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Section 1: 10-Q (10-Q)

rndb-10q_20180630.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 June 30, 2018

 

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 large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

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 August 8, 2018, there were 5,987,796 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 June 30, 2018 and December 31, 2017

1

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017

2

 

Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2018 and 2017

3

 

Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2018 and 2017

4

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017

5

 

Notes to Consolidated Financial Statements

6

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

27

Item 3. Quantitative and Qualitative Disclosures About Market Risk

39

Item 4. Controls and Procedures

40

PART II—OTHER INFORMATION

40

Item 1. Legal Proceedings

40

Item 1A. Risk Factors

40

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

41

Item 3. Defaults Upon Senior Securities

41

Item 4. Mine Safety Disclosures

41

Item 5. Other Information

41

Item 6. Exhibits

41

SIGNATURE

42

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (Unaudited)

(In thousands)

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

4,112

 

 

$

3,562

 

Interest-bearing deposits

 

 

4,950

 

 

 

5,260

 

Total cash and cash equivalents

 

 

9,062

 

 

 

8,822

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

2,695

 

 

 

2,940

 

Securities available for sale, at fair value

 

 

56,554

 

 

 

61,576

 

Loans held for sale, at fair value

 

 

36,661

 

 

 

25,390

 

Loans, net of allowance for loan losses of $3,742 in 2018 and $3,737 in 2017

 

 

427,703

 

 

 

400,373

 

Federal Home Loan Bank of Boston stock, at cost

 

 

3,155

 

 

 

3,310

 

Accrued interest receivable

 

 

1,435

 

 

 

1,432

 

Mortgage servicing rights, net

 

 

6,845

 

 

 

6,397

 

Premises and equipment, net

 

 

9,521

 

 

 

8,670

 

Bank-owned life insurance

 

 

8,113

 

 

 

8,037

 

Foreclosed real estate

 

 

193

 

 

 

193

 

Other assets

 

 

3,972

 

 

 

4,752

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

565,909

 

 

$

531,892

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing

 

$

64,151

 

 

$

62,130

 

Interest bearing

 

 

358,748

 

 

 

304,706

 

Total deposits

 

 

422,899

 

 

 

366,836

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank of Boston advances

 

 

56,680

 

 

 

75,954

 

Mortgagors' escrow accounts

 

 

1,559

 

 

 

907

 

Post-employment benefit obligations

 

 

2,622

 

 

 

2,750

 

Other liabilities

 

 

3,776

 

 

 

3,962

 

Total liabilities

 

 

487,536

 

 

 

450,409

 

 

 

 

 

 

 

 

 

 

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: 5,987,796 shares at June 30, 2018 and 6,034,276 at December 31, 2017

 

 

60

 

 

 

61

 

Additional paid-in capital

 

 

56,307

 

 

 

56,493

 

Retained earnings

 

 

28,698

 

 

 

30,415

 

ESOP-Unearned compensation

 

 

(4,225

)

 

 

(4,319

)

Accumulated other comprehensive loss, net of tax

 

 

(2,467

)

 

 

(1,167

)

Total stockholders' equity

 

 

78,373

 

 

 

81,483

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

565,909

 

 

$

531,892

 

 

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

4,586

 

 

$

3,697

 

 

$

8,881

 

 

$

7,113

 

Securities-taxable

 

 

398

 

 

 

368

 

 

 

736

 

 

 

726

 

Securities-tax exempt

 

 

21

 

 

 

88

 

 

 

85

 

 

 

177

 

Interest-bearing deposits and certificates of deposit

 

 

34

 

 

 

22

 

 

 

64

 

 

 

43

 

Total interest and dividend income

 

 

5,039

 

 

 

4,175

 

 

 

9,766

 

 

 

8,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

730

 

 

 

381

 

 

 

1,210

 

 

 

717

 

Federal Home Loan Bank of Boston advances

 

 

276

 

 

 

104

 

 

 

541

 

 

 

168

 

Total interest expense

 

 

1,006

 

 

 

485

 

 

 

1,751

 

 

 

885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

4,033

 

 

 

3,690

 

 

 

8,015

 

 

 

7,174

 

Provision (credit) for loan losses

 

 

(90

)

 

 

100

 

 

 

5

 

 

 

335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision (credit) for loan losses

 

 

4,123

 

 

 

3,590

 

 

 

8,010

 

 

 

6,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

439

 

 

 

378

 

 

 

739

 

 

 

750

 

Gain on loan origination and sale activities, net

 

 

1,854

 

 

 

2,520

 

 

 

3,401

 

 

 

4,558

 

Mortgage servicing fees, net

 

 

291

 

 

 

290

 

 

 

625

 

 

 

950

 

Gain on sales of securities

 

 

 

 

 

 

 

 

49

 

 

 

 

Increase in cash surrender value of life insurance

 

 

38

 

 

 

38

 

 

 

76

 

 

 

76

 

Other

 

 

161

 

 

 

208

 

 

 

300

 

 

 

510

 

Total non-interest income

 

 

2,783

 

 

 

3,434

 

 

 

5,190

 

 

 

6,844

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,979

 

 

 

4,715

 

 

 

9,415

 

 

 

9,391

 

Occupancy and equipment

 

 

729

 

 

 

619

 

 

 

1,427

 

 

 

1,275

 

Data processing

 

 

166

 

 

 

179

 

 

 

336

 

 

 

361

 

Professional fees

 

 

320

 

 

 

369

 

 

 

572

 

 

 

671

 

Marketing

 

 

321

 

 

 

199

 

 

 

624

 

 

 

347

 

FDIC insurance

 

 

44

 

 

 

43

 

 

 

84

 

 

 

86

 

Merger and integration costs

 

 

 

 

 

357

 

 

 

 

 

 

524

 

Other

 

 

1,353

 

 

 

947

 

 

 

2,451

 

 

 

1,902

 

Total non-interest expenses

 

 

7,912

 

 

 

7,428

 

 

 

14,909

 

 

 

14,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(1,006

)

 

 

(404

)

 

 

(1,709

)

 

 

(874

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

4

 

 

 

(254

)

 

 

8

 

 

 

(277

)

Net loss

 

$

(1,010

)

 

$

(150

)

 

$

(1,717

)

 

$

(597

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and

   diluted)

 

 

5,580,683

 

 

 

5,425,033

 

 

 

5,594,559

 

 

 

5,422,694

 

Loss per common share (basic and diluted)

 

$

(0.18

)

 

$

(0.03

)

 

$

(0.31

)

 

$

(0.11

)

 

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net loss

 

$

(1,010

)

 

$

(150

)

 

$

(1,717

)

 

$

(597

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses)

 

 

(173

)

 

 

725

 

 

 

(1,228

)

 

 

799

 

Reclassification adjustment for net gains realized in income (1)

 

 

 

 

 

 

 

 

(49

)

 

 

 

Net unrealized gains (losses)

 

 

(173

)

 

 

725

 

 

 

(1,277

)

 

 

799

 

Related tax effects

 

 

 

 

 

(254

)

 

 

 

 

 

(280

)

Net-of-tax amount

 

 

(173

)

 

 

471

 

 

 

(1,277

)

 

 

519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental retirement plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustments (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses

 

 

9

 

 

 

9

 

 

 

18

 

 

 

18

 

Prior service credits recognized

 

 

(20

)

 

 

(23

)

 

 

(41

)

 

 

(45

)

 

 

 

(11

)

 

 

(14

)

 

 

(23

)

 

 

(27

)

Related tax effects

 

 

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

(11

)

 

 

(14

)

 

 

(23

)

 

 

(27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

(184

)

 

 

457

 

 

 

(1,300

)

 

 

492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

(1,194

)

 

$

307

 

 

$

(3,017

)

 

$

(105

)

 

1)

Amounts are included in gain on sales of securities in the consolidated statements of operations.

2)

Amounts are included in other non-interest expenses in the consolidated statements of operations.

 

See accompanying notes to consolidated financial statements.

 

 

 

3


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Six Months Ended June 30, 2018 and 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Unearned

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Retained

 

 

Compensation

 

 

Comprehensive

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

ESOP

 

 

Loss

 

 

Equity

 

 

 

(Dollars in thousands)

 

Balance at December 31, 2016

 

 

5,868,726

 

 

$

59

 

 

$

56,373

 

 

$

32,661

 

 

$

(4,507

)

 

$

(1,284

)

 

$

83,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(597

)

 

 

 

 

 

 

 

 

(597

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

492

 

 

 

492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

(182

)

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

94

 

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2017

 

 

5,868,544

 

 

$

59

 

 

$

56,421

 

 

$

32,064

 

 

$

(4,413

)

 

$

(792

)

 

$

83,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

 

6,034,276

 

 

$

61

 

 

$

56,493

 

 

$

30,415

 

 

$

(4,319

)

 

$

(1,167

)

 

$

81,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,717

)

 

 

 

 

 

 

 

 

(1,717

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,300

)

 

 

(1,300

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

(39,438

)

 

 

(1

)

 

 

(630

)

 

 

 

 

 

 

 

 

 

 

 

(631

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

387

 

 

 

 

 

 

 

 

 

 

 

 

387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock awards forfeited

 

 

(7,042

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

94

 

 

 

 

 

 

151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2018

 

 

5,987,796

 

 

$

60

 

 

$

56,307

 

 

$

28,698

 

 

$

(4,225

)

 

$

(2,467

)

 

$

78,373

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

For the Six Months Ended June 30,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(1,717

)

 

$

(597

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

5

 

 

 

335

 

Loans originated for sale

 

 

(181,394

)

 

 

(201,423

)

Net gain on sales of mortgage loans

 

 

(3,111

)

 

 

(4,604

)