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Section 1: 10-Q (10-Q)

rndb-10q_20190630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) f

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 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)

 

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

 

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

As of July 31, 2019, there were 5,760,552 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, 2019 and December 31, 2018

1

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018

2

 

Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2019 and 2018

3

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended June 30, 2019 and 2018

4

 

Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2019 and 2018

5

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018

6

 

Notes to Unaudited Consolidated Financial Statements

7

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

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

38

Item 4. Controls and Procedures

44

PART II—OTHER INFORMATION

44

Item 1. Legal Proceedings

44

Item 1A. Risk Factors

44

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

45

Item 3. Defaults Upon Senior Securities

45

Item 4. Mine Safety Disclosures

45

Item 5. Other Information

45

Item 6. Exhibits

45

SIGNATURE

46

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1.  Financial Statements

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (Unaudited)

(In thousands except for share data)

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

3,614

 

 

$

3,451

 

Interest-bearing deposits

 

 

7,561

 

 

 

3,667

 

Total cash and cash equivalents

 

 

11,175

 

 

 

7,118

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

2,205

 

 

 

2,205

 

Securities available for sale, at fair value

 

 

48,851

 

 

 

50,556

 

Loans held for sale, at fair value

 

 

102,784

 

 

 

38,474

 

Loans, net of allowance for loan losses of $4,154 in 2019 and $4,437 in 2018

 

 

451,870

 

 

 

483,846

 

Federal Home Loan Bank of Boston stock, at cost

 

 

5,375

 

 

 

4,700

 

Accrued interest receivable

 

 

1,665

 

 

 

1,504

 

Mortgage servicing rights, net

 

 

8,201

 

 

 

7,786

 

Premises and equipment, net

 

 

6,162

 

 

 

6,368

 

Bank-owned life insurance

 

 

8,349

 

 

 

8,256

 

Foreclosed real estate, net

 

 

90

 

 

 

65

 

Other assets

 

 

5,842

 

 

 

3,462

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

652,569

 

 

$

614,340

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing

 

$

65,420

 

 

$

64,229

 

Interest bearing

 

 

313,584

 

 

 

312,321

 

Brokered

 

 

62,649

 

 

 

60,580

 

Total deposits

 

 

441,653

 

 

 

437,130

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank of Boston advances

 

 

121,553

 

 

 

89,036

 

Mortgagors' escrow accounts

 

 

1,863

 

 

 

2,129

 

Post-employment benefit obligations

 

 

2,424

 

 

 

2,551

 

Other liabilities

 

 

5,723

 

 

 

5,533

 

Total liabilities

 

 

573,216

 

 

 

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: 5,797,705 shares at June 30, 2019 and 5,903,793 shares

      at December 31, 2018

 

 

58

 

 

 

60

 

Additional paid-in capital

 

 

54,083

 

 

 

55,608

 

Retained earnings

 

 

29,784

 

 

 

28,329

 

ESOP-Unearned compensation

 

 

(4,038

)

 

 

(4,132

)

Accumulated other comprehensive loss, net of tax

 

 

(534

)

 

 

(1,904

)

Total stockholders' equity

 

 

79,353

 

 

 

77,961

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

652,569

 

 

$

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 June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

6,058

 

 

$

4,586

 

 

$

11,646

 

 

$

8,881

 

Securities-taxable

 

 

358

 

 

 

398

 

 

 

742

 

 

 

736

 

Securities-tax exempt

 

 

12

 

 

 

21

 

 

 

28

 

 

 

85

 

Interest-bearing deposits and certificates of deposit

 

 

26

 

 

 

34

 

 

 

54

 

 

 

64

 

Total interest and dividend income

 

 

6,454

 

 

 

5,039

 

 

 

12,470

 

 

 

9,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

1,221

 

 

 

730

 

 

 

2,381

 

 

 

1,210

 

Federal Home Loan Bank of Boston advances

 

 

744

 

 

 

276

 

 

 

1,222

 

 

 

541

 

Total interest expense

 

 

1,965

 

 

 

1,006

 

 

 

3,603

 

 

 

1,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

4,489

 

 

 

4,033

 

 

 

8,867

 

 

 

8,015

 

Provision (credit) for loan losses

 

 

(144

)

 

 

(90

)

 

 

(144

)

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision (credit) for loan losses

 

 

4,633

 

 

 

4,123

 

 

 

9,011

 

 

 

8,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

362

 

 

 

439

 

 

 

691

 

 

 

739

 

Gain on loan origination and sale activities, net

 

 

5,068

 

 

 

1,854

 

 

 

7,656

 

 

 

3,401

 

Mortgage servicing fees, net

 

 

224

 

 

 

291

 

 

 

543

 

 

 

625

 

Gain on sales of securities

 

 

 

 

 

 

 

 

 

 

 

49

 

Increase in cash surrender value of life insurance

 

 

48

 

 

 

38

 

 

 

93

 

 

 

76

 

Other

 

 

153

 

 

 

161

 

 

 

285

 

 

 

300

 

Total non-interest income

 

 

5,855

 

 

 

2,783

 

 

 

9,268

 

 

 

5,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

6,092

 

 

 

4,979

 

 

 

11,504

 

 

 

9,415

 

Occupancy and equipment

 

 

643

 

 

 

729

 

 

 

1,299

 

 

 

1,427

 

Data processing

 

 

197

 

 

 

166

 

 

 

391

 

 

 

336

 

Professional fees

 

 

287

 

 

 

320

 

 

 

555

 

 

 

572

 

Marketing

 

 

180

 

 

 

321

 

 

 

368

 

 

 

624

 

Other

 

 

1,464

 

 

 

1,397

 

 

 

2,624

 

 

 

2,535

 

Total non-interest expenses

 

 

8,863

 

 

 

7,912

 

 

 

16,741

 

 

 

14,909

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

1,625

 

 

 

(1,006

)

 

 

1,538

 

 

 

(1,709

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

119

 

 

 

4

 

 

 

83

 

 

 

8

 

Net income (loss)

 

$

1,506

 

 

$

(1,010

)

 

$

1,455

 

 

$

(1,717

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and

   diluted)

 

 

5,465,205

 

 

 

5,580,683

 

 

 

5,471,846

 

 

 

5,594,559

 

Net income (loss) per common share (basic and diluted)

 

$

0.28

 

 

$

(0.18

)

 

$

0.27

 

 

$

(0.31

)

 

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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income (loss)

 

$

1,506

 

 

$

(1,010

)

 

$

1,455

 

 

$

(1,717

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses)

 

 

716

 

 

 

(173

)

 

 

1,394

 

 

 

(1,228

)

Reclassification adjustment for net gains realized in income (1)

 

 

 

 

 

 

 

 

 

 

 

(49

)

Net unrealized gains (losses)

 

 

716

 

 

 

(173

)

 

 

1,394

 

 

 

(1,277

)

Related tax effects

 

 

38

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

754

 

 

 

(173

)

 

 

1,394

 

 

 

(1,277

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental retirement plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustments (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses

 

 

9

 

 

 

9

 

 

 

18

 

 

 

18

 

Prior service credits

 

 

(21

)

 

 

(20

)

 

 

(42

)

 

 

(41

)

 

 

 

(12

)

 

 

(11

)

 

 

(24

)

 

 

(23

)

Related tax effects

 

 

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

(12

)

 

 

(11

)

 

 

(24

)

 

 

(23

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

742

 

 

 

(184

)

 

 

1,370

 

 

 

(1,300

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

2,248

 

 

$

(1,194

)

 

$

2,825

 

 

$

(3,017

)

 

(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 June 30, 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 March 31, 2018

 

 

6,029,776

 

 

$

61

 

 

$

56,657

 

 

$

29,708

 

 

$

(4,272

)

 

$

(2,283

)

 

$

79,871

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,010

)

 

 

 

 

 

 

 

 

(1,010

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(184

)

 

 

(184

)

Stock repurchased

 

 

(34,938

)

 

 

(1

)

 

 

(560

)

 

 

 

 

 

 

 

 

 

 

 

(561

)

Stock-based compensation

 

 

 

 

 

 

 

 

180

 

 

 

 

 

 

 

 

 

 

 

 

180

 

Restricted stock awards forfeited

 

 

(7,042

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

47

 

 

 

 

 

 

77

 

Balance at June 30, 2018

 

 

5,987,796

 

 

$

60

 

 

$

56,307

 

 

$

28,698

 

 

$

(4,225

)

 

$

(2,467

)

 

$

78,373

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2019

 

 

5,893,293

 

 

$

59

 

 

$

55,419

 

 

$

28,278

 

 

$

(4,085

)

 

$

(1,276

)

 

$

78,395

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,506

 

 

 

 

 

 

 

 

 

1,506

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

742

 

 

 

742

 

Stock repurchased

 

 

(106,423

)

 

 

(1

)

 

 

(1,599

)

 

 

 

 

 

 

 

 

 

 

 

(1,600

)

Restricted stock awards granted

 

 

10,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

242

 

 

 

 

 

 

 

 

 

 

 

 

242

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

21

 

 

 

 

 

 

47

 

 

 

 

 

 

68

 

Balance at June 30, 2019

 

 

5,797,705

 

 

$

58

 

 

$

54,083

 

 

$

29,784

 

 

$

(4,038

)

 

$

(534

)

 

$

79,353

 

 

See accompanying notes to consolidated financial statements.

 

4


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Six Months Ended June 30, 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

 

 

 

 

 

 

 

 

 

 

 

(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