STOUGHTON, Mass., Feb. 25, 2020 (GLOBE NEWSWIRE) -- Randolph Bancorp, Inc. (the “Company”) (NASDAQ Global Market: RNDB), the holding company for Envision Bank (the “Bank”), today announced net income of $828,000, or $0.16 per share, for the three months ended December 31, 2019 compared to a net loss of $228,000, or $0.04 per share, for the three months ended December 31, 2018. Net income for the year ended December 31, 2019 was $3,428,000, or $0.64 per share, compared to a net loss of $2,086,000, or $0.37 per share, for the year ended December 31, 2018.
The operating results for the fourth quarter and full year of 2018 were affected by non-recurring items. Excluding non-recurring items, the net loss was $1.6 million in the fourth quarter of 2018, while the net loss for the year ended December 31, 2018 was $3.7 million. The non-recurring items, all presented on a pre-tax basis, were as follows:
- A gain on the sale of buildings of $2.5 million, including a gain of $2.3 million in the fourth quarter,
- Restructuring charges of $1.0 million, including $875,000 in the fourth quarter, and
- An insurance recovery for property damage of $90,000.
At December 31, 2019, total assets amounted to $631.0 million compared to $641.4 million at September 30, 2019, a decrease of $10.4 million, or 1.7%. This decrease was due to a reduction of $31.6 million in loans held for sale during the quarter ended December 31, 2019 attributable to both a seasonal decline in home purchases and a dip in loan refinancing activity. The reduction in loans held for sale was partially offset by increases in the loan and investment portfolios of $11.9 million and $10.3 million, respectively.
James P. McDonough, President and Chief Executive Officer, stated, “The turnaround in operating results in 2019 has been extremely gratifying. In the fourth quarter of 2018, we paved the way for this turnaround with our consolidation of mortgage banking operations and the expansion of our geographic footprint to Central and Western Massachusetts with fully staffed loan origination offices. Shortly thereafter, we further enhanced our production capabilities with the addition of an experienced team of loan originators in Boston’s MetroWest region, all at a time when refinancing activity had slowed and sales margins had contracted. By enhancing our capacity to generate additional revenues, we were well positioned in 2019 to take advantage of the boom in loan refinancing activity resulting from the decline in mortgage rates which started in the first quarter of the year. As a result, we closed $969 million in residential mortgage loans in 2019, a near 90% increase from 2018. In addition, our gain on loan origination and sale activities increased by $11.4 million, or 151%, from $7.5 million in 2018 to $18.9 million in 2019.”
“We are also pleased with our progress throughout the second half of 2019 in growing our non-brokered deposits, a key strategic initiative,” Mr. McDonough commented. “During this period, such deposits increased $27.2 million, an annualized growth rate of 14.3%. We believe that our core checking account acquisition efforts working with a nationally recognized organization specializing in such programs, combined with our use of business development officers and a focus on the need for competitively priced products for both consumer and business customers, position us well to sustain this momentum into 2020,” he added.
Fourth Quarter Operating Results
Net interest income was flat at $4.4 million for the three months ended December 31, 2019 compared to the same period in the prior year. While average interest-earning assets increased between periods by $21.6 million, or 3.7%, the net interest margin decreased in the fourth quarter of 2019 to 2.88% from 3.01% in the fourth quarter of 2018 due primarily to the rising cost of deposits as more customers shift their funds to accounts offering more attractive interest rates.
The Company recognized a provision for loan losses of $144,000 for the three months ended December 31, 2019 compared to a provision of $579,000 in the prior year quarter. The provisions in both periods were primarily due to loan growth. The provision in the fourth quarter of 2018 also included $149,000 for an impaired consumer loan. The allowance for loan losses was 0.90% and 0.91% of total loans at December 31, 2019 and 2018, respectively, and was 131.4% and 121.1% of non-performing loans at December 31, 2019 and 2018, respectively.
Non-interest income increased $807,000 to $6.1 million for the three months ended December 31, 2019 from $5.3 million for the three months ended December 31, 2018. Non-interest income in the fourth quarter of 2018 included a gain of $2.3 million on the sale of our former Boston branch. Excluding this non-recurring item, non-interest income increased $3.1 million in the fourth quarter of 2019 compared to the prior year period due to an increase of $3.3 million, or 150.2%, in the gain on loan origination and sale activities. This increase was volume related due to the addition of nearly 20 loan originators over the past twelve months and the favorable interest rate environment. Beginning in the first quarter of 2019, interest rates on mortgage loans began to decline which led to the first significant increase in loan refinancing activity experienced in nearly three years. Together these factors resulted in a 171.4% increase in loans sold during the fourth quarter of 2019 compared to the prior year period. The increase in the gain on loan origination and sale activities was partially offset by a decrease in net loan servicing fees due to a fair value adjustment for mortgage servicing rights (“MSRs”) of $284,000 as actual loan prepayments exceeded expectations.
Non-interest expenses increased $153,000 to $9.5 million for the three months ended December 31, 2019 from $9.3 million for the three months ended December 31, 2018. Non-interest expenses in the fourth quarter of 2018 included a restructuring charge of $875,000 consisting of accruals for workforce reduction costs as well as contractual costs associated with office space no longer being used in Andover following consolidation of mortgage banking operations. Excluding this non-recurring item, non-interest expenses in the fourth quarter of 2019 increased $1.0 million compared to the prior year period principally due to an increase in salaries and employee benefits of $783,000. This increase was caused by higher salaries and commissions associated with increased residential loan production of $166 million and higher incentive compensation costs, partially offset by lower transition payments to new loan originators, lower non-restructuring related severance costs and an increase in deferred loan origination costs.
Income tax expense of $21,000 and $17,000 for the three months ended December 31, 2019 and 2018, respectively, consists solely of a state income tax provision. The Company has a net operating loss (“NOL”) carryforward for federal tax purposes of $12.0 million. Since 2014, the NOL as well as other deferred tax assets have been subject to a full valuation allowance, which totaled $2.3 million at December 31, 2019. The valuation allowance for net deferred tax assets was reduced in 2019 principally due to the impact of the Company’s earnings on the NOL carryforward. We evaluate the tax valuation allowance on a quarterly basis. Based primarily on an assessment of historical operating results, we concluded that the tax valuation allowance should be maintained at December 31, 2019.
Year End Operating Results
Net interest income increased by $1.1 million, or 6.8%, for the year ended December 31, 2019 compared to the prior year. This increase was due to an increase in average interest-earning assets between periods of $65.4 million, or 12.1%, partially offset by a decrease in net interest margin of 15 basis points from 3.10% in 2018 to 2.95% in 2019. The decrease in net interest margin is due to a reduction in the ratio of average interest-earning assets to interest-bearing liabilities from 129.1% in 2018 to 125.5% in 2019, as well as an increase in the cost of deposits as more customers shift their funds to accounts offering more attractive interest rates.
The Company did not recognize a provision for loan losses in 2019 while in 2018 it recognized a provision of $762,000. The principal reason that no provision was recognized in 2019 was the reduction in the loan portfolio of $14.8 million, while the provision in 2018 was principally attributable to loan portfolio growth of $84.1 million. Due to overall stability in both internal and external measures of credit risk, the general component of the allowance for loan losses remained largely unchanged in both years. The allowance for loan losses as a percentage of total loans was 0.90% and 0.91% at December 31, 2019 and 2018, respectively.
Non-interest income increased $8.0 million to $21.7 million for the year ended December 31, 2019 from $13.7 million for the year ended December 31, 2018. Non-interest income in 2018 included a gain of $2.5 million on the sale of buildings and a $90,000 insurance recovery. Excluding these non-recurring items, non-interest income increased $10.5 million in 2019 compared to the prior year due to an increase of $11.4 million, or 150.7%, in the gain on loan origination and sale activities. This increase was partially offset by a reduction in net loan servicing fees caused by a $920,000 decline in the fair value of certain MSRs. The increase in the gain on loan origination and sale activities in 2019 was a direct result of the addition of nearly 20 loan originators since mid-2018 and the boom in loan refinancing activity resulting from the decline in mortgage rates which began in the first quarter of the year. Together these factors resulted in a $511 million, or 133.5%, increase in loans sold in 2019 (excluding the sale of portfolio loans) compared to the prior year. The fair value adjustment for MSRs resulted from the acceleration of both actual and projected loan prepayments on serviced loans.
Non-interest expenses increased $4.3 million, or 13.5%, to $36.0 million for the year ended December 31, 2019 from $31.7 million for the year ended December 31, 2018. Non-interest expenses in 2018 included a restructuring charge of $1.0 million consisting of accruals for workforce reduction costs as well as contractual costs associated with office space no longer being used in Andover following consolidation of mortgage banking operations. Excluding this non-recurring item, non-interest expenses in 2019 increased $5.2 million compared to the prior year principally due to an increase in salaries and employee benefits of $5.1 million, or 26.0%. This increase was caused by higher salaries and commissions associated with increased residential loan production of $456.8 million, or 89.0%, and higher incentive compensation costs, partially offset by lower transition payments to new loan originators and non-restructuring related severance costs and an increase in deferred loan origination costs.
Spending on marketing in 2019 was $174,000 less than the prior year due to additional advertising in 2018 associated with the re-branding to Envision Bank. The increase of $358,000 in other non-interest expenses in 2019 was driven by the increase in Envision Mortgage’s loan production and the donation of unused land to a charity.
Income tax expense of $118,000 and $31,000 for the years ended December 31, 2019 and 2018, respectively, consisted solely of a state income tax provision.
Balance Sheet
Total assets were $631.0 million at December 31, 2019 compared to $614.3 million at December 31, 2018, an increase of $16.7 million, or 2.7%. This growth resulted from an increase of $24.3 million in loans held for sale and an increase of $6.9 million in the investment portfolio, partially offset by a decrease of $14.7 million in portfolio loans. The increase in loans held for sale was a direct result of the 124.4% increase in residential loan production achieved in the fourth quarter of 2019 as compared to the prior year period. The decrease in portfolio loans occurred largely as a result of the transfer from portfolio of $28.6 million in residential mortgage loans to loans held for sale as well as prepayments of commercial and industrial loans. The increase in total assets was funded by non-brokered deposit growth of $29.6 million.
Net loans totaled $469.1 million at December 31, 2019, a decrease of $14.7 million, or 3.0%, from the balance at December 31, 2018. This reduction occurred principally in commercial and industrial participation loans which decreased by $12.2 million due principally to significant prepayments during the year. No new loan participations were purchased in 2019. One-to four-family residential mortgage loans decreased by $2.0 million in 2019 due to the transfer of loans from portfolio to loans held for sale and by the sale of a higher proportion of residential mortgage originations into the secondary market. Consumer loans, which consist primarily of purchased loans, decreased by $3.8 million in 2019 as loan repayments exceeded loan purchases during the year. No purchases of student loans and unsecured consumer loans were made in 2019.
Deposits increased $59.9 million, or 13.7%, to $497.0 million at December 31, 2019 from $437.1 million at December 31, 2018. Included in this increase was $30.3 million of brokered deposits. Non-brokered deposits increased $29.6 million, or 7.9%, in 2019 despite deposit run-off of nearly $10.0 million following the December 2018 closing of the Boston branch. The growth in non-brokered deposits experienced in 2019 has occurred primarily in competitively priced savings and money market accounts.
Total stockholders’ equity was $78.5 million at December 31, 2019 compared to $78.0 million at December 31, 2018. The increase of $501,000 in 2019 was due to net income of $3.4 million, an increase in the fair value of available-for-sale securities of $1.5 million and equity adjustments of $1.2 million related to the stock benefit plan and employee stock ownership plan. These increases were partially offset by stock repurchases of $5.4 million as the Company repurchased 353,572 of its shares in 2019 at an average cost of $15.35 per share. The Bank’s tier one capital to average assets was 11.3% at December 31, 2019 compared to 10.9% at December 31, 2018. The Bank exceeded all regulatory capital requirements at December 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 inception, the Foundation has funded projects focused on support of military veterans and their families, and education.
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, 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)
| December 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| Assets | ||||||||
| Cash and due from banks | $ | 4,371 | $ | 3,451 | ||||
| Interest-bearing deposits | 3,881 | 3,667 | ||||||
| Total cash and cash equivalents | 8,252 | 7,118 | ||||||
| Certificates of deposit | 490 | 2,205 | ||||||
| Securities available for sale, at fair value | 57,503 | 50,556 | ||||||
| Loans held for sale, at fair value | 62,792 | 38,474 | ||||||
| Loans, net of allowance for loan losses of $4,280 in 2019 and $4,437 in 2018 | 469,131 | 483,846 | ||||||
| Federal Home Loan Bank of Boston stock, at cost | 2,417 | 4,700 | ||||||
| Accrued interest receivable | 1,393 | 1,504 | ||||||
| Mortgage servicing rights, net | 8,556 | 7,786 | ||||||
| Premises and equipment, net | 5,748 | 6,368 | ||||||
| Bank-owned life insurance | 8,441 | 8,256 | ||||||
| Foreclosed real estate, net | - | 65 | ||||||
| Other assets | 6,281 | 3,462 | ||||||
| Total assets | $ | 631,004 | $ | 614,340 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 61,603 | $ | 64,229 | ||||
| Interest bearing | 344,581 | 312,321 | ||||||
| Brokered | 90,858 | 60,580 | ||||||
| Total deposits | 497,042 | 437,130 | ||||||
| Federal Home Loan Bank of Boston advances | 44,403 | 89,036 | ||||||
| Mortgagors' escrow accounts | 2,052 | 2,129 | ||||||
| Post-employment benefit obligations | 2,464 | 2,551 | ||||||
| Other liabilities | 6,581 | 5,533 | ||||||
| Total liabilities | 552,542 | 536,379 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock | 56 | 60 | ||||||
| Additional paid-in capital | 51,127 | 55,608 | ||||||
| Retained earnings | 31,757 | 28,329 | ||||||
| ESOP-Unearned compensation | (3,944 | ) | (4,132 | ) | ||||
| Accumulated other comprehensive loss, net of tax | (534 | ) | (1,904 | ) | ||||
| Total stockholders' equity | 78,462 | 77,961 | ||||||
| Total liabilities and stockholders' equity | $ | 631,004 | $ | 614,340 | ||||
Randolph Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans | $ | 5,841 | $ | 5,624 | $ | 23,631 | $ | 19,541 | ||||||||
| Other interest and dividend income | 378 | 426 | 1,600 | 1,743 | ||||||||||||
| Total interest and dividend income | 6,219 | 6,050 | 25,231 | 21,284 | ||||||||||||
| Interest expense | 1,828 | 1,630 | 7,398 | 4,588 | ||||||||||||
| Net interest income | 4,391 | 4,420 | 17,833 | 16,696 | ||||||||||||
| Provision for loan losses | 144 | 579 | - | 762 | ||||||||||||
| Net interest income after provision for loan losses | 4,247 | 3,841 | 17,833 | 15,934 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Customer service fees | 353 | 368 | 1,407 | 1,464 | ||||||||||||
| Gain on loan origination and sale activities, net | 5,462 | 2,183 | 18,900 | 7,539 | ||||||||||||
| Mortgage servicing fees, net | 32 | 329 | 394 | 1,264 | ||||||||||||
| Gain on sale of buildings | - | 2,261 | - | 2,476 | ||||||||||||
| Other | 245 | 144 | 962 | 940 | ||||||||||||
| Total non-interest income | 6,092 | 5,285 | 21,663 | 13,683 | ||||||||||||
| Non-interest expenses: | ||||||||||||||||
| Salaries and employee benefits | 6,382 | 5,599 | 24,896 | 19,765 | ||||||||||||
| Occupancy and equipment | 811 | 716 | 2,783 | 2,873 | ||||||||||||
| Professional fees | 366 | 340 | 1,185 | 1,164 | ||||||||||||
| Marketing | 322 | 274 | 967 | 1,141 | ||||||||||||
| Restructuring charges | - | 875 | - | 968 | ||||||||||||
| Other non-interest expenses | 1,609 | 1,533 | 6,119 | 5,761 | ||||||||||||
| Total non-interest expenses | 9,490 | 9,337 | 35,950 | 31,672 | ||||||||||||
| Income (loss) before income taxes | 849 | (211 | ) | 3,546 | (2,055 | ) | ||||||||||
| Income tax expense | 21 | 17 | 118 | 31 | ||||||||||||
| Net income (loss) | $ | 828 | $ | (228 | ) | $ | 3,428 | $ | (2,086 | ) | ||||||
| Net income (loss) per share (basic and diluted) | $ | 0.16 | $ | (0.04 | ) | $ | 0.64 | $ | (0.37 | ) | ||||||
| Weighted average shares outstanding | 5,248,021 | 5,526,416 | 5,383,617 | 5,570,720 | ||||||||||||
Randolph Bancorp, Inc.
Averages Balances/Yields
(Dollars in thousands)
(Unaudited)
| Average Balance and Yields | |||||||||||||||||||||
| For the Three Months Ended December 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) | $ | 554,972 | $ | 5,841 | 4.21 | % | $ | 526,192 | $ | 5,624 | 4.28 | % | |||||||||
| Investment securities(2) (3) | 50,290 | 367 | 2.92 | % | 58,055 | 403 | 2.78 | % | |||||||||||||
| Interest-earning deposits | 5,038 | 13 | 1.03 | % | 4,474 | 27 | 2.41 | % | |||||||||||||
| Total interest-earning assets | 610,300 | 6,221 | 4.08 | % | 588,721 | 6,054 | 4.11 | % | |||||||||||||
| Noninterest-earning assets | 32,250 | 28,310 | |||||||||||||||||||
| Total assets | $ | 642,550 | $ | 617,031 | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||
| Savings accounts | 120,343 | 223 | 0.74 | % | 101,566 | 52 | 0.20 | % | |||||||||||||
| NOW accounts | 38,389 | 50 | 0.52 | % | 42,291 | 50 | 0.47 | % | |||||||||||||
| Money market accounts | 80,623 | 241 | 1.20 | % | 60,442 | 200 | 1.32 | % | |||||||||||||
| Term certificates | 200,123 | 1,068 | 2.13 | % | 162,570 | 693 | 1.71 | % | |||||||||||||
| Total interest-bearing deposits | 439,478 | 1,582 | 1.44 | % | 366,869 | 995 | 1.08 | % | |||||||||||||
| FHLBB advances | 50,444 | 246 | 1.95 | % | 98,460 | 635 | 2.58 | % | |||||||||||||
| Total interest-bearing liabilities | 489,922 | 1,828 | 1.49 | % | 465,329 | 1,630 | 1.40 | % | |||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||
| Noninterest-bearing deposits | 62,674 | 66,608 | |||||||||||||||||||
| Other noninterest-bearing liabilities | 9,337 | 6,851 | |||||||||||||||||||
| Total liabilities | 561,933 | 538,788 | |||||||||||||||||||
| Total stockholders' equity | 80,617 | 78,243 | |||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 642,550 | $ | 617,031 | |||||||||||||||||
| Net interest income | $ | 4,393 | $ | 4,424 | |||||||||||||||||
| Interest rate spread(4) | 2.58 | % | 2.71 | % | |||||||||||||||||
| Net interest-earning assets(5) | $ | 120,378 | $ | 123,392 | |||||||||||||||||
| Net interest margin(6) | 2.88 | % | 3.01 | % | |||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 124.57 | % | 126.52 | % | |||||||||||||||||
(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 $2,000 and $4,000 for the three months ended December 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.
Averages Balances/Yields
(Dollars in thousands)
(Unaudited)
| Average Balance and Yields | |||||||||||||||||||||||
| For the Year Ended December 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) | $ | 547,454 | $ | 23,632 | 4.32 | % | $ | 471,849 | $ | 19,541 | 4.14 | % | |||||||||||
| Investment securities(2) (3) | 52,953 | 1,521 | 2.87 | % | 61,566 | 1,658 | 2.69 | % | |||||||||||||||
| Interest-earning deposits | 5,109 | 90 | 1.76 | % | 6,689 | 117 | 1.75 | % | |||||||||||||||
| Total interest-earning assets | 605,516 | 25,243 | 4.17 | % | 540,104 | 21,316 | 3.95 | % | |||||||||||||||
| Noninterest-earning assets | 27,903 | 26,621 | |||||||||||||||||||||
| Total assets | $ | 633,419 | $ | 566,725 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Savings accounts | 108,483 | 560 | 0.52 | % | 103,228 | 185 | 0.18 | % | |||||||||||||||
| NOW accounts | 39,197 | 194 | 0.49 | % | 42,449 | 205 | 0.48 | % | |||||||||||||||
| Money market accounts | 69,362 | 955 | 1.38 | % | 67,817 | 674 | 0.99 | % | |||||||||||||||
| Term certificates | 178,901 | 3,619 | 2.02 | % | 132,984 | 2,006 | 1.51 | % | |||||||||||||||
| Total interest-bearing deposits | 395,943 | 5,328 | 1.35 | % | 346,478 | 3,070 | 0.89 | % | |||||||||||||||
| FHLBB advances | 86,724 | 2,070 | 2.39 | % | 71,990 | 1,518 | 2.11 | % | |||||||||||||||
| Total interest-bearing liabilities | 482,667 | 7,398 | 1.53 | % | 418,468 | 4,588 | 1.10 | % | |||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||
| Noninterest-bearing deposits | 62,314 | 62,350 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 8,845 | 6,295 | |||||||||||||||||||||
| Total liabilities | 553,826 | 487,113 | |||||||||||||||||||||
| Total stockholders' equity | 79,593 | 79,612 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 633,419 | $ | 566,725 | |||||||||||||||||||
| Net interest income | $ | 17,845 | $ | 16,728 | |||||||||||||||||||
| Interest rate spread(4) | 2.64 | % | 2.85 | % | |||||||||||||||||||
| Net interest-earning assets(5) | $ | 122,849 | $ | 121,636 | |||||||||||||||||||
| Net interest margin(6) | 2.95 | % | 3.10 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 125.45 | % | 129.07 | % | |||||||||||||||||||
(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 $12,000 and $32,000 for the years ended December 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)
| For the Three Months Ended | |||||||||||
| December 31, 2019 v. 2018 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | 304 | $ | (87 | ) | $ | 217 | ||||
| Investment securities | (57 | ) | 20 | (37 | ) | ||||||
| Interest-earning deposits | 3 | (16 | ) | (13 | ) | ||||||
| Total interest-earning assets | 250 | (83 | ) | 167 | |||||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | 11 | 160 | 171 | ||||||||
| NOW accounts | (5 | ) | 5 | - | |||||||
| Money market accounts | 60 | (19 | ) | 41 | |||||||
| Term certificates | 181 | 194 | 375 | ||||||||
| Total interest-bearing deposits | 247 | 340 | 587 | ||||||||
| FHLBB advances | (259 | ) | (130 | ) | (389 | ) | |||||
| Total interest-bearing liabilities | (12 | ) | 210 | 198 | |||||||
| Change in net interest income | $ | 262 | $ | (293 | ) | $ | (31 | ) | |||
| For the Years Ended | |||||||||||
| December 31, 2019 v. 2018 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | 3,236 | $ | 855 | $ | 4,091 | |||||
| Investment securities | (242 | ) | 105 | (137 | ) | ||||||
| Interest-earning deposits | (28 | ) | 1 | (27 | ) | ||||||
| Total interest-earning assets | 2,966 | 961 | 3,927 | ||||||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | 10 | 365 | 375 | ||||||||
| NOW accounts | (16 | ) | 5 | (11 | ) | ||||||
| Money market accounts | 16 | 265 | 281 | ||||||||
| Term certificates | 811 | 802 | 1,613 | ||||||||
| Total interest-bearing deposits | 821 | 1,437 | 2,258 | ||||||||
| FHLBB advances | 336 | 216 | 552 | ||||||||
| Total interest-bearing liabilities | 1,157 | 1,653 | 2,810 | ||||||||
| Change in net interest income | $ | 1,809 | $ | (692 | ) | $ | 1,117 | ||||
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Three Months Ended December 31, 2019 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 3,862 | $ | 529 | $ | 4,391 | ||||||
| Provision for loan losses | 144 | - | 144 | |||||||||
| Net interest income after provision for loan losses | 3,718 | 529 | 4,247 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 320 | 33 | 353 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 5,808 | 5,808 | |||||||||
| Mortgage servicing fees, net | (90 | ) | 122 | 32 | ||||||||
| Other | 132 | 113 | 245 | |||||||||
| Total non-interest income | 362 | 6,076 | 6,438 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 1,773 | 4,609 | 6,382 | |||||||||
| Occupancy and equipment | 390 | 421 | 811 | |||||||||
| Other non-interest expenses | 1,354 | 943 | 2,297 | |||||||||
| Total non-interest expenses | 3,517 | 5,973 | 9,490 | |||||||||
| Income before income taxes and elimination of inter-segment profit | $ | 563 | $ | 632 | 1,195 | |||||||
| Elimination of inter-segment profit | (346 | ) | ||||||||||
| Income before income taxes | 849 | |||||||||||
| Income tax expense | 21 | |||||||||||
| Net income | $ | 828 | ||||||||||
(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 December 31, 2018 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 4,123 | $ | 297 | $ | 4,420 | ||||||
| Provision for loan losses | 579 | - | 579 | |||||||||
| Net interest income after provision for loan losses | 3,544 | 297 | 3,841 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 300 | 68 | 368 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 2,419 | 2,419 | |||||||||
| Mortgage servicing fees, net | (85 | ) | 414 | 329 | ||||||||
| Gain on sale of building | 2,261 | - | 2,261 | |||||||||
| Other | 87 | 57 | 144 | |||||||||
| Total non-interest income | 2,563 | 2,958 | 5,521 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 1,944 | 3,655 | 5,599 | |||||||||
| Occupancy and equipment | 417 | 299 | 716 | |||||||||
| Restructuring charge | - | 875 | 875 | |||||||||
| Other non-interest expenses | 1,121 | 1,026 | 2,147 | |||||||||
| Total non-interest expenses | 3,482 | 5,855 | 9,337 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | 2,625 | $ | (2,600 | ) | 25 | ||||||
| Elimination of inter-segment profit | (236 | ) | ||||||||||
| Loss before income taxes | (211 | ) | ||||||||||
| Income tax expense | 17 | |||||||||||
| Net loss | $ | (228 | ) | |||||||||
(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 Year Ended December 31, 2019 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 15,985 | $ | 1,848 | $ | 17,833 | ||||||
| Provision for loan losses | - | - | - | |||||||||
| Net interest income after provision for loan losses | 15,985 | 1,848 | 17,833 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 1,268 | 139 | 1,407 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 19,851 | 19,851 | |||||||||
| Mortgage servicing fees, net | (363 | ) | 757 | 394 | ||||||||
| Other | 596 | 366 | 962 | |||||||||
| Total non-interest income | 1,501 | 21,113 | 22,614 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 7,065 | 17,831 | 24,896 | |||||||||
| Occupancy and equipment | 1,527 | 1,256 | 2,783 | |||||||||
| Other non-interest expenses | 4,789 | 3,482 | 8,271 | |||||||||
| Total non-interest expenses | 13,381 | 22,569 | 35,950 | |||||||||
| Income before income taxes and elimination of inter-segment profit | $ | 4,105 | $ | 392 | 4,497 | |||||||
| Elimination of inter-segment profit | (951 | ) | ||||||||||
| Income before income taxes | 3,546 | |||||||||||
| Income tax expense | 118 | |||||||||||
| Net income | $ | 3,428 | ||||||||||
| Total assets - December 31, 2019 | $ | 521,144 | $ | 109,860 | $ | 631,004 | ||||||
(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 Year Ended December 31, 2018 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 15,664 | $ | 1,032 | $ | 16,696 | ||||||
| Provision for loan losses | 762 | - | 762 | |||||||||
| Net interest income after provision for loan losses | 14,902 | 1,032 | 15,934 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 1,344 | 120 | 1,464 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 8,859 | 8,859 | |||||||||
| Mortgage servicing fees, net | (310 | ) | 1,574 | 1,264 | ||||||||
| Gain on sale of buildings | 2,476 | - | 2,476 | |||||||||
| Other | 520 | 420 | 940 | |||||||||
| Total non-interest income | 4,030 | 10,973 | 15,003 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 6,793 | 12,972 | 19,765 | |||||||||
| Occupancy and equipment | 1,507 | 1,366 | 2,873 | |||||||||
| Restructuring charge | - | 968 | 968 | |||||||||
| Other non-interest expenses | 4,476 | 3,590 | 8,066 | |||||||||
| Total non-interest expenses | 12,776 | 18,896 | 31,672 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | 6,156 | $ | (6,891 | ) | (735 | ) | |||||
| Elimination of inter-segment profit | (1,320 | ) | ||||||||||
| Loss before income taxes | (2,055 | ) | ||||||||||
| Income tax expense | 31 | |||||||||||
| Net loss | $ | (2,086 | ) | |||||||||
| Total assets December 31, 2018 | $ | 526,871 | $ | 87,469 | $ | 614,340 | ||||||
(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.
Reconciliation of GAAP to Non-GAAP Net Loss
(In thousands)
(Unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||
| 2018 | 2018 | |||||||||
| Net loss - GAAP basis | $ | (228 | ) | $ | (2,086 | ) | ||||
| Non-interest income adjustments: | ||||||||||
| Gain on sales of buildings | (2,261 | ) | (2,476 | ) | ||||||
| Gain on insurance recovery | - | (90 | ) | |||||||
| Non-interest expense adjustments: | ||||||||||
| Restructuring charges | 875 | 968 | ||||||||
| Net loss - Non-GAAP basis | $ | (1,614 | ) | $ | (3,684 | ) | ||||
The Company’s management believes that the presentation of net loss on a non-GAAP basis excluding non-recurring items provides useful information for evaluating operating results and any related trends that may be affecting the Company’s business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP.
There were no non-GAAP adjustments for the three and twelve month periods ended December 31, 2019.
Randolph Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Return on average assets: (1) | ||||||||||||
| GAAP | 0.52 | % | (0.15 | %) | 0.54 | % | (0.37 | %) | ||||
| Non-GAAP (2) | NA | (1.05 | %) | NA | (0.65 | %) | ||||||
| Return on average equity: (1) | ||||||||||||
| GAAP | 4.11 | % | (1.17 | %) | 4.31 | % | (2.62 | %) | ||||
| Non-GAAP (2) | NA | (8.25 | %) | NA | (4.63 | %) | ||||||
| Net interest margin | 2.88 | % | 3.01 | % | 2.95 | % | 3.10 | % | ||||
| Non-interest income to total income: | ||||||||||||
| GAAP | 49.48 | % | 46.63 | % | 46.20 | % | 39.13 | % | ||||
| Non-GAAP (2) | NA | 33.33 | % | NA | 34.31 | % | ||||||
| Efficiency ratio: | ||||||||||||
| GAAP | 90.53 | % | 96.21 | % | 91.02 | % | 104.26 | % | ||||
| Non-GAAP (2) | NA | 113.68 | % | NA | 110.39 | % | ||||||
| Tier 1 capital to average assets (Bank) (3) | 11.30 | % | 10.88 | % | 11.30 | % | 10.88 | % | ||||
| Nonperforming assets as a percentage of total assets | 0.52 | % | 0.61 | % | 0.52 | % | 0.61 | % | ||||
| Allowance for loan losses as a percentage of total loans (4) | 0.90 | % | 0.91 | % | 0.90 | % | 0.91 | % | ||||
| Allowance for loan losses as a percentage of non-performing loans | 131.37 | % | 121.06 | % | 131.37 | % | 121.06 | % | ||||
| Tangible book value per share | 14.06 | 13.19 | 14.06 | 13.19 | ||||||||
(1) Annualized for quarterly periods presented.
(2) See page 14 – Reconciliation of GAAP to Non-GAAP Net Loss
(3) Average assets calculated on a quarterly basis for all periods presented
(4) Total loans excludes loans held for sale but includes net deferred loan costs and fees
NA – Not applicable
| For More Information, Contact: Michael K. Devlin, Executive Vice President and Chief Financial Officer (617-925-1961) mdevlin@envisionbank.com |