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

rndb-10q_20180930.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, 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 registrant has submitted electronically every Interactive Data File required to be submitted 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 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

 

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 November 2, 2018 there were 5,952,919 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, 2018 and December 31, 2017

1

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017

2

 

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

3

 

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

4

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017

5

 

Notes to Unaudited Consolidated Financial Statements

6

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

28

Item 3. Quantitative and Qualitative Disclosures About Market Risk

40

Item 4. Controls and Procedures

41

PART II—OTHER INFORMATION

42

Item 1. Legal Proceedings

42

Item 1A. Risk Factors

42

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

42

Item 3. Defaults Upon Senior Securities

42

Item 4. Mine Safety Disclosures

42

Item 5. Other Information

42

Item 6. Exhibits

43

SIGNATURE

44

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (Unaudited)

(In thousands except for share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

3,262

 

 

$

3,562

 

Interest-bearing deposits

 

 

2,658

 

 

 

5,260

 

Total cash and cash equivalents

 

 

5,920

 

 

 

8,822

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

2,695

 

 

 

2,940

 

Securities available for sale, at fair value

 

 

54,405

 

 

 

61,576

 

Loans held for sale, at fair value

 

 

24,120

 

 

 

25,390

 

Loans, net of allowance for loan losses of $3,890 in 2018 and $3,737 in 2017

 

 

468,938

 

 

 

400,373

 

Federal Home Loan Bank of Boston stock, at cost

 

 

3,471

 

 

 

3,310

 

Accrued interest receivable

 

 

1,521

 

 

 

1,432

 

Mortgage servicing rights, net

 

 

7,316

 

 

 

6,397

 

Premises and equipment, net

 

 

6,521

 

 

 

8,670

 

Bank-owned life insurance

 

 

8,186

 

 

 

8,037

 

Foreclosed real estate

 

 

82

 

 

 

193

 

Other assets

 

 

6,507

 

 

 

4,752

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

589,682

 

 

$

531,892

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing

 

$

66,810

 

 

$

62,130

 

Interest bearing

 

 

360,363

 

 

 

304,706

 

Total deposits

 

 

427,173

 

 

 

366,836

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank of Boston advances

 

 

77,411

 

 

 

75,954

 

Mortgagors' escrow accounts

 

 

1,810

 

 

 

907

 

Post-employment benefit obligations

 

 

2,588

 

 

 

2,750

 

Other liabilities

 

 

2,570

 

 

 

3,962

 

Total liabilities

 

 

511,552

 

 

 

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 September 30, 2018 and 6,034,276 at December 31, 2017

 

 

60

 

 

 

61

 

Additional paid-in capital

 

 

56,549

 

 

 

56,493

 

Retained earnings

 

 

28,556

 

 

 

30,415

 

ESOP-Unearned compensation

 

 

(4,179

)

 

 

(4,319

)

Accumulated other comprehensive loss, net of tax

 

 

(2,856

)

 

 

(1,167

)

Total stockholders' equity

 

 

78,130

 

 

 

81,483

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

589,682

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

5,036

 

 

$

3,936

 

 

$

13,917

 

 

$

11,049

 

Securities-taxable

 

 

386

 

 

 

339

 

 

 

1,122

 

 

 

1,065

 

Securities-tax exempt

 

 

19

 

 

 

87

 

 

 

104

 

 

 

264

 

Interest-bearing deposits and certificates of deposit

 

 

27

 

 

 

27

 

 

 

91

 

 

 

70

 

Total interest and dividend income

 

 

5,468

 

 

 

4,389

 

 

 

15,234

 

 

 

12,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

865

 

 

 

406

 

 

 

2,074

 

 

 

1,123

 

Federal Home Loan Bank of Boston advances

 

 

343

 

 

 

167

 

 

 

884

 

 

 

335

 

Total interest expense

 

 

1,208

 

 

 

573

 

 

 

2,958

 

 

 

1,458

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

4,260

 

 

 

3,816

 

 

 

12,276

 

 

 

10,990

 

Provision for loan losses

 

 

178

 

 

 

 

 

 

183

 

 

 

335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

4,082

 

 

 

3,816

 

 

 

12,093

 

 

 

10,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

357

 

 

 

359

 

 

 

1,096

 

 

 

1,109

 

Gain on loan origination and sale activities, net

 

 

1,956

 

 

 

2,705

 

 

 

5,356

 

 

 

7,263

 

Mortgage servicing fees, net

 

 

310

 

 

 

199

 

 

 

935

 

 

 

1,149

 

Gain on sale of building

 

 

230

 

 

 

 

 

 

230

 

 

 

 

Gain on sales of securities

 

 

 

 

 

 

 

 

49

 

 

 

 

Increase in cash surrender value of life insurance

 

 

73

 

 

 

38

 

 

 

148

 

 

 

114

 

Other

 

 

282

 

 

 

270

 

 

 

584

 

 

 

780

 

Total non-interest income

 

 

3,208

 

 

 

3,571

 

 

 

8,398

 

 

 

10,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,788

 

 

 

4,668

 

 

 

14,166

 

 

 

14,059

 

Occupancy and equipment

 

 

728

 

 

 

682

 

 

 

2,157

 

 

 

1,957

 

Data processing

 

 

172

 

 

 

179

 

 

 

508

 

 

 

540

 

Professional fees

 

 

252

 

 

 

348

 

 

 

824

 

 

 

1,019

 

Marketing

 

 

205

 

 

 

277

 

 

 

867

 

 

 

624

 

FDIC insurance

 

 

48

 

 

 

18

 

 

 

131

 

 

 

104

 

Merger and integration costs

 

 

 

 

 

7

 

 

 

 

 

 

531

 

Other

 

 

1,234

 

 

 

1,030

 

 

 

3,683

 

 

 

2,932

 

Total non-interest expenses

 

 

7,427

 

 

 

7,209

 

 

 

22,336

 

 

 

21,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(137

)

 

 

178

 

 

 

(1,845

)

 

 

(696

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

5

 

 

 

129

 

 

 

14

 

 

 

(148

)

Net income (loss)

 

$

(142

)

 

$

49

 

 

$

(1,859

)

 

$

(548

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and

   diluted)

 

 

5,567,596

 

 

 

5,429,564

 

 

 

5,585,571

 

 

 

5,427,262

 

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

 

$

(0.03

)

 

$

0.01

 

 

$

(0.33

)

 

$

(0.10

)

 

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,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income (loss)

 

$

(142

)

 

$

49

 

 

$

(1,859

)

 

$

(548

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses)

 

 

(377

)

 

 

(334

)

 

 

(1,605

)

 

 

465

 

Reclassification adjustment for net gains realized in income (1)

 

 

 

 

 

 

 

 

(49

)

 

 

 

Net unrealized gains (losses)

 

 

(377

)

 

 

(334

)

 

 

(1,654

)

 

 

465

 

Related tax effects

 

 

 

 

 

129

 

 

 

 

 

 

(151

)

Net-of-tax amount

 

 

(377

)

 

 

(205

)

 

 

(1,654

)

 

 

314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental retirement plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustments (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses

 

 

9

 

 

 

10

 

 

 

27

 

 

 

28

 

Prior service credits recognized

 

 

(21

)

 

 

(22

)

 

 

(62

)

 

 

(67

)

 

 

 

(12

)

 

 

(12

)

 

 

(35

)

 

 

(39

)

Related tax effects

 

 

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

(12

)

 

 

(12

)

 

 

(35

)

 

 

(39

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

(389

)

 

 

(217

)

 

 

(1,689

)

 

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

(531

)

 

$

(168

)

 

$

(3,548

)

 

$

(273

)

 

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)

Nine months ended September 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

 

 

 

 

 

 

 

 

 

 

 

(548

)

 

 

 

 

 

 

 

 

(548

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

275

 

 

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

(182

)

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

73

 

 

 

 

 

 

141

 

 

 

 

 

 

214

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2017

 

 

5,868,544

 

 

$

59

 

 

$

56,443

 

 

$

32,113

 

 

$

(4,366

)

 

$

(1,009

)

 

$

83,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 

 

6,034,276

 

 

$

61

 

 

$

56,493

 

 

$

30,415

 

 

$

(4,319

)

 

$

(1,167

)

 

$

81,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,859

)

 

 

 

 

 

 

 

 

(1,859

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,689

)

 

 

(1,689

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

(39,438

)

 

 

(1

)

 

 

(630

)

 

 

 

 

 

 

 

 

 

 

 

(631

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

597

 

 

 

 

 

 

 

 

 

 

 

 

597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock awards forfeited

 

 

(7,042

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

89

 

 

 

 

 

 

140

 

 

 

 

 

 

229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2018

 

 

5,987,796

 

 

$

60

 

 

$

56,549

 

 

$

28,556

 

 

$

(4,179

)

 

$

(2,856

)

 

$

78,130

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

For the Nine Months Ended September 30,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(1,859

)

 

$

(548

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

183

 

 

 

335

 

Loans originated for sale