rndb-ex991_8.htm
Exhibit 99.1
10 Cabot Place, Stoughton, MA 02072
News Release
For Immediate Release
October 27, 2020
For More Information, Contact:
William M. Parent, President and Chief Executive Officer (617-925-1955)
RANDOLPH BANCORP, INC. ANNOUNCES THIRD QUARTER AND YEAR-TO-DATE 2020 FINANCIAL RESULTS, ANNOUNCES SHARE BUYBACK PROGRAM
STOUGHTON, Massachusetts, October 27, 2020 – Randolph Bancorp, Inc. (the “Company”) (NASDAQ Global Market: RNDB), the holding company for Envision Bank (the “Bank”), today announced net income of $10.3 million, or $2.01 per basic and diluted share, for the three months ended September 30, 2020 compared to net income of $1.1 million, or $0.21 per basic and diluted share, for the three months ended September 30, 2019. Net income for the nine months ended September 30, 2020 was $14.7 million, or $2.86 per basic and diluted share, compared to net income of $2.6 million, or $0.48 per basic and diluted share, for the nine months ended September 30, 2019. Excluding one-time charges of $1.4 million related to the retirement of senior executives and operating expenses of $229,000 related to addressing the COVID-19 pandemic, earnings were $16.3 million, or $3.17 per share, for the nine months ended September 30, 2020.
The Company also announced today that its Board of Directors has approved a share repurchase program to purchase up to 552,000 shares of its common stock, representing approximately 10.0% of the Company’s outstanding common stock.
Repurchases under this program may be made in open market transactions. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program does not obligate the Company to purchase any particular number of shares. The repurchase program will expire on October 29, 2021, and may be suspended or terminated at any time.
At September 30, 2020, total assets amounted to $723.0 million, compared to $724.0 million at June 30, 2020, a decrease of $1.0 million, or 0.1%. An increase in loans held for sale of $26.1 million was offset by a decrease in cash and cash equivalents of $26.9 million relative to the prior quarter.
William M. Parent, President and Chief Executive Officer, stated, “The third 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 loans closed, loans sold, and net revenue from loan sales and origination activity. We continue to focus on maintaining a strong balance sheet during these unprecedented times, while the announcement of our new buyback program will enable our Company to deploy excess capital in the most effective manner.”
Third Quarter Operating Results
Net interest income increased by $96,000, or 2.1%, to $4.7 million for the three months ended September 30, 2020 from $4.6 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 at the Company increased $63.0 million, or 58.5%, from September 30, 2019 and the average balance of term certificates decreased $51.0 million, or 28.0%, from September 2019, contributing to an 83 basis point decrease in the cost of interest-bearing liabilities. The net interest margin decreased in the third quarter of 2020 to 2.81%,
from 2.89% in thethirdquarter 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 $546,000 for the quarter ended September 30, 2020. The allowance for loan losses was 1.34% and 0.90% of total loans at September 30, 2020 and December 31, 2019, respectively, and was 67.2% and 131.4% of non-performing assets at September 30, 2020 and December 31, 2019, respectively. Nonperforming assets include $2.8 million of credits which were paid in early October. Excluding these loans with payoffs, the allowance for loan losses would have been 92.3% of non-performing assets at September 30, 2020.
Non-interest income increased $13.6 million, or 215.3%, to $19.9 million for the quarter ended September 30, 2020 from $6.3 million in the quarter ended September 30, 2019, principally due to an increase of $12.3 million in the net gain on loan origination and sale activities. Sold mortgage loans reached a volume of $410.4 million in the third quarter of 2020. The increase in the gain on loan origination and sale activities was accompanied by an increase in net mortgage servicing fees due to a fair value adjustment for mortgage servicing rights of $1.1 million, given a recent stabilization of interest rates from the first half of the year. Net mortgage servicing fees for the quarter ended September 30, 2019 included a negative fair valuation adjustment of $522,000.
Non-interest expenses increased $1.3 million to $11.1 million in the quarter ended September 30, 2020 from $9.7 million in the quarter ended September 30, 2019. The increase is principally due to an increase in salaries and employee benefits of $901,000, mainly related to higher commissions and incentives associated with increased residential loan production.
Occupancy and equipment expenses increased $186,000 in the quarter ended September 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 $22,000, in addition to increased depreciation of furniture, fixtures and equipment that are expected to be retired as the Company looks to consolidate its office space in light of prolonged remote working arrangements.
Other non-interest expenses comprising professional fees, marketing, FDIC insurance and other non-interest expenses increased by $246,000 in the quarter ended September 30, 2020 versus the prior year period, as elevated mortgage loan production costs and the expiration of an FDIC deposit insurance credit were partially offset by a decrease in discretionary marketing expenses.
Income tax expense of $2.7 million for the quarter ended September 30, 2020 consists of both federal and state tax expenses. The Company’s net operating loss carryforward of $10.8 million from prior years was fully absorbed during the period.
Year-to-Date Operating Results
Net interest income increased by $385,000, or 2.9%, for the nine months ended September 30, 2020 compared to the same period in the prior year. This increase was driven by an increase in the proportion of non-maturity deposits, and a decline in the proportion of term certificates from the prior year. The net interest margin decreased in the first nine months of 2020 to 2.86%, from 2.94% in the first nine months 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 $2.3 million for the nine months ended September 30, 2020 compared to a credit of $144,000 in the prior year period.
Non-interest income increased $24.3 million, or 155.8%, to $39.8 million for the nine months ended September 30, 2020 from $15.6 million in the nine months ended September 30, 2019, principally due to an increase of $26.2 million in the net gain on loan origination and sale activities. Mortgage loans sold were $1.1 billion for the first nine months 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 $2.0 million in the nine months ended September 30, 2020,
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given expectations of higher prepayments. The fair value adjustment for mortgage servicing rights was $636,000 in theninemonths endedSeptember30, 2019.
Non-interest expenses increased $6.9 million, or 26.2%, to $33.4 million for the nine months ended September 30, 2020 from $26.5 million for the nine months ended September 30, 2019. Non-interest expenses in the first nine months of 2020 included one-time charges of $1.4 million related to the retirement of senior executives as well as $229,000 of COVID-19 pandemic-related expenses.
In the first nine months of 2020, salaries and employee benefits increased $5.9 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.
Occupancy and equipment expenses increased $423,000 in the first nine months 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 $125,000, 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 nine months of 2020 increased $69,000 over the prior year period, primarily related to management succession planning costs. Spending on marketing during the first nine months of 2020 was $186,000 less than in the prior year period, due to fewer marketing campaigns while communities were subject to a stay-at-home order. The increase of $652,000 in other non-interest expenses during the first nine months of 2020 was driven mainly by costs related to higher mortgage loan production.
Income tax expense of $3.3 million for the nine months ended September 30, 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 period.
Balance Sheet
At September 30, 2020, total assets amounted to $723.0 million compared to $631.0 million at December 31, 2019, an increase of $92.0 million, or 14.6%. Contributing to asset growth was a $15.4 million increase in net loans, mainly driven by the issuance of Paycheck Protection Program loans (“SBA PPP Loans”) for $15.4 million. Cash and cash equivalents increased by $40.8 million during the first nine months 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 increased by $25.0 million to $87.8 million at September 30, 2020 from $62.8 million at December 31, 2019.
The increase in total assets was funded by deposit growth. Non-brokered deposits totaled $485.0 million at September 30, 2020, increasing by $78.8 million, or 19.4%, during the first nine months of 2020. Driving the growth in non-brokered deposits were customers’ receipt of government stimulus, SBA PPP Loans 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 $53.6 million to $37.3 million at September 30, 2020, from $90.9 million at December 31, 2019. Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank advances increased by $37.8 million to $82.2 million at September 30, 2020, from $44.4 million at December 31, 2019, as a result of the funding of our SBA PPP Loans and other loans with FHLB and Federal Reserve Bank advances.
Total stockholders’ equity was $94.9 million at September 30, 2020 compared to $78.5 million at December 31, 2019. The increase of $16.5 million relates mainly to net income in the period of $14.7 million and an increase in the fair value of available-for-sale securities, net of taxes, of $1.6 million. In addition, the Company repurchased $1.2 million of shares during the first nine months of 2020, and equity adjustments related to the stock benefit plan and the employee stock ownership plan amounted to $1.5 million during the period.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
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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 September 30, 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 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, four 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.
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4
Randolph Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
September 30,
December 31,
2020
2019
Assets
Cash and due from banks
$
5,335
$
4,371
Interest-bearing deposits
43,756
3,881
Total cash and cash equivalents
49,091
8,252
Certificates of deposit
-
490
Securities available for sale, at fair value
55,551
57,503
Loans held for sale, at fair value
87,805
62,792
Loans, net of allowance for loan losses of $6,597 in 2020 and $4,280 in 2019
484,548
469,131
Federal Home Loan Bank of Boston stock, at cost
3,797
2,417
Accrued interest receivable
1,654
1,393
Mortgage servicing rights, net
10,944
8,556
Premises and equipment, net
5,133
5,748
Bank-owned life insurance
8,577
8,441
Foreclosed real estate, net
132
-
Other assets
15,736
6,281
Total assets
$
722,968
$
631,004
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing
$
93,352
$
61,603
Interest bearing
391,660
344,581
Brokered
37,273
90,858
Total deposits
522,285
497,042
Federal Reserve Bank advances
15,318
-
Federal Home Loan Bank of Boston advances
66,903
44,403
Mortgagors' escrow accounts
1,959
2,052
Post-employment benefit obligations
2,289
2,464
Other liabilities
19,276
6,581
Total liabilities
628,030
552,542
Stockholders' Equity:
Common stock
55
56
Additional paid-in capital
51,201
51,127
Retained earnings
46,415
31,757
ESOP-Unearned compensation
(3,803
)
(3,944
)
Accumulated other comprehensive income (loss), net of tax
1,070
(534
)
Total stockholders' equity
94,938
78,462
Total liabilities and stockholders' equity
$
722,968
$
631,004
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5
Randolph Bancorp, Inc.
Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Interest and dividend income:
Loans
$
5,337
$
6,144
$
16,680
$
17,791
Other interest and dividend income
311
397
1,080
1,221
Total interest and dividend income
5,648
6,541
17,760
19,012
Interest expense
979
1,968
3,933
5,570
Net interest income
4,669
4,573
13,827
13,442
Provision (credit) for loan losses
546
-
2,338
(144
)
Net interest income after provision for loan losses
4,123
4,573
11,489
13,586
Non-interest income:
Customer service fees
330
363
902
1,053
Gain on loan origination and sale activities, net
18,102
5,782
39,616
13,438
Mortgage servicing fees, net
1,180
(181
)
(1,428
)
362
Other
262
339
734
718
Total non-interest income
19,874
6,303
39,824
15,571
Non-interest expenses:
Salaries and employee benefits
7,911
7,010
24,439
18,514
Occupancy and equipment
859
673
2,395
1,972
Professional fees
253
264
888
819
Marketing
154
275
458
644
FDIC insurance
41
(55
)
136
91
Other non-interest expenses
1,833
1,551
5,073
4,421
Total non-interest expenses
11,051
9,718
33,389
26,461
Income before income taxes
12,946
1,158
17,924
2,696
Income tax expense
2,661
14
3,266
97
Net income
$
10,285
$
1,144
$
14,658
$
2,599
Net income per share:
Basic
$
2.01
$
0.21
$
2.86
$
0.48
Diluted
$
2.01
$
0.21
$
2.86
$
0.48
Weighted average shares outstanding:
Basic
5,120,367
5,345,786
5,123,705
5,429,339
Diluted
5,120,367
5,345,786
5,126,077
5,429,339
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6
Randolph Bancorp, Inc.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)
For the Three Months Ended September 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)
$
559,370
$
5,337
3.82
%
$
573,899
$
6,144
4.28
%
Investment securities(2) (3)
57,211
305
2.13
%
53,947
377
2.80
%
Interest-earning deposits
48,949
7
0.06
%
4,881
23
1.88
%
Total interest-earning assets
665,530
5,649
3.40
%
632,727
6,544
4.14
%
Noninterest-earning assets
41,037
14,757
Total assets
$
706,567
$
647,484
Interest-bearing liabilities:
Savings accounts
170,762
172
0.40
%
107,764
149
0.55
%
NOW accounts
57,646
41
0.28
%
38,697
47
0.49
%
Money market accounts
72,369
75
0.41
%
64,058
251
1.57
%
Term certificates
131,053
442
1.35
%
182,073
918
2.02
%
Total interest-bearing deposits
431,830
730
0.68
%
392,592
1,365
1.39
%
FHLBB and FRB advances
82,639
249
1.21
%
101,933
603
2.37
%
Total interest-bearing liabilities
514,469
979
0.76
%
494,525
1,968
1.59
%
Noninterest-bearing liabilities:
Noninterest-bearing deposits
88,394
62,456
Other noninterest-bearing liabilities
12,724
10,138
Total liabilities
615,587
567,119
Total stockholders' equity
90,980
80,365
Total liabilities and stockholders' equity
$
706,567
$
647,484
Net interest income
$
4,670
$
4,576
Interest rate spread(4)
2.64
%
2.55
%
Net interest-earning assets(5)
$
151,061
$
138,202
Net interest margin(6)
2.81
%
2.89
%
Ratio of interest-earning assets to interest-bearing liabilities
129.36
%
127.95
%
(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 September 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.
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Randolph Bancorp, Inc.
Average Balances/Yields
(Dollars in thousands)
(Unaudited)
For the Nine Months Ended September 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)
$
555,838
$
16,680
4.00
%
$
549,665
$
17,791
4.32
%
Investment securities(2) (3)
58,201
1,016
2.33
%
54,350
1,154
2.83
%
Interest-earning deposits
30,177
68
0.30
%
5,132
77
2.00
%
Total interest-earning assets
644,216
17,764
3.68
%
609,147
19,022
4.16
%
Noninterest-earning assets
37,509
21,228
Total assets
$
681,725
$
630,375
Interest-bearing liabilities:
Savings accounts
154,736
689
0.59
%
104,530
337
0.43
%
NOW accounts
54,185
142
0.35
%
39,466
144
0.49
%
Money market accounts
70,712
394
0.74
%
65,609
712
1.45
%
Term certificates
159,540
2,012
1.68
%
171,827
2,552
1.98
%
Total interest-bearing deposits
439,173
3,237
0.98
%
381,432
3,745
1.31
%
FHLBB and FRB advances
69,672
696
1.33
%
98,817
1,825
2.46
%
Total interest-bearing liabilities
508,845
3,933
1.03
%
480,249
5,570
1.55
%
Noninterest-bearing liabilities:
Noninterest-bearing deposits
76,397
62,194
Other noninterest-bearing liabilities
11,996
8,681
Total liabilities
597,238
551,124
Total stockholders' equity
84,487
79,251
Total liabilities and stockholders' equity
$
681,725
$
630,375
Net interest income
$
13,831
$
13,452
Interest rate spread(4)
2.65
%
2.61
%
Net interest-earning assets(5)
$
135,371
$
128,898
Net interest margin(6)
2.86
%
2.94
%
Ratio of interest-earning assets to interest-bearing liabilities
126.60
%
126.84
%
(1) Includes nonaccruing loan balances and interest received on such loans.
(2) Includes carrying value of securities classified as available-for-sale and FHLB of Boston stock.
(3) Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21%, of $4,000 and $10,000 for the nine months ended September 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.
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Randolph Bancorp, Inc.
Rate/Volume Analysis
(Dollars in thousands)
(Unaudited)
Three Months Ended
September 30, 2020 vs. 2019
Increase (Decrease)
Total
Due to Changes in
Increase
Volume
Rate
(Decrease)
Interest-earning assets:
Loans
$
(154
)
$
(653
)
$
(807
)
Investment securities
22
(94
)
(72
)
Interest-earning deposits
27
(41
)
(14
)
Total interest-earning assets
(105
)
(788
)
(893
)
Interest-bearing liabilities:
Savings accounts
71
(48
)
23
NOW accounts
18
(24
)
(6
)
Money market accounts
29
(205
)
(176
)
Term certificates
(218
)
(258
)
(476
)
Total interest-bearing deposits
(100
)
(535
)
(635
)
FHLBB and FRB advances
(99
)
(255
)
(354
)
Total interest-bearing liabilities
(199
)
(790
)
(989
)
Change in net interest income
$
94
$
2
$
96
Nine Months Ended
September 30, 2020 vs. 2019
Increase (Decrease)
Total
Due to Changes in
Increase
Volume
Rate
(Decrease)
Interest-earning assets:
Loans
$
(29
)
$
(1,080
)
$
(1,109
)
Investment securities
(1
)
(136
)
(137
)
Interest-earning deposits
30
(37
)
(7
)
Total interest-earning assets
-
(1,253
)
(1,253
)
Interest-bearing liabilities:
Savings accounts
197
154
351
NOW accounts
15
(17
)
(2
)
Money market accounts
(12
)
(306
)
(318
)
Term certificates
(173
)
(367
)
(540
)
Total interest-bearing deposits
27
(536
)
(509
)
FHLBB and FRB advances
(441
)
(688
)
(1,129
)
Total interest-bearing liabilities
(414
)
(1,224
)
(1,638
)
Change in net interest income
$
414
$
(29
)
$
385
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
9
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
For the Three Months Ended September 30, 2020
Envision Bank
Envision Mortgage
Consolidated Total
Net interest income
$
4,032
$
637
$
4,669
Provision for loan losses
546
-
546
Net interest income after provision for loan losses
3,486
637
4,123
Non-interest income:
Customer service fees
309
21
330
Gain on loan origination and sale activities, net (1)
-
18,459
18,459
Mortgage servicing fees, net
(98
)
1,278
1,180
Other
93
169
262
Total non-interest income
304
19,927
20,231
Non-interest expenses:
Salaries and employee benefits
1,959
5,952
7,911
Occupancy and equipment
437
422
859
Other non-interest expenses
1,084
1,197
2,281
Total non-interest expenses
3,480
7,571
11,051
Income (loss) before income taxes and elimination of inter-segment profit
$
310
$
12,993
13,303
Elimination of inter-segment profit
(357
)
Income before income taxes
12,946
Income tax expense
2,661
Net income
$
10,285
(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.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
10
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
For the Three Months Ended September 30, 2019
Envision Bank
Envision Mortgage
Consolidated Total
Net interest income
$
3,781
$
792
$
4,573
Credit for loan losses
-
-
-
Net interest income after credit for loan losses
3,781
792
4,573
Non-interest income:
Customer service fees
331
32
363
Gain on loan origination and sale activities, net (1)
-
6,010
6,010
Mortgage servicing fees, net
(93
)
(88
)
(181
)
Other
242
97
339
Total non-interest income
480
6,051
6,531
Non-interest expenses:
Salaries and employee benefits
1,966
5,044
7,010
Occupancy and equipment
367
306
673
Other non-interest expenses
1,184
851
2,035
Total non-interest expenses
3,517
6,201
9,718
Income before income taxes and elimination of inter-segment profit
$
744
$
642
1,386
Elimination of inter-segment profit
(228
)
Loss before income taxes
1,158
Income tax expense
14
Net income
$
1,144
(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.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
11
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
For the Nine Months Ended September 30, 2020
Envision Bank
Envision Mortgage
Consolidated Total
Net interest income
$
11,970
$
1,857
$
13,827
Provision for loan losses
2,338
-
2,338
Net interest income after provision for loan losses
9,632
1,857
11,489
Non-interest income:
Customer service fees
827
75
902
Gain on loan origination and sale activities, net (1)
-
40,667
40,667
Mortgage servicing fees, net
(281
)
(1,147
)
(1,428
)
Other
318
416
734
Total non-interest income
864
40,011
40,875
Non-interest expenses:
Salaries and employee benefits (2)
6,983
17,456
24,439
Occupancy and equipment
1,305
1,090
2,395
Other non-interest expenses
3,286
3,269
6,555
Total non-interest expenses
11,574
21,815
33,389
Income (loss) before income taxes and elimination of inter-segment profit
$
(1,078
)
$
20,053
18,975
Elimination of inter-segment profit
(1,051
)
Income before income taxes
17,924
Income tax expense
3,266
Net income
$
14,658
(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.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
12
Randolph Bancorp, Inc.
Segment Information
(Dollars in thousands)
(Unaudited)
For the Nine Months Ended September 30, 2019
Envision Bank
Envision Mortgage
Consolidated Total
Net interest income
$
12,123
$
1,319
$
13,442
Credit for loan losses
(144
)
-
(144
)
Net interest income after credit for loan losses
12,267
1,319
13,586
Non-interest income:
Customer service fees
947
106
1,053
Gain on loan origination and sale activities, net (1)
-
14,043
14,043
Mortgage servicing fees, net
(273
)
635
362
Other
465
253
718
Total non-interest income
1,139
15,037
16,176
Non-interest expenses:
Salaries and employee benefits
5,292
13,222
18,514
Occupancy and equipment
1,137
835
1,972
Other non-interest expenses
3,436
2,539
5,975
Total non-interest expenses
9,865
16,596
26,461
Income (loss) before income taxes and elimination of inter-segment profit
$
3,541
$
(240
)
3,301
Elimination of inter-segment profit
(605
)
Income before income taxes
2,696
Income tax expense
97
Net income
$
2,599
(1)
Before elimination of inter-segment profit.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
13
Randolph Bancorp, Inc.
Reconciliation of GAAP to Non-GAAP Net Income
(in thousands)
(Unaudited)
Quarter Ended
September 30, 2020
Income Before Taxes
Provision for Income Taxes
Net Income
Earnings per Common Share (diluted)
GAAP basis
$
12,946
$
2,661
$
10,285
$
2.01
Non-interest expense adjustments:
COVID-19 related expenses
22
4
18
$
0.00
Non-GAAP basis
$
12,968
$
2,665
$
10,303
$
2.01
Quarter Ended
September 30, 2019
Income Before Taxes
Provision for Income Taxes
Net Income
Earnings per Common Share (diluted)
GAAP basis
$
1,158
$
14
$
1,144
$
0.21
Non-GAAP basis
$
1,158
$
14
$
1,144
$
0.21
Year-to-Date
September 30, 2020
Income Before Taxes
Provision for Income Taxes
Net Income
Earnings per Common Share (diluted)
GAAP basis
$
17,924
$
3,266
$
14,658
$
2.86
Non-interest expense adjustments:
Retirement salary and benefits compensation
692
126
566
0.11
Accelerated vesting of stock-based compensation
683
124
559
0.11
COVID-19 related expenses
229
42
187
0.04
Non-GAAP basis
$
19,528
$
3,558
$
15,970
$
3.12
Year-to-Date
September 30, 2019
Income Before Taxes
Provision for Income Taxes
Net Income
Earnings per Common Share (diluted)
GAAP basis
$
2,696
$
97
$
2,599
$
0.48
Non-GAAP basis
$
2,696
$
97
$
2,599
$
0.48
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
14
Randolph Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
At or for the
At or for the
Three Months Ended September 30,
Nine Months Ended September 30,
2020
2019
2020
2019
Return on average assets: (1, 5)
GAAP
5.82
%
0.71
%
2.87
%
0.55
%
Non-GAAP (2)
5.83
%
0.71
%
3.12
%
0.55
%
Return on average equity: (1, 6)
GAAP
45.22
%
5.69
%
23.13
%
4.37
%
Non-GAAP (2)
45.30
%
5.69
%
25.20
%
4.37
%
Net interest margin
2.81
%
2.89
%
2.86
%
2.94
%
Non-interest income to total income:
GAAP
80.98
%
49.07
%
74.23
%
45.03
%
Efficiency ratio: (7)
GAAP
45.03
%
89.35
%
62.23
%
91.20
%
Non-GAAP (2)
44.94
%
89.35
%
59.24
%
91.20
%
Tier 1 capital to average assets (3)
13.28
%
12.28
%
13.28
%
12.28
%
Nonperforming assets as a percentage of total assets (4)
1.38
%
0.54
%
1.38
%
0.54
%
Allowance for loan losses as a percentage of total loans (4)
1.34
%
0.90
%
1.34
%
0.90
%
Allowance for loan losses as a percentage of total loans, excluding SBA PPP Loans (4)
1.39
%
0.90
%
1.39
%
0.90
%
Allowance for loan losses as a percentage of non-performing assets
67.21
%
120.20
%
67.21
%
120.20
%
Allowance for loan losses as a percentage of non-performing loans
66.31
%
120.20
%
66.31
%
120.20
%
Tangible book value per share
$
17.18
$
13.95
$
17.18
$
13.95
Outstanding Shares
5,524,390
5,701,152
5,524,390
5,701,152
(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.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
15
Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)
Loan Payment Deferrals
As of October 19, 2020
Commercial loans
Residential loans
Residential loans serviced for others
(Dollars in thousands)
Balance outstanding
$
169,940
$
362,176
$
1,629,169
COVID-19 related loan payment deferrals: (1)
Loans in COVID-19-related loan payment deferral
$
11,320
$
5,884
$
22,228
Loans in deferral as a percentage of category loans
6.7
%
1.6
%
1.4
%
Loans with suspended payment
$
11,320
$
4,588
$
13,296
Loans with reduced payment
-
1,296
8,932
Loans which obtained a COVID-19-related payment deferral but
have since resumed payment
$
25,600
$
11,934
$
44,543
Loans reinstated (borrower paid any unpaid principal and interest)
-
2,746
9,427
Loans on a repayment plan
-
-
1,376
Loans which resumed payment but deferred principal and/or
interest payments to maturity(2)
20,950
8,381
31,330
Loans which were paid off completely (3)
4,650
807
1,582
Other loans
-
-
828
(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.
(3)
Includes the payment from one commercial loan relationship for $2.8 million that was listed on nonaccrual status at September 30, 2020.
877-963-2100• www.envisionbank.com Member FDIC• Member DIF
16
Randolph Bancorp, Inc.
COVID-19 Supplemental Disclosure
(Unaudited)
COVID-19 Highly Impacted Sectors
As of September 30, 2020
Exposure Balance
Exposure by Risk Weighting
Balance
Real
Commercial
with
Estate
&
Deferred
Industry (1)
Total
Secured
Industrial
Construction
Pass
Criticized (4)
Payments
(Dollars in thousands)
Group home/care facility
$
1,103
$
1,103
$
-
$
-
$
1,103
$
-
$
-
Hotels/hospitality
12,592
12,559
33
-
-
12,592
8,317
Restaurants/food service
2,858
1,610
1,248
-
2,858
-
-
Retail/shopping center
24,719
20,044
-
4,675
24,082
637
2,060
Other sectors (2)
2,185
2,185
-
-
1,545
640
640
Total loans in COVID-19 impacted sectors
$
43,457
$
37,501
$
1,281
$
4,675
$
29,588
$
13,869
$
11,017
Percentage of commercial loans outstanding
24.7%
26.4%
6.3%
34.0%
Commercial loans outstanding
$
176,000
$
141,862
$
20,388
$
13,750
Loan to value secured by real estate (3)
40.9%
75.0%
(1)
This disclosure focuses on industries with balances that are significant to the portfolio at September 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. 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.
(4)
Includes one loan relationship for $2.8 million that was listed on nonaccrual status at September 30, 2020, and was subsequently paid off in early October.
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