STOUGHTON, Mass., Feb. 16, 2021 (GLOBE NEWSWIRE) -- Randolph Bancorp, Inc. (the “Company”) (NASDAQ Global Market: RNDB), the holding company for Envision Bank (the “Bank”), today announced net income of $5.3 million, or $1.03 per basic share and $1.01 per diluted share, for the three months ended December 31, 2020 compared to net income of $0.8 million, or $0.16 per basic and diluted share, for the three months ended December 31, 2019. Excluding one-time charges of $294,000 related to the closing of a residential lending office and $69,000 in severance expenses, earnings were $5.6 million, or $1.06 per diluted share for the three months ended December 31, 2020. Net income for the year ended December 31, 2020 was $19.9 million, or $3.89 per basic share and $3.86 per diluted share, compared to net income of $3.4 million, or $0.64 per basic and diluted share, for the year ended December 31, 2019. Excluding one-time charges of $1.4 million related to the retirement of senior executives, operating expenses of $229,000 related to addressing the COVID-19 pandemic, $294,000 in expenses related to the closing of a residential lending office and $69,000 in severance expenses, earnings were $21.5 million, or $4.15 per diluted share, for the year ended December 31, 2020.
At December 31, 2020, total assets amounted to $721.1 million, compared to $723.0 million at September 30, 2020, a decrease of $1.9 million, or 0.3%. An increase in loans held for sale of $31.3 million was offset by a decrease in cash and cash equivalents of $35.3 million relative to the prior quarter.
William M. Parent, President and Chief Executive Officer, stated, “The fourth quarter was another strong quarter in earnings for our Company. We are very pleased with our performance, especially our mortgage banking operations, which maintained high levels of productivity and efficiency throughout our loan origination and sales activities. We continue to identify and implement opportunities to streamline and improve our operational efficiency. In that regard, we have initiated a plan to outsource our residential loan servicing activities, which will improve our customer service experience and our operational and financial efficiency in the year ahead.”
Fourth Quarter Operating Results
Net interest income increased by $649,000, or 14.8%, to $5.0 million for the three months ended December 31, 2020 from $4.4 million the same period in the prior year. This increase was primarily due to an increase in the proportion of non-maturity deposits and a decline in the proportion of term certificates from the same period in the prior year. The average balance of savings accounts in the fourth quarter of 2020 increased $61.3 million, or 50.9%, from the prior year quarter and the average balance of term certificates decreased $87.9 million, or 43.9%, from the prior year quarter, contributing to an 87 basis point decrease in the cost of interest-bearing liabilities. Net interest margin increased in the fourth quarter of 2020 to 3.02%, from 2.88% in the fourth quarter of 2019. The change reflects the shortening and downward pricing of deposit liabilities as well as the forgiveness of Paycheck Protection Program loans (“SBA PPP Loans”) during the quarter of $4.4 million resulting in the accretion of deferred loan origination fees into interest income.
The Company recognized a provision for loan losses of $215,000 for the quarter ended December 31, 2020, largely driven by commercial real estate loan originations. The allowance for loan losses was 1.38% and 0.90% of total loans at December 31, 2020 and December 31, 2019, respectively, and was 94.6% and 131.4% of non-performing assets at December 31, 2020 and December 31, 2019, respectively.
Non-interest income increased $9.5 million, or 155.9%, to $15.6 million for the quarter ended December 31, 2020 from $6.1 million in the quarter ended December 31, 2019, principally due to an increase of $9.2 million in the net gain on loan origination and sale activities. Sold mortgage loans totaled $426.5 million in the fourth quarter of 2020. Mortgage servicing fees increased $243,000 in the quarter ended December 31, 2020, principally due to an impairment of mortgage servicing rights of $284,000 in the quarter ended December 31, 2019.
Non-interest expenses increased $3.4 million to $12.9 million in the quarter ended December 31, 2020 from $9.5 million in the quarter ended December 31, 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.
Occupancy and equipment expenses increased $339,000 in the quarter ended December 31, 2020 over the prior year period due to the closing of a residential lending office, as the bank consolidates its office space in light of prolonged remote working arrangements, resulting in a charge of $294,000 in the quarter.
Other non-interest expenses comprising professional fees, marketing, FDIC insurance and other non-interest expenses increased by $758,000 in the quarter ended December 31, 2020 versus the prior year period, as elevated mortgage loan production costs were partially offset by a decrease in discretionary marketing expenses. In addition, other non-interest expenses in the quarter ended December 31, 2020 included $584,000 to establish a reserve for unfunded loan commitments.
Year-End Operating Results
Net interest income increased by $1.0 million, or 5.8%, for the year ended December 31, 2020 compared to the same period in the prior year. This increase was driven by a $19.5 million increase in average net-interest earning assets, partially offset by a 5 basis point decline in net interest margin as the reduction in deposit costs lagged the impact of the lower interest rate environment on our interest earning asset yield.
The Company recognized a provision for loan losses of $2.6 million for the year ended December 31, 2020 compared to no provision in the prior year period.
Non-interest income increased $33.7 million, or 155.8%, to $55.4 million for the year ended December 30, 2020 from $21.7 million in the year ended December 31, 2019, principally due to an increase of $35.3 million in the net gain on loan origination and sale activities. Mortgage loans sold were $1.5 billion for the year ended December 31, 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 $2.1 million in the year ended December 31, 2020, given expectations of higher prepayments. The fair value adjustment for mortgage servicing rights was $920,000 in the year ended December 31, 2019.
Non-interest expenses increased $10.4 million, or 28.8%, to $46.3 million for the year ended December 31, 2020 from $36.0 million for the year ended December 31, 2019. Non-interest expenses for the year ended December 31, 2020 included one-time charges of $1.4 million related to the retirement of senior executives, $229,000 of COVID-19 pandemic-related expenses, $294,000 in expenses related to the closing of a residential lending office and $69,000 in severance expenses related to the planned outsourcing of residential loan servicing.
Salaries and employee benefits increased $8.3 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 front-line and quarantined employees during the year ended December 31, 2020.
Occupancy and equipment expenses increased $762,000 in the year ended December 31, 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $125,000, $294,000 in expenses related to the closing of a residential lending office, 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 for the year ended 2020 increased $92,000 over the prior year period, primarily related to management succession planning costs. Spending on marketing during the year ended December 31, 2020 was $278,000 less than in the prior year, due to fewer marketing campaigns while communities were subject to stay-at-home orders. The increase of $1.5 million in other non-interest expenses during the year ended 2020 was driven mainly by costs related to higher mortgage loan production and the establishment of a reserve for unfunded loan commitments.
Income tax expense of $5.5 million for the year ended December 31, 2020 consists of both federal and state income taxes, as the Company’s net operating loss carryforward of $12.0 million from prior years was fully absorbed during the third quarter.
Balance Sheet
At December 31, 2020, total assets amounted to $721.1 million compared to $631.0 million at December 31, 2019, an increase of $90.1 million, or 14.3%. Contributing to asset growth was a $14.5 million increase in net loans to $483.6 million at December 31, 2020 from $469.1 million at December 31, 2019, mainly driven by the issuance of SBA PPP Loans, which had a balance of $10.9 million at December 31, 2020. Cash and cash equivalents increased by $5.5 million during the year to $13.8 million at December 31, 2020 from $8.3 million at December 31, 2019, mainly as a result of strong core growth in deposits and the timing of cash proceeds from loan sales. Loans held for sale increased by $56.3 million to $119.1 million at December 31, 2020 from $62.8 million at December 31, 2019.
The increase in total assets was funded by deposit growth. Non-brokered deposits totaled $496.6 million at December 31, 2020, increasing by $90.4 million, or 22.3%, during the year ended December 31, 2020 from $406.2 million at December 31, 2019. Driving the growth in non-brokered deposits were customers’ receipt of government stimulus and our focus on deposit gathering prior to the onset of the COVID-19 pandemic. Brokered deposits declined by $59.1 million to $31.7 million at December 31, 2020, from $90.9 million at December 31, 2019. Federal Home Loan Bank of Boston (“FHLBB”) and Federal Reserve Bank advances increased by $28.9 million to $73.3 million at December 31, 2020, from $44.4 million at December 31, 2019, as a result of the funding of our SBA PPP Loans and other loans with FHLBB and Federal Reserve Bank advances.
Total stockholders’ equity was $99.8 million at December 31, 2020 compared to $78.5 million at December 31, 2019. The increase of $21.4 million relates mainly to net income in the period of $19.9 million and an increase in the fair value of available-for-sale securities, net of taxes, of $1.5 million. In addition, the Company repurchased $1.7 million of shares during the year ended December 31, 2020, and equity adjustments related to the 2017 Stock Option and Incentive Plan and the employee stock ownership plan amounted to $1.5 million during 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 $15.4 million of SBA PPP Loans through December 31, 2020, and granting payment deferrals for residential mortgage, home equity and certain commercial borrowers who were current in their payments at the time the deferral was requested. 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 Sections 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, four loan production offices located throughout Massachusetts and two loan production offices 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, 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)
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Assets | ||||||||
| Cash and due from banks | $ | 4,206 | $ | 4,371 | ||||
| Interest-bearing deposits | 9,568 | 3,881 | ||||||
| Total cash and cash equivalents | 13,774 | 8,252 | ||||||
| Certificates of deposit | - | 490 | ||||||
| Securities available for sale, at fair value | 55,366 | 57,503 | ||||||
| Loans held for sale, at fair value | 119,112 | 62,792 | ||||||
| Loans, net of allowance for loan losses of $6,784 in 2020 and $4,280 in 2019 | 483,644 | 469,131 | ||||||
| Federal Home Loan Bank of Boston stock, at cost | 3,576 | 2,417 | ||||||
| Accrued interest receivable | 1,562 | 1,393 | ||||||
| Mortgage servicing rights, net | 12,377 | 8,556 | ||||||
| Premises and equipment, net | 4,781 | 5,748 | ||||||
| Bank-owned life insurance | 8,622 | 8,441 | ||||||
| Foreclosed real estate, net | 132 | - | ||||||
| Other assets | 18,126 | 6,281 | ||||||
| Total assets | $ | 721,072 | $ | 631,004 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 96,731 | $ | 61,603 | ||||
| Interest bearing | 399,847 | 344,581 | ||||||
| Brokered | 31,729 | 90,858 | ||||||
| Total deposits | 528,307 | 497,042 | ||||||
| Federal Reserve Bank advances | 11,431 | - | ||||||
| Federal Home Loan Bank of Boston advances | 61,895 | 44,403 | ||||||
| Mortgagors' escrow accounts | 2,338 | 2,052 | ||||||
| Post-employment benefit obligations | 2,382 | 2,464 | ||||||
| Other liabilities | 14,900 | 6,581 | ||||||
| Total liabilities | 621,253 | 552,542 | ||||||
| Stockholders' Equity: | ||||||||
| Common stock | 54 | 56 | ||||||
| Additional paid-in capital | 50,937 | 51,127 | ||||||
| Retained earnings | 51,689 | 31,757 | ||||||
| ESOP-Unearned compensation | (3,756 | ) | (3,944 | ) | ||||
| Accumulated other comprehensive income (loss), net of tax | 895 | (534 | ) | |||||
| Total stockholders' equity | 99,819 | 78,462 | ||||||
| Total liabilities and stockholders' equity | $ | 721,072 | $ | 631,004 | ||||
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, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Interest and dividend income: | ||||||||||||||||
| Loans | $ | 5,532 | $ | 5,841 | $ | 22,212 | $ | 23,631 | ||||||||
| Other interest and dividend income | 296 | 378 | 1,376 | 1,600 | ||||||||||||
| Total interest and dividend income | 5,828 | 6,219 | 23,588 | 25,231 | ||||||||||||
| Interest expense | 788 | 1,828 | 4,721 | 7,398 | ||||||||||||
| Net interest income | 5,040 | 4,391 | 18,867 | 17,833 | ||||||||||||
| Provision (credit) for loan losses | 215 | 144 | 2,553 | - | ||||||||||||
| Net interest income after provision for loan losses | 4,825 | 4,247 | 16,314 | 17,833 | ||||||||||||
| Non-interest income: | ||||||||||||||||
| Customer service fees | 381 | 353 | 1,283 | 1,407 | ||||||||||||
| Gain on loan origination and sale activities, net | 14,620 | 5,462 | 54,236 | 18,900 | ||||||||||||
| Mortgage servicing fees, net | 275 | 32 | (1,153 | ) | 394 | |||||||||||
| Other | 311 | 245 | 1,045 | 962 | ||||||||||||
| Total non-interest income | 15,587 | 6,092 | 55,411 | 21,663 | ||||||||||||
| Non-interest expenses: | ||||||||||||||||
| Salaries and employee benefits | 8,722 | 6,382 | 33,161 | 24,896 | ||||||||||||
| Occupancy and equipment | 1,150 | 811 | 3,545 | 2,783 | ||||||||||||
| Professional fees | 389 | 366 | 1,277 | 1,185 | ||||||||||||
| Marketing | 231 | 322 | 689 | 967 | ||||||||||||
| FDIC insurance | 51 | 77 | 187 | 168 | ||||||||||||
| Other non-interest expenses | 2,384 | 1,532 | 7,457 | 5,951 | ||||||||||||
| Total non-interest expenses | 12,927 | 9,490 | 46,316 | 35,950 | ||||||||||||
| Income before income taxes | 7,485 | 849 | 25,409 | 3,546 | ||||||||||||
| Income tax expense | 2,211 | 21 | 5,477 | 118 | ||||||||||||
| Net income | $ | 5,274 | $ | 828 | $ | 19,932 | $ | 3,428 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 1.03 | $ | 0.16 | $ | 3.89 | $ | 0.64 | ||||||||
| Diluted | $ | 1.01 | $ | 0.16 | $ | 3.86 | $ | 0.64 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 5,135,069 | 5,248,021 | 5,126,561 | 5,383,617 | ||||||||||||
| Diluted | 5,244,414 | 5,248,021 | 5,163,042 | 5,383,617 | ||||||||||||
Randolph Bancorp, Inc.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)
| For the Three Months Ended December 31, | |||||||||||||||||||||||
| 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) | $ | 580,002 | $ | 5,532 | 3.82 | % | $ | 554,972 | $ | 5,841 | 4.21 | % | |||||||||||
| Investment securities(2) (3) | 58,329 | 290 | 1.99 | % | 50,290 | 367 | 2.92 | % | |||||||||||||||
| Interest-earning deposits | 30,573 | 8 | 0.10 | % | 5,038 | 13 | 1.03 | % | |||||||||||||||
| Total interest-earning assets | 668,904 | 5,830 | 3.49 | % | 610,300 | 6,221 | 4.08 | % | |||||||||||||||
| Noninterest-earning assets | 45,015 | 32,250 | |||||||||||||||||||||
| Total assets | $ | 713,919 | $ | 642,550 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Savings accounts | 181,653 | 142 | 0.31 | % | 120,343 | 223 | 0.74 | % | |||||||||||||||
| NOW accounts | 59,005 | 43 | 0.29 | % | 38,389 | 50 | 0.52 | % | |||||||||||||||
| Money market accounts | 75,106 | 62 | 0.33 | % | 80,623 | 241 | 1.20 | % | |||||||||||||||
| Term certificates | 112,260 | 293 | 1.04 | % | 200,123 | 1,068 | 2.13 | % | |||||||||||||||
| Total interest-bearing deposits | 428,024 | 540 | 0.50 | % | 439,478 | 1,582 | 1.44 | % | |||||||||||||||
| FHLBB and FRB advances | 77,584 | 247 | 1.27 | % | 50,444 | 246 | 1.95 | % | |||||||||||||||
| Total interest-bearing liabilities | 505,608 | 787 | 0.62 | % | 489,922 | 1,828 | 1.49 | % | |||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||
| Noninterest-bearing deposits | 94,540 | 62,674 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 13,539 | 9,337 | |||||||||||||||||||||
| Total liabilities | 613,687 | 561,933 | |||||||||||||||||||||
| Total stockholders' equity | 100,232 | 80,617 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 713,919 | $ | 642,550 | |||||||||||||||||||
| Net interest income | $ | 5,043 | $ | 4,393 | |||||||||||||||||||
| Interest rate spread(4) | 2.87 | % | 2.58 | % | |||||||||||||||||||
| Net interest-earning assets(5) | $ | 163,296 | $ | 120,378 | |||||||||||||||||||
| Net interest margin(6) | 3.02 | % | 2.88 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 132.30 | % | 124.57 | % | |||||||||||||||||||
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLBB stock.
(3) Includes tax equivalent adjustments for municipal securities, based on a statutory tax rate of 21%, of $1,000 and $2,000 for the three months ended December 31, 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.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)
| For the Year Ended December 31, | |||||||||||||||||||||||
| 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) | $ | 561,912 | $ | 22,212 | 3.95 | % | $ | 547,454 | $ | 23,632 | 4.32 | % | |||||||||||
| Investment securities(2) (3) | 58,233 | 1,306 | 2.24 | % | 52,953 | 1,521 | 2.87 | % | |||||||||||||||
| Interest-earning deposits | 30,277 | 76 | 0.25 | % | 5,109 | 90 | 1.76 | % | |||||||||||||||
| Total interest-earning assets | 650,422 | 23,594 | 3.63 | % | 605,516 | 25,243 | 4.17 | % | |||||||||||||||
| Noninterest-earning assets | 39,396 | 27,903 | |||||||||||||||||||||
| Total assets | $ | 689,818 | $ | 633,419 | |||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||
| Savings accounts | 161,502 | 831 | 0.51 | % | 108,483 | 560 | 0.52 | % | |||||||||||||||
| NOW accounts | 55,396 | 185 | 0.33 | % | 39,197 | 194 | 0.49 | % | |||||||||||||||
| Money market accounts | 71,817 | 456 | 0.63 | % | 69,362 | 955 | 1.38 | % | |||||||||||||||
| Term certificates | 147,655 | 2,305 | 1.56 | % | 178,901 | 3,619 | 2.02 | % | |||||||||||||||
| Total interest-bearing deposits | 436,370 | 3,777 | 0.87 | % | 395,943 | 5,328 | 1.35 | % | |||||||||||||||
| FHLBB and FRB advances | 71,661 | 943 | 1.32 | % | 86,724 | 2,070 | 2.39 | % | |||||||||||||||
| Total interest-bearing liabilities | 508,031 | 4,720 | 0.93 | % | 482,667 | 7,398 | 1.53 | % | |||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||
| Noninterest-bearing deposits | 80,957 | 62,314 | |||||||||||||||||||||
| Other noninterest-bearing liabilities | 12,384 | 8,845 | |||||||||||||||||||||
| Total liabilities | 601,372 | 553,826 | |||||||||||||||||||||
| Total stockholders' equity | 88,445 | 79,593 | |||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 689,817 | $ | 633,419 | |||||||||||||||||||
| Net interest income | $ | 18,874 | $ | 17,845 | |||||||||||||||||||
| Interest rate spread(4) | 2.70 | % | 2.64 | % | |||||||||||||||||||
| Net interest-earning assets(5) | $ | 142,391 | $ | 122,849 | |||||||||||||||||||
| Net interest margin(6) | 2.90 | % | 2.95 | % | |||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 128.03 | % | 125.45 | % | |||||||||||||||||||
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLBB stock.
(3) Includes tax equivalent adjustments for municipal securities, based on a statutory tax rate of 21%, of $5,000 and $12,000 for the year ended December 31, 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 | |||||||||||
| December 31, 2020 vs. 2019 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | 253 | $ | (562 | ) | $ | (309 | ) | |||
| Investment securities | 52 | (129 | ) | (77 | ) | ||||||
| Interest-earning deposits | 16 | (21 | ) | (5 | ) | ||||||
| Total interest-earning assets | 321 | (712 | ) | (391 | ) | ||||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | 83 | (164 | ) | (81 | ) | ||||||
| NOW accounts | 20 | (27 | ) | (7 | ) | ||||||
| Money market accounts | (15 | ) | (164 | ) | (179 | ) | |||||
| Term certificates | (358 | ) | (417 | ) | (775 | ) | |||||
| Total interest-bearing deposits | (270 | ) | (772 | ) | (1,042 | ) | |||||
| FHLBB and FRB advances | 106 | (104 | ) | 2 | |||||||
| Total interest-bearing liabilities | (164 | ) | (876 | ) | (1,040 | ) | |||||
| Change in net interest income | $ | 485 | $ | 164 | $ | 649 | |||||
| Year Ended | |||||||||||
| December 31, 2020 vs. 2019 | |||||||||||
| Increase (Decrease) | Total | ||||||||||
| Due to Changes in | Increase | ||||||||||
| Volume | Rate | (Decrease) | |||||||||
| Interest-earning assets: | |||||||||||
| Loans | $ | (95 | ) | $ | (1,324 | ) | $ | (1,419 | ) | ||
| Investment securities | (14 | ) | (200 | ) | (214 | ) | |||||
| Interest-earning deposits | 22 | (35 | ) | (13 | ) | ||||||
| Total interest-earning assets | (87 | ) | (1,559 | ) | (1,646 | ) | |||||
| Interest-bearing liabilities: | |||||||||||
| Savings accounts | 265 | 5 | 270 | ||||||||
| NOW accounts | 11 | (21 | ) | (10 | ) | ||||||
| Money market accounts | (15 | ) | (484 | ) | (499 | ) | |||||
| Term certificates | (570 | ) | (744 | ) | (1,314 | ) | |||||
| Total interest-bearing deposits | (309 | ) | (1,244 | ) | (1,553 | ) | |||||
| FHLBB and FRB advances | (315 | ) | (812 | ) | (1,127 | ) | |||||
| Total interest-bearing liabilities | (624 | ) | (2,056 | ) | (2,680 | ) | |||||
| Change in net interest income | $ | 537 | $ | 497 | $ | 1,034 | |||||
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Three Months Ended December 31, 2020 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 4,265 | $ | 775 | $ | 5,040 | ||||||
| Provision for loan losses | 215 | - | 215 | |||||||||
| Net interest income after provision for loan losses | 4,050 | 775 | 4,825 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 353 | 28 | 381 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 15,062 | 15,062 | |||||||||
| Mortgage servicing fees, net | (100 | ) | 375 | 275 | ||||||||
| Other | 147 | 164 | 311 | |||||||||
| Total non-interest income | 400 | 15,629 | 16,029 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits | 2,178 | 6,544 | 8,722 | |||||||||
| Occupancy and equipment | 465 | 685 | 1,150 | |||||||||
| Other non-interest expenses | 1,942 | 1,113 | 3,055 | |||||||||
| Total non-interest expenses | 4,585 | 8,342 | 12,927 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | (135 | ) | $ | 8,062 | 7,927 | ||||||
| Elimination of inter-segment profit | (442 | ) | ||||||||||
| Income before income taxes | 7,485 | |||||||||||
| Income tax expense | 2,211 | |||||||||||
| Net income | $ | 5,274 | ||||||||||
(1) Before elimination of inter-segment profit.
The information above was derived from the internal management reporting system used to measure performance of the segments.
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 credit 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 | ) | ||||||||||
| Loss 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 to measure performance of the segments.
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
| For the Year Ended December 31, 2020 | ||||||||||||
| Envision Bank | Envision Mortgage | Consolidated Total | ||||||||||
| Net interest income | $ | 16,235 | $ | 2,632 | $ | 18,867 | ||||||
| Provision for loan losses | 2,553 | - | 2,553 | |||||||||
| Net interest income after provision for loan losses | 13,682 | 2,632 | 16,314 | |||||||||
| Non-interest income: | ||||||||||||
| Customer service fees | 1,180 | 103 | 1,283 | |||||||||
| Gain on loan origination and sale activities, net (1) | - | 55,729 | 55,729 | |||||||||
| Mortgage servicing fees, net | (381 | ) | (772 | ) | (1,153 | ) | ||||||
| Other | 465 | 580 | 1,045 | |||||||||
| Total non-interest income | 1,264 | 55,640 | 56,904 | |||||||||
| Non-interest expenses: | ||||||||||||
| Salaries and employee benefits (2) | 9,161 | 24,000 | 33,161 | |||||||||
| Occupancy and equipment | 1,770 | 1,775 | 3,545 | |||||||||
| Other non-interest expenses | 5,228 | 4,382 | 9,610 | |||||||||
| Total non-interest expenses | 16,159 | 30,157 | 46,316 | |||||||||
| Income (loss) before income taxes and elimination of inter-segment profit | $ | (1,213 | ) | $ | 28,115 | 26,902 | ||||||
| Elimination of inter-segment profit | (1,493 | ) | ||||||||||
| Income before income taxes | 25,409 | |||||||||||
| Income tax expense | 5,477 | |||||||||||
| Net income | $ | 19,932 | ||||||||||
(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 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 credit 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 (loss) 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 | ||||||||||
(1) Before elimination of inter-segment profit.
Randolph Bancorp, Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(in thousands)
(Unaudited)
| Quarter Ended | ||||||||||||||||
| December 31, 2020 | ||||||||||||||||
| Income Before Taxes | Provision for Income Taxes | Net Income | Earnings per Common Share (diluted) | |||||||||||||
| GAAP basis | $ | 7,485 | $ | 2,211 | $ | 5,274 | $ | 1.01 | ||||||||
| Non-interest expense adjustments: | ||||||||||||||||
| Residential lending office closure | 294 | 63 | 231 | $ | 0.04 | |||||||||||
| Accrued severance expenses | 69 | 15 | 54 | $ | 0.01 | |||||||||||
| Non-GAAP basis | $ | 7,848 | $ | 2,289 | $ | 5,559 | $ | 1.06 | ||||||||
| December 31, 2019 | ||||||||||||||||
| Income Before Taxes | Provision for Income Taxes | Net Income | Earnings per Common Share (diluted) | |||||||||||||
| GAAP basis | $ | 849 | $ | 21 | $ | 828 | $ | 0.16 | ||||||||
| Non-GAAP basis | $ | 849 | $ | 21 | $ | 828 | $ | 0.16 | ||||||||
| Year-to-Date | ||||||||||||||||
| December 31, 2020 | ||||||||||||||||
| Income Before Taxes | Provision for Income Taxes | Net Income | Earnings per Common Share (diluted) | |||||||||||||
| GAAP basis | $ | 25,409 | $ | 5,477 | $ | 19,932 | $ | 3.86 | ||||||||
| Non-interest expense adjustments: | ||||||||||||||||
| Retirement salary and benefits compensation | 692 | 149 | 543 | 0.11 | ||||||||||||
| Accelerated vesting of stock-based compensation | 683 | 147 | 536 | 0.10 | ||||||||||||
| COVID-19 related expenses | 229 | 49 | 180 | 0.03 | ||||||||||||
| Residential lending office closure | 294 | 63 | 231 | 0.04 | ||||||||||||
| Accrued severance expenses | 69 | 15 | 54 | 0.01 | ||||||||||||
| Non-GAAP basis | $ | 27,376 | $ | 5,900 | $ | 21,476 | $ | 4.15 | ||||||||
| December 31, 2019 | ||||||||||||||||
| Income Before Taxes | Provision for Income Taxes | Net Income | Earnings per Common Share (diluted) | |||||||||||||
| GAAP basis | $ | 3,546 | $ | 118 | $ | 3,428 | $ | 0.64 | ||||||||
| Non-GAAP basis | $ | 3,546 | $ | 118 | $ | 3,428 | $ | 0.64 | ||||||||
Randolph Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
| At or for the | At or for the | |||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Return on average assets: (1, 5) | ||||||||||||||||
| GAAP | 2.95 | % | 0.52 | % | 2.89 | % | 0.54 | % | ||||||||
| Non-GAAP (2) | 3.11 | % | 0.52 | % | 3.11 | % | 0.54 | % | ||||||||
| Return on average equity: (1, 6) | ||||||||||||||||
| GAAP | 21.05 | % | 4.11 | % | 22.54 | % | 4.31 | % | ||||||||
| Non-GAAP (2) | 22.18 | % | 4.11 | % | 24.28 | % | 4.31 | % | ||||||||
| Net interest margin | 3.02 | % | 2.88 | % | 2.90 | % | 2.95 | % | ||||||||
| Non-interest income to total income: | ||||||||||||||||
| GAAP | 75.57 | % | 49.48 | % | 74.60 | % | 46.20 | % | ||||||||
| Efficiency ratio: (7) | ||||||||||||||||
| GAAP | 62.67 | % | 90.53 | % | 62.35 | % | 91.02 | % | ||||||||
| Non-GAAP (2) | 60.91 | % | 90.53 | % | 59.71 | % | 91.02 | % | ||||||||
| Tier 1 capital to average assets (3) | 13.85 | % | 11.30 | % | 13.85 | % | 11.30 | % | ||||||||
| Non-performing assets as a percentage of total assets (4) | 1.01 | % | 0.52 | % | 1.01 | % | 0.52 | % | ||||||||
| Allowance for loan losses as a percentage of total loans (4) | 1.38 | % | 0.90 | % | 1.38 | % | 0.90 | % | ||||||||
| Allowance for loan losses as a percentage of total loans, excluding SBA PPP Loans (4) | 1.41 | % | 0.90 | % | 1.41 | % | 0.90 | % | ||||||||
| Allowance for loan losses as a percentage of non-performing assets | 94.58 | % | 131.37 | % | 94.58 | % | 131.37 | % | ||||||||
| Allowance for loan losses as a percentage of non-performing loans | 92.87 | % | 131.37 | % | 92.87 | % | 131.37 | % | ||||||||
| Tangible book value per share (8) | $ | 18.16 | $ | 14.06 | $ | 18.16 | $ | 14.06 | ||||||||
| Outstanding shares | 5,495,514 | 5,576,855 | 5,495,514 | 5,576,855 | ||||||||||||
(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 net interest income and non-interest income.
(8) This non-GAAP measure represents total stockholders’ equity, minus intangible assets of $33,000, divided by outstanding shares at period end.
Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)
Loan Payment Deferrals
| As of January 18, 2021 | ||||||||||||
| Commercial loans | Residential loans | Residential loans serviced for others | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Balance outstanding | $ | 175,046 | $ | 364,041 | $ | 1,786,888 | ||||||
| COVID-19 related loan payment deferrals: (1) | ||||||||||||
| Loans in COVID-19-related loan payment deferral | $ | 6,544 | $ | 5,033 | $ | 18,672 | ||||||
| Loans in deferral as a percentage of category loans | 3.7 | % | 1.4 | % | 1.0 | % | ||||||
| Loans with suspended payment | $ | 6,544 | $ | 4,535 | $ | 10,342 | ||||||
| Loans with reduced payment | - | 498 | 8,330 | |||||||||
| Loans which obtained a COVID-19-related payment deferral but | ||||||||||||
| have since resumed payment | $ | 31,845 | $ | 13,796 | $ | 49,846 | ||||||
| Loans reinstated (borrower paid any unpaid principal and interest) | - | 2,732 | 8,318 | |||||||||
| Loans on a repayment plan | - | - | 1,363 | |||||||||
| Loans which resumed payment but deferred principal and/or | ||||||||||||
| interest payments to maturity (2) | 27,029 | 8,451 | 34,896 | |||||||||
| Loans which were paid off completely | 4,816 | 1,687 | 3,903 | |||||||||
| Other loans | - | 926 | 1,366 | |||||||||
(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 December 31, 2020 | ||||||||||||||||||||||||||||||||
| Exposure Balance | Exposure by Risk Weighting | |||||||||||||||||||||||||||||||
| Balance | ||||||||||||||||||||||||||||||||
| Real | Commercial | with | ||||||||||||||||||||||||||||||
| Estate | & | Deferred | ||||||||||||||||||||||||||||||
| Industry (1) | Total | Secured | Industrial | Construction | Pass | Criticized | Payments | |||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Group home/care facility | $ | 1,091 | $ | 1,091 | $ | - | $ | - | $ | 1,091 | $ | - | $ | - | ||||||||||||||||||
| Hotels/hospitality | 9,679 | 9,604 | 75 | - | 75 | 9,604 | 3,543 | |||||||||||||||||||||||||
| Restaurants/food service | 2,786 | 1,582 | 1,204 | - | 2,786 | - | - | |||||||||||||||||||||||||
| Retail/shopping center | 20,134 | 16,472 | - | 3,662 | 17,446 | 2,687 | 2,058 | |||||||||||||||||||||||||
| Other sectors (2) | 10,720 | 9,990 | 130 | 600 | 9,768 | 953 | 640 | |||||||||||||||||||||||||
| Total loans in COVID-19 impacted sectors | $ | 44,410 | $ | 38,739 | $ | 1,409 | $ | 4,262 | $ | 31,166 | $ | 13,244 | $ | 6,241 | ||||||||||||||||||
| Percentage of commercial loans outstanding | 25.3 | % | 26.9 | % | 7.0 | % | 36.5 | % | ||||||||||||||||||||||||
| Commercial loans outstanding | $ | 175,822 | $ | 143,893 | $ | 20,259 | $ | 11,670 | ||||||||||||||||||||||||
| Loan to value secured by real estate (3) | 45.5 | % | 57.3 | % | ||||||||||||||||||||||||||||
(1) This disclosure focuses on industries with balances that are significant to the portfolio at December 31, 2020 and omits industries affected by the COVID-19 pandemic (oil and gas, transportation, etc.) to which the Company has minimal or no exposure. This disclosure also excludes SBA PPP Loans, given their government guarantee.
(2) Includes customers operating in various sectors which have been impacted by COVID-19.
(3) Loan to value secured by real estate equals the exposure balance divided by the most recent appraised value.
For More Information, Contact:
William M. Parent,
President and Chief Executive Officer
(617-925-1955)