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Section 1: 10-Q (10-Q)

rndb-10q_20190930.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 September 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 October 31, 2019, there were 5,663,651 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, 2019 and December 31, 2018

1

 

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018

2

 

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

3

 

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

4

 

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

5

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 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

30

Item 3. Quantitative and Qualitative Disclosures About Market Risk

45

Item 4. Controls and Procedures

45

PART II—OTHER INFORMATION

45

Item 1. Legal Proceedings

45

Item 1A. Risk Factors

45

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

46

Item 3. Defaults Upon Senior Securities

46

Item 4. Mine Safety Disclosures

46

Item 5. Other Information

46

Item 6. Exhibits

46

SIGNATURE

47

 

 

 

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,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

6,525

 

 

$

3,451

 

Interest-bearing deposits

 

 

2,701

 

 

 

3,667

 

Total cash and cash equivalents

 

 

9,226

 

 

 

7,118

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 

490

 

 

 

2,205

 

Securities available for sale, at fair value

 

 

47,187

 

 

 

50,556

 

Loans held for sale, at fair value

 

 

94,372

 

 

 

38,474

 

Loans, net of allowance for loan losses of $4,153 in 2019 and $4,437 in 2018

 

 

457,218

 

 

 

483,846

 

Federal Home Loan Bank of Boston stock, at cost

 

 

2,985

 

 

 

4,700

 

Accrued interest receivable

 

 

1,410

 

 

 

1,504

 

Mortgage servicing rights, net

 

 

8,459

 

 

 

7,786

 

Premises and equipment, net

 

 

5,911

 

 

 

6,368

 

Bank-owned life insurance

 

 

8,395

 

 

 

8,256

 

Foreclosed real estate, net

 

 

 

 

 

65

 

Other assets

 

 

5,785

 

 

 

3,462

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

641,438

 

 

$

614,340

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Non-interest bearing

 

$

65,250

 

 

$

64,229

 

Interest bearing

 

 

329,319

 

 

 

312,321

 

Brokered

 

 

96,261

 

 

 

60,580

 

Total deposits

 

 

490,830

 

 

 

437,130

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank of Boston advances

 

 

57,668

 

 

 

89,036

 

Mortgagors' escrow accounts

 

 

2,199

 

 

 

2,129

 

Post-employment benefit obligations

 

 

2,385

 

 

 

2,551

 

Other liabilities

 

 

8,765

 

 

 

5,533

 

Total liabilities

 

 

561,847

 

 

 

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: 5,701,152 shares at September 30, 2019 and 5,903,793 shares

      at December 31, 2018

 

 

57

 

 

 

60

 

Additional paid-in capital

 

 

52,884

 

 

 

55,608

 

Retained earnings

 

 

30,928

 

 

 

28,329

 

ESOP-Unearned compensation

 

 

(3,991

)

 

 

(4,132

)

Accumulated other comprehensive loss, net of tax

 

 

(287

)

 

 

(1,904

)

Total stockholders' equity

 

 

79,591

 

 

 

77,961

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

641,438

 

 

$

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

6,144

 

 

$

5,036

 

 

$

17,790

 

 

$

13,917

 

Securities-taxable

 

 

366

 

 

 

386

 

 

 

1,108

 

 

 

1,122

 

Securities-tax exempt

 

 

8

 

 

 

19

 

 

 

36

 

 

 

104

 

Interest-bearing deposits and certificates of deposit

 

 

23

 

 

 

27

 

 

 

77

 

 

 

91

 

Total interest and dividend income

 

 

6,541

 

 

 

5,468

 

 

 

19,011

 

 

 

15,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

1,365

 

 

 

865

 

 

 

3,746

 

 

 

2,074

 

Federal Home Loan Bank of Boston advances

 

 

603

 

 

 

343

 

 

 

1,825

 

 

 

884

 

Total interest expense

 

 

1,968

 

 

 

1,208

 

 

 

5,571

 

 

 

2,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

4,573

 

 

 

4,260

 

 

 

13,440

 

 

 

12,276

 

Provision (credit) for loan losses

 

 

 

 

 

178

 

 

 

(144

)

 

 

183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision (credit) for loan losses

 

 

4,573

 

 

 

4,082

 

 

 

13,584

 

 

 

12,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer service fees

 

 

363

 

 

 

357

 

 

 

1,054

 

 

 

1,096

 

Gain on loan origination and sale activities, net

 

 

5,782

 

 

 

1,956

 

 

 

13,438

 

 

 

5,356

 

Mortgage servicing fees, net

 

 

(181

)

 

 

310

 

 

 

362

 

 

 

935

 

Gain on sale of building

 

 

 

 

 

230

 

 

 

 

 

 

230

 

Gain on sales of securities

 

 

 

 

 

 

 

 

 

 

 

49

 

Increase in cash surrender value of life insurance

 

 

45

 

 

 

73

 

 

 

139

 

 

 

148

 

Other

 

 

294

 

 

 

282

 

 

 

578

 

 

 

584

 

Total non-interest income

 

 

6,303

 

 

 

3,208

 

 

 

15,571

 

 

 

8,398

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,010

 

 

 

4,788

 

 

 

18,514

 

 

 

14,166

 

Occupancy and equipment

 

 

673

 

 

 

728

 

 

 

1,972

 

 

 

2,157

 

Data processing

 

 

179

 

 

 

172

 

 

 

570

 

 

 

508

 

Professional fees

 

 

264

 

 

 

252

 

 

 

819

 

 

 

824

 

Marketing

 

 

275

 

 

 

205

 

 

 

643

 

 

 

867

 

Other

 

 

1,317

 

 

 

1,282

 

 

 

3,941

 

 

 

3,814

 

Total non-interest expenses

 

 

9,718

 

 

 

7,427

 

 

 

26,459

 

 

 

22,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

1,158

 

 

 

(137

)

 

 

2,696

 

 

 

(1,845

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

14

 

 

 

5

 

 

 

97

 

 

 

14

 

Net income (loss)

 

$

1,144

 

 

$

(142

)

 

$

2,599

 

 

$

(1,859

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding (basic and

   diluted)

 

 

5,345,786

 

 

 

5,567,596

 

 

 

5,429,339

 

 

 

5,585,571

 

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

 

$

0.21

 

 

$

(0.03

)

 

$

0.48

 

 

$

(0.33

)

 

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,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net income (loss)

 

$

1,144

 

 

$

(142

)

 

$

2,599

 

 

$

(1,859

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses)

 

 

259

 

 

 

(377

)

 

 

1,653

 

 

 

(1,605

)

Reclassification adjustment for net gains realized in income (1)

 

 

 

 

 

 

 

 

 

 

 

(49

)

Net unrealized gains (losses)

 

 

259

 

 

 

(377

)

 

 

1,653

 

 

 

(1,654

)

Related tax effects

 

 

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

259

 

 

 

(377

)

 

 

1,653

 

 

 

(1,654

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental retirement plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassification adjustments (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial losses

 

 

9

 

 

 

9

 

 

 

27

 

 

 

27

 

Prior service credits

 

 

(21

)

 

 

(21

)

 

 

(63

)

 

 

(62

)

 

 

 

(12

)

 

 

(12

)

 

 

(36

)

 

 

(35

)

Related tax effects

 

 

 

 

 

 

 

 

 

 

 

 

Net-of-tax amount

 

 

(12

)

 

 

(12

)

 

 

(36

)

 

 

(35

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income (loss)

 

 

247

 

 

 

(389

)

 

 

1,617

 

 

 

(1,689

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

$

1,391

 

 

$

(531

)

 

$

4,216

 

 

$

(3,548

)

 

(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 September 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 June 30, 2018

 

 

5,987,796

 

 

$

60

 

 

$

56,307

 

 

$

28,698

 

 

$

(4,225

)

 

$

(2,467

)

 

$

78,373

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(142

)

 

 

 

 

 

 

 

 

(142

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(389

)

 

 

(389

)

Stock-based compensation

 

 

 

 

 

 

 

 

210

 

 

 

 

 

 

 

 

 

 

 

 

210

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

46

 

 

 

 

 

 

78

 

Balance at September 30, 2018

 

 

5,987,796

 

 

$

60

 

 

$

56,549

 

 

$

28,556

 

 

$

(4,179

)

 

$

(2,856

)

 

$

78,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

 

5,797,705

 

 

$

58

 

 

$

54,083

 

 

$

29,784

 

 

$

(4,038

)

 

$

(534

)

 

$

79,353

 

Net income

 

 

 

 

 

 

 

 

 

 

 

1,144

 

 

 

 

 

 

 

 

 

1,144

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

247

 

 

 

247

 

Stock repurchased

 

 

(96,553

)

 

 

(1

)

 

 

(1,440

)

 

 

 

 

 

 

 

 

 

 

 

(1,441

)

Stock-based compensation

 

 

 

 

 

 

 

 

223

 

 

 

 

 

 

 

 

 

 

 

 

223

 

ESOP shares committed to be released

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

47

 

 

 

 

 

 

65

 

Balance at September 30, 2019

 

 

5,701,152

 

 

$

57

 

 

$

52,884

 

 

$

30,928

 

 

$

(3,991

)

 

$

(287

)

 

$

79,591

 

 

See accompanying notes to consolidated financial statements.

 

4


 

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Nine Months ended September 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

 

 

 

 

 

 

 

 

 

 

 

(1,859

)

 

 

 

 

 

 

 

 

(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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

5,903,793

 

 

$

60

 

 

$

55,608

 

 

$

28,329

 

 

$

(4,132

)

 

$

(1,904

)

 

$

77,961

 

Net income

 

 

 

 

 

 

 

 

 

 

 

2,599

 

 

 

 

 

 

 

 

 

2,599

 

Other comprehensive income