Randolph Bancorp, Inc. Announces Second Quarter and Year-to-Date 2020 Financial Results

Quincy, Massachusetts, UNITED STATES


STOUGHTON, Mass., July 28, 2020 (GLOBE NEWSWIRE) -- Randolph Bancorp, Inc. (NASDAQ: RNDB) , the holding company for Envision Bank (the “Bank”), today announced net income of $5,191,000, or $1.02 per share, for the three months ended June 30, 2020 compared to net income of $1,506,000, or $0.28 per share, for the three months ended June 30, 2019. Net income for the six months ended June 30, 2020 was $4,373,000, or $0.86 per share, compared to net income of $1,455,000, or $0.27 per share, for the six months ended June 30, 2019.

Excluding $189,000 of operating expenses related to addressing the COVID-19 pandemic, net income for the three months ended June 30, 2020 was $5,380,000, or $1.06 per share. Excluding one-time charges of $1,375,000 related to the retirement of senior executives and operating expenses of $207,000 related to addressing the COVID-19 pandemic, earnings were $5,955,000, or $1.17 per share, for the six months ended June 30, 2020.

At June 30, 2020, total assets amounted to $724.0 million, compared to $652.9 million at March 31, 2020, an increase of $71.2 million, or 10.9%. Contributing to asset growth was a $14.7 million increase in net loans, mainly driven by Paycheck Protection Program loans, and a $54.8 million increase in cash and cash equivalents as a result of strong deposit growth and the timing of loan sales proceeds.

William M. Parent, President and Chief Executive Officer, stated, “The second quarter of 2020 was a record quarter in earnings for our Company. We are very pleased with the strong performance of our mortgage banking operations, which achieved record levels of loans closed, loans sold, and net revenue from loan sales and origination activity. We continue our focused growth in core deposits, increasing our non-brokered deposit base by $63.9 million in the quarter, reflecting the benefit of government programs for consumers and small businesses, and an environment of increased savings. With the continuation of the COVID-19 pandemic, we worked diligently to assist customers by participating in the Paycheck Protection Program, facilitating loan payment deferrals with borrowers experiencing hardship because of the pandemic, and leveraging our digital platform to service customers remotely, while continuing to have the vast majority of our team work remotely as well. With a strong balance sheet and capital position, the Company is ready to manage our continued evolution through whatever challenges lie ahead.”

Second Quarter Operating Results
Net interest income increased by $244,000, or 5.4%, to $4.7 million for the three months ended June 30, 2020 from $4.5 million the same period in the prior year. This increase was primarily due to an increase in average interest-earning assets between periods of $39.5 million, or 6.4%, as the Company continued to leverage its strong capital base. The net interest margin decreased in the second quarter of 2020 to 2.88%, from 2.91% in the second quarter of 2019, due to deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.

The Company recognized a provision for loan losses of $1.1 million for the quarter ended June 30, 2020 compared to a credit of $144,000 in the prior year quarter. The provision in the quarter ended June 30, 2020 included $154,000 representing the estimate of probable incurred losses associated with the impact of the COVID-19 pandemic. At June 30, 2020, higher loss factors were assigned to each major loan portfolio category based on their level of risk, taking into consideration the deterioration in economic conditions given stay-at-home orders and sharply increased unemployment in our local marketplace. The allowance for loan losses was 1.22% and 0.90% of total loans at June 30, 2020 and December 31, 2019, respectively, and was 186.0% and 131.4% of non-performing loans at June 30, 2020 and December 31, 2019, respectively.

Non-interest income increased $7.6 million, or 130.6%, to $13.5 million for the quarter ended June 30, 2020 from $5.9 million in the quarter ended June 30, 2019, principally due to an increase of $9.3 million in the net gain on loan origination and sale activities. Sold mortgage loans reached a record volume of $442.9 million in the second quarter of 2020. The increase in the gain on loan origination and sale activities was partially offset by a decrease in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $1.5 million given expectations of higher prepayments.

Non-interest expenses increased $2.5 million to $11.4 million in the quarter ended June 30, 2020 from $8.9 million in the quarter ended June 30, 2019. The increase is principally due to an increase in salaries and employee benefits of $2.3 million, mainly related to higher commissions and incentives associated with increased residential loan production, as well as COVID-19 pandemic-related compensation of $101,000 for frontline and quarantined employees.

Occupancy and equipment expenses increased $195,000 in the quarter ended June 30, 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $70,000, in addition to increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space in light of prolonged remote working arrangements for certain back-office staff.

Other non-interest expenses comprising professional fees, marketing, FDIC insurance and other non-interest expenses increased by $1,000 in the quarter ended June 30, 2020 versus the prior year period as a result of a combination of factors.

Marketing and certain operating expenses declined as a result of lower deposit customer activity while stay-at-home orders were in effect. Those reductions were offset by higher costs related to elevated mortgage loan production.

Income tax expense of $594,000 for the quarter ended June 30, 2020 consists solely of a state income tax provision which is based on the projected effective state tax rate for the year.

The Company has a net operating loss carryforward (“NOL”) for federal tax purposes of $10.8 million. Since 2014, the NOL, as well as other deferred tax assets, have been subject to a full valuation allowance, which totaled $1.2 million at June 30, 2020. We evaluate the tax valuation allowance on a quarterly basis. Based primarily on an assessment of historical operating results, we concluded that the valuation allowance should be maintained at June 30, 2020.

Year-to-Date Operating Results
Net interest income increased by $289,000, or 3.3%, for the six months ended June 30, 2020 compared to the same period in the prior year. This increase was driven by an increase in average interest-earning assets between periods of $35.8 million, or 6.0%. The net interest margin decreased in the first half of 2020 to 2.89%, from 2.97% in the first half of 2019, due to deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.

The Company recognized a provision for loan losses of $1.8 million for the six months ended June 30, 2020 compared to a credit of $144,000 in the prior year period. The provision in the first half of 2020 included $511,000 representing the estimate of probable incurred losses associated with the impact of the COVID-19 pandemic. At June 30, 2020, higher loss factors were assigned to each major loan portfolio category based on their level of risk, taking into consideration the deterioration in economic conditions given stay-at-home orders and sharply increased unemployment in our local marketplace.

Non-interest income increased $10.6 million, or 113.9%, to $20.0 million for the six months ended June 30, 2020 from $9.3 million in the six months ended June 30, 2019, principally due to an increase of $13.8 million in the net gain on loan origination and sale activities. Mortgage loans sold were $657.9 million in the first half of 2020. The increase in the gain on loan origination and sale activities was partially offset by a decrease in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $3.1 million in the six months ended June 30, 2020, given expectations of higher prepayments. The fair value adjustment for mortgage servicing rights was $114,000 in the six months ended June 30, 2019.

Non-interest expenses increased $5.5 million, or 32.9%, to $22.3 million for the six months ended June 30, 2020 from $16.8 million for the six months ended June 30, 2019. Non-interest expenses in the first half of 2020 included one-time charges of $1,375,000 related to the retirement of senior executives as well as $207,000 of COVID-19 pandemic-related expenses.

In the first half of 2020, salaries and employee benefits increased $5.0 million, including one-time charges of $1.4 million for the retirement of senior executives, higher commissions and incentives associated with higher residential loan production, and COVID-19 pandemic-related compensation of $101,000 for frontline and quarantined employees.

Occupancy and equipment expenses increased $238,000 in the first half of 2020 over the prior year period, partly as a result of increased spending on cleaning and supplies related to the COVID-19 pandemic of $106,000, as well as increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space in light of prolonged remote working arrangements for certain back-office staff.

Professional fees in the first half of 2020 increased $80,000 over the prior year period, primarily related to management succession planning costs. Spending on marketing in the first half of 2020 was $65,000 less than in the prior year period due to fewer marketing campaigns while our communities are subject to a stay-at-home order. The increase of $310,000 in other non-interest expenses in the first half of 2020 was driven mainly by costs related to higher mortgage loan production.

Income tax expense of $605,000 for the six months ended June 30, 2020 consists solely of a state income tax provision which is based on the projected effective state tax rate for the year.

Balance Sheet
At June 30, 2020, total assets amounted to $724.0 million compared to $631.0 million at December 31, 2019, an increase of $93.0 million, or 14.7%. Contributing to asset growth was a $21.8 million increase in net loans, mainly driven by the issuance of 177 Paycheck Protection Program loans for $15.1 million, as well as smaller increases in residential and commercial real estate loans. In addition, cash and cash equivalents increased by $67.8 million in the first half of 2020, mainly as a result of strong core growth in deposits and the timing of cash proceeds from loan sales. Loans held for sale decreased by $1.1 million to $61.7 million at June 30, 2020 from $62.8 million at December 31, 2019.

The increase in total assets was funded by deposit growth. Non-brokered deposits totaled $483.0 million at June 30, 2020, increasing by $76.8 million, or 18.9%, in the first half of 2020. Driving the growth in non-brokered deposits included customers’ receipt of government stimulus, Paycheck Protection Program loan proceeds which were deposited with us, and our focus on deposit gathering prior to the onset of the COVID-19 pandemic. Brokered deposits declined by $34.9 million to $56.0 million at June 30, 2020, from $90.9 million at December 31, 2019. Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank advances increased by $42.6 million to $87.0 million at June 30, 2020, from $44.4 million at December 31, 2019, given the funding of our Paycheck Protection Program loans and other loans with FHLB and Federal Reserve Bank advances, which were a relatively cheaper source of wholesale funding during the first quarter of the year.

Total stockholders’ equity was $84.5 million at June 30, 2020 compared to $78.5 million at December 31, 2019. The increase of $6.1 million relates mainly to net income in the period of $4.4 million and an increase in the fair value of available-for-sale securities, net of taxes, of $1.7 million. In addition, the Company repurchased $1.2 million of shares during the first half of 2020, and equity adjustments related to the stock benefit plan and employee stock ownership plan amounted to $1.2 million in the period.

COVID-19 Impact
In response to the impact of the COVID-19 pandemic on our customers and our business, the Company implemented a series of measures through the date of this release, including participation in the Small Business Administration’s Paycheck Protection Program, for which we funded $15.1 million of loans through June 30, 2020, and granting payment deferrals for residential mortgage, home equity and certain commercial borrowers who were current in their payments. Depending on the circumstances of the borrowers, the forbearance calls for a reduced or full deferral of payment. Please refer to the Loan Payment Deferrals and COVID-19 Most Impacted Sectors for statistics on loan payment deferrals and the commercial loan sectors we believe could be exposed to the economic impact of the COVID-19 pandemic.

About Randolph Bancorp, Inc.
Randolph Bancorp, Inc. is the holding company for Envision Bank and its Envision Mortgage Division. Envision Bank is a full-service community bank with five retail branch locations, loan operations centers in North Attleboro and Stoughton, Massachusetts, eight loan production offices located throughout Massachusetts and one loan production office in Southern New Hampshire.

Forward Looking Statements
Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the negative impacts and disruptions of the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of economic contraction as a result of the COVID-19 pandemic; the effects of continued deterioration in employment levels, general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in consumer behavior due to changing political, business and economic conditions or legislative or regulatory initiatives; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; and the risk factors described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Non-GAAP Financial Measures
The Company uses certain non-GAAP financial measures, such as return on average assets, return on average equity, non-interest income to total income, the efficiency ratio, tangible book value per share and, where applicable, as adjusted for non-recurring items. These non-GAAP financial measures provide information for investors to effectively analyze financial trends of on-going business activities, and to enhance comparability with peers across the financial services sector.  


Randolph Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)

  June 30,  December 31, 
  2020  2019 
         
Assets 
Cash and due from banks $3,922  $4,371 
Interest-bearing deposits  72,081   3,881 
Total cash and cash equivalents  76,003   8,252 
         
Certificates of deposit  490   490 
Securities available for sale, at fair value  54,462   57,503 
Loans held for sale, at fair value  61,673   62,792 
Loans, net of allowance for loan losses of $6,059 in 2020 and $4,280 in 2019  490,938   469,131 
Federal Home Loan Bank of Boston stock, at cost  4,072   2,417 
Accrued interest receivable  1,760   1,393 
Mortgage servicing rights, net  8,094   8,556 
Premises and equipment, net  5,313   5,748 
Bank-owned life insurance  8,532   8,441 
Foreclosed real estate, net  132   - 
Other assets  12,572   6,281 
         
Total assets $724,041  $631,004 
         
Liabilities and Stockholders' Equity 
Deposits:        
Non-interest bearing $89,014  $61,603 
Interest bearing  393,980   344,581 
Brokered  55,972   90,858 
Total deposits  538,966   497,042 
         
Federal Reserve Bank advances  15,010   - 
Federal Home Loan Bank of Boston advances  71,944   44,403 
Mortgagors' escrow accounts  1,824   2,052 
Post-employment benefit obligations  2,319   2,464 
Other liabilities  9,449   6,581 
Total liabilities  639,512   552,542 
         
Stockholders' Equity:        
Common stock  55   56 
Additional paid-in capital  51,013   51,127 
Retained earnings  36,130   31,757 
ESOP-Unearned compensation  (3,850)  (3,944)
Accumulated other comprehensive income (loss), net of tax  1,181   (534)
Total stockholders' equity  84,529   78,462 
         
Total liabilities and stockholders' equity $724,041  $631,004 


Randolph Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)

  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
Interest and dividend income:                
Loans $5,723  $6,058  $11,343  $11,646 
Other interest and dividend income  336   396   769   824 
Total interest and dividend income  6,059   6,454   12,112   12,470 
                 
Interest expense  1,326   1,965   2,955   3,603 
                 
Net interest income  4,733   4,489   9,157   8,867 
Provision for loan losses  1,068   (144)  1,792   (144)
Net interest income after provision for loan losses  3,665   4,633   7,365   9,011 
                 
Non-interest income:                
Customer service fees  266   362   573   691 
Gain on loan origination and sale activities, net  14,370   5,078   21,514   7,716 
Mortgage servicing fees, net  (1,354)  224   (2,608)  543 
Other  217   201   472   378 
Total non-interest income  13,499   5,865   19,951   9,328 
Non-interest expenses:                
Salaries and employee benefits  8,402   6,092   16,527   11,504 
Occupancy and equipment  838   643   1,537   1,299 
Professional fees  230   287   635   555 
Marketing  152   180   304   369 
FDIC insurance  39   115   96   146 
Other non-interest expenses  1,718   1,556   3,239   2,928 
Total non-interest expenses  11,379   8,873   22,338   16,801 
Income before income taxes  5,785   1,625   4,978   1,538 
Income tax expense  594   119   605   83 
                 
Net income $5,191  $1,506  $4,373  $1,455 
                 
Net income per share (basic and diluted) $1.02  $0.28  $0.86  $0.27 
                 
Weighted average shares outstanding  5,092,490   5,455,679   5,107,700   5,467,057 


Randolph Bancorp, Inc.
Averages Balances/Yields
(Dollars in thousands)
(Unaudited)

 For the Three Months Ended June 30, 
 2020  2019 
 Average  Interest  Average  Average  Interest  Average 
 Outstanding  Earned/  Yield/  Outstanding  Earned/  Yield/ 
(Dollars in thousands)Balance  Paid  Rate  Balance  Paid  Rate 
Interest-earning assets:                       
  Loans (1)$576,964  $5,723   3.97% $558,643  $6,058   4.34%
  Investment securities(2) (3) 58,119   332   2.28%  53,947   373   2.77%
  Interest-earning deposits 22,918   5   0.09%  5,915   26   1.76%
Total interest-earning assets 658,001   6,060   3.68%  618,505   6,457   4.18%
Noninterest-earning assets 40,156           23,820         
Total assets$698,157          $642,325         
Interest-bearing liabilities:                       
  Savings accounts 158,427   233   0.59%  103,849   106   0.41%
  NOW accounts 46,593   50   0.43%  39,130   49   0.50%
  Money market accounts 71,396   122   0.68%  61,361   232   1.51%
  Term certificates 159,224   677   1.70%  169,740   834   1.97%
Total interest-bearing deposits 435,640   1,082   0.99%  374,080   1,221   1.31%
  FHLBB and FRB advances 79,133   244   1.23%  118,364   744   2.51%
Total interest-bearing liabilities 514,773   1,326   1.03%  492,444   1,965   1.60%
Noninterest-bearing liabilities:                       
  Noninterest-bearing deposits 77,947           62,377         
  Other noninterest-bearing liabilities 22,893           8,270         
Total liabilities 615,613           563,091         
Total stockholders' equity 82,544           79,234         
Total liabilities and stockholders' equity$698,157          $642,325         
Net interest income    $4,734          $4,492     
Interest rate spread(4)         2.65%          2.58%
Net interest-earning assets(5)$143,228          $126,061         
Net interest margin(6)         2.88%          2.91%
                        
Ratio of interest-earning assets to interest-bearing liabilities 127.82%          125.60%        

                                               
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $1,000 and $3,000 for the three months ended June 30, 2020 and 2019, respectively.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.


Randolph Bancorp, Inc.
Averages Balances/Yields
(Dollars in thousands)
(Unaudited)

 For the Six Months Ended June 30, 
 2020  2019 
 Average  Interest  Average  Average  Interest  Average 
 Outstanding  Earned/  Yield/  Outstanding  Earned/  Yield/ 
(Dollars in thousands)Balance  Paid  Rate  Balance  Paid  Rate 
Interest-earning assets:                       
  Loans (1)$554,053  $11,343   4.09% $537,549  $11,646   4.33%
  Investment securities(2) (3) 58,459   711   2.43%  54,551   777   2.85%
  Interest-earning deposits 20,688   61   0.59%  5,258   54   2.05%
Total interest-earning assets 633,200   12,115   3.83%  597,358   12,477   4.18%
Noninterest-earning assets 35,965           24,462         
Total assets$669,165          $621,820         
Interest-bearing liabilities:                       
  Savings accounts 146,635   516   0.70%  102,912   188   0.37%
  NOW accounts 42,821   101   0.47%  39,851   97   0.49%
  Money market accounts 74,895   321   0.86%  66,384   461   1.39%
  Term certificates 173,939   1,570   1.81%  166,704   1,634   1.96%
Total interest-bearing deposits 438,290   2,508   1.14%  375,851   2,380   1.27%
  FHLBB and FRB advances 63,118   447   1.42%  97,259   1,222   2.51%
Total interest-bearing liabilities 501,408   2,955   1.18%  473,110   3,602   1.52%
Noninterest-bearing liabilities:                       
  Noninterest-bearing deposits 70,333           62,063         
  Other noninterest-bearing liabilities 16,221           7,952         
Total liabilities 587,962           543,125         
Total stockholders' equity 81,204           78,695         
Total liabilities and stockholders' equity$669,166          $621,820         
Net interest income    $9,160          $8,875     
Interest rate spread(4)         2.65%          2.65%
Net interest-earning assets(5)$131,792          $124,248         
Net interest margin(6)         2.89%          2.97%
                        
Ratio of interest-earning assets to interest-bearing liabilities 126.28%          126.26%        

                                               
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $3,000 and $7,000 for the six months ended June 30, 2020 and 2019, respectively.
(4) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.


Randolph Bancorp, Inc.
Rate/Volume Analysis
(Dollars in thousands)
(Unaudited)

 Three Months Ended 
 June 30, 2020 v. 2019 
 Increase (Decrease)  Total 
 Due to Changes in  Increase 
 Volume  Rate  (Decrease) 
Interest-earning assets:           
  Loans$194  $(529) $(335)
  Investment securities 27   (68)  (41)
  Interest-earning deposits 21   (42)  (21)
   Total interest-earning assets 242   (639)  (397)
Interest-bearing liabilities:           
Savings accounts 69   58   127 
NOW accounts 9   (8)  1 
Money market accounts 33   (143)  (110)
Term certificates (49)  (108)  (157)
   Total interest-bearing deposits 62   (201)  (139)
FHLBB and FRB advances (197)  (303)  (500)
  Total interest-bearing liabilities (135)  (504)  (639)
            
Change in net interest income$377  $(135) $242 


 Six Months Ended 
 June 30, 2020 v. 2019 
 Increase (Decrease)  Total 
 Due to Changes in  Increase 
 Volume  Rate  (Decrease) 
Interest-earning assets:           
  Loans$351  $(654) $(303)
  Investment securities 53   (119)  (66)
  Interest-earning deposits 68   (61)  7 
   Total interest-earning assets 472   (834)  (362)
Interest-bearing liabilities:           
Savings accounts 103   225   328 
NOW accounts 7   (3)  4 
Money market accounts 53   (193)  (140)
Term certificates 69   (133)  (64)
   Total interest-bearing deposits 232   (104)  128 
FHLBB and FRB advances (346)  (429)  (775)
  Total interest-bearing liabilities (114)  (533)  (647)
            
Change in net interest income$586  $(301) $285 


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

  For the Three Months Ended June 30, 2020 
  Envision Bank  Envision Mortgage  Consolidated Total 
Net interest income $3,944  $789  $4,733 
Provision for loan losses  1,068   -   1,068 
             
Net interest income after provision for loan losses  2,876   789   3,665 
             
Non-interest income:            
Customer service fees  245   21   266 
Gain on loan origination and sale activities, net (1)  -   14,736   14,736 
Mortgage servicing fees, net  (95)  (1,258)  (1,353)
Other  85   132   217 
Total non-interest income  235   13,631   13,866 
             
Non-interest expenses:            
Salaries and employee benefits  1,925   6,476   8,401 
Occupancy and equipment  465   374   839 
Other non-interest expenses  1,057   1,082   2,139 
Total non-interest expenses  3,447   7,932   11,379 
             
Income (loss) before income taxes and elimination of inter-segment profit $(336) $6,488   6,152 
             
Elimination of inter-segment profit          (367)
Income before income taxes          5,785 
             
Income tax expense          594 
Net income         $5,191 

                                               
       
(1) Before elimination of inter-segment profit

The information above was derived from the internal management reporting system used by management to measure performance of the segments.


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

  For the Three Months Ended June 30, 2019 
  Envision Bank  Envision Mortgage  Consolidated Total 
Net interest income $4,161  $328  $4,489 
Credit for loan losses  (144)  -   (144)
             
Net interest income after credit for loan losses  4,305   328   4,633 
             
Non-interest income:            
Customer service fees  322   40   362 
Gain on loan origination and sale activities, net (1)  -   5,299   5,299 
Mortgage servicing fees, net  (92)  316   224 
Other  97   104   201 
Total non-interest income  327   5,759   6,086 
             
Non-interest expenses:            
Salaries and employee benefits  1,786   4,306   6,092 
Occupancy and equipment  370   273   643 
Other non-interest expenses  1,298   840   2,138 
Total non-interest expenses  3,454   5,419   8,873 
             
Income before income taxes and elimination of inter-segment profit $1,178  $668   1,846 
             
Elimination of inter-segment profit          (221)
Loss before income taxes          1,625 
             
Income tax expense          119 
Net income         $1,506 

                                               
       
(1) Before elimination of inter-segment profit

The information above was derived from the internal management reporting system used by management to measure performance of the segments.


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

  For the Six Months Ended June 30, 2020 
  Envision Bank  Envision Mortgage  Consolidated Total 
Net interest income $7,937  $1,220  $9,157 
Provision for loan losses  1,792   -   1,792 
             
Net interest income after provision for loan losses  6,145   1,220   7,365 
             
Non-interest income:            
Customer service fees  518   55   573 
Gain on loan origination and sale activities, net (1)  -   22,209   22,209 
Mortgage servicing fees, net  (182)  (2,426)  (2,608)
Other  225   247   472 
Total non-interest income  561   20,085   20,646 
             
Non-interest expenses:            
Salaries and employee benefits (2)  5,023   11,504   16,527 
Occupancy and equipment  869   668   1,537 
Other non-interest expenses  2,203   2,071   4,274 
Total non-interest expenses  8,095   14,243   22,338 
             
Income (loss) before income taxes and elimination of inter-segment profit $(1,389) $7,062   5,673 
             
Elimination of inter-segment profit          (695)
Income before income taxes          4,978 
             
Income tax expense          605 
Net income         $4,373 

                                               

(1) Before elimination of inter-segment profit
(2) Salaries and benefits include the severance and vested stock acceleration costs related to the retirement of the CEO and CFO of the Bank. The total cost of this event was $1.38 million, of which $1.03 million was allocated to the Bank segment and the remainder, $344,000, was allocated to the mortgage segment.


Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)

  For the Six Months Ended June 30, 2019 
  Envision Bank  Envision Mortgage  Consolidated Total 
Net interest income $8,343  $524  $8,867 
Credit for loan losses  (144)  -   (144)
             
Net interest income after credit for loan losses  8,487   524   9,011 
             
Non-interest income:            
Customer service fees  617   74   691 
Gain on loan origination and sale activities, net (1)  -   8,093   8,093 
Mortgage servicing fees, net  (180)  723   543 
Other  222   156   378 
Total non-interest income  659   9,046   9,705 
             
Non-interest expenses:            
Salaries and employee benefits  3,325   8,179   11,504 
Occupancy and equipment  770   529   1,299 
Other non-interest expenses  2,252   1,746   3,998 
Total non-interest expenses  6,347   10,454   16,801 
             
Income (loss) before income taxes and elimination of inter-segment profit $2,799  $(884)  1,915 
             
Elimination of inter-segment profit          (377)
Income before income taxes          1,538 
             
Income tax expense          83 
Net income         $1,455 

                                               
       
(1) Before elimination of inter-segment profit


Randolph Bancorp, Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(in thousands)
(Unaudited)

  Three Months Ended June 30,  Six Months Ended June 30, 
  2020  2019  2020  2019 
                 
Net income - GAAP basis $5,191  $1,506  $4,373  $1,455 
                 
Non-interest expense adjustments:                
Retirement salary and benefits compensation  -   -   692   - 
Accelerated vesting of stock-based compensation  -   -   683   - 
COVID-19 related expenses  189   -   207   - 
Net income - Non-GAAP basis $5,380  $1,506  $5,955  $1,455 
                 
Non-GAAP net income per share (basic and diluted) $1.06  $0.28  $1.17  $0.27 
                 
Weighted average shares outstanding  5,092,490   5,455,679   5,107,700   5,467,057 


Randolph Bancorp, Inc.
Selected Financial Highlights
(Unaudited)

  At or for the  At or for the 
  Three Months Ended June 30,  Six Months Ended June 30, 
   2020   2019   2020   2019 
                 
Return on average assets: (1, 5)                
GAAP  2.97%  0.94%  1.31%  0.47%
Non-GAAP (2)  3.08%  0.94%  1.78%  0.47%
                 
Return on average equity: (1, 6)                
GAAP  25.16%  7.60%  10.77%  3.70%
Non-GAAP (2)  26.07%  7.60%  14.67%  3.70%
                 
Net interest margin  2.88%  2.91%  2.89%  2.97%
                 
Non-interest income to total income:                
GAAP  74.04%  56.64%  68.54%  51.27%
                 
Efficiency ratio: (7)                
GAAP  62.41%  85.70%  76.74%  92.34%
Non-GAAP (2)  61.38%  85.70%  71.31%  92.34%
                 
Tier 1 capital to average assets (3)  11.93%  12.41%  11.93%  12.41%
                 
Nonperforming assets as a percentage of total assets (4)  0.47%  0.37%  0.47%  0.37%
                 
Allowance for loan losses as a percentage of total loans (4)  1.22%  0.91%  1.22%  0.91%
                 
Allowance for loan losses as a percentage of non-performing loans  186.60%  179.44%  186.60%  179.44%
                 
Tangible book value per share $15.43  $13.70  $15.43  $13.70 

                                                 

(1) Annualized for quarterly periods presented.
(2) See page 14 – Reconciliation of GAAP to Non-GAAP Net Income.
(3) Average assets calculated on a quarterly basis for all periods presented
(4) Total loans exclude loans held for sale but includes net deferred loan costs and fees.
(5) This non-GAAP measure represents net income divided by average total assets.
(6) This non-GAAP measure represents net income divided by average stockholders’ equity.
(7) This non-GAAP measure represents total non-interest expenses divided by the sum of net interest income and non-interest income.


Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)

Loan Payment Deferrals

  As of July 21, 2020 
  Commercial loans  Residential loans  Residential loans
serviced for others
 
  (Dollars in thousands) 
Balance outstanding $172,748  $305,849  $1,365,234 
             
COVID-19 related loan payment deferrals: (1)            
Loans in COVID-19-related loan payment deferral $33,466  $12,428  $40,651 
Loans in deferral as a percentage of category loans  19.4%  4.1%  3.0%
Loans with suspended payment $33,466  $10,513  $26,928 
Loans with reduced payment  -   1,915   13,723 
             
Loans which obtained a COVID-19-related payment deferral but            
have since resumed payment $5,461  $5,893  $23,667 
Loans reinstated (borrower paid any unpaid principal and interest)  -   1,293   6,426 
Loans on a repayment plan  -   -   685 
Loans which resumed payment but deferred principal and/or            
 interest payments to maturity (2)  5,461   4,600   15,922 
Loans which were paid off completely  -   -   160 
Other loans  -   -   474 

                                                 

(1) Includes commercial loans that have been approved for loan payment deferral but for which documentation is closing or pending.
(2) Includes commercial loan for which maturity was extended.

Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)

COVID-19 Highly Impacted Sectors

  As of June 30, 2020 
  Exposure Balance  Exposure by Risk Weighting     
                          Balance 
      Real  Commercial              with 
      Estate  &              Deferred 
Industry (1) Total  Secured  Industrial (2)  Construction  Pass  Criticized  Payments 
  (Dollars in thousands) 
Group home/care facility $1,123   $1,123   $-   $-   $1,123  $-  $- 
Hotels/hospitality  12,560    12,526    34    -    -   12,560   12,560 
Restaurants/food service  6,804    1,637    5,167    -    6,180   624   1,805 
Retail/shopping center  22,731    18,056    -    4,675    22,731   -   8,261 
Other sectors (3)  9,747    9,432    315    -    9,597   150   9,747 
Total loans in COVID-19 impacted sectors $52,965   $42,774   $5,516   $4,675   $39,631  $13,334  $32,373 
Percentage of commercial loans outstanding 30.5%  31.7%  24.0%  29.0%             
Commercial loans outstanding $173,794   $134,750   $22,940   $16,104              
Loan to value secured by real estate (4)     51.5%      75.0%             
Restaurant/food service loans                            
to enterprise value (2)         60.3%                 

                                                 

(1) This disclosure focuses on industries with balances that are significant to the portfolio at June 30, 2020 and omits industries affected by the COVID-19 pandemic (oil and gas, transportation, etc.) to which the Company has minimal or no exposure.
(2) Commercial & Industrial loans primarily relate to restaurant franchises for which enterprise value is determined as a multiple of revenue or earnings before interest, taxes, depreciation, and amortization.
(3) Includes customers operating in various sectors which have been impacted by COVID-19.
(4) Loan to value secured by real estate equals the exposure balance divided by the most recent appraised value.


Category: Earnings
Source: Randolph Bancorp, Inc. and Envision Bank

CONTACT:

Envision Bank
William M. Parent
President and Chief Executive Officer
617.925.1955
wparent@envisionbank.com