STOUGHTON, Mass., April 23, 2019 (GLOBE NEWSWIRE) -- Randolph Bancorp, Inc. (the “Company”) (NASDAQ Global Market: RNDB), the holding company for Envision Bank (the “Bank”), today announced a net loss of $51,000, or $0.01 per share, for the first quarter of 2019 compared to a net loss of $707,000, or $0.13 per share, for the first quarter of 2018.
James P. McDonough, President and Chief Executive Officer, stated, “Because of the typical slowdown in homebuying during the winter months in New England, our mortgage banking business generally experiences its lowest loan origination volume of the year during the first quarter. However, the actions taken in the fourth quarter of 2018 to expand our loan origination capabilities and to consolidate mortgage banking operations had a significant impact in the improvement in our first quarter revenues and operating results compared to the prior year period. Overall, our residential mortgage loan production increased 40% compared to the first quarter of last year and our pipeline of interest rate lock agreements with customers increased threefold at March 31, 2019 compared to March 31, 2018. With the drop in mortgage rates, we are optimistic that the recent surge in loan applications will be sustained throughout the upcoming Spring homebuying season.”
“We are also encouraged by the steady improvement in operating results in our community banking business,” Mr. McDonough added. “The leveraging of our capital through loan growth has resulted in steady improvement in our net interest income which increased approximately 10% in the first quarter of 2019 compared to the prior year period. As we continue to focus on this aspect of our business, we are pleased to announce the addition of Nancy Curry as our new Senior Vice President of Commercial Lending. Nancy joins us from Blue Hills Bank, where she had led their commercial real estate lending team.”
First Quarter Operating Results
Net interest income increased by $396,000, or 9.9%, to $4.4 million for the three months ended March 31, 2019 compared to the same period in the prior year. This increase was due to an increase in average interest-earning assets between periods of $76.7 million, or 15.4%, as the Company continued to leverage the capital raised in its 2016 initial public offering. The net interest margin decreased in the first quarter of 2019 to 3.04% from 3.20% in the first quarter of 2018 due primarily to the increased utilization of Federal Home Loan Bank of Boston (“FHLBB”) advances and brokered deposits to fund asset growth, combined with a flattening yield curve.
The Bank recognized no provision for loan losses for the three months ended March 31, 2019 compared to $95,000 for the three months ended March 31, 2018. Classified and nonaccrual loan balances were stable during the quarter. The provision during the first quarter of 2018 primarily reflected portfolio growth in the residential and commercial real estate loan portfolios. The allowance for loan losses was 0.88% of total loans at March 31, 2019 and 0.91% at December 31, 2018, and was 150.3% of non-performing loans at March 31, 2019 compared to 121.1% at December 31, 2018. The increase in the allowance as a percentage of non-performing loans was due to a reduction of $815,000 in non-performing loans during the first quarter.
Non-interest income increased $1.0 million, or 41.7%, to $3.4 million for the three months ended March 31, 2019 from $2.4 million for the three months ended March 31, 2018. This increase was primarily due to our mortgage banking business as the net gain on loan origination and sale activities increased $1.0 million, or 67.3%, to $2.6 million. Loan production capacity has significantly increased over the past year with the addition of new originators and expansion into Central and Western Massachusetts, as well the MetroWest region of the Boston market. In addition, the decrease in mortgage rates occurring during the first quarter of 2019 favorably impacted loan refinancing activity. Together, these factors resulted in a 40% increase in closed loan production and a threefold increase in outstanding interest rate locks with customers.
Non-interest expenses increased $880,000, or 12.6%, from $7.0 million for the three months ended March 31, 2018 to $7.9 million for the three months ended March 31, 2019. This increase was entirely attributable to salaries and employee benefits which increased $976,000 due primarily to: 1) increased commissions of $374,000; 2) transition payments to new loan originators of $300,000, and 3) higher employment related taxes of $160,000. The number of full-time equivalent employees increased by 16 from 180 at March 31, 2018 to 196 at March 31, 2019. This increase was entirely due to an increase in loan originators.
Other areas of non-interest expense decreased, in the aggregate, $96,000 between periods largely caused by a reduction of $114,000 in marketing spending due to prior year costs associated with the re-branding to Envision Bank.
The Company has a net operating loss carryforward (“NOL”) of $13.6 million. Since 2014, the NOL as well as other deferred tax assets have been subject to a full valuation allowance, which totaled $3.2 million at March 31, 2019. We evaluate this position on a quarterly basis. Based on recent operating results, we concluded that the valuation allowance should be maintained at March 31, 2019.
Balance Sheet
Total assets were unchanged at $614.3 million at March 31, 2019 as compared to December 31, 2018. An increase in loans held for sale of $3.4 million during the first quarter of 2019 was largely offset by decreases in net loans ($2.7 million) and securities available for sale ($367,000).
The decrease in net loans during the three months ended March 31, 2019 occurred principally as a result of decreases in commercial and industrial loans ($1.2 million) and consumer loans ($1.4 million). These loans are originated by other lenders with the Bank either purchasing or participating in the loan. Loan purchases were limited to less than $1.0 million during the first quarter of 2019 as the Bank expects loan growth during 2019 to be primarily in its internally generated real estate secured loans.
Deposits increased $6.7 million, or 1.5%, to $443.8 million at March 31, 2019 from $437.1 million at December 31, 2018. During this period brokered deposits decreased $224,000. Deposit growth was primarily used to repay FHLBB advances which decreased $5.4 million during the first quarter of 2019. Brokered deposits and FHLBB advances make up the Bank’s wholesale funding which the Bank targets to limit to 25% of total assets. At March 31, 2019, wholesale funding amounted to $144.0 million, or 23.4% of total assets.
Total stockholders’ equity increased $434,000 to $78.4 million at March 31, 2019 compared to $78.0 million at December 31, 2018. This increase was due to an increase of $640,000 in the fair value of available-for-sale securities and equity adjustments of $263,000 related to the stock benefit plan and employee stock ownership plan, partially offset by stock repurchases of $428,000 and the net loss of $51,000. The increase in the fair value of available-for-sale securities was due to a decrease in longer-term interest rates during the quarter. The Company’s tier one capital to average assets was 13.22% at March 31, 2019 compared to 14.08% at December 31, 2018. Envision Bank exceeded all regulatory capital requirements at March 31, 2019.
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.
Randolph Bancorp, Inc. is the sole member of Envision Bank Foundation, Inc. (the “Foundation”), a nonprofit corporation organized in 2016 to financially support community projects that improve the quality of life in markets served by Envision Bank. Since 2016, the Foundation has funded projects focused on support of military veterans and education. At March 31, 2019, the Foundation had total assets of $3.0 million.
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 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 and the efficiency ratio, 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)
| 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 | 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 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock | 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 | ||||
Randolph Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Interest and dividend income: | ||||||||
| Loans | $ | 5,588 | $ | 4,295 | ||||
| Other interest and dividend income | 428 | 432 | ||||||
| Total interest and dividend income | 6,016 | 4,727 | ||||||
| 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 | ||||||
| Other | 177 | 226 | ||||||
| Total non-interest income | 3,413 | 2,408 | ||||||
| Non-interest expenses: | ||||||||
| Salaries and employee benefits | 5,412 | 4,436 | ||||||
| Occupancy and equipment | 656 | 699 | ||||||
| Professional fees | 268 | 252 | ||||||
| Marketing | 189 | 303 | ||||||
| Other non-interest expenses | 1,353 | 1,308 | ||||||
| Total non-interest expenses | 7,878 | 6,998 | ||||||
| Loss before income taxes | (87 | ) | (703 | ) | ||||
| Income tax provision (benefit) | (36 | ) | 4 | |||||
| Net loss | $ | (51 | ) | $ | (707 | ) | ||
| Loss per share (basic and diluted) | $ | (0.01 | ) | $ | (0.13 | ) | ||
| Weighted average shares outstanding | 5,478,544 | 5,603,886 | ||||||
Randolph Bancorp, Inc.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)
| Average Balance and Yields | |||||||||||||||||||||||
| For the Three Months Ended March 31, | |||||||||||||||||||||||
| 2019 | 2018 | ||||||||||||||||||||||
| 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) | $ | 516,454 | $ | 5,588 | 4.33 | % | $ | 430,078 | $ | 4,295 | 3.99 | % | |||||||||||
| Investment securities(2) (3) | 55,156 | 404 | 2.93 | % | 61,522 | 421 | 2.74 | % | |||||||||||||||
| Interest-earning deposits | 4,550 | 28 | 2.46 | % | 7,885 | 29 | 1.47 | % | |||||||||||||||
| Total interest-earning assets | 576,160 | 6,020 | 4.18 | % | 499,485 | 4,745 | 3.80 | % | |||||||||||||||
| Noninterest-earning assets | 25,150 | 29,336 | |||||||||||||||||||||
| Total assets | $ | 601,310 | $ | 528,821 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Savings accounts | 101,976 | 82 | 0.32 | % | 104,140 | 41 | 0.16 | % | |||||||||||||||
| NOW accounts | 40,571 | 48 | 0.47 | % | 44,219 | 54 | 0.49 | % | |||||||||||||||
| Money market accounts | 71,407 | 228 | 1.28 | % | 67,714 | 115 | 0.68 | % | |||||||||||||||
| Term certificates | 163,668 | 802 | 1.96 | % | 100,146 | 270 | 1.08 | % | |||||||||||||||
| Total interest-bearing deposits | 377,622 | 1,160 | 1.23 | % | 316,219 | 480 | 0.61 | % | |||||||||||||||
| FHLB advances | 76,153 | 478 | 2.51 | % | 66,458 | 265 | 1.59 | % | |||||||||||||||
| Total interest-bearing liabilities | 453,775 | 1,638 | 1.44 | % | 382,677 | 745 | 0.78 | % | |||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||
| Noninterest-bearing deposits | 61,748 | 59,094 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 7,632 | 5,758 | |||||||||||||||||||||
| Total liabilities | 523,155 | 447,529 | |||||||||||||||||||||
| Total equity | 78,155 | 81,292 | |||||||||||||||||||||
| Total liabilities and equity | $ | 601,310 | $ | 528,821 | |||||||||||||||||||
| Net interest income | $ | 4,382 | $ | 4,000 | |||||||||||||||||||
| Interest rate spread(4) | 2.74 | % | 3.02 | % | |||||||||||||||||||
| Net interest-earning assets(5) | $ | 122,385 | $ | 116,808 | |||||||||||||||||||
| Net interest margin(6) | 3.04 | % | 3.20 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 126.97 | % | 130.52 | % | |||||||||||||||||||
(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 $4,000 and $18,000 for the three months ended March 31, 2019 and 2018, 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)
| 3 Months Ended | |||||||||||
| March 31, 2019 v. 2018 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | 913 | $ | 380 | $ | 1,293 | |||||
| Investment securities | (45 | ) | 28 | (17 | ) | ||||||
| Interest-earning deposits | (15 | ) | 14 | (1 | ) | ||||||
| Total interest-earning assets | 853 | 422 | 1,275 | ||||||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | (1 | ) | 42 | 41 | |||||||
| NOW accounts | (4 | ) | (2 | ) | (6 | ) | |||||
| Money market accounts | 7 | 106 | 113 | ||||||||
| Term certificates | 232 | 300 | 532 | ||||||||
| Total interest-bearing deposits | 234 | 446 | 680 | ||||||||
| FHLBB advances | 43 | 170 | 213 | ||||||||
| Total interest-bearing liabilities | 277 | 616 | 893 | ||||||||
| Change in net interest income | 576 | (194 | ) | 382 | |||||||
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| March 31, 2019 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 4,181 | $ | 197 | $ | 4,378 | ||||||
| Provision for loan losses | - | - | - | |||||||||
| Net interest income after provision for loan losses | 4,181 | 197 | 4,378 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 329 | - | 329 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 2,744 | 2,744 | |||||||||
| Mortgage servicing fees, net | (88 | ) | 407 | 319 | ||||||||
| Other | 125 | 52 | 177 | |||||||||
| Total non-interest income | 366 | 3,203 | 3,569 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 1,539 | 3,873 | 5,412 | |||||||||
| Occupancy and equipment | 400 | 256 | 656 | |||||||||
| Other non-interest expenses | 954 | 856 | 1,810 | |||||||||
| Total non-interest expenses | 2,893 | 4,985 | 7,878 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | 1,654 | $ | (1,585 | ) | 69 | ||||||
| Elimination of inter-segment profit | (156 | ) | ||||||||||
| Loss before income taxes | (87 | ) | ||||||||||
| Income tax benefit | (36 | ) | ||||||||||
| Net loss | $ | (51 | ) | |||||||||
| Total Assets March 31, 2019 | $ | 528,956 | $ | 85,392 | $ | 614,348 | ||||||
(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)
| March 31, 2018 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 3,740 | $ | 242 | $ | 3,982 | ||||||
| Provision for loan losses | 95 | - | 95 | |||||||||
| Net interest income after provision for loan losses | 3,645 | 242 | 3,887 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 270 | 31 | 301 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 1,800 | 1,800 | |||||||||
| Mortgage servicing fees, net | (68 | ) | 402 | 334 | ||||||||
| Other | 144 | 82 | 226 | |||||||||
| Total non-interest income | 346 | 2,315 | 2,661 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 1,636 | 2,800 | 4,436 | |||||||||
| Occupancy and equipment | 400 | 299 | 699 | |||||||||
| Other non-interest expenses | 1,069 | 794 | 1,863 | |||||||||
| Total non-interest expenses | 3,105 | 3,893 | 6,998 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | 886 | $ | (1,336 | ) | (450 | ) | |||||
| Elimination of inter-segment profit | (253 | ) | ||||||||||
| Loss before income taxes | (703 | ) | ||||||||||
| Income tax provision | 4 | |||||||||||
| Net loss | $ | (707 | ) | |||||||||
| Total Assets March 31, 2018 | $ | 473,513 | $ | 60,023 | $ | 533,536 | ||||||
(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.
Selected Financial Highlights
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Return on average assets: (1) | (0.03 | %) | (0.53 | %) | ||||
| Return on average equity: (1) | (0.26 | %) | (3.48 | %) | ||||
| Net interest margin | 3.04 | % | 3.20 | % | ||||
| Non-interest income to total income: | 36.20 | % | 33.75 | % | ||||
| Efficiency ratio: | 101.12 | % | 109.51 | % | ||||
| Tier 1 capital to average assets (2) | 13.22 | % | 15.52 | % | ||||
| Nonperforming assets as a percentage of total assets | 0.48 | % | 0.42 | % | ||||
| Allowance for loan losses as a percentage of total loans (3) | 0.88 | % | 0.93 | % | ||||
| Allowance for loan losses as a percentage of non-performing loans | 150.30 | % | 171.99 | % | ||||
| Tangible book value per share | 13.29 | 13.23 | ||||||
(1) Annualized for quarterly periods presented
(2) Average assets calculated on a quarterly basis for all periods presented
(3) Total loans excludes loans held for sale but includes net deferred loan costs and fees
For More Information, Contact:
Michael K. Devlin, Executive Vice President and Chief Financial Officer (617-925-1961)
mdevlin@envisionbank.com