Quarterly Report (10-q)

false 2022 Q2 0001667161 --12-31 true false P3Y http://fasb.org/us-gaap/2022#OtherAssets http://fasb.org/us-gaap/2022#OtherAssets http://fasb.org/us-gaap/2022#OtherLiabilities http://fasb.org/us-gaap/2022#OtherLiabilities true 2022 0 P3Y 0 P5Y P10Y P6Y2M12D P7Y7M9D P7Y9M14D P7Y1M17D P1Y11M8D P2Y1M17D P1Y9M14D P2Y25D 0001667161 2022-01-01 2022-06-30 xbrli:shares 0001667161 2022-07-31 iso4217:USD 0001667161 2022-06-30 0001667161 2021-12-31 iso4217:USD xbrli:shares 0001667161 2022-04-01 2022-06-30 0001667161 2021-04-01 2021-06-30 0001667161 2021-01-01 2021-06-30 0001667161 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2022-04-01 2022-06-30 0001667161 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2021-04-01 2021-06-30 0001667161 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2022-01-01 2022-06-30 0001667161 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2021-01-01 2021-06-30 0001667161 us-gaap:CommonStockMember 2021-03-31 0001667161 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001667161 us-gaap:RetainedEarningsMember 2021-03-31 0001667161 rndb:UnearnedCompensationESOPMember 2021-03-31 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001667161 2021-03-31 0001667161 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001667161 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001667161 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001667161 rndb:UnearnedCompensationESOPMember 2021-04-01 2021-06-30 0001667161 us-gaap:CommonStockMember 2021-06-30 0001667161 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001667161 us-gaap:RetainedEarningsMember 2021-06-30 0001667161 rndb:UnearnedCompensationESOPMember 2021-06-30 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001667161 2021-06-30 0001667161 us-gaap:CommonStockMember 2022-03-31 0001667161 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001667161 us-gaap:RetainedEarningsMember 2022-03-31 0001667161 rndb:UnearnedCompensationESOPMember 2022-03-31 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001667161 2022-03-31 0001667161 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001667161 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001667161 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001667161 rndb:UnearnedCompensationESOPMember 2022-04-01 2022-06-30 0001667161 us-gaap:CommonStockMember 2022-06-30 0001667161 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001667161 us-gaap:RetainedEarningsMember 2022-06-30 0001667161 rndb:UnearnedCompensationESOPMember 2022-06-30 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001667161 us-gaap:CommonStockMember 2020-12-31 0001667161 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001667161 us-gaap:RetainedEarningsMember 2020-12-31 0001667161 rndb:UnearnedCompensationESOPMember 2020-12-31 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001667161 2020-12-31 0001667161 us-gaap:RetainedEarningsMember 2021-01-01 2021-06-30 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-06-30 0001667161 us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001667161 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-06-30 0001667161 rndb:UnearnedCompensationESOPMember 2021-01-01 2021-06-30 0001667161 us-gaap:CommonStockMember 2021-12-31 0001667161 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001667161 us-gaap:RetainedEarningsMember 2021-12-31 0001667161 rndb:UnearnedCompensationESOPMember 2021-12-31 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001667161 us-gaap:RetainedEarningsMember 2022-01-01 2022-06-30 0001667161 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-06-30 0001667161 us-gaap:CommonStockMember 2022-01-01 2022-06-30 0001667161 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-06-30 0001667161 rndb:UnearnedCompensationESOPMember 2022-01-01 2022-06-30 0001667161 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2022-01-01 2022-06-30 0001667161 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-01-01 2021-12-31 0001667161 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2022-01-01 2022-06-30 0001667161 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetUnamortizedGainLossMember 2021-01-01 2021-12-31 0001667161 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2022-01-01 2022-06-30 0001667161 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentNetPriorServiceCostCreditMember 2021-01-01 2021-12-31 0001667161 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2022-01-01 2022-06-30 0001667161 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2021-01-01 2021-12-31 0001667161 us-gaap:USTreasurySecuritiesMember 2022-06-30 0001667161 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2022-06-30 0001667161 us-gaap:CorporateDebtSecuritiesMember 2022-06-30 0001667161 us-gaap:MunicipalBondsMember 2022-06-30 0001667161 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-06-30 0001667161 rndb:CommercialMortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-06-30 0001667161 rndb:CollateralizedMortgageObligationsIssuedByUSGovernmentSponsoredEnterprisesMember 2022-06-30 0001667161 rndb:CollateralizedMortgageObligationsIssuedByUSGovernmentGuaranteedMember 2022-06-30 0001667161 us-gaap:USTreasurySecuritiesMember 2021-12-31 0001667161 us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2021-12-31 0001667161 us-gaap:CorporateDebtSecuritiesMember 2021-12-31 0001667161 us-gaap:MunicipalBondsMember 2021-12-31 0001667161 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001667161 rndb:CommercialMortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001667161 us-gaap:CommercialMortgageBackedSecuritiesMember 2021-12-31 0001667161 rndb:CollateralizedMortgageObligationsIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001667161 rndb:CollateralizedMortgageObligationsIssuedByUSGovernmentGuaranteedMember 2021-12-31 0001667161 us-gaap:DebtSecuritiesMember us-gaap:USTreasurySecuritiesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember us-gaap:CorporateDebtSecuritiesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember rndb:CommercialMortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember rndb:CollateralizedMortgageObligationsIssuedByUSGovernmentSponsoredEnterprisesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember us-gaap:CommercialMortgageBackedSecuritiesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember 2022-06-30 0001667161 us-gaap:DebtSecuritiesMember us-gaap:USTreasurySecuritiesMember 2021-12-31 0001667161 us-gaap:DebtSecuritiesMember us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember 2021-12-31 0001667161 us-gaap:DebtSecuritiesMember us-gaap:CorporateDebtSecuritiesMember 2021-12-31 0001667161 us-gaap:DebtSecuritiesMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2021-12-31 0001667161 us-gaap:DebtSecuritiesMember 2021-12-31 rndb:Debt_Security xbrli:pure 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember us-gaap:RealEstateSectorMember 2022-06-30 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember us-gaap:RealEstateSectorMember 2021-12-31 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember us-gaap:RealEstateSectorMember 2022-06-30 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember us-gaap:RealEstateSectorMember 2021-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateSectorMember 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:RealEstateSectorMember 2021-12-31 0001667161 us-gaap:ConstructionLoansMember us-gaap:RealEstateSectorMember 2022-06-30 0001667161 us-gaap:ConstructionLoansMember us-gaap:RealEstateSectorMember 2021-12-31 0001667161 us-gaap:RealEstateSectorMember 2022-06-30 0001667161 us-gaap:RealEstateSectorMember 2021-12-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2022-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2021-12-31 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-03-31 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-03-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-03-31 0001667161 us-gaap:ConstructionLoansMember 2022-03-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2022-03-31 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2022-03-31 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-04-01 2022-06-30 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-04-01 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-04-01 2022-06-30 0001667161 us-gaap:ConstructionLoansMember 2022-04-01 2022-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2022-04-01 2022-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2022-04-01 2022-06-30 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-06-30 0001667161 us-gaap:ConstructionLoansMember 2022-06-30 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-03-31 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-03-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-03-31 0001667161 us-gaap:ConstructionLoansMember 2021-03-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2021-03-31 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2021-03-31 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-04-01 2021-06-30 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-04-01 2021-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-04-01 2021-06-30 0001667161 us-gaap:ConstructionLoansMember 2021-04-01 2021-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2021-04-01 2021-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2021-04-01 2021-06-30 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-06-30 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-06-30 0001667161 us-gaap:ConstructionLoansMember 2021-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2021-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2021-06-30 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-12-31 0001667161 us-gaap:ConstructionLoansMember 2021-12-31 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-01-01 2022-06-30 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-01-01 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-01-01 2022-06-30 0001667161 us-gaap:ConstructionLoansMember 2022-01-01 2022-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2022-01-01 2022-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2022-01-01 2022-06-30 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2020-12-31 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2020-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2020-12-31 0001667161 us-gaap:ConstructionLoansMember 2020-12-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2020-12-31 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2020-12-31 0001667161 rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-01-01 2021-06-30 0001667161 rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-01-01 2021-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-01-01 2021-06-30 0001667161 us-gaap:ConstructionLoansMember 2021-01-01 2021-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2021-01-01 2021-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2021-01-01 2021-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember us-gaap:ConsumerPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember us-gaap:ConsumerPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-12-31 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember 2022-06-30 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember us-gaap:ConsumerPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:FinancingReceivables60To89DaysPastDueMember 2021-12-31 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 rndb:FinancingReceivables30To89DaysPastDueMember rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 rndb:FinancingReceivables30To89DaysPastDueMember rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-06-30 0001667161 rndb:FinancingReceivables30To89DaysPastDueMember 2022-06-30 0001667161 rndb:FinancingReceivables30To89DaysPastDueMember rndb:OneToFourFamilyLoansMember us-gaap:ResidentialPortfolioSegmentMember 2021-12-31 0001667161 rndb:FinancingReceivables30To89DaysPastDueMember 2021-12-31 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-04-01 2022-06-30 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-04-01 2021-06-30 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2022-01-01 2022-06-30 0001667161 rndb:HomeEquityLoansAndLinesOfCreditMember us-gaap:ResidentialPortfolioSegmentMember 2021-01-01 2021-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember srt:MinimumMember 2022-01-01 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember srt:MaximumMember 2022-01-01 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember srt:MaximumMember 2022-01-01 2022-06-30 rndb:Office 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2022-01-01 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2022-01-01 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember 2022-01-01 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2021-01-01 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2021-01-01 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember 2021-01-01 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsAccrualMember 2021-12-31 rndb:Lease 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2022-01-01 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember 2022-01-01 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2021-01-01 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2021-01-01 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember 2021-01-01 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember 2022-06-30 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2021-12-31 0001667161 rndb:TroubleDebtRestructuringsListedAsNonAccrualMember 2021-12-31 rndb:Contract 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2021-01-01 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:HomeEquityLoansAndLinesOfCreditMember 2021-01-01 2021-12-31 0001667161 2021-01-01 2021-12-31 rndb:TDR 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-04-01 2022-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-04-01 2021-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember 2022-01-01 2022-06-30 0001667161 us-gaap:FinancingReceivables30To59DaysPastDueMember 2021-01-01 2021-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:NoteRatedMember rndb:OneToFourFamilyLoansMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:NoteRatedMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2022-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember rndb:NoteRatedMember 2022-06-30 0001667161 rndb:NoteRatedMember 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:PassMember 2022-06-30 0001667161 us-gaap:PassMember us-gaap:ConstructionLoansMember 2022-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember us-gaap:PassMember 2022-06-30 0001667161 us-gaap:PassMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SpecialMentionMember rndb:OneToFourFamilyLoansMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SpecialMentionMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SpecialMentionMember 2022-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember us-gaap:SpecialMentionMember 2022-06-30 0001667161 us-gaap:SpecialMentionMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SubstandardMember rndb:OneToFourFamilyLoansMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SubstandardMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SubstandardMember 2022-06-30 0001667161 us-gaap:SubstandardMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2022-06-30 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2022-06-30 0001667161 us-gaap:ConstructionLoansMember 2022-06-30 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2022-06-30 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:NoteRatedMember rndb:OneToFourFamilyLoansMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:NoteRatedMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2021-12-31 0001667161 us-gaap:ConsumerPortfolioSegmentMember rndb:NoteRatedMember 2021-12-31 0001667161 rndb:NoteRatedMember 2021-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:PassMember 2021-12-31 0001667161 us-gaap:PassMember us-gaap:ConstructionLoansMember 2021-12-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember us-gaap:PassMember 2021-12-31 0001667161 us-gaap:PassMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SpecialMentionMember rndb:OneToFourFamilyLoansMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SpecialMentionMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2021-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SpecialMentionMember 2021-12-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember us-gaap:SpecialMentionMember 2021-12-31 0001667161 us-gaap:SpecialMentionMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SubstandardMember rndb:OneToFourFamilyLoansMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember us-gaap:SubstandardMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2021-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember us-gaap:SubstandardMember 2021-12-31 0001667161 us-gaap:SubstandardMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:OneToFourFamilyLoansMember 2021-12-31 0001667161 us-gaap:ResidentialPortfolioSegmentMember rndb:SecondMortgagesAndHomeEquityLoansAndLinesOfCreditMember 2021-12-31 0001667161 us-gaap:CommercialRealEstatePortfolioSegmentMember 2021-12-31 0001667161 us-gaap:ConstructionLoansMember 2021-12-31 0001667161 rndb:CommercialAndIndustrialPortfolioSegmentMember 2021-12-31 0001667161 us-gaap:ConsumerPortfolioSegmentMember 2021-12-31 0001667161 rndb:DerivativeLoanCommitmentsMember 2022-06-30 0001667161 rndb:DerivativeLoanCommitmentsMember 2021-12-31 0001667161 rndb:DerivativeLoanCommitmentsMember us-gaap:OtherAssetsMember 2022-06-30 0001667161 rndb:DerivativeLoanCommitmentsMember us-gaap:OtherAssetsMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsAndToBeAnnouncedSecuritiesMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsAndToBeAnnouncedSecuritiesMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsAndToBeAnnouncedSecuritiesMember us-gaap:OtherAssetsMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsAndToBeAnnouncedSecuritiesMember us-gaap:OtherAssetsMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsAndToBeAnnouncedSecuritiesMember us-gaap:OtherLiabilitiesMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsAndToBeAnnouncedSecuritiesMember us-gaap:OtherLiabilitiesMember 2021-12-31 0001667161 rndb:FoundationMember 2022-01-01 2022-06-30 0001667161 rndb:OctoberTwoThousandTwentyOneShareRepurchaseProgramMember 2021-10-01 2021-10-31 0001667161 rndb:OctoberTwoThousandTwentyOneShareRepurchaseProgramMember 2022-01-25 2022-01-25 0001667161 rndb:OctoberTwoThousandTwentyOneShareRepurchaseProgramMember 2021-10-31 0001667161 rndb:OctoberTwoThousandTwentyOneShareRepurchaseProgramMember 2022-01-25 0001667161 rndb:OctoberTwoThousandTwentyOneShareRepurchaseProgramMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandSeventeenStockOptionAndIncentivePlanMember us-gaap:EmployeeStockOptionMember 2022-06-30 0001667161 rndb:TwoThousandSeventeenStockOptionAndIncentivePlanMember us-gaap:EmployeeStockOptionMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandSeventeenStockOptionAndIncentivePlanMember us-gaap:RestrictedStockMember 2022-06-30 0001667161 rndb:TwoThousandSeventeenStockOptionAndIncentivePlanMember srt:MinimumMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandSeventeenStockOptionAndIncentivePlanMember srt:MaximumMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandAndTwentyInducementPlanMember us-gaap:RestrictedStockMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandAndTwentyInducementPlanMember us-gaap:EmployeeStockOptionMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandAndTwentyInducementPlanMember 2022-01-01 2022-06-30 0001667161 rndb:TwoThousandAndTwentyOneEquityPlanMember srt:MaximumMember 2022-06-30 0001667161 rndb:TwoThousandAndTwentyOneEquityPlanMember us-gaap:PerformanceSharesMember 2021-08-13 2021-08-13 0001667161 rndb:TwoThousandAndTwentyOneEquityPlanMember us-gaap:RestrictedStockMember 2021-08-13 2021-08-13 0001667161 us-gaap:EmployeeStockOptionMember 2021-01-01 2021-06-30 0001667161 us-gaap:EmployeeStockOptionMember 2022-01-01 2022-06-30 0001667161 us-gaap:EmployeeStockOptionMember 2022-04-01 2022-06-30 0001667161 us-gaap:EmployeeStockOptionMember 2021-04-01 2021-06-30 0001667161 us-gaap:RestrictedStockMember 2021-12-31 0001667161 us-gaap:PerformanceSharesMember 2021-12-31 0001667161 rndb:RestrictedStockAwardsAndPerformanceBasedRestrictedStockUnitsMember 2021-12-31 0001667161 us-gaap:RestrictedStockMember 2022-01-01 2022-06-30 0001667161 rndb:RestrictedStockAwardsAndPerformanceBasedRestrictedStockUnitsMember 2022-01-01 2022-06-30 0001667161 us-gaap:RestrictedStockMember 2022-06-30 0001667161 us-gaap:PerformanceSharesMember 2022-06-30 0001667161 rndb:RestrictedStockAwardsAndPerformanceBasedRestrictedStockUnitsMember 2022-06-30 0001667161 us-gaap:PerformanceSharesMember 2022-01-01 2022-06-30 0001667161 us-gaap:RestrictedStockMember 2021-01-01 2021-06-30 0001667161 us-gaap:RestrictedStockMember 2022-04-01 2022-06-30 0001667161 us-gaap:RestrictedStockMember 2021-04-01 2021-06-30 0001667161 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 rndb:DerivativeLoanCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 rndb:DerivativeLoanCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsIncludingTBAsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 rndb:ForwardLoanSaleCommitmentsIncludingTBAsMember us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001667161 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 rndb:DerivativeLoanCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 rndb:DerivativeLoanCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsIncludingTBAsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 rndb:ForwardLoanSaleCommitmentsIncludingTBAsMember us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001667161 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2022-06-30 0001667161 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2022-06-30 0001667161 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2021-12-31 0001667161 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2021-12-31 0001667161 us-gaap:FairValueMeasurementsNonrecurringMember 2022-01-01 2022-06-30 0001667161 us-gaap:FairValueMeasurementsNonrecurringMember 2022-06-30 0001667161 us-gaap:FairValueMeasurementsNonrecurringMember 2021-12-31 0001667161 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2022-06-30 0001667161 us-gaap:FairValueInputsLevel2Member 2022-06-30 0001667161 us-gaap:FairValueInputsLevel3Member 2022-06-30 0001667161 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2021-12-31 0001667161 us-gaap:FairValueInputsLevel2Member 2021-12-31 0001667161 us-gaap:FairValueInputsLevel3Member 2021-12-31 0001667161 us-gaap:LoanOriginationCommitmentsMember 2022-06-30 0001667161 us-gaap:LoanOriginationCommitmentsMember 2021-12-31 0001667161 rndb:UnusedLinesAndLettersOfCreditMember 2022-06-30 0001667161 rndb:UnusedLinesAndLettersOfCreditMember 2021-12-31 0001667161 rndb:UnadvancedFundsOnConstructionLoansMember 2022-06-30 0001667161 rndb:UnadvancedFundsOnConstructionLoansMember 2021-12-31 0001667161 rndb:OverdraftMember 2022-06-30 0001667161 rndb:OverdraftMember 2021-12-31 rndb:Segment 0001667161 rndb:EnvisionBankMember 2022-04-01 2022-06-30 0001667161 rndb:EnvisionMortgageMember 2022-04-01 2022-06-30 0001667161 rndb:EnvisionBankMember 2022-06-30 0001667161 rndb:EnvisionMortgageMember 2022-06-30 0001667161 rndb:EnvisionBankMember 2022-01-01 2022-06-30 0001667161 rndb:EnvisionMortgageMember 2022-01-01 2022-06-30 0001667161 rndb:EnvisionBankMember 2021-04-01 2021-06-30 0001667161 rndb:EnvisionMortgageMember 2021-04-01 2021-06-30 0001667161 rndb:EnvisionBankMember 2021-06-30 0001667161 rndb:EnvisionMortgageMember 2021-06-30 0001667161 rndb:EnvisionBankMember 2021-01-01 2021-06-30 0001667161 rndb:EnvisionMortgageMember 2021-01-01 2021-06-30 0001667161 srt:MinimumMember 2022-06-30 0001667161 srt:MaximumMember 2022-06-30 0001667161 srt:MinimumMember 2022-01-01 2022-06-30 0001667161 rndb:RandolphSavingsBankMember 2022-06-30 0001667161 rndb:RandolphSavingsBankMember 2021-12-31 rndb:LeaseAgreement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

Commission File Number: 001-37780

Randolph Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Massachusetts	81-1844402
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2 Batterymarch Park, Suite 301
Quincy, Massachusetts	02169
(Address of principal executive offices)	(Zip Code)

(781) 963-2100

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	RNDB	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial account standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2022, there were 5,202,743 shares of the registrant’s common stock outstanding.

Table of Contents

		Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021	3
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended June 30, 2022 and 2021	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2022 and 2021	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 3. Quantitative and Qualitative Disclosures About Market Risk		45
Item 4. Controls and Procedures		45
PART II—OTHER INFORMATION		46
Item 1. Legal Proceedings		46
Item 1A. Risk Factors		46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		46
Item 3. Defaults Upon Senior Securities		46
Item 4. Mine Safety Disclosures		46
Item 5. Other Information		46
Item 6. Exhibits		47
SIGNATURE		48

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets (Unaudited)

(In thousands except for share data)

	June 30,			December 31,
	2022			2021
Assets
Cash and due from banks	$	3,732		$	3,501
Interest-bearing deposits		11,159			111,948
Total cash and cash equivalents		14,891			115,449
Securities available for sale, at fair value		47,142			51,666
Loans held for sale, at fair value		9,736			44,766
Loans, net of allowance for loan losses of $6,602 in 2022 and $6,289 in 2021		657,618			544,621
Federal Home Loan Bank of Boston stock, at cost		1,778			2,940
Accrued interest receivable		1,699			1,500
Mortgage servicing rights, net		15,093			15,616
Premises and equipment, net		7,669			7,684
Bank-owned life insurance		8,865			8,784
Other assets		10,262			10,252
Total assets	$	774,753		$	803,278

Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing	$	146,635		$	145,666
Interest-bearing		494,729			492,481
Total deposits		641,364			638,147
Federal Home Loan Bank of Boston advances		32,946			50,000
Mortgagors' escrow accounts		2,546			2,128
Post-employment benefit obligations		2,055			2,222
Other liabilities		6,564			9,878
Total liabilities		685,475			702,375

Commitments and contingencies (Note 13)
Stockholders' Equity:
Preferred stock, no par value; authorized: 1,000,000 shares; issued: none		—			—
Common stock, $.01 par value; authorized: 15,000,000 shares; issued and outstanding: 5,197,680 shares at June 30, 2022 and 5,113,825 shares at December 31, 2021		52			50
Additional paid-in capital		45,501			44,078
Retained earnings		49,290			60,524
ESOP-Unearned compensation		(2,651	)		(3,568	)
Accumulated other comprehensive income (loss), net of tax		(2,914	)		(181	)
Total stockholders' equity		89,278			100,903
Total liabilities and stockholders' equity	$	774,753		$	803,278

See accompanying notes to unaudited consolidated financial statements.

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Operations (Unaudited)

(Dollars in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Interest and dividend income:
Loans	$	6,182		$	5,505		$	11,649		$	11,013
Securities-taxable		221			223			437			463
Securities-tax exempt		4			6			8			12
Interest-bearing deposits and certificates of deposit		45			8			87			15
Total interest and dividend income		6,452			5,742			12,181			11,503

Interest expense:
Deposits		342			345			657			783
Borrowings		99			198			246			430
Total interest expense		441			543			903			1,213

Net interest income		6,011			5,199			11,278			10,290
Provision (credit) for loan losses		269			(27	)		340			(240	)
Net interest income after provision (credit) for loan losses		5,742			5,226			10,938			10,530

Non-interest income:
Customer service fees		372			419			737			786
Gain on loan origination and sale activities, net		484			5,740			1,748			16,733
Mortgage servicing fees, net		509			381			857			1,160
Increase in cash surrender value of life insurance		41			41			81			81
Other		419			235			594			479
Total non-interest income		1,825			6,816			4,017			19,239
Non-interest expenses:
Salaries and employee benefits		4,414			7,310			9,568			15,747
Occupancy and equipment		559			621			924			1,365
Data processing		378			301			723			564
Professional fees		578			323			1,603			884
Marketing		151			200			308			370
FDIC insurance		62			54			120			108
Other		1,342			1,818			2,944			3,540
Total non-interest expenses		7,484			10,627			16,190			22,578
Income before income taxes		83			1,415			(1,235	)		7,191
Income tax expense (benefit)		(165	)		(162	)		(1,248	)		1,502
Net income	$	248		$	1,577		$	13		$	5,689

Earnings per common share:
Basic	$	0.05		$	0.32		$	0.00		$	1.14
Diluted	$	0.05		$	0.31		$	0.00		$	1.10

Weighted average shares outstanding:
Basic		4,839,796			4,921,182			4,827,628			4,988,283
Diluted		5,076,181			5,135,582			5,046,444			5,193,643

See accompanying notes to unaudited consolidated financial statements.

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net income	$	248		$	1,577		$	13		$	5,689

Other comprehensive income:
Securities available for sale:
Unrealized holding gains (losses)		(1,193	)		125			(3,556	)		(792	)
Related tax effects		275			(28	)		817			91
Net-of-tax amount		(918	)		97			(2,739	)		(701	)

Supplemental retirement plan:
Reclassification adjustments ⁽¹⁾:
Actuarial losses		11			12			22			24
Prior service credits		(8	)		(8	)		(16	)		(16	)
		3			4			6			8
Related tax effects		—			—			—			—
Net-of-tax amount		3			4			6			8

Total other comprehensive income (loss)		(915	)		101			(2,733	)		(693	)

Comprehensive income (loss)	$	(667	)	$	1,678		$	(2,720	)	$	4,996

(1)	Amounts are included in other non-interest expenses in the consolidated statements of operations.

See accompanying notes to unaudited consolidated financial statements.

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Three Months Ended June 30, 2022 and 2021

															Accumulated
							Additional					Unearned			Other			Total
	Common Stock						Paid-in			Retained		Compensation			Comprehensive			Stockholders’
	Shares			Amount			Capital			Earnings		ESOP			Income (Loss)			Equity
	(Dollars in thousands)
Balance at March 31, 2021		5,364,240		$	53		$	48,613		$	55,801	$	(3,709	)	$	101		$	100,859
Net income		—			—			—			1,577		—			—			1,577
Other comprehensive income		—			—			—			—		—			101			101
Stock repurchased		(108,691	)		(1	)		(2,177	)		—		—			—			(2,178	)
Share redemptions for tax withholdings
for restricted stock vesting		(1,027	)		—			(20	)		—		—			—			(20	)
Stock-based compensation		—			—			270			—		—			—			270
ESOP shares committed to be released		—			—			54			—		47			—			101
Balance at June 30, 2021		5,254,522		$	52		$	46,740		$	57,378	$	(3,662	)	$	202		$	100,710

Balance at March 31, 2022		5,180,670		$	52		$	44,904		$	49,042	$	(3,521	)	$	(1,999	)	$	88,478
Net income		—			—			—			248		—			—			248
Other comprehensive loss		—			—			—			—		—			(915	)		(915	)
Share redemptions for tax withholdings
for restricted stock vesting		(1,827	)		—			(48	)		—		—			—			(48	)
Stock-based compensation		—			—			297			—		—			—			297
ESOP shares committed to be released		—			—			76			—		870			—			946
Proceeds from the exercise of options, net		18,837			—			272			—		—			—			272
Balance at June 30, 2022		5,197,680		$	52		$	45,501		$	49,290	$	(2,651	)	$	(2,914	)	$	89,278

See accompanying notes to unaudited consolidated financial statements.

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Six Months Ended June 30, 2022 and 2021

																Accumulated
							Additional						Unearned			Other			Total
	Common Stock						Paid-in			Retained			Compensation			Comprehensive			Stockholders’
	Shares			Amount			Capital			Earnings			ESOP			Income (Loss)			Equity
	(Dollars in thousands)
Balance at December 31, 2020		5,495,514		$	54		$	50,937		$	51,689		$	(3,756	)	$	895		$	99,819
Net income		—			—			—			5,689			—			—			5,689
Other comprehensive loss		—			—			—			—			—			(693	)		(693	)
Stock repurchased		(239,792	)		(2	)		(4,812	)		—			—			—			(4,814	)
Share redemption for tax withholdings
for restricted stock vesting		(1,200	)		—			(23	)		—			—			—			(23	)
Stock-based compensation		—			—			537			—			—			—			537
ESOP shares committed to be released		—			—			101			—			94			—			195
Balance at June 30, 2021		5,254,522		$	52		$	46,740		$	57,378		$	(3,662	)	$	202		$	100,710

Balance at December 31, 2021		5,113,825		$	50		$	44,078		$	60,524		$	(3,568	)	$	(181	)	$	100,903
Net income		—			—			—			13			—			—			13
Dividends paid at $2.15 per share		—			—			—			(11,247	)		—			—			(11,247	)
Other comprehensive loss		—			—			—			—			—			(2,733	)		(2,733	)
Stock repurchased		(58,572	)		—			(1,327	)		—			—			—			(1,327	)
Restricted stock awards forfeited		(704	)		—			—			—			—			—			—
Share redemption for tax withholdings
for restricted stock vesting		(2,009	)		—			(52	)		—			—			—			(52	)
Stock-based compensation		—			—			581			—			—			—			581
ESOP shares committed to be released		—			—			141			—			917			—			1,058
Proceeds from the exercise of options, net		145,140			2			2,080			—			—			—			2,082
Balance at June 30, 2022		5,197,680		$	52		$	45,501		$	49,290		$	(2,651	)	$	(2,914	)	$	89,278

See accompanying notes to unaudited consolidated financial statements.

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net income	$	13		$	5,689
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Provision (credit) for loan losses		340			(240	)
Loans originated for sale		(152,733	)		(815,453	)
Net gain on sales of mortgage loans		(1,748	)		(16,733	)
Proceeds from sales of mortgage loans		188,791			864,851
Net amortization of securities		100			178
Net change in deferred loan costs and fees, and purchase premiums		(289	)		339
Depreciation and amortization		360			353
Loss on sale of foreclosed assets		—			5
Stock-based compensation		581			537
ESOP expense		235			195
Increase in cash surrender value of life insurance		(81	)		(81	)
Amortization of mortgage servicing rights		1,481			1,571
Decrease in valuation allowance of mortgage servicing rights		(421	)		(356	)
Other, net		(1,915	)		8,571
Net cash provided by operating activities		34,714			49,426

Cash flows from investing activities:
Redemptions of certificates of deposit
Securities available for sale:
Purchases		(2,691	)		(3,913	)
Calls/maturities		—			500
Principal payments on mortgage-backed securities		3,561			7,597
Net loan repayments (originations)		(112,136	)		(46,707	)
Loan purchases		(912	)		(959	)
Redemptions (purchases) of Federal Home Loan Bank of Boston stock		1,162			721
Purchases of premises and equipment		(345	)		(708	)
Proceeds from the sale of foreclosed real estate		—			127
Loss on disposal of assets		—			21
Net cash used in investing activities		(111,361	)		(43,321	)

Cash flows from financing activities:
Net increase in non-interest bearing deposits		969			27,952
Net increase in interest-bearing deposits		2,248			15,724
Net increase (decrease) in short-term Federal Reserve Bank borrowings		—			(11,431	)
Net increase (decrease) in short-term Federal Home Loan Bank of Boston borrowings		17,946			5,000
Repayments of long-term Federal Home Loan Bank of Boston advances		(35,000	)		(16,879	)
Net increase (decrease) in mortgagors' escrow accounts		418			(555	)
Repurchases of common stock		(1,327	)		(4,814	)
Proceeds from exercise of stock options		2,082			—
Common stock dividends paid		(11,247	)		—
Net cash provided by (used in) financing activities		(23,911	)		14,997

Net change in cash and cash equivalents		(100,558	)		21,102
Cash and cash equivalents at beginning of period		115,449			13,774
Cash and cash equivalents at end of period	$	14,891		$	34,876
Supplemental cash flow information:
Interest paid on deposits and borrowed funds	$	959		$	1,380
Income taxes paid	$	560		$	2,257
Non-cash item:
Transfer of held for sale loans to portfolio	$	—		$	9,449

See accompanying notes to unaudited consolidated financial statements.

RANDOLPH BANCORP, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

June 30, 2022 and 2021

1.	BASIS OF FINANCIAL STATEMENT PRESENTATION

The unaudited consolidated financial statements include the accounts of Randolph Bancorp, Inc. (“Bancorp”) and its wholly-owned subsidiary, Envision Bank (the “Bank”, together with Bancorp, the “Company”). The Bank has subsidiaries involved in owning investment securities and foreclosed real estate properties and a subsidiary which provides loan closing services. All intercompany accounts and transactions have been eliminated in consolidation. When necessary, certain amounts in prior year financial statements have been reclassified to conform to the current year’s presentation.

These unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the Securities and Exchange Commission (“SEC”). Accordingly, the accompanying interim financial statements do not include all information required under GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. The operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or any other interim period.

For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC.

2.	RECENT ACCOUNTING PRONOUNCEMENTS

In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses. The ASU sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This replaces the existing probable incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgements used in determining the allowance for loan losses, as well as the credit quality and underwriting standards of an organization’s loan portfolio. In addition, the ASU amends the accounting for credit losses on available for sale debt securities and purchased financial assets with credit deterioration. In November 2019, FASB issued ASU 2019-10 which extended the effective date for adoption of ASU 2016-13 for smaller reporting companies to fiscal years beginning after December 15, 2022, including interim periods therein. Early adoption is permitted. The Company has formed a working group consisting of accounting, credit and data systems personnel to lead our implementation of this ASU. The working group is evaluating the alternative methodologies which are available and has engaged professional advisors to assist in implementation.

3.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of stockholders’ equity, such items, along with net income, are components of comprehensive income.

The components of accumulated other comprehensive income (loss), included in total stockholders’ equity, are as follows:

	June 30,			December 31,
	2022			2021
	(In thousands)
Securities available for sale:
Net unrealized gain (loss)	$	(3,307	)	$	249
Tax effect		753			(64	)
Net-of-tax amount		(2,554	)		185
Supplemental retirement plan
Unrecognized net actuarial loss		(624	)		(646	)
Unrecognized net prior service credit		206			222
		(418	)		(424	)
Tax effect		58			58
Net-of-tax amount		(360	)		(366	)
Accumulated other comprehensive income (loss)	$	(2,914	)	$	(181	)

4.	SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale, including gross unrealized gains and losses, are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In thousands)
June 30, 2022
Debt securities:
U.S. Treasury		13,632		—		(883	)		12,749
U.S. Government-sponsored enterprises		1,997		—		(68	)		1,929
Corporate		2,491		—		(170	)		2,321
Municipal		350		1		—			351
Residential mortgage-backed securities:
U.S. Government-sponsored enterprises		20,350		2		(1,688	)		18,664
Commercial mortgage-backed securities:
U.S. Government-sponsored enterprises		8,670		—		(336	)		8,334
Collateralized mortgage obligations:						—
U.S. Government-sponsored enterprises		717		—		(49	)		668
U.S. Government-guaranteed		2,242		—		(116	)		2,126
Total securities available for sale	$	50,449	$	3	$	(3,310	)	$	47,142

December 31, 2021
Debt securities:
U.S. Treasury	$	10,939	$	—	$	(168	)	$	10,771
U.S. Government-sponsored enterprises		1,995		—		(17	)		1,978
Corporate		2,510		33		(7	)		2,536
Municipal		351		2		—			353
Residential mortgage-backed securities:
U.S. Government-sponsored enterprises		23,349		324		(194	)		23,479
Commercial mortgage-backed securities:
U.S. Government-sponsored enterprises		8,733		223		—			8,956
U.S. Government-guaranteed		103		—		—			103
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises		796		14		—			810
U.S. Government-guaranteed		2,641		39		—			2,680
Total securities available for sale	$	51,417	$	635	$	(386	)	$	51,666

There were no sales of securities during the six months ended June 30, 2022 and 2021.

The amortized cost and fair value of debt securities by contractual maturity at June 30, 2022 are presented below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
	Cost		Value
	(In thousands)
Within 1 year	$	3,410	$	3,386
After 1 year through 5 years		9,334		8,843
After 5 years through 10 years		5,726		5,121
		18,470		17,350
Mortgage-backed securities		31,979		29,792
	$	50,449	$	47,142

Information pertaining to securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than Twelve Months					Over Twelve Months
	Gross					Gross
	Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value
June 30, 2022
Debt securities:
U.S. Treasury	$	(883	)	$	12,749	$	—		$	—
U.S. Government-sponsored enterprises		(68	)		1,928		—			—
Corporate		(170	)		2,322		—			—
Residential mortgage-backed securities:
U.S. Government-sponsored enterprises		(1,674	)		18,029		(14	)		481
Commercial mortgage-backed securities:
U.S. Government-sponsored enterprises		(336	)		8,334		—			—
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises		(49	)		668		—			—
U.S. Government-guaranteed		(116	)		2,126		—			—
Total	$	(3,296	)	$	46,156	$	(14	)	$	481

December 31, 2021
Debt securities:
U.S. Treasury		(168	)		10,771	$	—		$	—
U.S. Government-sponsored enterprises		(17	)		1,978		—			—
Corporate		(7	)		723		—			—
Residential mortgage-backed securities:
U.S. Government-sponsored enterprises		(194	)		11,477		—			—
Total	$	(386	)	$	24,949	$	—		$	—

At June 30, 2022, 69 debt securities had unrealized losses with aggregate depreciation of 6.63% from the Company’s amortized cost basis. The unrealized losses at June 30, 2022 were due to securities price fluctuations since the time they were purchased. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of these investments. Therefore, it is expected that the securities would not be settled at a price less than the par value of the investment. Because the Company does not intend to sell any debt securities and it is more likely than not that the Company will not be required to sell any debt securities before recovery of its amortized cost basis, it does not consider these investments to be other-than-temporarily impaired at June 30, 2022.

5.	LOANS AND ALLOWANCE FOR LOAN LOSSES

A summary of the loan portfolio is as follows:

	June 30, 2022			December 31, 2021
	(In thousands)
Real estate loans:
Residential:
One- to four-family	$	354,922		$	236,364
Home equity loans and lines of credit		65,210			57,295
Commercial		189,334			197,423
Construction		33,877			33,961
Total real estate loans		643,343			525,043
Commercial and industrial		13,162			17,242
Consumer		6,353			7,552
Total loans		662,858			549,837
Allowance for loan losses		(6,602	)		(6,289	)
Net deferred loan costs and fees, and purchase premiums		1,362			1,073
Loans, net	$	657,618		$	544,621

The following tables present activity in the allowance for loan losses by loan category for the three and six months ended June 30, 2022 and 2021, and allocation of the allowance to each category as of June 30, 2022 and December 31, 2021:

	Residential 1-4 Family			Second Mortgages and HELOC			Commercial Real Estate			Construction			Commercial and Industrial			Consumer			Total
	(In thousands)
Three Months Ended June 30, 2022

Allowance at March 31, 2022	$	1,236		$	451		$	3,402		$	716		$	476		$	76		$	6,357
Provision (credit) for loan losses		353			60			(178	)		11			(1	)		24			269
Loans charged-off		—			—			—			—			—			(26	)		(26	)
Recoveries		1			—			—			—			—			1			2
Balance at June 30, 2022	$	1,590		$	511		$	3,224		$	727		$	475		$	75		$	6,602

Three Months Ended June 30, 2021

Allowance at March 31, 2021	$	1,522		$	425		$	3,390		$	720		$	401		$	105		$	6,563
Provision (credit) for loan losses		(251	)		(21	)		169			(106	)		166			16			(27	)
Loans charged-off		—			—			—			—			—			(16	)		(16	)
Recoveries		1			—			—			—			2			-			3
Balance at June 30, 2021	$	1,272		$	404		$	3,559		$	614		$	569		$	105		$	6,523

Six Months Ended June 30, 2022

Allowance at December 31, 2021		1,093			462			3,451			697			499			87		$	6,289
Provision (credit) for loan losses		495			49			(227	)		30			(24	)		17			340
Loans charged-off		—			—			—			—			—			(30	)		(30	)
Recoveries		2			—			—			—			—			1			3
Balance at June 30, 2022	$	1,590		$	511		$	3,224		$	727		$	475		$	75		$	6,602

Six Months Ended June 30, 2021

Allowance at December 31, 2020	$	1,646		$	442		$	3,402		$	751		$	416		$	127		$	6,784
Provision (credit) for loan losses		(377	)		(38	)		157			(137	)		151			4			(240	)
Loans charged-off		—			—			—			—			—			(26	)		(26	)
Recoveries		3			—			—			—			2			-			5
Balance at June 30, 2021	$	1,272		$	404		$	3,559		$	614		$	569		$	105		$	6,523

Additional information pertaining to the allowance for loan losses at June 30, 2022 and December 31, 2021 is as follows:

	Residential 1-4 Family		Second Mortgages and HELOC		Commercial Real Estate		Construction		Commercial and Industrial		Consumer		Total
June 30, 2022	(In thousands)
Allowance for impaired loans	$	89	$	1	$	—	$	—	$	—	$	—	$	90
Allowance for non-impaired loans		1,501		510		3,224		727		475		75		6,512
Total allowance for loan losses	$	1,590	$	511	$	3,224	$	727	$	475	$	75	$	6,602

Impaired loans	$	3,402	$	580	$	—	$	—	$	—	$	—	$	3,982
Non-impaired loans		351,520		64,630		189,334		33,877		13,162		6,353		658,876
Total loans	$	354,922	$	65,210	$	189,334	$	33,877	$	13,162	$	6,353	$	662,858

December 31, 2021

Allowance for impaired loans	$	81	$	19	$	—	$	—	$	—	$	—	$	100
Allowance for non-impaired loans		1,012		443		3,451		697		499		87		6,189
Total allowance for loan losses	$	1,093	$	462	$	3,451	$	697	$	499	$	87	$	6,289

Impaired loans	$	3,255	$	603	$	-	$	—	$	—	$	—	$	3,858
Non-impaired loans		233,109		56,692		197,423		33,961		17,242		7,552		545,979
Total loans	$	236,364	$	57,295	$	197,423	$	33,961	$	17,242	$	7,552	$	549,837

The following is a summary of past due and non-accrual loans at June 30, 2022 and December 31, 2021:

	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Loans 30-89 Days Past Due that are also Non-accrual Loans		Total Non-accrual Loans
	(In thousands)
June 30, 2022
Residential one- to four-family	$	880	$	451	$	—	$	1,331	$	136	$	2,300
Home equity loans and lines of credit		329		65		—		394		93		481
Commercial real estate		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer		42		—		—		42		—		—
Total	$	1,251	$	516	$	—	$	1,767	$	229	$	2,781

December 31, 2021
Residential one- to four-family	$	701	$	193	$	—	$	894	$	316	$	2,133
Home equity loans and lines of credit		186		215		—		401		—		491
Commercial real estate		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		—		—
Consumer		76		9		—		85		—		—
Total	$	963	$	417	$	—	$	1,380	$	316	$	2,624

The following is a summary of impaired loans at June 30, 2022 and December 31, 2021:

	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
June 30, 2022
Impaired loans without a valuation allowance:
Residential one- to four-family	$	2,422	$	2,421
Home equity loans and lines of credit		481		479
Total		2,903		2,900

Impaired loans with a valuation allowance:
Residential one- to four-family		984		981	$	89
Home equity loans and lines of credit		101		101		1
Total		1,085		1,082		90
Total impaired loans	$	3,988	$	3,982	$	90

December 31, 2021
Impaired loans without a valuation allowance:
Residential one- to four-family	$	2,364	$	2,377
Home equity loans and lines of credit		479		485
Total		2,843		2,862

Impaired loans with a valuation allowance:
Residential one- to four-family		874		878	$	81
Home equity loans and lines of credit		108		118	$	19
Total		982		996		100
Total impaired loans	$	3,825	$	3,858	$	100

Additional information pertaining to impaired loans follows:

	Average		Interest		Cash Basis
	Recorded		Income		Interest
	Investment		Recognized		Recognized
	(In thousands)
Three Months Ended June 30, 2022
Residential one- to four-family	$	3,406	$	29	$	15
Home equity loans and lines of credit		581		3		3
Total	$	3,987	$	32	$	18

Three Months Ended June 30, 2021
Residential one- to four-family	$	3,542	$	18	$	39
Home equity loans and lines of credit		423		1		—
Commercial real estate		4,182		—		—
Total	$	8,147	$	19	$	39
Six Months Ended June 30, 2022
Residential one- to four-family	$	3,418	$	59	$	31
Home equity loans and lines of credit		533		4		9
Total	$	3,951	$	63	$	40

Six Months Ended June 30, 2021
Residential one- to four-family	$	3,548	$	36	$	78
Home equity loans and lines of credit		423		1		—
Commercial real estate		4,191		—		—
Total	$	8,162	$	37	$	78

Troubled Debt Restructurings

The Company periodically grants concessions to borrowers experiencing financial difficulties. The Company’s troubled debt restructurings consist primarily of interest rate concessions for periods of three months to thirty years for residential real estate loans, and for periods up to one year for commercial real estate loans.

	Number of Contracts		TDRs Listed as Accrual		Number of Contracts		TDRs Listed as Non-accrual		Total Number of Contracts		Total TDRs
	(In thousands)
June 30, 2022
Residential one- to four-family		9	$	1,106		3	$	925		12	$	2,031
Home equity loans and lines of credit		2		101		—		—		2		101
Total		11	$	1,207		3	$	925		14	$	2,132

December 31, 2021
Residential one- to four-family	$	9	$	1,103	$	3	$	919		12	$	2,022
Home equity loans and lines of credit		2		97		1		109		3		206
Total		11		1,200		4	$	1,028		15	$	2,228

For the six months ended June 30, 2022 and 2021, the Company did not enter into any loan modifications meeting the criteria of a troubled debt restructuring.

Management performs a discounted cash flow calculation to determine the amount of valuation reserve required on each of the troubled debt restructurings. Any reserve required is recorded as part of the allowance for loan losses. There were no material changes to the allowance for loan losses as a result of loan modifications made which were considered a troubled debt restructuring.

No additional funds are committed to be advanced in connection with trouble debt restructurings.

During the three and six months ended June 30, 2022 and 2021, there were no troubled debt restructurings that defaulted (over 30 days past due) within twelve months of the restructure date.

Credit Quality Information

The Company utilizes an eight-grade internal loan rating system for commercial real estate, construction and commercial and industrial loans, as follows:

Loans rated 1 – 3B are considered “pass” rated loans with low to average risk.

Loans rated 4 are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 5 are considered “substandard” and are inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 6 are considered “doubtful” and have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 7 are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial and industrial loans. Annually, the Company engages an independent third party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process.

The following table presents the Company’s loans by risk rating at the dates indicated:

	Residential 1-4 Family		Second Mortgages and HELOC		Commercial Real Estate		Construction		Commercial and Industrial		Consumer		Total
	(In thousands)
June 30, 2022
Not Rated	$	352,632	$	64,731	$	—	$	—	$	—	$	6,353	$	423,716
Loans rated 1 - 3B (Pass rated)		—		—		177,885		33,877		12,886		—		224,648
Loans rated 4		346		380		7,906		—		276		—		8,908
Loans rated 5		1,944		99		3,543		—		—		—		5,586
	$	354,922	$	65,210	$	189,334	$	33,877	$	13,162	$	6,353	$	662,858

December 31, 2021
Not Rated	$	234,225	$	56,797	$	—	$	—	$	—	$	7,552	$	298,574
Loans rated 1 - 3B (Pass rated)		—		—		186,774		33,961		16,910		—		237,645
Loans rated 4		361		381		7,106		—		332		—		8,180
Loans rated 5		1,778		117		3,543		—		—		—		5,438
	$	236,364	$	57,295	$	197,423	$	33,961	$	17,242	$	7,552	$	549,837

6.	LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying unaudited consolidated balance sheets. The unpaid principal balances of residential mortgage loans serviced for others were $1.92 billion and $1.98 billion at June 30, 2022 and December 31, 2021, respectively.

The following table summarizes the activity relating to mortgage servicing rights (“MSRs”) for the three and six months ended June 30, 2022 and 2021:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
	(In thousands)
Mortgage servicing rights:
Balance at beginning of period	$	17,801		$	17,318		$	18,173		$	15,372
Additions through originations		160			1,455			537			4,241
Amortization		(731	)		(759	)		(1,480	)		(1,599	)
Balance at end of period	$	17,230		$	18,014		$	17,230		$	18,014

Valuation allowance:
Balance at beginning of period	$	2,423		$	2,574		$	2,558		$	2,995
Provision (release)		(286	)		65			(421	)		(356	)
Balance at end of period	$	2,137		$	2,639		$	2,137		$	2,639
Amortized cost, net	$	15,093		$	15,375		$	15,093		$	15,375
Fair value	$	17,369		$	15,673		$	17,369		$	15,673

During the three months ended June 30, 2022, the Company decreased the valuation allowance for its MSRs by $286,000 and during the three months ended June 30, 2021, the Company increased the valuation allowance by $65,000. Such adjustments to the valuation allowance were due primarily to changes in fair value caused by the impact of changes in interest rates on expected loan prepayments.

During the six months ended June 30, 2022 and 2021, the Company decreased the valuation allowance for its MSRs by $421,000 and $356,000, respectively. Such adjustments to the valuation allowance were due primarily to changes in fair value caused by the impact of changes in interest rates on expected loan prepayments.

7.ON-BALANCE SHEET DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Loan Commitments

Mortgage loan interest rate lock commitments qualify as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified rates and times in the future, with the intention that these loans will subsequently be sold either in the secondary market, to large aggregators of loans or to other financial institutions.

Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to an increase in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. The notional amount of derivative loan commitments was $10,913,000 and $85,887,000 at June 30, 2022 and December 31, 2021, respectively. The fair value of such commitments consisted of assets of $248,000 and $1,364,000 at June 30, 2022 and December 31, 2021, respectively, included in other assets on the consolidated balance sheets.

Forward Loan Sale Commitments

The Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments and To Be Announced (“TBA”) securities to mitigate the risk of potential decreases in the value of loans that would result from the exercise of the derivative loan commitments as well as for loans held for sale.

With a “mandatory delivery” contract, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor to compensate the investor for the shortfall.

With a “best efforts” contract, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower).

The Company expects that these forward loan sale commitments and TBA securities will experience changes in fair value that serve to offset the change in fair value of loans held for sale and derivative loan commitments the degree to which depends on the notional amount of such sale commitments. The notional amount of forward loan sale commitments and TBA securities was $20,461,000 and $80,407,000 at June 30, 2022 and December 31, 2021, respectively. The fair value of such commitments consisted of liabilities of $118,000 and $84,000 at June 30, 2022 and December 31, 2021, respectively, included in other liabilities in the consolidated balance sheets and assets of $27,000 and $50,000 at June 30, 2022 and December 31, 2021, respectively, included in other assets in the consolidated balance sheets.

8.	EMPLOYEE STOCK OWNERSHIP PLAN

The Company maintains an Employee Stock Ownership Plan (“ESOP”), which is a tax-qualified retirement plan providing eligible employees the opportunity to own Bancorp stock. Bancorp made a loan to the ESOP for the purchase of 469,498 shares of its common stock at $10.00 per share in connection with its initial public offering in July 2016. The loan is payable annually over 25 years with interest at the prime rate to be reset each January 1. The loan is secured by the shares which have not yet been allocated to participants. Loan payments are funded by cash contributions from the Bank. Such contributions are allocated to eligible participants based on their compensation, subject to federal tax limits.

Shares are committed to be released on a monthly basis and allocated as of December 31 of each year. The number of shares to be allocated annually is 18,780 through the year 2040. For the three and six months ended June 30, 2022, the Company recognized compensation expense for the ESOP of $123,000 and $235,000, respectively, compared to $99,000 and $195,000, for the same periods last year, respectively. The fair value of the 347,505 unallocated ESOP shares at June 30, 2022 was $9,192,000.

9.	SHARE REPURCHASE PROGRAM

In October 2021, the Company’s Board of Directors adopted a share repurchase program under which the Company may repurchase up to 510,000 shares, or 10%, of its then outstanding common shares. Repurchases under the program may be made in open market or in privately negotiated transactions and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the SEC. Any repurchased shares will be held by the Company as authorized but unissued shares. On January 25, 2022, the Company announced a modification to this program. The modification changes the program so that the Company may purchase up to 62,000 shares, or approximately 1% of the Company’s outstanding stock. As of June 30, 2022, the Company had repurchased 62,000 shares at a cost of $1,402,000 in connection with this program.

10.	EARNINGS PER SHARE

Basic earnings (loss) per share represents net income divided by the weighted average of common shares outstanding during the period. Diluted earnings per share represents net income divided by the weighted average of common shares and all potentially dilutive common shares outstanding during the period. Unvested restricted shares of common stock having dividend rights are treated as “participating securities” and, accordingly, are considered outstanding in computing basic and diluted earnings per share. Unallocated ESOP shares are not considered to be outstanding for purposes of computing basic or diluted earnings per share.

The following table sets forth the calculation of the average number of shares outstanding used to calculate the basic and diluted earnings per share for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Average number of common shares outstanding		5,189,616			5,289,782			5,179,764			5,359,198
Less: Average unallocated ESOP shares		(349,820	)		(368,600	)		(352,136	)		(370,915	)
Average number of common shares outstanding used to calculate basic earnings per share		4,839,796			4,921,182			4,827,628			4,988,283
Effect of dilutive stock options		236,385			214,400			218,816			205,360
Average number of common shares outstanding used to calculate dilutive earnings per share		5,076,181			5,135,582			5,046,444			5,193,643

11.	STOCK-BASED COMPENSATION

Under the Randolph Bancorp, Inc. 2017 Stock Option and Incentive Plan (the “2017 Equity Plan”), the Company may grant options, restricted stock, restricted units or performance awards to its directors, officers and employees. Both incentive stock options and nonqualified stock options may be granted under the 2017 Equity Plan with 586,872 shares initially reserved for options. Any options forfeited because vesting requirements are not met or expired will become available for re-issuance under the 2017 Equity Plan. The exercise price of each option equals the market price of the Company’s stock on the date of the grant and the maximum term of each option is 10 years. The total number of shares initially reserved for restricted stock is 234,749. Options and awards generally vest ratably over three to five years. The fair value of shares awarded is based on the market price at the date of grant.

In addition, the Company granted 15,000 shares of restricted stock and 44,118 options in 2020 as an inducement for senior executives to accept employment (the “2020 Inducement Plan”). The inducement awards and options vest ratably over five years. The fair value of shares awarded is based on the market price at the date of grant.

At the 2021 Annual Meeting of Shareholders held on May 24, 2021, the Company’s shareholders approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”). The 2021 Equity Plan permits equity awards to employees and directors in the form of stock options, restricted stock units and other forms of compensation. The maximum number of shares of common stock to be issued under the 2021 Equity Plan is 100,000. On August 13, 2021, the Company granted 18,000 performance-based restricted stock unit awards to certain senior level employees. These performance-based restricted stock unit awards were issued from the 2021 Equity Plan and were determined to have a grant fair value per share of $20.15. The number of stock units to be vested is contingent upon the Company’s attainment of certain performance criteria to be measured at the end of a three-year performance period, ending December 31, 2023. The awards will vest upon the earlier of the date on which it is determined if the performance goal is achieved subsequent to the performance period or April 15, 2024. Also on August 13, 2021, the Company granted 19,750 restricted stock awards to certain senior level employees and members of the Board of Directors. These restricted stock awards were issued from the 2021 Equity Plan and were determined to have a grant fair value per share of $20.15. The shares vest ratably over a three-year period.

Stock Options

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:

•

Volatility is based on peer group volatility because the Company does not have a sufficient trading history.

•

Expected life represents the period of time that the option is expected to be outstanding, taking into account the contractual term, and the vesting period.

•

Expected dividend yield is based on the Company's history and expectation of dividend payouts.

•

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected life of the option.

During the six months ended June 30, 2022 and 2021, the Company made the following grants of options to purchase shares of common stock and used the following assumptions in measuring the fair value of such grants:

	2022		2021
Options granted		—		40,491
Vesting period (years)		—		5
Expiration period (years)		—		10
Expected volatility		—		30.98	%
Expected life (years)		—		6.2
Expected dividend yield		—		—
Risk free interest rate		—		0.64	%
Option fair value		—	$6.20

A summary of stock option activity for the six months ended June 30, 2022 is presented in the table below:

Options	Stock Option Grants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at January 1, 2022		599,383		$	13.80		7.61
Exercised		(145,140	)		14.34
Forfeited		(20,119	)		16.62
Balance at June 30, 2022		434,124		$	13.48		7.79	$	5,568,586
Exercisable at June 30, 2022		173,917		$	14.37		7.13	$	2,076,086
Unrecognized compensation cost (inclusive of directors' options)	$	766,299
Weighted average remaining recognition period (years)		1.94

For the six months ended June 30, 2022 and 2021, stock-based compensation expense applicable to stock options was $201,000 and $286,000, respectively. For the three months ended June 30, 2022 and 2021, stock-based compensation expense applicable to stock options was $108,000 and $144,000, respectively.

Restricted Stock

Shares issued may be either authorized but unissued shares or reacquired shares held by the Company. Any shares forfeited because vesting requirements are not met will become available for reissuance under the 2017 Equity Plan. The fair market value of shares awarded, based on the market price at the date of grant, is amortized over the applicable vesting period. Restricted stock awarded to date has been at no cost to the awardee. The following table presents the activity in restricted stock awards under the 2017 Equity Plan, the 2020 Inducement Plan and the 2021 Equity Plan for the six months ended June 30, 2022:

	Restricted Stock Awards			Weighted Average Grant Price		Performance-Based Restricted Stock Units⁽¹⁾		Weighted Average Grant Price		Total Restricted Stock Awards and Performance-Based Restricted Stock Units			Weighted Average Grant Price
Restricted stock awards at January 1, 2022		99,485		$	13.93		18,000	$	20.15		117,485		$	14.89
Vested		(9,781	)		12.83		—		—		(9,781	)		12.83
Forfeited		(704	)		11.48		—		—		(704	)		11.48
Restricted stock awards at June 30, 2022		89,000		$	14.07		18,000	$	20.15		107,000		$	15.10
Unrecognized compensation cost	$	802,265				$	243,161			$	1,045,426
Weighted average remaining recognition period (years)		2.13					1.79				2.07

For the six months ended June 30, 2022 and 2021 stock-based compensation expense applicable to restricted stock was $380,000 and $251,000, respectively. For the three months ended June 30, 2022 and 2021, stock-based compensation expense applicable to restricted stock was $189,000 and $126,000, respectively.

12.	FAIR VALUE OF ASSETS AND LIABILITIES

Determination of fair value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various assets and liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability.

The following methods and assumptions were used by the Company in estimating fair value disclosures:

Securities – All fair value measurements are obtained from a third-party pricing service and are not adjusted by management. The securities measured at fair value in Level 1 (none at June 30, 2022 and December 31, 2021) are based on quoted market prices in an active exchange market. Securities measured at fair value in Level 2 are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

Loans held for sale – Fair values are based on commitments in effect from investors or prevailing market prices and include the servicing value of the loans.

Loans – Fair values for mortgage loans and other loans are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Mortgage servicing rights – Fair value is based on a valuation model that calculates the present value of estimated future net servicing income, using various assumptions related to fees, discount rates and prepayment speeds.

On-balance-sheet derivatives - Fair values of forward loan sale commitments and derivative loan commitments are based on fair values of the underlying mortgage loans using current market prices for similar assets in the secondary market. For derivative loan commitments, fair values also consider the value of servicing, costs to be incurred to close loans and the probability of such commitments being exercised.

Off-balance sheet credit-related instruments - Fair values for off-balance-sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair values of these instruments are not material.

Assets and liabilities recorded at fair value on a recurring basis

Assets and liabilities recorded at fair value on a recurring basis are summarized below.

							Total
	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
June 30, 2022
Assets:
Securities available for sale	$	—	$	47,142	$	—	$	47,142
Portfolio loans (fair value option)		—		7,438		—		7,438
Loans held for sale (fair value option)		—		9,736		—		9,736
Derivative loan commitments		—		248		—		248
Forward loan sale commitments		—		27		—		27

Liabilities:
Forward loan sale commitments, including TBAs		—		118		—		118

December 31, 2021
Assets:
Securities available for sale	$	—	$	51,666	$	—	$	51,666
Portfolio loans (fair value option)		—		13,780		—		13,780
Loans held for sale (fair value option)		—		44,766		—		44,766
Derivative loan commitments		—		1,364		—		1,364
Forward loan sale commitments		—		50		—		50

Liabilities:
Forward loan sale commitments, including TBAs		—		84		—		84

There were no transfers between levels for assets and liabilities recorded at fair value on a recurring basis during the six months ended June 30, 2022 and 2021.

Assets recorded at fair value on a non-recurring basis

The Company may also be required, from time to time, to record certain other assets at fair value on a non-recurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related assets as of June 30, 2022 and December 31, 2021.

							Period Ended
	June 30, 2022						June 30, 2022
	Level 1		Level 2		Level 3		Total Gains (Losses)
	(In thousands)
Collateral dependent
impaired loans	$	—	$	—	$	2,281	$	—
Mortgage servicing rights		—		15,093		—		421
	$	—	$	15,093	$	2,281	$	421

	December 31, 2021
	Level 1		Level 2		Level 3
	(In thousands)
Collateral dependent
impaired loans	$	—	$	—	$	2,551
Mortgage servicing rights		—		15,616		—
	$	—	$	15,616	$	2,551

The Company recorded a net decrease in the valuation allowance for its MSRs of $421,000 during the six months ended June 30, 2022. The Company utilizes an independent valuation from a third party which uses a discounted cash flow model to estimate the fair value of MSRs. The model uses loan prepayment assumptions based on current market conditions and applies a discount rate based on indicated rates of return required by market participants. The decrease in the valuation allowance during the six months ended June 30, 2022 was caused by slower loan prepayment speeds attributable to the increase in interest rates on residential mortgage loans during the period.

Losses applicable to write-downs of impaired loans and foreclosed real estate are based on the appraised value of the underlying collateral less estimated costs to sell. The losses on impaired loans are not recorded directly as an adjustment to current earnings, but rather as a component in determining the allowance for loan losses. The losses on foreclosed real estate represent adjustments in valuation recorded during the time period indicated and not for losses incurred on sales. Appraised values are typically based on a blend of (a) an income approach using observable cash flows to measure fair value, and (b) a market approach using observable market comparisons. These appraised values may be discounted based on management’s historical knowledge, expertise or changes in market conditions from time of valuation.

There were no liabilities measured at fair value on a non-recurring basis at June 30, 2022 and December 31, 2021.

Summary of fair values of financial instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are presented below. Certain financial instruments and all non-financial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the Company. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include mortgagors’ escrow accounts and accrued interest payable.

	June 30, 2022
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Securities available for sale	$	47,142	$	47,142		—	$	47,142		—
Loans held for sale		9,736		9,736		—		9,736		—
Loans, net		657,618		636,618		—		—		636,618
Derivative assets		275		275		—		275		—

Financial liabilities:
Deposits	$	641,364	$	641,415	$	—	$	641,415	$	—
FHLBB advances		32,946		32,362		—		32,362		—
Derivative liabilities		118		118		—		118		—

	December 31, 2021
	Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets:
Securities available for sale	$	51,666	$	51,666		—	$	51,666		—
Loans held for sale		44,766		44,766		—		44,766		—
Loans, net		544,621		549,674		—		—		549,674
Derivative assets		1,414		1,414		—		1,414		—

Financial liabilities:
Deposits	$	638,147	$	637,538	$	—	$	637,538	$	—
FHLBB advances		50,000		50,001		—		50,001		—
Derivative liabilities		84		84		—		84		—

13.	COMMITMENTS AND CONTINGENCIES

Loan commitments

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. These instruments involve, to varying

degrees, elements of market, credit and interest rate risk which are not recognized in the unaudited consolidated financial statements. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The following financial instruments were outstanding, at the dates indicated, whose contract amounts represent credit risk:

	June 30, 2022		December 31, 2021
	(In thousands)
Commitments to originate loans	$	85,666	$	107,889
Unused lines and letters of credit		71,628		79,012
Unadvanced funds on construction loans		13,132		13,879
Overdraft lines of credit		7,759		7,967

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The majority of these financial instruments are collateralized by real estate.

Other contingencies

The Company is not currently a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, results of operations or cash flows.

14.	SEGMENT INFORMATION

The Company reports its activities in one of two business segments, namely Envision Bank (“EB”) and Envision Mortgage (“EM”). Envision Bank operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s five full-service branch offices and investing those funds in residential and commercial real estate loans, home equity lines of credit, construction loans, commercial and industrial loans, and consumer loans. Envision Mortgage’s operations primarily consist of the origination and sale of residential mortgage loans and the servicing of loans sold to government-sponsored entities. A portion of the loans originated by Envision Mortgage are held in the loan portfolio of Envision Bank.

Segment information as of and for the three and six months ended June 30, 2022 follows:

	For the Three Months Ended June 30, 2022
	Envision Bank			Envision Mortgage			Consolidated Total
	(in thousands)
Net interest income	$	5,741		$	270		$	6,011
Provision for loan losses		269			—			269
Net interest income after provision for loan losses		5,472			270			5,742

Non-interest income:
Customer service fees		365			7			372
Gain on loan origination and sale activities, net ⁽¹⁾		—			1,920			1,920
Mortgage servicing fees, net		(240	)		749			509
Other		369			91			460
Total non-interest income		494			2,767			3,261

Non-interest expenses:
Salaries and employee benefits		1,831			2,583			4,414
Occupancy and equipment		447			112			559
Other non-interest expenses		1,357			1,154			2,511
Total non-interest expenses		3,635			3,849			7,484
Income (loss) before income taxes and elimination of inter-segment profit	$	2,331		$	(812	)		1,519
Elimination of inter-segment profit								(1,436	)
Income before income taxes								83

Income tax expense (benefit)								(165	)
Net income							$	248

Total assets, June 30, 2022	$	718,602		$	56,151		$	774,753

	For the Six Months Ended June 30, 2022
	Envision Bank			Envision Mortgage			Consolidated Total
	(in thousands)
Net interest income	$	10,751		$	527		$	11,278
Provision for loan losses		340			—			340
Net interest income after provision for loan losses		10,411			527			10,938

Non-interest income:
Customer service fees		720			17			737
Gain on loan origination and sale activities, net ⁽¹⁾		—			3,911			3,911
Mortgage servicing fees, net		(445	)		1,302			857
Other		468			207			675
Total non-interest income		743			5,437			6,180

Non-interest expenses:
Salaries and employee benefits		3,766			5,802			9,568
Occupancy and equipment		959			(35	)		924
Other non-interest expenses		3,268			2,430			5,698
Total non-interest expenses		7,993			8,197			16,190
Income (loss) before income taxes and elimination of inter-segment profit	$	3,161		$	(2,233	)		928
Elimination of inter-segment profit								(2,163	)
Income (loss) before income taxes								(1,235	)

Income tax expense (benefit)								(1,248	)
Net income							$	13

(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.

The Company’s internal transfer pricing arrangements determined by management primarily consist of the following:

EM’s cost of funds is based on the weighted average rate of overnight advances from the Federal Home Loan Bank of Boston (“FHLBB”) for the period.

EM is credited with service released premiums and a sales premium totaling 1.50% for new loans transferred to EB’s loans held for investment, and a 1.00% fee for Home Equity Line of Credit (“HELOC”) originations. This income for the three and six months ended June 30, 2022 totaled $1,436,000 and $2,163,000, respectively.

Loan servicing fees are charged to EB by EM based on the number of residential mortgage loans held in portfolio at a rate of 0.14% per annum and amounted to $240,000 and $445,000 for the three and six months ended June 30, 2022, respectively.

Certain cost centers provide services to both business segments. The cost centers include Finance, Marketing, IT and Administration. Costs which are common to both business segments are referred to as “indirect costs” and are allocated using relevant benchmarks, e.g. headcount, number of accounts, etc.

Segment information as of and for the three and six months ended June 30, 2021 follows:

	For the Three Months Ended June 30, 2021
	Envision Bank			Envision Mortgage		Consolidated Total
	(in thousands)
Net interest income	$	4,535		$	664	$	5,199
Provision (credit) for loan losses		(27	)		—		(27	)
Net interest income after provision (credit) for loan losses		4,562			664		5,226

Non-interest income:
Customer service fees		393			26		419
Gain on loan origination and sale activities, net ⁽¹⁾		—			6,558		6,558
Mortgage servicing fees, net		(94	)		475		381
Other		158			118		276
Total non-interest income		457			7,177		7,634

Non-interest expenses:
Salaries and employee benefits		1,746			5,564		7,310
Occupancy and equipment		407			214		621
Other non-interest expenses		1,265			1,431		2,696
Total non-interest expenses		3,418			7,209		10,627

Income before income taxes and elimination of inter-segment profit	$	1,601		$	632		2,233
Elimination of inter-segment profit							(818	)
Income before income taxes							1,415
Income tax expense (benefit)							(162	)
Net income						$	1,577

Total assets, June 30, 2021	$	608,686		$	135,456	$	744,142

	For the Six Months Ended June 30, 2021
	Envision Bank			Envision Mortgage		Consolidated Total
	(in thousands)
Net interest income	$	8,736		$	1,554	$	10,290
Provision (credit) for loan losses		(240	)		—		(240	)
Net interest income after provision (credit) for loan losses		8,976			1,554		10,530

Non-interest income:
Customer service fees		733			53		786
Gain on loan origination and sale activities, net ⁽¹⁾		—			18,232		18,232
Mortgage servicing fees, net		(189	)		1,349		1,160
Other		309			251		560
Total non-interest income		853			19,885		20,738

Non-interest expenses:
Salaries and employee benefits ⁽²⁾		3,548			12,199		15,747
Occupancy and equipment		851			514		1,365
Other non-interest expenses		2,349			3,117		5,466
Total non-interest expenses		6,748			15,830		22,578
Income before income taxes and elimination of inter-segment profit	$	3,081		$	5,609		8,690
Elimination of inter-segment profit							(1,499	)
Income before income taxes							7,191

Income tax expense							1,502
Net income						$	5,689

(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.

The Company’s internal transfer pricing arrangements determined by management primarily consist of the following:

EM’s cost of funds is based on the weighted average rate of overnight advances from the FHLBB for the period.

EM is credited with service released premiums and a sales premium totaling 1.50% for new loans transferred to EB’s loans held for investment, and a 1.00% fee for HELOC originations. This income for the three and six months ended June 30, 2021 totaled $818,000 and $1,499,000, respectively.

Loan servicing fees are charged to EB by EM based on the number of residential mortgage loans held in portfolio at a rate of 0.14% per annum and amounted to $94,000 and $189,000 for the three and six months ended June 30, 2021, respectively.

15.

DEPOSITS

A summary of deposit balances, by type is as follows:

	June 30, 2022		December 31, 2021
	(In thousands)
Demand deposits	$	146,635	$	145,666
NOW accounts		51,928		53,996
Money market deposits		98,331		90,544
Regular and other savings accounts		195,107		191,712
Brokered deposits		10		10,061
Total non-certificate accounts		492,011		491,979
Term certificates less than $250,000		80,651		85,877
Term certificates of $250,000 or more		21,351		20,235
Term certificates - brokered		47,351		40,056
Total certificate accounts		149,353		146,168
		641,364		638,147

16.	BORROWINGS

Advances consist of funds borrowed from the Federal Home Loan Bank of Boston (the “FHLB”). Maturities of advances from the FHLB as of June 30, 2022 are summarized as follows:

	June 30, 2022
	(In thousands)
2022	$	17,946
2023		5,000
2024		—
2025		10,000
		32,946

Borrowings from the FHLB, which aggregated $32.9 million at June 30, 2022, are secured by blanket lien on qualified collateral, consisting primarily of loans with first mortgages secured by one- to four-family properties, certain commercial loans and qualified mortgage-backed government securities. The interest rates on FHLB advances ranged from 0.45% to 1.70%, and the weighted average interest rate on FHLB advances was 1.42% at June 30, 2022. FHLB borrowings at June 30, 2022, that are long-term with an original maturity of more than one year totaled $15.0 million.

17.	MINIMUM CAPITAL REQUIREMENTS

The Bank is subject to various capital requirements administered by the federal banking agencies. Capital adequacy guidelines and prompt corrective actions regulations involve qualitative measure of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgment by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. Banks (Basel III rules) became effective for the Bank on January 1, 2015. Under BASEL III, community banking institutions must maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater than 2.5% of total risk weighted assets to avoid being subject to limitations on capital distributions and discretionary bonuses.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following tables) of total, Tier 1 capital and common equity Tier 1 capital to risk weighted assets, and Tier 1 capital to average assets (all as defined). Management believes, as of June 30, 2022 and December 31, 2021, that the Bank met all capital adequacy requirements to which it is subject.

As of June 30, 2022, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk based, common equity Tier 1 and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank’s category.

The Bank’s actual and minimum capital amounts and ratios, exclusive of the capital conservation buffer, are presented in the following table:

											Minimum
											To Be Well
						For Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2022
Total capital (to risk weighted assets)	$	91,308		15.3	%	$	47,735		8.0	%	$	59,668		10.0	%
Tier 1 capital (to risk weighted assets)		83,941		14.1			35,801		6.0			47,735		8.0
Common equity Tier 1 capital (to risk weighted assets)		83,941		14.1			26,851		4.5			38,784		6.5
Tier 1 capital (to average assets)		83,941		11.1			30,169		4.0			37,711		5.0
December 31, 2021
Total capital (to risk weighted assets)	$	100,180		17.4	%	$	45,956		8.0	%	$	57,445		10.0	%
Tier 1 capital (to risk weighted assets)		93,288		16.2			34,467		6.0			45,956		8.0
Common equity Tier 1 capital (to risk weighted assets)		93,288		16.2			25,850		4.5			37,339		6.5
Tier 1 capital (to average assets)		93,288		12.3			30,355		4.0			37,943		5.0

18.

LEASES

The Company recognized ROUs and operating lease liabilities totaling $1.7 million and $1.8 million at June 30, 2022 and December 31, 2021, respectively. The ROU is recognized in other assets on the Company’s Consolidated Balance Sheet and operating lease liabilities are recognized in other liabilities on the Company’s Consolidated Balance Sheet. At June 30, 2022, the Company had entered in 9 noncancelable operating lease agreements for office space and branch locations, several of which contain renewal options to extend lease payments for a period of 1 to 10 years. The Company had no financing leases outstanding and no leases with residual value guarantees.

The Company’s operating lease cost was $175,000 and $208,000 for the three months ended June 30, 2022 and 2021, respectively and $345,000 and $416,000 for the six months ended June 30, 2022 and 2021, respectively. The weighted average remaining lease term for operating leases was 4.45 years and 4.50 years at June 30, 2022 and December 31, 2021, respectively, and the weighted average discount rate used in the measurement of operating lease liabilities was 1.97% and 1.99% at June 30, 2022 and December 31, 2021, respectively.

The following table sets forth the undiscounted cash flows of base rent related to operating leases at June 30, 2022 with payments scheduled over the next five years and thereafter, including a reconciliation to the operating lease liability.

	June 30, 2022
	(In thousands)
2022	$	344
2023		486
2024		344
2025		256
2026		226
2027		95
Thereafter		—
Total minimum lease payments		1,751
Less: amount representing interest		(70	)
Present value of future minimum lease payments		1,681

19.	MORTGAGE BANKING INCOME

The components of gain on loan origination and sale activities and mortgage servicing fees for the three and six months ended June 30, 2022 and 2021 are as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Gain on loan origination and sale activities, net	(In thousands)
Gain on sale of mortgages and realized gain from derivative financial instruments, net	$	632		$	6,545		$	3,725		$	22,421
Net change in fair value of loans held for sale and portfolio loans accounted for at fair value		218			1,091			(1,341	)		(2,725	)
Capitalized residential mortgage loan servicing rights		160			1,476			537			4,273
Net change in fair value of derivative loan commitments and forward loan sale commitments		(526	)		(3,372	)		(1,173	)		(7,236	)
Gain on loan origination and sales activities, net	$	484		$	5,740		$	1,748		$	16,733

Mortgage servicing fees, net
Residential mortgage loan servicing fees	$	1,259		$	1,205		$	2,536		$	2,375
Amortization of residential mortgage loan servicing rights		(731	)		(759	)		(1,480	)		(1,571	)
Release (provision) to the valuation allowance of mortgage loan servicing rights		286			(65	)		421			356
Sub-servicer expenses⁽¹⁾		(305	)		-			(620	)		-
Mortgage servicing fees, net	$	509		$	381		$	857		$	1,160
Total gain on loan origination and sales activities and mortgage servicing fees	$	993		$	6,121		$	2,605		$	17,893

(1)

Sub-servicer expenses were first incurred during the third quarter of 2021, due to the conversion of the Company’s mortgage loan servicing portfolio. Previously, all expenses related to servicing mortgage loans serviced for others were included in non-interest expenses.

20.	TRANSACTION WITH HOMETOWN FINANCIAL GROUP, INC.

On March 28, 2022, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with Hometown Financial Group, MHC, Hometown Financial Group, Inc. (“Hometown”), and Hometown Financial Acquisition Corp. (“Merger Sub”). Pursuant to the merger agreement, Merger Sub will be merged with and into the Company, with the Company as the surviving corporation (the “merger”). Immediately after the merger, the Company will be merged with and into Hometown as the surviving corporation (the “second step merger”). Immediately following the second step merger, the Bank will merge with and into Abington Bank, the wholly-owned subsidiary of Hometown, with Abington Bank as the surviving entity. On June 29, 2022, the shareholders of Randolph Bancorp, Inc. voted to approve the transaction. The consummation of the merger is now subject to customary closing conditions, including receipt of regulatory approvals. The merger is expected to be completed in the fourth quarter of 2022.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This section is intended to help investors understand the financial performance of Randolph Bancorp, Inc. and its subsidiary, Envision Bank, through a discussion of the factors affecting its financial condition at June 30, 2022 and December 31, 2021, and its results of operations for the three and six month periods ended June 30, 2022 and 2021. This section should be read in conjunction with the unaudited consolidated financial statements of Randolph Bancorp, Inc. and notes thereto that appear elsewhere in this Quarterly Report. For the purpose of this Quarterly Report, the terms the “Company” “we,” “our,” and “us” refer to Randolph Bancorp, Inc. and its subsidiary unless the context indicates another meaning. When necessary, certain amounts in prior year financial statements have been reclassified to conform to the current year’s presentation.

Proposed Transaction with Hometown Financial Group, Inc.

On March 28, 2022, the Company entered into an Agreement and Plan of Merger (the “merger agreement”) with Hometown Financial Group, MHC, Hometown Financial Group, Inc. (“Hometown”), and Hometown Financial Acquisition Corp. (“Merger Sub”). Pursuant to the merger agreement, Merger Sub will be merged with and into the Company, with the Company as the surviving corporation (the “merger”). Immediately after the merger, the Company will be merged with and into Hometown as the surviving corporation (the “second step merger”). Immediately following the second step merger, the Bank will merge with and into Abington Bank, the wholly-owned subsidiary of Hometown, with Abington Bank as the surviving entity. On June 29, 2022, the shareholders of Randolph Bancorp, Inc. voted to approve the transaction. The consummation of the merger is subject to customary closing conditions, including receipt of regulatory approvals. The merger is expected to be completed in the fourth quarter of 2022.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that may be considered 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. These statements, which are based on certain current assumptions, can generally be identified by the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target” and similar expressions. The Company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with these safe harbor provisions. You should read statements that contain these words carefully because they discuss the relevant company’s future expectations, contain projections of the relevant company’s future results of operations or financial condition, or state other “forward-looking” information.

Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. Our actual results could differ materially from those projected in the forward-looking statements as a result of, among others, factors referenced herein under the section captioned “Risk Factors”; failure to obtain necessary regulatory approvals for the proposed transaction with Hometown; failure to satisfy any of the conditions to the proposed transaction with Hometown on a timely basis or at all or other delays in completing the merger; the risk that the merger agreement may be terminated in certain circumstances; the outcome of any legal proceedings that may be instituted against the Company and/or others related to the merger agreement or the merger; disruptions to the Company’s business as a result of the announcement and pendency of the merger; the reputational risks and the reaction of Randolph’s customers to the proposed transaction; ongoing disruptions due to the COVID-19 pandemic and the measures taken to contain its spread on the Company’s employees, customers, business operations, credit quality, financial position, liquidity and results of operations; changes in the 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 interest rates; competition; inflation; 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 pandemic-related legislative and regulatory initiatives and programs; ongoing turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities and the other risks and uncertainties detailed in our Annual Report on Form 10-K and updated in this Quarterly Report on Form 10-Q and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. We do 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.

Overview

Our results of operations depend primarily on net interest income and net gains on loan origination and sale activities. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on interest-bearing liabilities. Our interest-earning assets consist primarily of residential mortgage loans (including loans held for sale),

commercial real estate loans, commercial and industrial loans, home equity loans and lines of credit, construction loans, consumer loans and investment securities. Interest-bearing liabilities consist primarily of deposit accounts (including brokered deposits) and borrowings from the Federal Home Loan Bank of Boston (“FHLBB”) and the Federal Reserve Bank (“FRB”). Net gains on loan origination and sale activities result from the origination and sale of such loans to investors including Fannie Mae, Freddie Mac and other financial institutions. The amount of these gains is dependent on the volume of our loan originations, profit margins earned upon sale and the prevailing fair value of mortgage servicing rights (“MSRs”).

Critical Accounting Policies and Estimates

Certain of our accounting policies are important to the presentation of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. Our significant accounting policies are discussed in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission.

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to cover incurred losses inherent in the loan portfolio at the balance sheet date. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance for loan losses when management believes the loan is uncollectable. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as either additional information becomes available or circumstances change. The allowance for loan losses is allocated to loan types using both a formula-based approach applied to groups of loans (general component) and an analysis of certain individual loans for impairment (allocated component). Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation. In addition, the FDIC and the Massachusetts Commissioner of Banks, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to recognize adjustments to the allowance based on their judgments using information available to them at the time of their examination.

Income Taxes. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws. A valuation allowance is established against deferred tax assets when, based upon available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized.

In 2014, we established a 100% valuation allowance for our net deferred tax assets after completing an assessment of our recent operating results, including significant non-recurring items, and projected operating results. This assessment led us to conclude that it was more likely than not that we would be unable to realize our deferred tax assets. In performing subsequent assessments through 2019, management concluded that no significant changes in the key factors affecting the realizability of our deferred tax assets had occurred and that a valuation allowance for all deferred tax assets should be maintained. After incurring losses in four of the seven previous years, the Company had net income of $9.6 million and $19.9 million in 2021 and 2020, respectively. During 2021, management concluded that the previous 100% valuation allowance for deferred tax assets was no longer needed. There was no valuation allowance as of June 30, 2022 or December 31, 2021.

We do not have any uncertain tax positions at June 30, 2022 and December 31, 2021 which require accrual or disclosure. We record interest and penalties as part of income tax expense. Interest and penalties recorded for the three and six months ended June 30, 2022 and 2021 were not significant.

Comparison of Financial Condition at June 30, 2022 and December 31, 2021

Total Assets. Total assets decreased $28.5 million to $774.8 million at June 30, 2022 from $803.3 million at December 31, 2021. Contributing to the asset decline was a $100.6 million decrease in cash and cash equivalents and a $35.0 million decrease in loans held for sale. The decrease in cash and cash equivalents was due to the funding of net loan growth of $113.0 million, primarily due to an increase of $118.6 million in one- to four-family residential loans. The decrease in loans held for sale was the result of a decline in mortgage banking production and the decision to allocate a larger portion of residential loan production to the Company’s own portfolio as a result of an increase in mortgage interest rates.

Loans Held for Sale. We are actively involved in the secondary mortgage market and sell a portion of our residential first mortgage loan production to investors. At June 30, 2022, loans held for sale totaled $9.7 million compared to $44.8 million at

December 31, 2021, and proceeds from sales of mortgage loans totaled $188.8 million in the six months ended June 30, 2022. Higher mortgage rates available during the first six months of 2022 negatively impacted loan refinancing activity, which comprised 60% of residential mortgage loan originations in the first six months of 2022, compared to 72% in the first six months of 2021.

Net Loans. Net loans increased $113.0 million to $657.6 million at June 30, 2022 from $544.6 million at December 31, 2021, primarily as a result of the origination of one- to four-family residential loans, home equity loans and lines of credit and commercial real estate loans. These increases were partially offset by decreases in commercial and industrial, construction and consumer loans, where loan repayments have not been offset by increased loan originations or purchases.

Investment Securities. Investment securities, all of which are classified as available for sale, decreased $4.5 million to $47.1 million at June 30, 2022 from $51.7 million at December 31, 2021, primarily due to principal payments on mortgage-backed securities and a decrease in the market value attributable to an increase in longer-term interest rates, partially offset by security purchases during the first six months of 2022. At June 30, 2022, investment securities and cash and cash equivalents, primary sources of on-balance sheet liquidity, totaled $62.0 million, or 8.0% of total assets.

Mortgage Servicing Rights. MSRs decreased $523,000 to $15.1 million at June 30, 2022 from $15.6 million at December 31, 2021. The principal reason for the decrease was amortization in excess of the pace of the origination of new MSRs, partially offset by a reversal of previous impairment charges of $421,000 recognized through a valuation allowance, reflecting the higher interest rate environment. At June 30, 2022, the Company serviced $1.92 billion of mortgage loans for others, a decrease of $0.6 billion from $1.98 billion at December 31, 2021. The average value of MSRs at June 30, 2022 stood at 79 basis points, unchanged from December 31, 2021.

Deposits. Deposits increased $3.2 million, or 0.5%, to $641.4 million at June 30, 2022 from $638.1 million at December 31, 2021. Interest-bearing brokered deposits, which management considers to be a source of wholesale funding, decreased by $2.8 million to $47.4 million at June 30, 2022, from $50.1 million at December 31, 2021.

FHLBB Advances. FHLBB advances, which consist of term and overnight advances, decreased by $17.1 million to $32.9 million at June 30, 2022, from $50.0 million at December 31, 2021. The Company’s deposit gathering activities have reduced the reliance on advances.

FHLBB advances, interest-bearing brokered deposits, listing and certain other deposits make up the Bank’s wholesale funding which management targets at a limit of 25% of total assets. At June 30, 2022, wholesale funding amounted to $132.7 million, or 17.1% of total assets.

Stockholders’ Equity. Stockholders’ equity decreased $11.6 million to $89.3 million at June 30, 2022 compared to $100.9 million at December 31, 2021. The decrease was mainly attributed to dividends of $11.3 million, other comprehensive losses of $2.7 million and share repurchases of $1.3 million, partially offset by proceeds from the exercises of stock options of $2.1 million, $1.1 million in ESOP shares committed to be released and net income of $13,000.

Comparison of Operating Results for the Three Months Ended June 30, 2022 and 2021

General. The Company recognized net income of $248,000, or $0.05 per diluted share, for the three months ended June 30, 2022 compared to net income of $1.6 million, or $0.31 per diluted share, for the three months ended June 30, 2021, a decrease of $1.3 million.

Analysis of Net Interest Income

Net interest income represents the difference between income earned on interest-earning assets and the expenses paid on interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned on such assets and paid on such liabilities.

Average Balances and Yields. The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. The yields set forth below include the effect of acquisition accounting adjustments as well as deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

	For the Three Months Ended June 30,
	2022								2021
	Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
(Dollars in thousands)	Balance			Paid		Rate⁽⁷⁾			Balance			Paid		Rate⁽⁷⁾
Interest-earning assets:
Loans ⁽¹⁾	$	634,021		$	6,182		3.91	%	$	592,750		$	5,505		3.73	%
Investment securities ^{(2) (3)}		49,426			226		1.83	%		55,376			230		1.67	%
Interest-earning deposits		27,803			45		0.65	%		43,888			8		0.07	%
Total interest-earning assets		711,250			6,453		3.64	%		692,014			5,743		3.33	%
Noninterest-earning assets		41,971								40,257
Total assets	$	753,221							$	732,271
Interest-bearing liabilities:
Savings accounts		194,944			76		0.16	%		192,434			89		0.19	%
NOW accounts		52,890			49		0.37	%		69,730			38		0.22	%
Money market accounts		98,813			79		0.32	%		72,469			43		0.24	%
Term certificates		141,279			138		0.39	%		104,604			175		0.67	%
Total interest-bearing deposits		487,926			342		0.28	%		439,237			345		0.32	%
FHLBB and FRB advances		31,058			99		1.28	%		51,502			198		1.54	%
Total interest-bearing liabilities		518,984			441		0.34	%		490,739			543		0.44	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		133,915								124,656
Other noninterest-bearing liabilities		10,642								13,606
Total liabilities		663,541								629,001
Total stockholders' equity		89,680								103,270
Total liabilities and stockholders' equity	$	753,221							$	732,271
Net interest income				$	6,012							$	5,200
Interest rate spread⁽⁴⁾							3.30	%							2.89	%
Net interest-earning assets⁽⁵⁾	$	192,266							$	201,275
Net interest margin⁽⁶⁾							3.39	%							3.01	%

Ratio of interest-earning assets to interest- bearing liabilities		137.05	%							141.01	%

(1)

Includes nonaccruing loan balances and interest received on such loans as well as loans held for sale.

(2)

Includes carrying value of securities classified as available for sale, FHLBB stock and investment in a correspondent bank.

(3)

Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21% of $1,000 and $1,000 for the three months ended June 30, 2022 and 2021, 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.

(7) During the fourth quarter of 2021, the Company changed the yield calculation method from “30/360” to the “Actual/Actual” method. Management believes that the “Actual/Actual” method provides a more consistent and relevant metric for yield performance comparisons.

Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income, presented on a tax equivalent basis, for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.

	Three Months Ended June 30, 2022
	Compared to
	Three Months Ended June 30, 2021
	Increase (Decrease)						Total
	Due to Changes in						Increase
(In thousands)	Volume			Rate			(Decrease)
Interest-earning assets:
Loans	$	412		$	265		$	677
Investment securities		(24	)		20			(4	)
Interest-earning deposits		(2	)		39			37
Total interest-earning assets		386			324			710
Interest-bearing liabilities:
Savings accounts		1			(14	)		(13	)
NOW accounts		(7	)		18			11
Money market accounts		13			23			36
Term certificates		50			(87	)		(37	)
Total interest-bearing deposits		57			(60	)		(3	)
FHLBB and FRB advances		(69	)		(30	)		(99	)
Total interest-bearing liabilities		(12	)		(90	)		(102	)
Change in net interest income	$	398		$	414		$	812

Interest and Dividend Income. Interest and dividend income, inclusive of tax equivalent adjustments on municipal securities, increased $710,000, or 12.4%, to $6.5 million for the three months ended June 30, 2022 compared to $5.7 million for the three months ended June 30, 2021. The yield on interest-earning assets increased 31 basis points to 3.64% in the second quarter of 2022 from 3.33% in the same quarter of the prior year, due to a higher portion of loans and increasing earning-asset yields in a rising interest rate environment.

Interest Expense. Interest expense decreased $102,000, or 18.8%, to $441,000 for the three months ended June 30, 2022 compared to $543,000 for the three months ended June 30, 2021. This decrease was due to a in a 10 basis point decrease in the cost of interest-bearing liabilities to 0.34%. The decrease in cost of funds was principally due to the downward pricing of deposits and the change in composition of interest-bearing liabilities.

Net Interest Income. Net interest income, inclusive of tax equivalent adjustments on municipal securities, increased $812,000, or 15.6%, to $6.0 million for the three months ended June 30, 2022 compared to $5.2 million for the three months ended June 30, 2021. This increase resulted in a 38 basis point improvement in the net interest margin, to 3.39%, in the second quarter of 2022. The improvement in net interest margin was primarily the result of an increase in the rate earned on loans and increases in the average balance of loans.

Provision for Loan Losses. The Company recognized a provision for loan losses of $269,000 for the quarter ended June 30, 2022 compared to a credit of $27,000 in the prior year quarter. The provision in the second quarter of 2022 was driven by loan growth in one- to four-family residential real estate. The allowance for loan losses was 1.00% and 1.19% of gross loans at June 30, 2022 and June 30, 2021, respectively, and was 237.4% and 101.9% of non-performing assets at June 30, 2022 and June 30, 2021, respectively.

Net Gain on Loan Origination and Sale Activities. The net gain on loan origination and sale activities decreased $5.3 million, or 91.6%, to $484,000 for the three months ended June 30, 2022 compared to $5.7 million for the three months ended June 30, 2021. Lower mortgage sales and margins earned on the sale of loans, and a decline in the fair value of loans held for sale during the second quarter of 2022 were responsible for the decline between the periods.

Other Non-interest Income. Other non-interest income was $1.3 million in the three months ended June 30, 2022 compared to other non-interest income of $1.1 million during the three months ended June 30, 2021. The $265,000 increase between periods was mainly attributed a $286,000 release to the valuation allowance of mortgage loan servicing rights during the three months ended June

30, 2022, compared to a $65,000 impairment charge to MSRs which was recognized in the quarter ended June 30, 2021 as loan prepayment speeds were adjusted to reflect changing interest rates.

Non-interest Expenses. Non-interest expenses decreased $3.1 million, or 29.6%, to $7.5 million for the three months ended June 30, 2022, from $10.6 million for the three months ended June 30, 2021.

Salaries and employee benefits decreased $2.9 million to $4.4 million in the second quarter of 2022 from $7.3 million in the second quarter of 2021. This decrease was primarily due to lower head count, commissions, incentives, overtime and temporary assistance associated with lower residential loan production during the second quarter of 2022.

Occupancy and equipment expenses decreased $62,000 in the quarter ended June 30, 2022 over the prior year period. This decrease was a result of the consolidation of administrative office space.

Other non-interest expenses comprising data processing, professional fees, marketing, FDIC insurance and other non-interest expenses decreased by $185,000 in the quarter ended June 30, 2022 compared to the prior year period as a result of a $197,000 decrease in the provision for unfunded commitments from the second quarter of 2021.

Income Tax Expense (Benefit). An income tax benefit of $165,000 for the three months ended June 30, 2022 incorporates a federal and state income tax provision, based on the projected effective tax rate for the year. The income tax benefit for the three months ended June 30, 2021 was $162,000, and consisted of a federal and state income tax provision, offset by the reversal of a valuation allowance on the Company’s charitable contribution carryforward during the quarter of $531,000.

Comparison of Operating Results for the Six Months Ended June 30, 2022 and 2021

General.

Analysis of Net Interest Income

Net interest income represents the difference between income we earn on our interest-earning assets and the expense we pay on interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned on such assets and paid on such liabilities.

	For the Six Months Ended June 30,
	2022								2021
	Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
(Dollars in thousands)	Balance			Paid		Rate⁽⁷⁾			Balance			Paid		Rate⁽⁷⁾
Interest-earning assets:
Loans ⁽¹⁾	$	610,262		$	11,649		3.85	%	$	593,382		$	11,013		3.74	%
Investment securities ^{(2) (3)}		51,168			447		1.76	%		56,590			477		1.70	%
Interest-earning deposits		67,613			87		0.26	%		39,713			15		0.08	%
Total interest-earning assets		729,043			12,183		3.37	%		689,685			11,505		3.36	%
Noninterest-earning assets		41,958								41,146
Total assets	$	771,001							$	730,831
Interest-bearing liabilities:
Savings accounts		194,535			148		0.15	%		191,379			187		0.20	%
NOW accounts		57,439			92		0.32	%		69,621			86		0.25	%
Money market accounts		96,009			115		0.24	%		74,222			97		0.26	%
Term certificates		142,294			302		0.43	%		100,812			413		0.83	%
Total interest-bearing deposits		490,277			657		0.27	%		436,034			783		0.36	%
FHLBB and FRB advances		39,648			246		1.25	%		61,126			430		1.42	%
Total interest-bearing liabilities		529,925			903		0.34	%		497,160			1,213		0.49	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		137,167								115,841
Other noninterest-bearing liabilities		11,098								14,486
Total liabilities		678,190								627,487
Total stockholders' equity		92,811								103,344
Total liabilities and stockholders' equity	$	771,001							$	730,831
Net interest income				$	11,280							$	10,292
Interest rate spread⁽⁴⁾							3.03	%							2.87	%
Net interest-earning assets⁽⁵⁾	$	199,118							$	192,525
Net interest margin⁽⁶⁾							3.12	%							3.01	%

Ratio of interest-earning assets to interest- bearing liabilities		137.57	%							138.72	%

(1)

Includes nonaccruing loan balances and interest received on such loans as well as loans held for sale.

(2)

Includes carrying value of securities classified as available for sale, FHLBB stock and investment in a correspondent bank.

(3)

Includes tax equivalent adjustments for municipal securities, based on an effective tax rate of 21% of $2,000 and $2,000 for the six months ended June 30, 2022 and 2021, 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.

(7)

During the fourth quarter of 2021, the Company changed the yield calculation method from “30/360” to the “Actual/Actual” method. Management believes that the “Actual/Actual” method provides a more consistent and relevant metric for yield performance comparisons.

	Six Months Ended June 30, 2022
	Compared to
	Six Months Ended June 30, 2021
	Increase (Decrease)						Total
	Due to Changes in						Increase
(In thousands)	Volume			Rate			(Decrease)
Interest-earning assets:
Loans	$	393		$	243		$	636
Investment securities		(45	)		15			(30	)
Interest-earning deposits		5			67			72
Total interest-earning assets		353			325			678
Interest-bearing liabilities:
Savings accounts		3			(42	)		(39	)
NOW accounts		(13	)		19			6
Money market accounts		26			(8	)		18
Term certificates		132			(243	)		(111	)
Total interest-bearing deposits		148			(274	)		(126	)
FHLBB and FRB advances		(138	)		(46	)		(184	)
Total interest-bearing liabilities		10			(320	)		(310	)
Change in net interest income	$	343		$	645		$	988

Interest and Dividend Income. Interest and dividend income, inclusive of tax equivalent adjustments on municipal securities, increased $678,000, or 5.9%, to $12.2 million for the six months ended June 30, 2022 compared to $11.5 million for the six months ended June 30, 2021. The yield on interest-earning assets increased 1 basis point to 3.37% in the first six months of 2022 from 3.36% in the first six months of the prior year, and average interest-earning assets increased between periods by $39.4 million, or 5.7%, as the Company increased lending and continued to leverage its capital base.

Interest Expense. Interest expense decreased $310,000, or 25.6%, to $903,000 for the six months ended June 30, 2022 compared to $1.2 million for the six months ended June 30, 2021. This decrease resulted from a 15 basis point decrease in the cost of funds to 0.34%. The decrease in cost of funds was principally due to a decline in deposit costs and in the volume and cost of advances.

Net Interest Income. Net interest income, inclusive of tax equivalent adjustments on municipal securities, increased $988,000, or 9.6%, to $11.3 million for the six months ended June 30, 2022 compared to $10.3 million for the six months ended June 30, 2021. This improvement resulted principally from loan growth and improved interest rate spread mainly reflecting higher loan yields and decreased wholesale funding cost. The net interest margin increased 11 basis points to 3.12% in the first six months of 2022 from 3.01% in the first six months of 2021.

Provision for Loan Losses. The Company recognized a provision for loan losses of $340,000 for the six months ended June 30, 2022, compared to a credit for loan losses of $240,000 in the prior year period due to loan growth.

Net Gain on Loan Origination and Sale Activities. The net gain on loan origination and sale activities decreased $15.0 million, or 89.6%, to $1.7 million for the six months ended June 30, 2022 compared to $16.7 million for the six months ended June 30, 2021. The lower mortgage origination and sale levels and compressed margins on the sale of loans were due to the rising interest rate environment.

Other Non-interest Income. Other non-interest income was $2.3 million in the six months ended June 30, 2022, compared to other non-interest income of $2.5 million during the six months ended June 30, 2021. The $237,000 decrease between periods was mainly attributed to a decrease in mortgage loan servicing fees of $303,000, as the Company recognized newly incurred sub-servicing costs in mortgage servicing fees during the six months ended June 30, 2022.

Non-interest Expenses. Non-interest expenses decreased $6.4 million, or 28.3%, to $16.2 million for the six months ended June 30, 2022, from $22.6 million for the six months ended June 30, 2021. Non-interest expenses in the first six months of 2022 included $240,000 in accrued severance expenses, $290,000 in a credit for the reversal of a cease use liability and $945,000 of merger expenses. Non-interest expenses in the first six months of 2021 included $254,000 in accrued severance expenses and $71,000 of outsourcing expenses related to the Company’s outsourcing of its residential loans servicing function.

Salaries and employee benefits decreased $6.2 million to $9.6 million in the first six months of 2022 from $15.7 million in the first six months of 2021. The decrease from the prior year period was primarily due to lower head count, commissions, incentives, overtime and temporary assistance associated with lower residential loan production during the first half of 2022.

Occupancy and equipment expenses decreased $441,000, or 32.3%, to $924,000 in the first six months of 2022 compared to $1.4 million in the first six months of 2021. This decrease was driven by a $290,000 reversal of a cease use liability and decreases in the Company’s operating footprint.

Other non-interest expenses comprising data processing, professional fees, marketing, FDIC insurance and other non-interest expenses increased by $232,000 in the six months ended June 30, 2022 versus the prior year period primarily as a result of $945,000 in merger expenses, partially offset by a decrease in residential mortgage loan origination expenses.

Income Tax Expense (Benefit). An income tax benefit of $1.2 million for the six months ended June 30, 2022 consisted of a federal and state income tax provision, which was based on the projected effective tax rate for the year.

Segments. The Company has two reportable segments: Envision Bank and Envision Mortgage. Revenue from Envision Bank consists primarily of interest earned on loans and investment securities and customer service fees on deposit accounts. Revenue from Envision Mortgage consists primarily of gains on loan origination and sales activities, loan servicing income and interest income on loans held for sale and residential construction loans. Also included in Envision Mortgage’s revenues is income on loan originations that are retained in Envision Bank’s loan portfolio and loan servicing fees on these loans. This inter-segment profit is eliminated in consolidation.

Comparison of Segment Results for the Three Months Ended June 30, 2022 and 2021

The following table presents a comparison of the results of operations for each segment before incomes taxes and elimination of inter-segment profit, and the changes in those results, for the three months ended June 30, 2022 and 2021.

	Envision Bank												Envision Mortgage
	Three Months Ended June 30,						Increase (Decrease)						Three Months Ended June 30,					Increase (Decrease)
	2022			2021			Dollars			Percent			2022			2021		Dollars			Percent
	(in thousands)
Net interest income	$	5,741		$	4,535		$	1,206			26.6	%	$	270		$	664	$	(394	)		-59.3	%
Provision (credit) for loan losses		269			(27	)		296			1,096.3			—			—		—			—
Net interest income after provision (credit) for loan losses		5,472			4,562			910			19.9			270			664		(394	)		(59.3	)

Non-interest income:
Customer service fees		365			393			(28	)		(7.1	)		7			26		(19	)		(73.1	)
Gain on loan origination and sale activities, net ⁽¹⁾		—			—			—			—			1,920			6,558		(4,638	)		(70.7	)
Mortgage servicing fees, net		(240	)		(94	)		(146	)		(155.3	)		749			475		274			57.7
Other		369			158			211			133.5			91			118		(27	)		(22.9	)
Total non-interest income		494			457			37			8.1			2,767			7,177		(4,410	)		(61.4	)

Non-interest expenses:
Salaries and employee benefits		1,831			1,746			85			4.9			2,583			5,564		(2,981	)		(53.6	)
Occupancy and equipment		447			407			40			9.8			112			214		(102	)		(47.7	)
Other non-interest expenses		1,357			1,265			92			7.3			1,154			1,431		(277	)		(19.4	)
Total non-interest expenses		3,635			3,418			217			6.3			3,849			7,209		(3,360	)		(46.6	)
Income (loss) before income taxes and elimination of inter-segment profit	$	2,331		$	1,601		$	730			45.6	%	$	(812	)	$	632	$	(1,444	)		(228.5	)%

Total Assets at June 30, 2022	$	718,602											$	56,151
Total Assets at December 31, 2021		708,631												94,647
Increase (decrease)	$	9,971											$	(38,496	)

(1)

Before elimination of inter-segment profit.

Envision Bank Segment

The Envision Bank segment had income before income taxes and elimination of inter-segment profit of $2.3 million for the three months ended June 30, 2022 compared to $1.6 million for the three months ended June 30, 2021. The increase in operating results between periods of $730,000 was driven by a number of factors as explained below.

Net interest income increased $1.2 million, or 26.6%, primarily as a result of loan growth and an increase in asset yields, as well as a decrease in deposit costs. The Company recognized a provision for loan losses of $269,000 for the quarter ended June 30, 2022 compared to a credit of $27,000 in the prior year quarter.

Non-interest income increased by $37,000 between periods, driven by an increase in other fees primarily related to commercial loan customers, partially offset by greater imputed servicing costs on residential loans in portfolio.

Non-interest expense increased by $217,000 in the quarter ended June 30, 2022 as compared to the prior year period as a result of a combination of factors. Salaries and employee benefits increased by $85,000, or 4.9%, between periods as a result normal pay increases. Occupancy and equipment expenses increased $40,000 in the quarter ended June 30, 2022 over the prior year period, partly as a result of depreciation of office improvements to the Company’s main bank branch. Other non-interest expenses increased by $92,000 between periods, due to a $357,000 in merger expenses during three months ended June 30, 2022.

Total assets attributable to the Envision Bank segment increased $10.0 million, or 1.4%, to $718.6 million at June 30, 2022 from $708.6 million at December 31, 2021. This increase was principally due to loan growth.

Envision Mortgage Segment

The Envision Mortgage segment had a loss before income taxes and elimination of inter-segment profit of $812,000 for the three months ended June 30, 2022 compared to income before income taxes and elimination of inter-segment profit of $632,000 for the three months ended June 30, 2021. The decline of $1.4 million in operating results occurred as a result of a decrease of $4.6 million, or 70.7%, in net gains on loan origination and sale activities.

The net gain on loan origination and sale activities, the principal source of revenue for Envision Mortgage, decreased $4.6 million to $1.9 million in the second quarter of 2022 from $6.6 million in the second quarter of 2021, driven by lower mortgage loan refinancing in a rising rate environment and lower sale margins in the three months ended June 30, 2022, compared to the three months ended June 30, 2021.

Net interest income decreased $394,000, or 59.3%, to $270,000 in the second quarter of 2022 compared to $664,000 in the second quarter of 2021. This was primarily due to a decrease in the volume of loans held for sale, partially offset by an increase in the average rate earned on loans held for sale and residential construction loans in the 2022 period.

Mortgage servicing fee income increased $274,000 between periods largely due to a $286,000 release of prior impairment charges in the valuation allowance for MSRs in the 2022 period due to an increase in interest rates and a slowing of mortgage prepayments, versus an impairment charge of $65,000 in the 2021 period.

Non-interest expenses of Envision Mortgage decreased $3.4 million, or 46.6%, to $3.8 million in the second quarter of 2022 from $7.2 million in the second quarter of 2021. This decrease was primarily due to a decrease of $3.0 million, or 53.6%, in salaries and employee benefits, largely related to decreased loan production volume and head count.

The decrease of $102,000 in occupancy and equipment costs in the second quarter of 2022 compared to the prior year period was related to mortgage office closures that took place in early 2022.

Other non-interest expenses decreased $277,000 or 19.4% from the prior year period, as loan origination expenses decreased with a decline in mortgage loan production during the three months ended June 30, 2022.

Total assets attributable to the Envision Mortgage segment were $56.2 million at June 30, 2022, compared to $94.6 million at December 31, 2021.

Comparison of Segment Results for the Six Months Ended June 30, 2022 and 2021

	Envision Bank												Envision Mortgage
	Six Months Ended June 30,						Increase (Decrease)						Six Months Ended June 30,					Increase (Decrease)
	2022			2021			Dollars			Percent			2022			2021		Dollars			Percent
	(in thousands)
Net interest income	$	10,751		$	8,736		$	2,015			23.1	%	$	527		$	1,554	$	(1,027	)		-66.1	%
Provision (credit) for loan losses		340			(240	)		580			241.7			—			—		—			—
Net interest income after provision (credit) for loan losses		10,411			8,976			1,435			16.0			527			1,554		(1,027	)		(66.1	)

Non-interest income:
Customer service fees		720			733			(13	)		(1.8	)		17			53		(36	)		(67.9	)
Gain on loan origination and sale activities, net ⁽¹⁾		—			—			—			—			3,911			18,232		(14,321	)		(78.5	)
Mortgage servicing fees, net		(445	)		(189	)		(256	)		(135.4	)		1,302			1,349		(47	)		(3.5	)
Other		468			309			159			51.5			207			251		(44	)		(17.5	)
Total non-interest income		743			853			(110	)		(12.9	)		5,437			19,885		(14,448	)		(72.7	)

Non-interest expenses:
Salaries and employee benefits		3,766			3,548			218			6.1			5,802			12,199		(6,397	)		(52.4	)
Occupancy and equipment		959			851			108			12.7			(35	)		514		(549	)		(106.8	)
Other non-interest expenses		3,268			2,349			919			39.1			2,430			3,117		(687	)		(22.0	)
Total non-interest expenses		7,993			6,748			1,245			18.4			8,197			15,830		(7,633	)		(48.2	)
Income (loss) before income taxes and elimination of inter-segment profit	$	3,161		$	3,081		$	80			2.6	%	$	(2,233	)	$	5,609	$	(7,842	)		(139.8	)%

(1)

Before elimination of inter-segment profit.

Envision Bank Segment

The Envision Bank segment had income before income taxes and elimination of inter-segment profit of $3.2 million for the six months ended June 30, 2022 compared to $3.1 million for the six months ended June 30, 2021. The increase in operating results between periods of $80,000 was driven by a number of factors as explained below.

Net interest income increased by $2.0 million, or 23.1%, as a result of increases in the balance and yield earned on interest-earning assets and a decline in the cost of funds. The Company recognized a provision for loan losses of $340,000 for the six months ended June 30, 2022 compared to a credit for loan losses of $240,000 in the prior year period.

Non-interest income decreased between periods by $110,000, driven by higher costs paid to Envision Mortgage for the servicing of loans in the six months ended June 30, 2022.

Non-interest expense increased by $1.2 million in the six months ended June 30, 2022 as compared to the prior year period, primarily driven by merger expenses of $945,000 as well as normal pay increases for salaries and employee benefits expenses in the six months ended June 30, 2021.

Envision Mortgage Segment

The Envision Mortgage segment had a loss before income taxes and elimination of inter-segment profit of $2.2 million for the six months ended June 30, 2022 compared to income of $5.6 million for the six months ended June 30, 2021. The decline of $7.8 million in operating results occurred as a result of a decrease of $14.3 million, or 78.5%, in net gains on loan origination and sale activities.

The decline in net gain on loan origination and sale activities, the principal source of revenue for Envision Mortgage, was driven by lower origination levels as mortgage banking activity has decreased substantially from the prior year period as a result of an increase in interest rates.

Net interest income decreased $1.0 million, or 66.1%, to $527,000 in the first six months of 2022 compared to $1.6 million in the first six months of 2021. This was primarily due to a decrease in the average balance of loans held for sale in the 2022 period.

Mortgage servicing fee income decreased $47,000 between periods largely due to the incurring of sub-servicer expenses during the first six months of 2022, as compared to the prior year period, where loan servicing expenses were recorded in non-interest expense.

Non-interest expenses of Envision Mortgage decreased $7.6 million, or 48.2%, to $8.2 million in the second quarter of 2022 from $15.8 million in the second quarter of 2021. This decrease was primarily due to a decrease of $6.4 million, or 52.4%, in salaries and employee benefits, and a decrease of $687,000, or 22.0% in other non-interest expenses largely related to decreased closed loan production volume.

The decrease of $549,000 in occupancy and equipment costs in the first six months of 2022 compared to the prior year period was related to mortgage office closures that occurred throughout 2021, in addition to a $290,000 reversal of a cease use liability during the six months ended June 30, 2022.

Asset Quality

Nonperforming Assets. The following table provides information with respect to our nonperforming assets, including troubled debt restructurings, at the dates indicated.

	June 30, 2022			December 31, 2021
Nonaccrual loans:	(In thousands)
Real estate loans:
One- to four-family residential	$	2,300		$	2,133
Home equity loans and lines of credit		481			491
Total nonaccrual loans		2,781			2,624
Other real estate owned		—			—
Total nonperforming assets	$	2,781		$	2,624
Performing troubled debt restructurings		1,207			1,200
Total nonperforming assets and performing troubled debt restructurings	$	3,988		$	3,824

Total nonperforming loans to total loans⁽¹⁾		0.42	%		0.48	%
Total nonperforming assets to total assets		0.36	%		0.33	%
Total nonperforming assets and performing troubled debt restructurings to total assets		0.51	%		0.48	%

(1)

Total loans exclude loans held for sale but include net deferred loan costs and fees.

Interest income that would have been recorded for the six months ended June 30, 2022 had nonaccruing loans been current according to their original terms amounted to $96,000. Income related to nonaccrual loans included in interest income for the six months ended June 30, 2022 amounted to $189,000.

Classified Loans. The following table shows the aggregate amounts of our regulatory classified loans at the dates indicated.

	June 30, 2022		December 31, 2021
	(In thousands)
Classified assets:
Substandard	$	5,586	$	5,783
Doubtful		—		—
Loss		—		—
Total classified assets	$	5,586	$	5,783
Special mention	$	8,908	$	11,075

Assets that do not expose the Company to risk sufficient to warrant classified loan status, but which possess potential weaknesses that deserve close attention, are designated as special mention. As of June 30, 2022, there were $8.9 million of assets designated as special mention compared to $11.1 million at December 31, 2021.

Allowance for Loan Losses. The following table sets forth the breakdown for loan losses by loan category at the dates indicated.

	June 30, 2022								December 31, 2021
			% of Allowance			% of Loans					% of Allowance			% of Loans
			Amount to Total			in Category					Amount to Total			in Category
(Dollars in thousands)	Amount		Allowance			to Total Loans			Amount		Allowance			to Total Loans
Real estate loans:
One- to four-family residential	$	1,590		24.08	%		53.54	%	$	1,093		17.38	%		42.99	%
Commercial		3,224		48.83	%		28.56	%		3,451		54.87	%		35.91	%
Home equity loans and lines of credit		511		7.74	%		9.84	%		462		7.35	%		10.42	%
Construction		727		11.01	%		5.11	%		697		11.08	%		6.18	%
Commercial and industrial loans		475		7.19	%		1.99	%		499		7.93	%		3.14	%
Consumer loans		75		1.15	%		0.96	%		87		1.39	%		1.36	%
Total	$	6,602		100.00	%		100.00	%	$	6,289		100.00	%		100.00	%

The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

	Six Months Ended June 30,
	2022			2021
	(In thousands)
Allowance at beginning of period	$	6,289		$	6,784
Provision (credit) for loan losses		340			(240	)
Charge offs:
Consumer		(30	)		(26	)
Total charge-offs		(30	)		(26	)
Recoveries:
One- to four-family residential		2			3
Commercial and industrial		—			2
Consumer		1			-
Total recoveries		3			5
Net charge-offs		(27	)		(21	)
Allowance at end of period	$	6,602		$	6,523
Total loans outstanding⁽¹⁾	$	664,220		$	547,183
Average loans outstanding	$	610,262		$	593,382
Allowance for loan losses as a percent of total loans outstanding⁽¹⁾		0.99	%		1.19	%
Net loans charged off as a percent of average loans outstanding⁽²⁾		0.01	%		0.01	%
Allowance for loan losses to nonperforming loans		237.40	%		101.89	%

(1)	Total loans exclude loans held for sale but include net deferred loan costs and fees.

(2)	Annualized.

Liquidity and Capital Resources

At June 30, 2022, we had $32.9 million of FHLBB advances outstanding. At that date, we had the ability to borrow up to an additional $100.5 million from the FHLBB, $4.2 million and $2.0 million under available lines of credit from the FHLB Federal Reserve Bank of Boston, respectively, and $12.5 million under an unsecured line of credit with a correspondent bank.

Our most liquid assets are cash and cash equivalents. The level of these assets is dependent on our operating, financing, lending and investing activities during any given period. At June 30, 2022, cash and cash equivalents totaled $14.9 million.

Financing activities consist primarily of activity in deposit accounts and borrowings. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors, and by other factors. Deposits increased $3.2 million, or 0.5%, to $641.4 million at June 30, 2022 from $638.1 million at December 31, 2021. During this period, interest-bearing brokered deposits, which management considers to be a source of wholesale funding and an alternative to FHLBB advances, decreased $2.8 million. FHLBB advances decreased $17.1 million to $32.9 million at June 30, 2022 from $50.0 million at December 31, 2021.

Interest-bearing brokered deposits, FHLBB advances and listing service deposits make up the Bank’s wholesale funding which management targets at a limit of 25% of assets. At June 30, 2022, wholesale funding amounted to $132.7 million, or 17.1% of total assets.

At June 30, 2022, we had $85.7 million in loan commitments outstanding, including $10.9 million related to loans to be sold in the secondary mortgage market and to other financial institutions. In addition to commitments to originate loans, we had $71.6 million in unused lines of credit and letters of credit and $13.1 million in undisbursed construction loans to borrowers. We anticipate that we will have sufficient funds available to meet our current loan origination commitments. Certificates of deposit that are scheduled to mature in less than one year from June 30, 2022 totaled $101.6 million, including $24.3 million of brokered certificates of deposit. Management expects, based on historical experience, that a substantial portion of the maturing non-brokered certificates of deposit will be renewed.

The Bank is subject to various regulatory capital requirements, including a risk-based capital measure. At June 30, 2022, the Bank’s Tier 1 capital to average assets ratio was 11.1%. The Bank exceeded all regulatory capital requirements and was considered “well capitalized” under regulatory guidelines as of June 30, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is not required to disclose quantitative and qualitative information about market risk as it qualifies as a smaller reporting company.

Item 4. Controls and Procedures.

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2022. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended June 30, 2022, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not involved in any material pending litigation.

Item 1A. Risk Factors.

Please read “Risk Factors” in the Company’s Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2021 (the “10-K”) and the Quarterly Report on Form 10-Q for the quarter ended on March 31, 2022 (the “10-Q). There have been no material changes since the 10-K and 10-Q were filed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

None

(b)

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed in the Exhibit Index (following the signatures section of this report) are included in, or incorporated by reference into, this Quarterly Report on Form 10-Q.


31.1		Certification of Chief Executive Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act

31.2		Certification of Chief Financial Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act

32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		Inline XBRL Instance Document - The following materials from Randolph Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 were formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, (ii) Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021, (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021, (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021, (v) Consolidated Statements of Cash Flows for the three and six months ended June 30, 2022 and 2021 and (vi) Notes to Unaudited Consolidated Financial Statements.

104		Cover Page Interactive Data File (formatted in Inline XBRL and included in Exhibit 101).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Randolph Bancorp, Inc.


Date: August 4, 2022	By:	/s/ William M. Parent
		William M. Parent
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: August 4, 2022	By:	/s/ Lauren B. Messmore
		Lauren B. Messmore
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)