Randolph Bancorp, Inc. Announces Second Quarter and Year-to-Date 2020 Financial Results
STOUGHTON, Mass., July 28, 2020 (GLOBE NEWSWIRE) -- Randolph Bancorp, Inc. (NASDAQ: RNDB) , the holding company for Envision Bank (the “Bank”), today announced net income of $5,191,000, or $1.02 per share, for the three months ended June 30, 2020 compared to net income of $1,506,000, or $0.28 per share, for the three months ended June 30, 2019. Net income for the six months ended June 30, 2020 was $4,373,000, or $0.86 per share, compared to net income of $1,455,000, or $0.27 per share, for the six months ended June 30, 2019.
Excluding $189,000 of operating expenses related to addressing the COVID-19 pandemic, net income for the three months ended June 30, 2020 was $5,380,000, or $1.06 per share. Excluding one-time charges of $1,375,000 related to the retirement of senior executives and operating expenses of $207,000 related to addressing the COVID-19 pandemic, earnings were $5,955,000, or $1.17 per share, for the six months ended June 30, 2020.
At June 30, 2020, total assets amounted to $724.0 million, compared to $652.9 million at March 31, 2020, an increase of $71.2 million, or 10.9%. Contributing to asset growth was a $14.7 million increase in net loans, mainly driven by Paycheck Protection Program loans, and a $54.8 million increase in cash and cash equivalents as a result of strong deposit growth and the timing of loan sales proceeds.
William M. Parent, President and Chief Executive Officer, stated, “The second quarter of 2020 was a record quarter in earnings for our Company. We are very pleased with the strong performance of our mortgage banking operations, which achieved record levels of loans closed, loans sold, and net revenue from loan sales and origination activity. We continue our focused growth in core deposits, increasing our non-brokered deposit base by $63.9 million in the quarter, reflecting the benefit of government programs for consumers and small businesses, and an environment of increased savings. With the continuation of the COVID-19 pandemic, we worked diligently to assist customers by participating in the Paycheck Protection Program, facilitating loan payment deferrals with borrowers experiencing hardship because of the pandemic, and leveraging our digital platform to service customers remotely, while continuing to have the vast majority of our team work remotely as well. With a strong balance sheet and capital position, the Company is ready to manage our continued evolution through whatever challenges lie ahead.”
Second Quarter Operating Results
Net interest income increased by $244,000, or 5.4%, to $4.7 million for the three months ended June 30, 2020 from $4.5 million the same period in the prior year. This increase was primarily due to an increase in average interest-earning assets between periods of $39.5 million, or 6.4%, as the Company continued to leverage its strong capital base. The net interest margin decreased in the second quarter of 2020 to 2.88%, from 2.91% in the second quarter of 2019, due to deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.
The Company recognized a provision for loan losses of $1.1 million for the quarter ended June 30, 2020 compared to a credit of $144,000 in the prior year quarter. The provision in the quarter ended June 30, 2020 included $154,000 representing the estimate of probable incurred losses associated with the impact of the COVID-19 pandemic. At June 30, 2020, higher loss factors were assigned to each major loan portfolio category based on their level of risk, taking into consideration the deterioration in economic conditions given stay-at-home orders and sharply increased unemployment in our local marketplace. The allowance for loan losses was 1.22% and 0.90% of total loans at June 30, 2020 and December 31, 2019, respectively, and was 186.0% and 131.4% of non-performing loans at June 30, 2020 and December 31, 2019, respectively.
Non-interest income increased $7.6 million, or 130.6%, to $13.5 million for the quarter ended June 30, 2020 from $5.9 million in the quarter ended June 30, 2019, principally due to an increase of $9.3 million in the net gain on loan origination and sale activities. Sold mortgage loans reached a record volume of $442.9 million in the second quarter of 2020. The increase in the gain on loan origination and sale activities was partially offset by a decrease in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $1.5 million given expectations of higher prepayments.
Non-interest expenses increased $2.5 million to $11.4 million in the quarter ended June 30, 2020 from $8.9 million in the quarter ended June 30, 2019. The increase is principally due to an increase in salaries and employee benefits of $2.3 million, mainly related to higher commissions and incentives associated with increased residential loan production, as well as COVID-19 pandemic-related compensation of $101,000 for frontline and quarantined employees.
Occupancy and equipment expenses increased $195,000 in the quarter ended June 30, 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $70,000, in addition to increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space in light of prolonged remote working arrangements for certain back-office staff.
Other non-interest expenses comprising professional fees, marketing, FDIC insurance and other non-interest expenses increased by $1,000 in the quarter ended June 30, 2020 versus the prior year period as a result of a combination of factors.
Marketing and certain operating expenses declined as a result of lower deposit customer activity while stay-at-home orders were in effect. Those reductions were offset by higher costs related to elevated mortgage loan production.
Income tax expense of $594,000 for the quarter ended June 30, 2020 consists solely of a state income tax provision which is based on the projected effective state tax rate for the year.
The Company has a net operating loss carryforward (“NOL”) for federal tax purposes of $10.8 million. Since 2014, the NOL, as well as other deferred tax assets, have been subject to a full valuation allowance, which totaled $1.2 million at June 30, 2020. We evaluate the tax valuation allowance on a quarterly basis. Based primarily on an assessment of historical operating results, we concluded that the valuation allowance should be maintained at June 30, 2020.
Year-to-Date Operating Results
Net interest income increased by $289,000, or 3.3%, for the six months ended June 30, 2020 compared to the same period in the prior year. This increase was driven by an increase in average interest-earning assets between periods of $35.8 million, or 6.0%. The net interest margin decreased in the first half of 2020 to 2.89%, from 2.97% in the first half of 2019, due to deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.
The Company recognized a provision for loan losses of $1.8 million for the six months ended June 30, 2020 compared to a credit of $144,000 in the prior year period. The provision in the first half of 2020 included $511,000 representing the estimate of probable incurred losses associated with the impact of the COVID-19 pandemic. At June 30, 2020, higher loss factors were assigned to each major loan portfolio category based on their level of risk, taking into consideration the deterioration in economic conditions given stay-at-home orders and sharply increased unemployment in our local marketplace.
Non-interest income increased $10.6 million, or 113.9%, to $20.0 million for the six months ended June 30, 2020 from $9.3 million in the six months ended June 30, 2019, principally due to an increase of $13.8 million in the net gain on loan origination and sale activities. Mortgage loans sold were $657.9 million in the first half of 2020. The increase in the gain on loan origination and sale activities was partially offset by a decrease in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $3.1 million in the six months ended June 30, 2020, given expectations of higher prepayments. The fair value adjustment for mortgage servicing rights was $114,000 in the six months ended June 30, 2019.
Non-interest expenses increased $5.5 million, or 32.9%, to $22.3 million for the six months ended June 30, 2020 from $16.8 million for the six months ended June 30, 2019. Non-interest expenses in the first half of 2020 included one-time charges of $1,375,000 related to the retirement of senior executives as well as $207,000 of COVID-19 pandemic-related expenses.
In the first half of 2020, salaries and employee benefits increased $5.0 million, including one-time charges of $1.4 million for the retirement of senior executives, higher commissions and incentives associated with higher residential loan production, and COVID-19 pandemic-related compensation of $101,000 for frontline and quarantined employees.
Occupancy and equipment expenses increased $238,000 in the first half of 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $106,000, as well as increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space in light of prolonged remote working arrangements for certain back-office staff.
Professional fees in the first half of 2020 increased $80,000 over the prior year period, primarily related to management succession planning costs. Spending on marketing in the first half of 2020 was $65,000 less than in the prior year period due to fewer marketing campaigns while our communities are subject to a stay-at-home order. The increase of $310,000 in other non-interest expenses in the first half of 2020 was driven mainly by costs related to higher mortgage loan production.
Income tax expense of $605,000 for the six months ended June 30, 2020 consists solely of a state income tax provision which is based on the projected effective state tax rate for the year.
Balance Sheet
At June 30, 2020, total assets amounted to $724.0 million compared to $631.0 million at December 31, 2019, an increase of $93.0 million, or 14.7%. Contributing to asset growth was a $21.8 million increase in net loans, mainly driven by the issuance of 177 Paycheck Protection Program loans for $15.1 million, as well as smaller increases in residential and commercial real estate loans. In addition, cash and cash equivalents increased by $67.8 million in the first half of 2020, mainly as a result of strong core growth in deposits and the timing of cash proceeds from loan sales. Loans held for sale decreased by $1.1 million to $61.7 million at June 30, 2020 from $62.8 million at December 31, 2019.
The increase in total assets was funded by deposit growth. Non-brokered deposits totaled $483.0 million at June 30, 2020, increasing by $76.8 million, or 18.9%, in the first half of 2020. Driving the growth in non-brokered deposits included customers’ receipt of government stimulus, Paycheck Protection Program loan proceeds which were deposited with us, and our focus on deposit gathering prior to the onset of the COVID-19 pandemic. Brokered deposits declined by $34.9 million to $56.0 million at June 30, 2020, from $90.9 million at December 31, 2019. Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank advances increased by $42.6 million to $87.0 million at June 30, 2020, from $44.4 million at December 31, 2019, given the funding of our Paycheck Protection Program loans and other loans with FHLB and Federal Reserve Bank advances, which were a relatively cheaper source of wholesale funding during the first quarter of the year.
Total stockholders’ equity was $84.5 million at June 30, 2020 compared to $78.5 million at December 31, 2019. The increase of $6.1 million relates mainly to net income in the period of $4.4 million and an increase in the fair value of available-for-sale securities, net of taxes, of $1.7 million. In addition, the Company repurchased $1.2 million of shares during the first half of 2020, and equity adjustments related to the stock benefit plan and employee stock ownership plan amounted to $1.2 million in the period.
COVID-19 Impact
In response to the impact of the COVID-19 pandemic on our customers and our business, the Company implemented a series of measures through the date of this release, including participation in the Small Business Administration’s Paycheck Protection Program, for which we funded $15.1 million of loans through June 30, 2020, and granting payment deferrals for residential mortgage, home equity and certain commercial borrowers who were current in their payments. Depending on the circumstances of the borrowers, the forbearance calls for a reduced or full deferral of payment. Please refer to the Loan Payment Deferrals and COVID-19 Most Impacted Sectors for statistics on loan payment deferrals and the commercial loan sectors we believe could be exposed to the economic impact of the COVID-19 pandemic.
About Randolph Bancorp, Inc.
Randolph Bancorp, Inc. is the holding company for Envision Bank and its Envision Mortgage Division. Envision Bank is a full-service community bank with five retail branch locations, loan operations centers in North Attleboro and Stoughton, Massachusetts, eight loan production offices located throughout Massachusetts and one loan production office in Southern New Hampshire.
Forward Looking Statements
Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the negative impacts and disruptions of the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of economic contraction as a result of the COVID-19 pandemic; the effects of continued deterioration in employment levels, general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in consumer behavior due to changing political, business and economic conditions or legislative or regulatory initiatives; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; and the risk factors described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as return on average assets, return on average equity, non-interest income to total income, the efficiency ratio, tangible book value per share and, where applicable, as adjusted for non-recurring items. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of on-going business activities, and to enhance comparability with peers across the financial services sector.
Randolph Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
| June 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Cash and due from banks | $ | 3,922 | $ | 4,371 | ||||
| Interest-bearing deposits | 72,081 | 3,881 | ||||||
| Total cash and cash equivalents | 76,003 | 8,252 | ||||||
| Certificates of deposit | 490 | 490 | ||||||
| Securities available for sale, at fair value | 54,462 | 57,503 | ||||||
| Loans held for sale, at fair value | 61,673 | 62,792 | ||||||
| Loans, net of allowance for loan losses of $6,059 in 2020 and $4,280 in 2019 | 490,938 | 469,131 | ||||||
| Federal Home Loan Bank of Boston stock, at cost | 4,072 | 2,417 | ||||||
| Accrued interest receivable | 1,760 | 1,393 | ||||||
| Mortgage servicing rights, net | 8,094 | 8,556 | ||||||
| Premises and equipment, net | 5,313 | 5,748 | ||||||
| Bank-owned life insurance | 8,532 | 8,441 | ||||||
| Foreclosed real estate, net | 132 | - | ||||||
| Other assets | 12,572 | 6,281 | ||||||
| Total assets | $ | 724,041 | $ | 631,004 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 89,014 | $ | 61,603 | ||||
| Interest bearing | 393,980 | 344,581 | ||||||
| Brokered | 55,972 | 90,858 | ||||||
| Total deposits | 538,966 | 497,042 | ||||||
| Federal Reserve Bank advances | 15,010 | - | ||||||
| Federal Home Loan Bank of Boston advances | 71,944 | 44,403 | ||||||
| Mortgagors' escrow accounts | 1,824 | 2,052 | ||||||
| Post-employment benefit obligations | 2,319 | 2,464 | ||||||
| Other liabilities | 9,449 | 6,581 | ||||||
| Total liabilities | 639,512 | 552,542 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock | 55 | 56 | ||||||
| Additional paid-in capital | 51,013 | 51,127 | ||||||
| Retained earnings | 36,130 | 31,757 | ||||||
| ESOP-Unearned compensation | (3,850 | ) | (3,944 | ) | ||||
| Accumulated other comprehensive income (loss), net of tax | 1,181 | (534 | ) | |||||
| Total stockholders' equity | 84,529 | 78,462 | ||||||
| Total liabilities and stockholders' equity | $ | 724,041 | $ | 631,004 | ||||
Randolph Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans | $ | 5,723 | $ | 6,058 | $ | 11,343 | $ | 11,646 | ||||||||
| Other interest and dividend income | 336 | 396 | 769 | 824 | ||||||||||||
| Total interest and dividend income | 6,059 | 6,454 | 12,112 | 12,470 | ||||||||||||
| Interest expense | 1,326 | 1,965 | 2,955 | 3,603 | ||||||||||||
| Net interest income | 4,733 | 4,489 | 9,157 | 8,867 | ||||||||||||
| Provision for loan losses | 1,068 | (144 | ) | 1,792 | (144 | ) | ||||||||||
| Net interest income after provision for loan losses | 3,665 | 4,633 | 7,365 | 9,011 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Customer service fees | 266 | 362 | 573 | 691 | ||||||||||||
| Gain on loan origination and sale activities, net | 14,370 | 5,078 | 21,514 | 7,716 | ||||||||||||
| Mortgage servicing fees, net | (1,354 | ) | 224 | (2,608 | ) | 543 | ||||||||||
| Other | 217 | 201 | 472 | 378 | ||||||||||||
| Total non-interest income | 13,499 | 5,865 | 19,951 | 9,328 | ||||||||||||
| Non-interest expenses: | ||||||||||||||||
| Salaries and employee benefits | 8,402 | 6,092 | 16,527 | 11,504 | ||||||||||||
| Occupancy and equipment | 838 | 643 | 1,537 | 1,299 | ||||||||||||
| Professional fees | 230 | 287 | 635 | 555 | ||||||||||||
| Marketing | 152 | 180 | 304 | 369 | ||||||||||||
| FDIC insurance | 39 | 115 | 96 | 146 | ||||||||||||
| Other non-interest expenses | 1,718 | 1,556 | 3,239 | 2,928 | ||||||||||||
| Total non-interest expenses | 11,379 | 8,873 | 22,338 | 16,801 | ||||||||||||
| Income before income taxes | 5,785 | 1,625 | 4,978 | 1,538 | ||||||||||||
| Income tax expense | 594 | 119 | 605 | 83 | ||||||||||||
| Net income | $ | 5,191 | $ | 1,506 | $ | 4,373 | $ | 1,455 | ||||||||
| Net income per share (basic and diluted) | $ | 1.02 | $ | 0.28 | $ | 0.86 | $ | 0.27 | ||||||||
| Weighted average shares outstanding | 5,092,490 | 5,455,679 | 5,107,700 | 5,467,057 | ||||||||||||
Randolph Bancorp, Inc.
Averages Balances/Yields
(Dollars in thousands)
(Unaudited)
| For the Three Months Ended June 30, | |||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||
| Average | Interest | Average | Average | Interest | Average | ||||||||||||||||||
| Outstanding | Earned/ | Yield/ | Outstanding | Earned/ | Yield/ | ||||||||||||||||||
| (Dollars in thousands) | Balance | Paid | Rate | Balance | Paid | Rate | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||
| Loans (1) | $ | 576,964 | $ | 5,723 | 3.97 | % | $ | 558,643 | $ | 6,058 | 4.34 | % | |||||||||||
| Investment securities(2) (3) | 58,119 | 332 | 2.28 | % | 53,947 | 373 | 2.77 | % | |||||||||||||||
| Interest-earning deposits | 22,918 | 5 | 0.09 | % | 5,915 | 26 | 1.76 | % | |||||||||||||||
| Total interest-earning assets | 658,001 | 6,060 | 3.68 | % | 618,505 | 6,457 | 4.18 | % | |||||||||||||||
| Noninterest-earning assets | 40,156 | 23,820 | |||||||||||||||||||||
| Total assets | $ | 698,157 | $ | 642,325 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Savings accounts | 158,427 | 233 | 0.59 | % | 103,849 | 106 | 0.41 | % | |||||||||||||||
| NOW accounts | 46,593 | 50 | 0.43 | % | 39,130 | 49 | 0.50 | % | |||||||||||||||
| Money market accounts | 71,396 | 122 | 0.68 | % | 61,361 | 232 | 1.51 | % | |||||||||||||||
| Term certificates | 159,224 | 677 | 1.70 | % | 169,740 | 834 | 1.97 | % | |||||||||||||||
| Total interest-bearing deposits | 435,640 | 1,082 | 0.99 | % | 374,080 | 1,221 | 1.31 | % | |||||||||||||||
| FHLBB and FRB advances | 79,133 | 244 | 1.23 | % | 118,364 | 744 | 2.51 | % | |||||||||||||||
| Total interest-bearing liabilities | 514,773 | 1,326 | 1.03 | % | 492,444 | 1,965 | 1.60 | % | |||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||
| Noninterest-bearing deposits | 77,947 | 62,377 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 22,893 | 8,270 | |||||||||||||||||||||
| Total liabilities | 615,613 | 563,091 | |||||||||||||||||||||
| Total stockholders' equity | 82,544 | 79,234 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 698,157 | $ | 642,325 | |||||||||||||||||||
| Net interest income | $ | 4,734 | $ | 4,492 | |||||||||||||||||||
| Interest rate spread(4) | 2.65 | % | 2.58 | % | |||||||||||||||||||
| Net interest-earning assets(5) | $ | 143,228 | $ | 126,061 | |||||||||||||||||||
| Net interest margin(6) | 2.88 | % | 2.91 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 127.82 | % | 125.60 | % | |||||||||||||||||||
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $1,000 and $3,000 for the three months ended June 30, 2020 and 2019, respectively.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
Randolph Bancorp, Inc.
Averages Balances/Yields
(Dollars in thousands)
(Unaudited)
| For the Six Months Ended June 30, | |||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||
| Average | Interest | Average | Average | Interest | Average | ||||||||||||||||||
| Outstanding | Earned/ | Yield/ | Outstanding | Earned/ | Yield/ | ||||||||||||||||||
| (Dollars in thousands) | Balance | Paid | Rate | Balance | Paid | Rate | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||
| Loans (1) | $ | 554,053 | $ | 11,343 | 4.09 | % | $ | 537,549 | $ | 11,646 | 4.33 | % | |||||||||||
| Investment securities(2) (3) | 58,459 | 711 | 2.43 | % | 54,551 | 777 | 2.85 | % | |||||||||||||||
| Interest-earning deposits | 20,688 | 61 | 0.59 | % | 5,258 | 54 | 2.05 | % | |||||||||||||||
| Total interest-earning assets | 633,200 | 12,115 | 3.83 | % | 597,358 | 12,477 | 4.18 | % | |||||||||||||||
| Noninterest-earning assets | 35,965 | 24,462 | |||||||||||||||||||||
| Total assets | $ | 669,165 | $ | 621,820 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Savings accounts | 146,635 | 516 | 0.70 | % | 102,912 | 188 | 0.37 | % | |||||||||||||||
| NOW accounts | 42,821 | 101 | 0.47 | % | 39,851 | 97 | 0.49 | % | |||||||||||||||
| Money market accounts | 74,895 | 321 | 0.86 | % | 66,384 | 461 | 1.39 | % | |||||||||||||||
| Term certificates | 173,939 | 1,570 | 1.81 | % | 166,704 | 1,634 | 1.96 | % | |||||||||||||||
| Total interest-bearing deposits | 438,290 | 2,508 | 1.14 | % | 375,851 | 2,380 | 1.27 | % | |||||||||||||||
| FHLBB and FRB advances | 63,118 | 447 | 1.42 | % | 97,259 | 1,222 | 2.51 | % | |||||||||||||||
| Total interest-bearing liabilities | 501,408 | 2,955 | 1.18 | % | 473,110 | 3,602 | 1.52 | % | |||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||
| Noninterest-bearing deposits | 70,333 | 62,063 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 16,221 | 7,952 | |||||||||||||||||||||
| Total liabilities | 587,962 | 543,125 | |||||||||||||||||||||
| Total stockholders' equity | 81,204 | 78,695 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 669,166 | $ | 621,820 | |||||||||||||||||||
| Net interest income | $ | 9,160 | $ | 8,875 | |||||||||||||||||||
| Interest rate spread(4) | 2.65 | % | 2.65 | % | |||||||||||||||||||
| Net interest-earning assets(5) | $ | 131,792 | $ | 124,248 | |||||||||||||||||||
| Net interest margin(6) | 2.89 | % | 2.97 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 126.28 | % | 126.26 | % | |||||||||||||||||||
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $3,000 and $7,000 for the six months ended June 30, 2020 and 2019, respectively.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
Randolph Bancorp, Inc.
Rate/Volume Analysis
(Dollars in thousands)
(Unaudited)
| Three Months Ended | |||||||||||
| June 30, 2020 v. 2019 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | 194 | $ | (529 | ) | $ | (335 | ) | |||
| Investment securities | 27 | (68 | ) | (41 | ) | ||||||
| Interest-earning deposits | 21 | (42 | ) | (21 | ) | ||||||
| Total interest-earning assets | 242 | (639 | ) | (397 | ) | ||||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | 69 | 58 | 127 | ||||||||
| NOW accounts | 9 | (8 | ) | 1 | |||||||
| Money market accounts | 33 | (143 | ) | (110 | ) | ||||||
| Term certificates | (49 | ) | (108 | ) | (157 | ) | |||||
| Total interest-bearing deposits | 62 | (201 | ) | (139 | ) | ||||||
| FHLBB and FRB advances | (197 | ) | (303 | ) | (500 | ) | |||||
| Total interest-bearing liabilities | (135 | ) | (504 | ) | (639 | ) | |||||
| Change in net interest income | $ | 377 | $ | (135 | ) | $ | 242 | ||||
| Six Months Ended | |||||||||||
| June 30, 2020 v. 2019 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | 351 | $ | (654 | ) | $ | (303 | ) | |||
| Investment securities | 53 | (119 | ) | (66 | ) | ||||||
| Interest-earning deposits | 68 | (61 | ) | 7 | |||||||
| Total interest-earning assets | 472 | (834 | ) | (362 | ) | ||||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | 103 | 225 | 328 | ||||||||
| NOW accounts | 7 | (3 | ) | 4 | |||||||
| Money market accounts | 53 | (193 | ) | (140 | ) | ||||||
| Term certificates | 69 | (133 | ) | (64 | ) | ||||||
| Total interest-bearing deposits | 232 | (104 | ) | 128 | |||||||
| FHLBB and FRB advances | (346 | ) | (429 | ) | (775 | ) | |||||
| Total interest-bearing liabilities | (114 | ) | (533 | ) | (647 | ) | |||||
| Change in net interest income | $ | 586 | $ | (301 | ) | $ | 285 | ||||
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Three Months Ended June 30, 2020 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 3,944 | $ | 789 | $ | 4,733 | ||||||
| Provision for loan losses | 1,068 | - | 1,068 | |||||||||
| Net interest income after provision for loan losses | 2,876 | 789 | 3,665 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 245 | 21 | 266 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 14,736 | 14,736 | |||||||||
| Mortgage servicing fees, net | (95 | ) | (1,258 | ) | (1,353 | ) | ||||||
| Other | 85 | 132 | 217 | |||||||||
| Total non-interest income | 235 | 13,631 | 13,866 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 1,925 | 6,476 | 8,401 | |||||||||
| Occupancy and equipment | 465 | 374 | 839 | |||||||||
| Other non-interest expenses | 1,057 | 1,082 | 2,139 | |||||||||
| Total non-interest expenses | 3,447 | 7,932 | 11,379 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | (336 | ) | $ | 6,488 | 6,152 | ||||||
| Elimination of inter-segment profit | (367 | ) | ||||||||||
| Income before income taxes | 5,785 | |||||||||||
| Income tax expense | 594 | |||||||||||
| Net income | $ | 5,191 | ||||||||||
(1) Before elimination of inter-segment profit
The information above was derived from the internal management reporting system used by management to measure performance of the segments.
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Three Months Ended June 30, 2019 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 4,161 | $ | 328 | $ | 4,489 | ||||||
| Credit for loan losses | (144 | ) | - | (144 | ) | |||||||
| Net interest income after credit for loan losses | 4,305 | 328 | 4,633 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 322 | 40 | 362 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 5,299 | 5,299 | |||||||||
| Mortgage servicing fees, net | (92 | ) | 316 | 224 | ||||||||
| Other | 97 | 104 | 201 | |||||||||
| Total non-interest income | 327 | 5,759 | 6,086 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 1,786 | 4,306 | 6,092 | |||||||||
| Occupancy and equipment | 370 | 273 | 643 | |||||||||
| Other non-interest expenses | 1,298 | 840 | 2,138 | |||||||||
| Total non-interest expenses | 3,454 | 5,419 | 8,873 | |||||||||
| Income before income taxes and elimination of inter-segment profit | $ | 1,178 | $ | 668 | 1,846 | |||||||
| Elimination of inter-segment profit | (221 | ) | ||||||||||
| Loss before income taxes | 1,625 | |||||||||||
| Income tax expense | 119 | |||||||||||
| Net income | $ | 1,506 | ||||||||||
(1) Before elimination of inter-segment profit
The information above was derived from the internal management reporting system used by management to measure performance of the segments.
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Six Months Ended June 30, 2020 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 7,937 | $ | 1,220 | $ | 9,157 | ||||||
| Provision for loan losses | 1,792 | - | 1,792 | |||||||||
| Net interest income after provision for loan losses | 6,145 | 1,220 | 7,365 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 518 | 55 | 573 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 22,209 | 22,209 | |||||||||
| Mortgage servicing fees, net | (182 | ) | (2,426 | ) | (2,608 | ) | ||||||
| Other | 225 | 247 | 472 | |||||||||
| Total non-interest income | 561 | 20,085 | 20,646 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits (2) | 5,023 | 11,504 | 16,527 | |||||||||
| Occupancy and equipment | 869 | 668 | 1,537 | |||||||||
| Other non-interest expenses | 2,203 | 2,071 | 4,274 | |||||||||
| Total non-interest expenses | 8,095 | 14,243 | 22,338 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | (1,389 | ) | $ | 7,062 | 5,673 | ||||||
| Elimination of inter-segment profit | (695 | ) | ||||||||||
| Income before income taxes | 4,978 | |||||||||||
| Income tax expense | 605 | |||||||||||
| Net income | $ | 4,373 | ||||||||||
(1) Before elimination of inter-segment profit
(2) Salaries and benefits include the severance and vested stock acceleration costs related to the retirement of the CEO and CFO of the Bank. The total cost of this event was $1.38 million, of which $1.03 million was allocated to the Bank segment and the remainder, $344,000, was allocated to the mortgage segment.
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Six Months Ended June 30, 2019 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 8,343 | $ | 524 | $ | 8,867 | ||||||
| Credit for loan losses | (144 | ) | - | (144 | ) | |||||||
| Net interest income after credit for loan losses | 8,487 | 524 | 9,011 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 617 | 74 | 691 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 8,093 | 8,093 | |||||||||
| Mortgage servicing fees, net | (180 | ) | 723 | 543 | ||||||||
| Other | 222 | 156 | 378 | |||||||||
| Total non-interest income | 659 | 9,046 | 9,705 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 3,325 | 8,179 | 11,504 | |||||||||
| Occupancy and equipment | 770 | 529 | 1,299 | |||||||||
| Other non-interest expenses | 2,252 | 1,746 | 3,998 | |||||||||
| Total non-interest expenses | 6,347 | 10,454 | 16,801 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | 2,799 | $ | (884 | ) | 1,915 | ||||||
| Elimination of inter-segment profit | (377 | ) | ||||||||||
| Income before income taxes | 1,538 | |||||||||||
| Income tax expense | 83 | |||||||||||
| Net income | $ | 1,455 | ||||||||||
(1) Before elimination of inter-segment profit
Randolph Bancorp, Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(in thousands)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net income - GAAP basis | $ | 5,191 | $ | 1,506 | $ | 4,373 | $ | 1,455 | ||||||||
| Non-interest expense adjustments: | ||||||||||||||||
| Retirement salary and benefits compensation | - | - | 692 | - | ||||||||||||
| Accelerated vesting of stock-based compensation | - | - | 683 | - | ||||||||||||
| COVID-19 related expenses | 189 | - | 207 | - | ||||||||||||
| Net income - Non-GAAP basis | $ | 5,380 | $ | 1,506 | $ | 5,955 | $ | 1,455 | ||||||||
| Non-GAAP net income per share (basic and diluted) | $ | 1.06 | $ | 0.28 | $ | 1.17 | $ | 0.27 | ||||||||
| Weighted average shares outstanding | 5,092,490 | 5,455,679 | 5,107,700 | 5,467,057 | ||||||||||||
Randolph Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
| At or for the | At or for the | |||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||
| Return on average assets: (1, 5) | ||||||||||||||||||||
| GAAP | 2.97 | % | 0.94 | % | 1.31 | % | 0.47 | % | ||||||||||||
| Non-GAAP (2) | 3.08 | % | 0.94 | % | 1.78 | % | 0.47 | % | ||||||||||||
| Return on average equity: (1, 6) | ||||||||||||||||||||
| GAAP | 25.16 | % | 7.60 | % | 10.77 | % | 3.70 | % | ||||||||||||
| Non-GAAP (2) | 26.07 | % | 7.60 | % | 14.67 | % | 3.70 | % | ||||||||||||
| Net interest margin | 2.88 | % | 2.91 | % | 2.89 | % | 2.97 | % | ||||||||||||
| Non-interest income to total income: | ||||||||||||||||||||
| GAAP | 74.04 | % | 56.64 | % | 68.54 | % | 51.27 | % | ||||||||||||
| Efficiency ratio: (7) | ||||||||||||||||||||
| GAAP | 62.41 | % | 85.70 | % | 76.74 | % | 92.34 | % | ||||||||||||
| Non-GAAP (2) | 61.38 | % | 85.70 | % | 71.31 | % | 92.34 | % | ||||||||||||
| Tier 1 capital to average assets (3) | 11.93 | % | 12.41 | % | 11.93 | % | 12.41 | % | ||||||||||||
| Nonperforming assets as a percentage of total assets (4) | 0.47 | % | 0.37 | % | 0.47 | % | 0.37 | % | ||||||||||||
| Allowance for loan losses as a percentage of total loans (4) | 1.22 | % | 0.91 | % | 1.22 | % | 0.91 | % | ||||||||||||
| Allowance for loan losses as a percentage of non-performing loans | 186.60 | % | 179.44 | % | 186.60 | % | 179.44 | % | ||||||||||||
| Tangible book value per share | $ | 15.43 | $ | 13.70 | $ | 15.43 | $ | 13.70 | ||||||||||||
(1) Annualized for quarterly periods presented.
(2) See page 14 – Reconciliation of GAAP to Non-GAAP Net Income.
(3) Average assets calculated on a quarterly basis for all periods presented
(4) Total loans exclude loans held for sale but includes net deferred loan costs and fees.
(5) This non-GAAP measure represents net income divided by average total assets.
(6) This non-GAAP measure represents net income divided by average stockholders’ equity.
(7) This non-GAAP measure represents total non-interest expenses divided by the sum of net interest income and non-interest income.
Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)
Loan Payment Deferrals
| As of July 21, 2020 | ||||||||||||
| Commercial loans | Residential loans | Residential loans serviced for others | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Balance outstanding | $ | 172,748 | $ | 305,849 | $ | 1,365,234 | ||||||
| COVID-19 related loan payment deferrals: (1) | ||||||||||||
| Loans in COVID-19-related loan payment deferral | $ | 33,466 | $ | 12,428 | $ | 40,651 | ||||||
| Loans in deferral as a percentage of category loans | 19.4 | % | 4.1 | % | 3.0 | % | ||||||
| Loans with suspended payment | $ | 33,466 | $ | 10,513 | $ | 26,928 | ||||||
| Loans with reduced payment | - | 1,915 | 13,723 | |||||||||
| Loans which obtained a COVID-19-related payment deferral but | ||||||||||||
| have since resumed payment | $ | 5,461 | $ | 5,893 | $ | 23,667 | ||||||
| Loans reinstated (borrower paid any unpaid principal and interest) | - | 1,293 | 6,426 | |||||||||
| Loans on a repayment plan | - | - | 685 | |||||||||
| Loans which resumed payment but deferred principal and/or | ||||||||||||
| interest payments to maturity (2) | 5,461 | 4,600 | 15,922 | |||||||||
| Loans which were paid off completely | - | - | 160 | |||||||||
| Other loans | - | - | 474 | |||||||||
(1) Includes commercial loans that have been approved for loan payment deferral but for which documentation is closing or pending.
(2) Includes commercial loan for which maturity was extended.
Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)
COVID-19 Highly Impacted Sectors
| As of June 30, 2020 | ||||||||||||||||||||||||||||||||
| Exposure Balance | Exposure by Risk Weighting | |||||||||||||||||||||||||||||||
| Balance | ||||||||||||||||||||||||||||||||
| Real | Commercial | with | ||||||||||||||||||||||||||||||
| Estate | & | Deferred | ||||||||||||||||||||||||||||||
| Industry (1) | Total | Secured | Industrial (2) | Construction | Pass | Criticized | Payments | |||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Group home/care facility | $ | 1,123 | $ | 1,123 | $ | - | $ | - | $ | 1,123 | $ | - | $ | - | ||||||||||||||||||
| Hotels/hospitality | 12,560 | 12,526 | 34 | - | - | 12,560 | 12,560 | |||||||||||||||||||||||||
| Restaurants/food service | 6,804 | 1,637 | 5,167 | - | 6,180 | 624 | 1,805 | |||||||||||||||||||||||||
| Retail/shopping center | 22,731 | 18,056 | - | 4,675 | 22,731 | - | 8,261 | |||||||||||||||||||||||||
| Other sectors (3) | 9,747 | 9,432 | 315 | - | 9,597 | 150 | 9,747 | |||||||||||||||||||||||||
| Total loans in COVID-19 impacted sectors | $ | 52,965 | $ | 42,774 | $ | 5,516 | $ | 4,675 | $ | 39,631 | $ | 13,334 | $ | 32,373 | ||||||||||||||||||
| Percentage of commercial loans outstanding | 30.5 | % | 31.7 | % | 24.0 | % | 29.0 | % | ||||||||||||||||||||||||
| Commercial loans outstanding | $ | 173,794 | $ | 134,750 | $ | 22,940 | $ | 16,104 | ||||||||||||||||||||||||
| Loan to value secured by real estate (4) | 51.5 | % | 75.0 | % | ||||||||||||||||||||||||||||
| Restaurant/food service loans | ||||||||||||||||||||||||||||||||
| to enterprise value (2) | 60.3 | % | ||||||||||||||||||||||||||||||
(1) This disclosure focuses on industries with balances that are significant to the portfolio at June 30, 2020 and omits industries affected by the COVID-19 pandemic (oil and gas, transportation, etc.) to which the Company has minimal or no exposure.
(2) Commercial & Industrial loans primarily relate to restaurant franchises for which enterprise value is determined as a multiple of revenue or earnings before interest, taxes, depreciation, and amortization.
(3) Includes customers operating in various sectors which have been impacted by COVID-19.
(4) Loan to value secured by real estate equals the exposure balance divided by the most recent appraised value.
Category: Earnings
Source: Randolph Bancorp, Inc. and Envision Bank
CONTACT:
Envision Bank
William M. Parent
President and Chief Executive Officer
617.925.1955
