 

5,868,726

 

 

$

59

 

 

$

56,373

 

 

$

32,661

 

 

$

(4,507

)

 

$

(1,284

)

 

$

83,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(548

)

 

 

 

 

 

 

 

 

(548

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

275

 

 

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

(182

)

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

141