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Section 1: 10-Q (10-Q)

rndb-10q_20190331.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 March 31, 2019

 

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 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.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

RNDB

The NASDAQ Stock Market LLC

As of April 30, 2019 there were 5,893,293 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 March 31, 2019 and December 31, 2018

1

 

Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018

2

 

Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018

3

 

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2019 and 2018

4

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018

5

 

Notes to Unaudited Consolidated Financial Statements

6

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

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

34

Item 4. Controls and Procedures

34

PART II—OTHER INFORMATION

34

Item 1. Legal Proceedings

34

Item 1A. Risk Factors

34

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

34

Item 3. Defaults Upon Senior Securities

35

Item 4. Mine Safety Disclosures

35

Item 5. Other Information

35

Item 6. Exhibits

35

SIGNATURE

36

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (Unaudited)

(In thousands except for share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

3,774

 

 

$

3,451

 

Interest-bearing deposits

 

 

2,494

 

 

 

3,667

 

Total cash and cash equivalents

 

 

6,268

 

 

 

7,118

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

2,205

 

 

 

2,205

 

Securities available for sale, at fair value

 

 

50,189

 

 

 

50,556

 

Loans held for sale, at fair value

 

 

41,858

 

 

 

38,474

 

Loans, net of allowance for loan losses of $4,282 in 2019 and $4,437 in 2018

 

 

481,173

 

 

 

483,846

 

Federal Home Loan Bank of Boston stock, at cost

 

 

3,650

 

 

 

4,700

 

Accrued interest receivable

 

 

1,526

 

 

 

1,504

 

Mortgage servicing rights, net

 

 

8,140

 

 

 

7,786

 

Premises and equipment, net

 

 

6,307

 

 

 

6,368

 

Bank-owned life insurance

 

 

8,301

 

 

 

8,256

 

Foreclosed real estate

 

 

76

 

 

 

65

 

Other assets

 

 

4,655

 

 

 

3,462

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

614,348

 

 

$

614,340

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing

 

$

67,284

 

 

$

64,229

 

Interest bearing

 

 

316,182

 

 

 

312,321

 

Brokered

 

 

60,355

 

 

 

60,580

 

Total deposits

 

 

443,821

 

 

 

437,130

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank of Boston advances

 

 

83,642

 

 

 

89,036

 

Mortgagors' escrow accounts

 

 

1,992

 

 

 

2,129

 

Post-employment benefit obligations

 

 

2,416

 

 

 

2,551

 

Other liabilities

 

 

4,082

 

 

 

5,533

 

Total liabilities

 

 

535,953

 

 

 

536,379

 

 

 

 

 

 

 

 

 

 

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: 5,893,293 shares at March 31, 2019 and 5,903,793 shares

      at December 31, 2018

 

 

59

 

 

 

60

 

Additional paid-in capital

 

 

55,419

 

 

 

55,608

 

Retained earnings

 

 

28,278

 

 

 

28,329

 

ESOP-Unearned compensation

 

 

(4,085

)

 

 

(4,132

)

Accumulated other comprehensive loss, net of tax

 

 

(1,276

)

 

 

(1,904

)

Total stockholders' equity

 

 

78,395

 

 

 

77,961

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

614,348

 

 

$

614,340

 

 

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 March 31,

 

 

 

2019

 

 

2018

 

Interest and dividend income:

 

 

 

 

 

 

 

 

Loans

 

$

5,588

 

 

$

4,295

 

Securities-taxable

 

 

384

 

 

 

338

 

Securities-tax exempt

 

 

16

 

 

 

65

 

Interest-bearing deposits and certificates of deposit

 

 

28

 

 

 

29

 

Total interest and dividend income

 

 

6,016

 

 

 

4,727

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

Deposits

 

 

1,160

 

 

 

480

 

Federal Home Loan Bank of Boston advances

 

 

478

 

 

 

265

 

Total interest expense

 

 

1,638

 

 

 

745

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

4,378

 

 

 

3,982

 

Provision for loan losses

 

 

 

 

 

95

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

4,378

 

 

 

3,887

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

Customer service fees

 

 

329

 

 

 

301

 

Gain on loan origination and sale activities, net

 

 

2,588

 

 

 

1,547

 

Mortgage servicing fees, net

 

 

319

 

 

 

334

 

Gain on sales of securities

 

 

 

 

 

49

 

Increase in cash surrender value of life insurance

 

 

45

 

 

 

38

 

Other

 

 

132

 

 

 

139

 

Total non-interest income

 

 

3,413

 

 

 

2,408

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,412

 

 

 

4,436

 

Occupancy and equipment

 

 

656

 

 

 

699

 

Data processing

 

 

194

 

 

 

170

 

Professional fees

 

 

268

 

 

 

252

 

Marketing

 

 

188

 

 

 

303

 

FDIC insurance

 

 

31

 

 

 

40

 

Other

 

 

1,129

 

 

 

1,098

 

Total non-interest expenses

 

 

7,878

 

 

 

6,998

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

(87

)

 

 

(703

)

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

(36

)

 

 

4

 

Net loss

 

$

(51

)

 

$

(707

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and

   diluted)

 

 

5,478,544

 

 

 

5,603,886

 

Loss per common share (basic and diluted)

 

$

(0.01

)

 

$

(0.13

)

 

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 March 31,

 

 

 

2019

 

 

2018

 

Net loss

 

$

(51

)

 

$

(707

)

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

Unrealized holding gains (losses)

 

 

678

 

 

 

(1,055

)

Reclassification adjustment for net gains realized in income (1)

 

 

 

 

 

(49

)

Net unrealized gains (losses)

 

 

678

 

 

 

(1,104

)

Related tax effects

 

 

(38

)

 

 

 

Net-of-tax amount

 

 

640

 

 

 

(1,104

)

 

 

 

 

 

 

 

 

 

Supplemental retirement plan:

 

 

 

 

 

 

 

 

Reclassification adjustments (2):

 

 

 

 

 

 

 

 

Actuarial losses

 

 

9

 

 

 

9

 

Prior service credits

 

 

(21

)

 

 

(21

)

 

 

 

(12

)

 

 

(12

)

Related tax effects

 

 

 

 

 

 

Net-of-tax amount

 

 

(12

)

 

 

(12

)

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

628

 

 

 

(1,116

)

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

577

 

 

$

(1,823

)

 

1)

Amount is 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)

Three months ended March 31, 2019 and 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2017

 

 

6,034,276

 

 

$

61

 

 

$

56,493

 

 

$

30,415

 

 

$

(4,319

)

 

$

(1,167

)

 

$

81,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(707

)

 

 

 

 

 

 

 

 

(707

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,116

)

 

 

(1,116

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

(4,500

)

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

(70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

207

 

 

 

 

 

 

 

 

 

 

 

 

207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

27

 

 

 

 

 

 

47

 

 

 

 

 

 

74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2018

 

 

6,029,776

 

 

$

61

 

 

$

56,657

 

 

$

29,708

 

 

$

(4,272

)

 

$

(2,283

)

 

$

79,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

5,903,793

 

 

$

60

 

 

$

55,608

 

 

$

28,329

 

 

$

(4,132

)

 

$

(1,904

)

 

$

77,961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(51

)

 

 

 

 

 

 

 

 

(51

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

628

 

 

 

628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock repurchased

 

 

(30,500

)

 

 

(1

)

 

 

(428

)

 

 

 

 

 

 

 

 

 

 

 

(429

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock awards granted

 

 

20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

216

 

 

 

 

 

 

 

 

 

 

 

 

216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

47

 

 

 

 

 

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2019

 

 

5,893,293

 

 

$

59

 

 

$

55,419

 

 

$

28,278

 

 

$

(4,085

)

 

$

(1,276

)

 

$

78,395

 

 

See accompanying notes to consolidated financial statements.

 

 

4


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(51

)

 

$

(707

)

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

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

 

 

 

95

 

Loans originated for sale

 

 

(107,640

)

 

 

(70,797

)

Net gain on sales of mortgage loans

 

 

(2,070

)

 

 

(1,547

)

Proceeds from sales of mortgage loans

 

 

106,466

 

 

 

75,644

 

Net amortization of securities

 

 

32

 

 

 

53

 

Net change in deferred loan costs and fees, and purchase premiums

 

 

20

 

 

 

(7

)

Gain on sales of securities

 

 

 

 

 

(49

)

Depreciation and amortization

 

 

209

 

 

 

145

 

Stock-based compensation

 

 

216

 

 

 

207

 

ESOP expense

 

 

70

 

 

 

74

 

Increase in cash surrender value of life insurance

 

 

(45

)

 

 

(38

)

Net increase in mortgage servicing rights

 

 

(354

)

 

 

(202

)

Other, net

 

 

(3,002

)

 

 

(1,181

)

Net cash (used in) provided by operating activities

 

 

(6,149

)

 

 

1,690

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Redemptions of certificates of deposit

 

 

 

 

 

245

 

Securities available for sale:

 

 

 

 

 

 

 

 

Calls/maturities

 

 

 

 

 

930

 

Purchases

 

 

 

 

 

(9,993

)

Sales

 

 

 

 

 

8,958

 

Principal payments on mortgage-backed securities

 

 

1,013

 

 

 

952

 

Loan originations, net of principal repayments

 

 

3,655

 

 

 

(7,036

)

Loan purchases

 

 

(1,002

)

 

 

 

Redemptions of Federal Home Loan Bank of Boston stock

 

 

1,050

 

 

 

706

 

Purchases of premises and equipment

 

 

(148

)

 

 

(731

)

Net cash provided by (used in) investing activities

 

 

4,568

 

 

 

(5,969

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net increase in non-brokered deposits

 

 

6,916

 

 

 

5,519

 

Net increase (decrease) in brokered deposits

 

 

(225

)

 

 

23,237

 

Net decrease in short-term Federal Home Loan Bank of Boston borrowings

 

 

(3,827

)

 

 

(22,904

)

Repayments of long-term Federal Home Loan Bank of Boston advances

 

 

(1,567

)

 

 

(2,130

)

Net increase (decrease) in mortgagors' escrow accounts

 

 

(137

)

 

 

769

 

Repurchases of common stock

 

 

(429

)

 

 

(70

)

Net cash provided by financing activities

 

 

731

 

 

 

4,421

 

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(850

)

 

 

142

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

7,118

 

 

 

8,822

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

6,268

 

 

$

8,964

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Interest paid on deposits and borrowed funds

 

$

1,657

 

 

$

734

 

Income taxes paid

 

$

15

 

 

$

16

 

 

See accompanying notes to consolidated financial statements.

 

5


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

March 31, 2019 and 2018

 

1.

BASIS OF FINANCIAL STATEMENT PRESENTATION

The consolidated financial statements include the accounts of Randolph Bancorp, Inc. (“Bancorp”) and its wholly-owned subsidiary, Envision Bank (the “Bank”, together with Bancorp, the “Company”). The Bank has subsidiaries involved in owning investment securities and foreclosed real estate properties and a subsidiary which provides loan closing services. All intercompany accounts and transactions have been eliminated in consolidation.

These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying interim financial statements do not include all information required under GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. The operating results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other interim period.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC.

 

2.

RECENT ACCOUNTING PRONOUNCEMENTS

 

On January 1, 2019, the Company early adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This Update provides a revenue recognition framework for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other accounting standards. The Company’s revenues relate principally to financial instruments, which are explicitly excluded from the scope of this Update. The impact to the consolidated financial statements upon adopting ASU 2014-09 was not material. See Note 16 – Revenue from Contracts with Customers for additional information.

 

In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-01, Financial Instruments. This ASU revises the accounting related to the classification and measurement of investments in equity securities, and the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments to require use of an exit pricing notion. This ASU is effective for emerging growth companies for annual periods beginning after December 31, 2018, and interim periods beginning after December 31, 2019. The Company intends to adopt this ASU effective December 31, 2019. The impact of adoption of this ASU is limited to disclosure of the fair value of financial instruments.

In February 2016, FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting requirements. This ASU is effective for emerging growth companies in fiscal years beginning after December 15, 2019, including interim periods therein. The Company’s assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the time of adoption. The Company is currently assessing the impact of the adoption of this ASU on its consolidated balance sheet.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This replaces the existing probable incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgements used in determining the allowance for loan losses, as well as the credit quality and underwriting standards of an organization’s loan portfolio. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. As we will no longer be treated as an emerging growth company beginning December 31, 2021, we are required to adopt this ASU no later than 2021. Early adoption is permitted in fiscal years beginning after December 31, 2018. The Company is currently evaluating the alternative methodologies available and assessing its data and system needs to implement this ASU.

In April 2017, the FASB issued ASU 2017-08 Receivables – Non-refundable Fees and Other Costs, which shortens the period of amortization of the premium on certain callable debt securities to the earliest call date. Currently, generally accepted accounting

6


 

principles (“GAAP”) excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. This ASU requires that premiums on certain callable debt securities be amortized to the shortest call date. Securities within the scope of this paragraph are those that have explicit, noncontingent call features that are callable at fixed prices and on preset dates. This ASU is effective for emerging growth companies for annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted, including adoption in an interim period. The impact of adopting this ASU is dependent on the materiality of callable debt securities meeting the specific criteria set forth therein at the time of adoption.

In August 2018, the FASB issued ASU 2018-13 Fair Value Measurement – Changes to the Disclosure Requirements for Fair Value Measurement, which removes the disclosure requirements for transfers between Levels 1 and 2 of the fair value hierarchy, the policy for timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements. This ASU also adds disclosure requirements for the changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements and the range and weighted average of significant unobservable inputs used to develop Level 3 measurements. This ASU is effective for emerging growth companies for annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing the impact of this ASU on the consolidated financial statements.

3.

ACCUMULATED OTHER COMPREHENSIVE LOSS

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net loss. Although certain changes in assets and liabilities are reported as a separate component of stockholders’ equity, such items, along with net loss, are components of comprehensive loss.

The components of accumulated other comprehensive loss, included in total stockholders’ equity, are as follows:

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(In thousands)

 

Securities available for sale:

 

 

 

 

 

 

 

 

Net unrealized loss

 

$

(656

)

 

$

(1,334

)

Tax effect

 

 

(351

)

 

 

(313

)

Net-of-tax amount

 

 

(1,007

)

 

 

(1,647

)

 

 

 

 

 

 

 

 

 

Supplemental retirement plan

 

 

 

 

 

 

 

 

Unrecognized net actuarial loss

 

 

(596

)

 

 

(605

)

Unrecognized net prior service credit

 

 

374

 

 

 

395