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.

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 ~~October 31, 2020,~~April 30, 2021, there were ~~5,523,522~~5,305,881 shares of the registrant’s common stock outstanding.

	September 30,			December 31,			March 31,			December 31,
	2020			2019			2021			2020
Assets
Cash and due from banks	$	5,335		$	4,371		$	3,453		$	4,206
Interest-bearing deposits		43,756			3,881			51,497			9,568
Total cash and cash equivalents		49,091			8,252			54,950			13,774

Certificates of deposit		—			490
Securities available for sale, at fair value		55,551			57,503			54,148			55,366
Loans held for sale, at fair value		87,805			62,792			93,176			119,112
Loans, net of allowance for loan losses of $6,597 in 2020 and $4,280 in 2019		484,548			469,131
Loans, net of allowance for loan losses of $6,563 in 2021 and $6,784 in 2020								491,983			483,644
Federal Home Loan Bank of Boston stock, at cost		3,797			2,417			3,576			3,576
Accrued interest receivable		1,654			1,393			1,501			1,562
Mortgage servicing rights, net		10,944			8,556			14,744			12,377
Premises and equipment, net		5,133			5,748			4,709			4,781
Bank-owned life insurance		8,577			8,441			8,662			8,622
Foreclosed real estate		132			—			132			132
Other assets		15,736			6,281			10,607			18,126

Total assets	$	722,968		$	631,004		$	738,188		$	721,072

Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing	$	93,352		$	61,603		$	118,623		$	96,731
Interest bearing		391,660			344,581			409,410			399,847
Brokered		37,273			90,858			32,225			31,729
Total deposits		522,285			497,042			560,258			528,307

Federal Reserve Bank advances		15,318			—			—			11,431
Federal Home Loan Bank of Boston advances		66,903			44,403			60,024			61,895
Mortgagors' escrow accounts		1,959			2,052			1,924			2,338
Post-employment benefit obligations		2,289			2,464			2,235			2,382
Other liabilities		19,276			6,581			12,888			14,900
Total liabilities		628,030			552,542			637,329			621,253

Commitments and contingencies (Note 15)
Commitments and contingencies (Note 14)
Stockholders' Equity:
Preferred stock, no par value; authorized: 1,000,000 shares; issued: NaN		—			—
Common stock, $.01 par value; authorized: 15,000,000 shares; issued and outstanding: 5,524,390 shares at September 30, 2020 and 5,576,855 shares at December 31, 2019		55			56
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: 5,364,240 shares at March 31, 2021 and 5,495,514 shares at December 31, 2020								53			54
Additional paid-in capital		51,201			51,127			48,613			50,937
Retained earnings		46,415			31,757			55,801			51,689
ESOP-Unearned compensation		(3,803	)		(3,944	)		(3,709	)		(3,756	)
Accumulated other comprehensive income (loss), net of tax		1,070			(534	)
Accumulated other comprehensive income, net of tax								101			895
Total stockholders' equity		94,938			78,462			100,859			99,819
Total liabilities and stockholders' equity	$	722,968		$	631,004		$	738,188		$	721,072

	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2020		2019			2020			2019			2021			2020
Interest and dividend income:
Loans	$	5,337	$	6,144		$	16,680		$	17,790		$	5,508		$	5,620
Securities-taxable		297		366			990			1,108			240			370
Securities-tax exempt		7		8			22			36			6			7
Interest-bearing deposits and certificates of deposit		7		23			68			77			7			56
Total interest and dividend income		5,648		6,541			17,760			19,011			5,761			6,053

Interest expense:
Deposits		730		1,365			3,237			3,746			438			1,425
Borrowings		249		603			696			1,825
Federal Reserve Bank and Federal Home Loan Bank of Boston advances													232			203
Total interest expense		979		1,968			3,933			5,571			670			1,628

Net interest income		4,669		4,573			13,827			13,440			5,091			4,425
Provision (credit) for loan losses		546		—			2,338			(144	)		(213	)		724

Net interest income after provision (credit) for loan losses		4,123		4,573			11,489			13,584			5,304			3,701

Non-interest income:
Customer service fees		330		363			902			1,054			367			306
Gain on loan origination and sale activities, net		18,102		5,782			39,616			13,438			10,993			7,144
Mortgage servicing fees, net		1,180		(181	)		(1,428	)		362			779			(1,254	)
Increase in cash surrender value of life insurance		46		45			136			139			40			45
Other		216		294			598			578			244			210
Total non-interest income		19,874		6,303			39,824			15,571			12,423			6,451

Non-interest expenses:
Salaries and employee benefits		7,911		7,010			24,439			18,514			8,437			8,126
Occupancy and equipment		859		673			2,395			1,972			744			698
Data processing		242		179			663			570			263			196
Professional fees		253		264			888			819			561			405
Marketing		154		275			458			643			170			152
FDIC insurance		41		(55	)		136			91			54			56
Other		1,591		1,372			4,410			3,850			1,722			1,326
Total non-interest expenses		11,051		9,718			33,389			26,459			11,951			10,959

Income before income taxes		12,946		1,158			17,924			2,696
Income (loss) before income taxes													5,776			(807	)

Income tax expense		2,661		14			3,266			97			1,664			11
Net income	$	10,285	$	1,144		$	14,658		$	2,599
Earnings per common share:
Net income (loss)												$	4,112		$	(818	)
Earnings (loss) per common share
Basic	$	2.01	$	0.21		$	2.86		$	0.48		$	0.81		$	(0.16	)
Diluted	$	2.01	$	0.21		$	2.86		$	0.48		$	0.78		$	(0.16	)
Weighted average shares outstanding:
Weighted average shares outstanding
Basic		5,120,367		5,345,786			5,123,705			5,429,339			5,056,165			5,158,294
Diluted		5,120,367		5,345,786			5,126,077			5,429,339			5,254,907			5,158,294

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
Net income	$	10,285		$	1,144		$	14,658		$	2,599
Net income (loss)													$	4,112		$	(818	)

Other comprehensive income:
Other comprehensive income (loss):
Securities available for sale:
Unrealized holding gains (losses)		(108	)		259			1,613			1,653			(917	)		1,564
Reclassification adjustment for net gains realized in income		0			0			0			0
Net unrealized gains (losses)		(108	)		259			1,613			1,653
Related tax effects		—			—			—			—			119			0
Net-of-tax amount		(108	)		259			1,613			1,653			(798	)		1,564

Supplemental retirement plan:
Reclassification adjustments ⁽¹⁾:
Actuarial losses		9			9			27			27			12			9
Prior service credits		(12	)		(21	)		(36	)		(63	)		(8	)		(12	)
		(3	)		(12	)		(9	)		(36	)		4			(3	)
Related tax effects		0			0			0			0			0			0
Net-of-tax amount		(3	)		(12	)		(9	)		(36	)		4			(3	)

Total other comprehensive income (loss)		(111	)		247			1,604			1,617			(794	)		1,561

Comprehensive income	$	10,174		$	1,391		$	16,262		$	4,216		$	3,318		$	743

Three ~~Months Ended Septe~~m~~ber 30,~~months ended March 31, 2021 and 2020 ~~and 2019~~

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 June 30, 2019

5,797,705

$
58

$
54,083

$
29,784

$
(4,038
)

$
(534
)

$
79,353

Net income

—

—

—

1,144

—

—

1,144

Other comprehensive income

—

—

—

—

—

247

247

Stock repurchased

(96,553
)

(1
)

(1,440
)

—

—

—

(1,441
)
Stock-based compensation

—

—

223

—

—

—

223

ESOP shares committed to be released

—

—

18

—

47

—

65

Balance at September 30, 2019

5,701,152

$
57

$
52,884

$
30,928

$
(3,991
)

$
(287
)

$
79,591

Balance at June 30, 2020

5,479,884

$
55

$
51,013

$
36,130

$
(3,850
)

$
1,181

$
84,529

Net income

—

—

—

10,285

—

—

10,285

Other comprehensive income (loss)

—

—

—

—

—

(111
)

(111
)
Stock repurchased

(1,624
)

—

(16
)

—

—

—

(16
)
Restricted stock awards granted

48,130

—

—

—

—

—

—

Restricted stock awards forfeited

(2,000
)

—

—

—

—

—

—

Stock-based compensation

—

—

199

—

—

—

199

ESOP shares committed to be released

—

—

5

—

47

—

52

Balance at September 30, 2020

5,524,390

$
55

$
51,201

$
46,415

$
(3,803
)

$
1,070

$
94,938

															Accumulated																					Accumulated
							Additional					Unearned			Other			Total									Additional						Unearned			Other			Total
	Common Stock						Paid-in			Retained		Compensation			Comprehensive			Stockholders’			Common Stock						Paid-in			Retained			Compensation			Comprehensive			Stockholders’
	Shares			Amount			Capital			Earnings		ESOP			Income (Loss)			Equity			Shares			Amount			Capital			Earnings			ESOP			Income (Loss)			Equity
	(Dollars in thousands)																				(Dollars in thousands)
Balance at December 31, 2018		5,903,793		$	60		$	55,608		$	28,329	$	(4,132	)	$	(1,904	)	$	77,961
Net income		—			—			—			2,599		—			—			2,599
Balance at December 31, 2019																						5,576,855		$	56		$	51,127		$	31,757		$	(3,944	)	$	(534	)	$	78,462

Net loss																						—			—			—			(818	)		—			—			(818	)

Other comprehensive income		—			—			—			—		—			1,617			1,617			—			—			—			—			—			1,561			1,561

Stock repurchased		(233,476	)		(3	)		(3,467	)		—		—			—			(3,470	)		(98,800	)		(1	)		(1,194	)		—			—			—			(1,195	)
Restricted stock awards granted		33,335			—			—			—		—			—			—

Restricted stock awards forfeited		(2,500	)		—			—			—		—			—			—			(7,251	)		—			—			—			—			—			—
Stock-based compensation		—			—			681			—		—			—			681
ESOP shares committed to be released		—			—			62			—		141			—			203
Balance at September 30, 2019		5,701,152		$	57		$	52,884		$	30,928	$	(3,991	)	$	(287	)	$	79,591

Balance at December 31, 2019		5,576,855		$	56		$	51,127		$	31,757	$	(3,944	)	$	(534	)	$	78,462
Net income		—			—			—			14,658		—			—			14,658
Other comprehensive income		—			—			—			—		—			1,604			1,604
Stock repurchased		(101,131	)		(1	)		(1,216	)		—		—			—			(1,217	)
Restricted stock awards granted		63,130			—			—			—		—			—			—
Restricted stock awards forfeited		(9,251	)		—			—			—		—			—			—
Share redemption for tax withholdings
for restricted stock vesting		(5,213	)		—			(60	)		—		—			—			(60	)		(4,460	)		—			(53	)		—			—			—			(53	)

Stock-based compensation		—			—			1,327			—		—			—			1,327			—			—			931			—			—			—			931

ESOP shares committed to be released		—			—			23			—		141			—			164			—			—			21			—			47			—			68
Balance at September 30, 2020		5,524,390		$	55		$	51,201		$	46,415	$	(3,803	)	$	1,070		$	94,938
Balance at March 31, 2020																						5,466,344		$	55		$	50,832		$	30,939		$	(3,897	)	$	1,027		$	78,956

Balance at December 31, 2020																						5,495,514		$	54		$	50,937		$	51,689		$	(3,756	)	$	895		$	99,819

Net income																						—			—			—			4,112			—			—			4,112

Other comprehensive loss																						—			—			—			—			—			(794	)		(794	)

Stock repurchased																						(130,295	)		(1	)		(2,651	)		—			—			—			(2,652	)

Share redemption for tax withholdings
for restricted stock vesting																						(173	)		—			(3	)		—			—			—			(3	)

Stock-based compensation																						—			—			283			—			—			—			283

ESOP shares committed to be released																						(806	)		—			47			—			47			—			94
Balance at March 31, 2021																						5,364,240		$	53		$	48,613		$	55,801		$	(3,709	)	$	101		$	100,859

	Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2021			2020
Cash flows from operating activities:
Net income	$	14,658		$	2,599
Net income (loss)							$	4,112		$	(818	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Provision (credit) for loan losses		2,338			(144	)		(213	)		724
Loans originated for sale		(1,144,058	)		(616,301	)		(487,808	)		(219,471	)
Net gain on sales of mortgage loans		(43,539	)		(13,590	)		(10,993	)		(5,825	)
Proceeds from sales of mortgage loans		1,158,237			579,990			515,419			229,579
Net amortization of securities		218			92			95			54
Net change in deferred loan costs and fees, and purchase premiums		324			(43	)		339			3
Depreciation and amortization		1,028			643			182			218
Stock-based compensation		1,327			681			283			931
ESOP expense		164			203			94			68
Increase in cash surrender value of life insurance		(136	)		(139	)		(40	)		(45	)
Net (increase) decrease in mortgage servicing rights		(2,388	)		(673	)		(2,366	)		1,068
Other, net		545			(196	)		9,293			(2,908	)
Net cash provided by (used in) operating activities		(11,282	)		(46,878	)
Net cash provided by operating activities								28,397			3,578

Cash flows from investing activities:
Redemptions of certificates of deposit		490			1,715
Securities available for sale:
Purchases		(11,543	)		—			(3,913	)		—
Calls/maturities		4,500			500			—			1,000
Principal payments on mortgage-backed securities		10,390			4,430			4,119			2,548
Net loan originations (repayments)		(10,155	)		891
Loan originations, net of principal repayments								(2,900	)		(6,435	)
Loan purchases		(1,519	)		(2,684	)		—			(1,519	)
Proceeds from residential portfolio sales		—			23,689
Redemptions (purchases) of Federal Home Loan Bank of Boston stock		(1,380	)		1,715
Purchases of Federal Home Loan Bank of Boston stock								—			(456	)
Purchases of premises and equipment		(503	)		(259	)		(110	)		(137	)
Loss on disposal of assets		90			—
Proceeds from sale of foreclosed real estate		—			61
Net cash (used in) provided by investing activities		(9,630	)		30,058
Net cash used in investing activities								(2,804	)		(4,999	)

Cash flows from financing activities:
Net increase in non-brokered deposits		78,828			18,019			31,455			12,884
Net increase (decrease) in brokered deposits		(53,585	)		35,681			496			(4,907	)
Net increase in short-term Federal Reserve Bank borrowings		15,318			—
Net increase (decrease) in short-term Federal Home Loan Bank of Boston borrowings		(14,822	)		(49,665	)
Net decrease in Federal Reserve Bank borrowings								(11,431	)		—
Net decrease in short-term Federal Home Loan Bank of Boston borrowings								—			(19,822	)
Issuance of long-term Federal Home Loan Bank of Boston advances		40,000			20,000			—			27,432
Repayments of long-term Federal Home Loan Bank of Boston advances		(2,678	)		(1,703	)		(1,871	)		—
Net increase (decrease) in mortgagors' escrow accounts		(93	)		70			(414	)		22
Repurchases of common stock		(1,217	)		(3,470	)		(2,652	)		(1,195	)
Net cash provided by financing activities		61,751			18,932			15,583			14,414

Net change in cash and cash equivalents		40,839			2,112			41,176			12,993

Cash and cash equivalents at beginning of period		8,252			7,118			13,774			8,252

Cash and cash equivalents at end of period	$	49,091		$	9,230		$	54,950		$	21,245
Supplemental cash flow information:
Interest paid on deposits and borrowed funds	$	4,225		$	5,328		$	794		$	1,728
Income taxes paid	$	1,025		$	15		$	655		$	225
Non-cash item:
Transfer of held for sale loans to portfolio	$	6,537		$	6,553		$	5,565		$	—
Transfer of portfolio loan to held for sale	$	—		$	28,608
Donation of land, net	$	—		$	73
Transfer of portfolio loan to foreclosed real estate	$	132		$	—		$	—		$	132
Initial recognition of operating lease at commencement							$	1,310		$	—

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 nine~~ months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2020~~2021 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, ~~2019,~~2020, as filed with the SEC.

In February 2016, FASB issued ASU 2016-02, Leases. This ASU requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to current accounting requirements. In May 2020, FASB amended the effective date ofon the new guidance on leases. Previously, the amendments and related new guidance on leases were effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021 for private companies. The new guidance on leases is now effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is still ~~permitted. Due~~permitted, and the Company has adopted the standard during this interim period. As of March 31, 2021, the Company held right-of-use assets related to operating leases of $1.1 million, and recognized the right-of-use assets in the Company’s ~~Emerging Growth Company status expiring on December 31, 2021, this pronouncement will be effective~~Consolidated Balance Sheet in other assets. The corresponding operating lease liability is recognized in the Company’s Consolidated Balance Sheet in other liabilities for the fiscal period ending December 31, 2021 and for interim reporting periods thereafter. The Company’s assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the time of adoption. The Company is currently assessing the impact of the adoption of this ASU on its consolidated balance sheet.$1.1 million.

In June 2016, the 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 31, 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.

On March 13, 2020, the United States Government declared a national emergency in response to the coronavirus (“COVID-19”) outbreak. ~~This outbreak~~The COVID-19 pandemic has caused, among other things, widespread shutdowns of businesses and volatile markets and has severely disrupted normal economic activity in the region the Company serves as well as across the nation.

The following summarizes the more significant financial repercussions of this national emergency for the Company.

The Company ~~established a $558,000~~increased the allowance for loan losses during ~~the first nine months of~~ 2020 directly related to its estimate, based on available information, of probable incurred losses resulting from the impact of the COVID-19 pandemic. During the first quarter of 2021, the Company decreased part of the allowance for loan losses, based on available information, due to improving conditions relating to the COVID-19 pandemic. As the Company acquires additional information on overall economic prospects together with further assessments of the impact on individual

borrowers, the loss estimated will be revised as needed, and these revisions could be material. The Company’s approach to estimating the impact of this pandemic on credit quality is presented in Note 6 – “Loans and Allowance for Loan Losses.”

The Company implemented its disaster response plans when the national emergency was declared and a stay at home order was issued in the Commonwealth of Massachusetts. To operate in this mode the Company incurred expenses for, among other things, compensation for front-line and quarantined employees, buying equipment for a remote workforce, cleaning of office and branch buildings, and communications with customers regarding the status of the Company’s operations. These plan costs ~~amounted to $229,000 through the~~were immaterial for first ~~nine months~~quarter of ~~2020.~~2021 and 2020, respectively.

In response to the pandemic’s effect on our customers, the Company implemented a series of measures through the date of this report, including participation in the Small Business Administration’s (“SBA”) Paycheck Protection Program (the “PPP”) and granting payment deferrals for residential mortgage, home equity and certain commercial borrowers who were current in their payments. AsThe table below summarizes the lending activity and outstanding balances of ~~September 30, 2020,~~PPP loans and the ~~Company had a balance of $15.4 million loans as part of the PPP. These loans are included with commercial and industrial loans, are pledged~~associated pledges to the Federal ~~Reserve’s~~Reserve Bank’s (“FRB”) Paycheck Protection Program Liquidity Facility ~~and have no direct effect on the Company’s capital ratios.~~(“PPPLF”):

The Company has granted short-term loan payment deferrals for residential mortgage, home equity and certain commercial borrowers who were current on their payment and experiencing a hardship due to the COVID-19 pandemic. In accordance with interagency guidance issued in March 2020 and/or the CARES Act enacted in March 2020 and as modified by the Consolidated Appropriations Act, these short-term deferrals are not considered troubled debt restructurings, provided the loan modification is made between March 1, 2020 and as modified by the Consolidated Appropriations Act, the earlier of January 1, 2022 or 60 days after the end of the coronavirus emergency declaration and the applicable loan was ~~current~~not more than 30 days past due as of ~~the date the deferral program was implemented, or~~ December 31, ~~2019 for deferrals made under the CARES Act.~~2019.

The Company has agreed to loan payment deferrals on commercial loans totaling ~~$37.0~~$38.2 million, residential real estate loans in portfolio totaling ~~$17.9~~$20.4 million and residential real estate loans serviced for others totaling ~~$66.8~~$66.0 million as of ~~September 30, 2020.~~March 31, 2021. The commercial loan payment deferrals are concentrated in the hotel and hospitality, restaurant and retail service industries. The qualifying residential real estate and commercial loan borrowers were required to contact the Company to receive the loan ~~payment~~ deferrals.

The table below summarizes the status of the bank’s loan deferral ~~activity at September 30, 2020:~~activity:

	Deferrals		Suspended/		Resumed		Full				Status of Deferrals Granted
	Granted		Reduced Payment		Payment		Payoff				Currently Outstanding				Paid Off
	(In thousands)								Deferrals		Suspended/		Resumed		Full
September 30, 2020
									Granted ⁽¹⁾		Reduced Payment ⁽²⁾		Payment ⁽²⁾		Payoff ⁽³⁾
									(In thousands)
March 31, 2021
Real estate loans:
Residential:
One-to-four family	$	14,902	$	5,270	$	8,825	$	807
One- to four-family									$	16,793	$	4,316	$	9,107	$	3,370
Home equity loans and lines of credit		2,984		1,314		1,670		-		3,168		423		1,479		1,266
Construction										350		-		350		-
Commercial		33,286		19,287		13,999		-		34,616		6,241		24,628		3,747
Total real estate loans		51,172		25,871		24,494		807		54,927		10,980		35,564		8,383

Commercial and industrial		3,710		33		1,830		1,847		3,579		-		1,569		2,010
Consumer		20		-		20		-		68		38		30		-
Total	$	54,902	$	25,904	$	26,344	$	2,654	$	58,574	$	11,018	$	37,163	$	10,393

December 31, 2020
Real estate loans:
Residential:
One- to four-family									$	15,514	$	12,974	$	2,109	$	431
Home equity loans and lines of credit										3,179		626		1,287		1,266
Construction										350		350		-		-
Commercial										34,754		6,544		25,406		2,804
Total real estate loans										53,797		20,494		28,802		4,501

Commercial and industrial										3,645		-		1,635		2,010
Consumer										68		68		-		-
Total									$	57,510	$	20,562	$	30,437	$	6,511

The payment deferral programs were applied prospectively from the respective dates of the events and did not change the delinquency status of the loans as of such dates. Accordingly, if all payments were current at the date of the event, the loan will not be reported as past due during the deferral period. Furthermore, for loans subject to the deferral programs on which payments were past due prior to the event, the delinquency status of such loans was frozen to the status that existed at the date of the event until the end of the deferral period.

Accordingly, the table below summarizes the risk rating and for all loans that were granted deferral and are outstanding, and any loans that were listed in nonaccrual status at ~~September 30, 2020:~~the dates indicated:

	Pass Rated /		Special		Sub-		Non-		Currently Outstanding Deferred Loans by Risk Rating
	Not Rated		Mention		standard ⁽¹⁾		accrual ⁽¹⁾ ⁽²⁾		Pass Rated /		Special		Sub-		Non-
	(In thousands)								Not Rated ⁽¹⁾		Mention⁽¹⁾		standard ⁽¹⁾		accrual ⁽²⁾
September 30, 2020
									(In thousands)
March 31, 2021
Real estate loans:
Residential:
One-to-four family	$	13,071	$	778	$	246	$	196
One- to four-family									$	13,228	$	195	$	-	$	195
Home equity loans and lines of credit		2,984		-		-		-		1,902		-		-		-
Construction										350		-		-		-
Commercial		19,451		5,378		8,457		6,986		17,985		7,649		5,235		5,235
Total real estate loans		35,506		6,156		8,703		7,182		33,465		7,844		5,235		5,430

Commercial and industrial		1,378		452		33		33		1,159		410		-		-
Consumer		20		-		-		-		68		-		-		-
Total	$	36,904	$	6,608	$	8,736	$	7,215	$	34,692	$	8,254	$	5,235	$	5,430

December 31, 2020
Real estate loans:
Residential:
One- to four-family									$	14,887	$	196	$	-	$	196
Home equity loans and lines of credit										1,913		-		-		-
Construction										350		-		-		-
Commercial										19,020		8,748		4,182		4,182
Total real estate loans										36,170		8,944		4,182		4,378

Commercial and industrial										1,204		431		-		-
Consumer										68		-		-		-
Total									$	37,442	$	9,375	$	4,182	$	4,378

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

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

	September 30,			December 31,			March 31,			December 31,
	2020			2019			2021			2020
	(In thousands)						(In thousands)
Securities available for sale:
Net unrealized gain	$	1,780		$	167		$	795		$	1,713
Tax effect		(313	)		(313	)		(193	)		(313	)
Net-of-tax amount		1,467			(146	)		602			1,400

Supplemental retirement plan
Unrecognized net actuarial loss		(625	)		(652	)		(700	)		(712	)
Unrecognized net prior service credit		275			311			246			254
		(350	)		(341	)		(454	)		(458	)
Tax effect		(47	)		(47	)		(47	)		(47	)
Net-of-tax amount		(397	)		(388	)		(501	)		(505	)

Accumulated other comprehensive income (loss)	$	1,070		$	(534	)	$	101		$	895

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

			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
	(In thousands)									(In thousands)
September 30, 2020
March 31, 2021

Debt securities:
U.S. Treasury										$	3,913	$	—	$	(90	)	$	3,823
U.S. Government-sponsored enterprises											1,993		—		(2	)		1,991
Corporate		4,319		24		(7	)		4,336		4,286		15		(5	)		4,296
Municipal		744		6		—			750		595		3		—			598
Residential mortgage-backed securities:
U.S. Government-sponsored enterprises		34,190		974		—			35,164		29,023		623		(220	)		29,426
Commercial mortgage-backed securities:
U.S. Government-sponsored enterprises		8,887		551		—			9,438		8,825		361		—			9,186
U.S. Government-guaranteed		1,023		24		—			1,047		559		9		—			568
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises		1,049		58		—			1,107		944		41		—			985
U.S. Government-guaranteed		3,559		150		—			3,709		3,215		60		—			3,275
Total securities available for sale	$	53,771	$	1,787	$	(7	)	$	55,551	$	53,353	$	1,112	$	(317	)	$	54,148

December 31, 2019
December 31, 2020

Debt securities:
U.S. Government-sponsored enterprises	$	4,000	$	13	$	(1	)	$	4,012	$	1,993	$	3	$	—		$	1,996
Corporate		1,513		15		—			1,528		4,300		56		—			4,356
Municipal		744		9		—			753		595		5		—			600
Residential mortgage-backed securities:
U.S. Government-sponsored enterprises		35,238		458		(286	)		35,410		32,538		919		—			33,457
Commercial mortgage-backed securities:
U.S. Government-sponsored enterprises		8,977		—		(53	)		8,924		8,857		525		—			9,382
U.S. Government-guaranteed		1,363		7		—			1,370		977		24		—			1,001
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises		1,395		23		—			1,418		996		52		—			1,048
U.S. Government-guaranteed		4,106		10		(28	)		4,088		3,398		128		—			3,526
Total securities available for sale	$	57,336	$	535	$	(368	)	$	57,503	$	53,654	$	1,712	$	—		$	55,366

There were 0 sales of securities during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

The amortized cost and fair value of debt securities by contractual maturity at ~~September 30, 2020~~March 31, 2021 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		Amortized		Fair
	Cost		Value		Cost		Value
	(In thousands)				(In thousands)
Within 1 year	$	505	$	510	$	1,001	$	1,011
After 1 year through 5 years		3,486		3,511		4,804		4,811
After 5 years through 10 years		1,072		1,065		4,982		4,886
		5,063		5,086		10,787		10,708

Mortgage-backed securities		48,708		50,465		42,566		43,440

	$	53,771	$	55,551	$	53,353	$	54,148

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

September 30, 2020

(In thousands)

Corporate

$
(7
)

$
1,065

$
—

$
—

December 31, 2019

U.S. Government-sponsored enterprises

$
—

$
—

$
(1
)

$
1,999

Residential mortgage-backed securities:

U.S. Government-sponsored enterprises

(123
)

11,256

(163
)

9,632

Commercial mortgage-backed securities:

U.S. Government-sponsored enterprises

(53
)

8,924

—

—

Collateralized mortgage obligations:

U.S. Government-guaranteed

(15
)

1,891

(13
)

883

Total

$
(191
)

$
22,071

$
(177
)

$
12,514

	Less Than Twelve Months					Over Twelve Months
	Gross					Gross
	Unrealized			Fair		Unrealized		Fair
	Losses			Value		Losses		Value
March 31, 2021	(In thousands)
Debt securities:
U.S. Treasury	$	(90	)	$	3,823	$	—	$	—
U.S. Government-sponsored enterprises		(2	)		1,992		—		—
Corporate		(5	)		1,801		—		—
Residential mortgage-backed securities
U.S. Government-sponsored enterprises		(220	)		10,356		—		—
Total debt securities	$	(317	)	$	17,972	$	—	$	—

There were no securities in a loss position at December 31, 2020. At ~~September 30, 2020, 1~~March 31, 2021, 11 debt ~~security~~securities had unrealized losses with aggregate depreciation of ~~0.65%~~1.73% from the Company’s amortized cost basis. The unrealized losses at ~~September 30, 2020~~March 31, 2021 were due to ~~securities price fluctuations~~interest rate increases since the ~~time~~date on which 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 ~~September 30, 2020.~~March 31, 2021.

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
	(In thousands)						(In thousands)
Real estate loans:
Residential:
One-to-four family	$	235,955		$	244,711
One- to four-family							$	239,190		$	235,648
Home equity loans and lines of credit		48,097			41,669			49,073			48,166
Commercial		141,862			125,405			146,930			143,893
Construction		32,064			35,485			29,975			31,050
		457,978			447,270			465,168			458,757

Commercial and industrial		20,388			9,093			23,869			20,259
Consumer		11,696			15,641			8,724			10,289

Total loans		490,062			472,004			497,761			489,305
Allowance for loan losses		(6,597	)		(4,280	)		(6,563	)		(6,784	)
Net deferred loan costs and fees, and purchase premiums		1,083			1,407			785			1,123

	$	484,548		$	469,131		$	491,983		$	483,644

The following tables present activity in the allowance for loan losses by loan category for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and allocation of the allowance to each category as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

	Residential 1-4 Family			Second Mortgages and HELOC			Commercial Real Estate			Construction			Commercial and Industrial			Consumer			Total			Residential 1-4 Family			Second Mortgages and HELOC			Commercial Real Estate			Construction			Commercial and Industrial			Consumer			Total
	(In thousands)																					(In thousands)
Three Months Ended September 30, 2020
Three Months Ended March 31, 2021

Allowance at June 30, 2020	$	1,553		$	378		$	2,766		$	897		$	319		$	146		$	6,059
Allowance at December 31, 2020																						$	1,646		$	442		$	3,402		$	751		$	416		$	127		$	6,784
Provision (credit) for loan losses		30			77			589			(90	)		(75	)		15			546			(126	)		(17	)		(12	)		(31	)		(15	)		(12	)		(213	)
Loans charged-off		—			(3	)		—			—			—			(8	)		(11	)		—			—			—			—			—			(10	)		(10	)
Recoveries		—			—			—			—			2			1			3			2			—			—			—			—			—			2

Balance at September 30, 2020	$	1,583		$	452		$	3,355		$	807		$	246		$	154		$	6,597
Balance at March 31, 2021																						$	1,522		$	425		$	3,390		$	720		$	401		$	105		$	6,563

Three Months Ended September 30, 2019

Allowance at June 30, 2019	$	1,018		$	297		$	1,625		$	755		$	264		$	195		$	4,154
Provision (credit) for loan losses		43			(6	)		22			(30	)		6			(35	)		—
Loans charged-off		—			—			—			—			—			(3	)		(3	)
Recoveries		2			—			—			—			—			-			2

Balance at September 30, 2019	$	1,063		$	291		$	1,647		$	725		$	270		$	157		$	4,153

Nine Months Ended September 30, 2020
Three Months Ended March 31, 2020

Allowance at December 31, 2019	$	1,096		$	289		$	1,840		$	692		$	235		$	128		$	4,280		$	1,096		$	289		$	1,840		$	692		$	235		$	128		$	4,280
Provision for loan losses		480			166			1,515			115			9			53			2,338			123			54			401			80			45			21			724
Loans charged-off		—			(3	)		—			—			—			(37	)		(40	)		—			—			—			—			—			(16	)		(16	)
Recoveries		7			—			—			—			2			10			19			4			—			—			—			—			4			8

Balance at September 30, 2020	$	1,583		$	452		$	3,355		$	807		$	246		$	154		$	6,597

Nine Months Ended September 30, 2019

Allowance at December 31, 2018	$	1,092		$	292		$	1,648		$	765		$	265		$	375		$	4,437
Provision (credit) for loan losses		(52	)		(1	)		(1	)		(40	)		5			(55	)		(144	)
Loans charged-off		—			—			—			—			—			(171	)		(171	)
Recoveries		23			—			—			—			—			8			31

Balance at September 30, 2019	$	1,063		$	291		$	1,647		$	725		$	270		$	157		$	4,153
Balance at March 31, 2020																						$	1,223		$	343		$	2,241		$	772		$	280		$	137		$	4,996

Additional information pertaining to the allowance for loan losses at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 is as follows:

	Residential 1-4 Family		Second Mortgages and HELOC		Commercial Real Estate		Construction		Commercial and Industrial		Consumer		Total		Residential 1-4 Family		Second Mortgages and HELOC		Commercial Real Estate		Construction		Commercial and Industrial		Consumer		Total
September 30, 2020	(In thousands)
March 31, 2021															(In thousands)
Allowance for impaired loans	$	79	$	—	$	—	$	—	$	—	$	—	$	79	$	132	$	—	$	17	$	—	$	—	$	—	$	149
Allowance for non-impaired loans		1,504		452		3,355		807		246		154		6,518		1,390		425		3,373		720		401		105		6,414

Total allowance for loan losses	$	1,583	$	452	$	3,355	$	807	$	246	$	154	$	6,597	$	1,522	$	425	$	3,390	$	720	$	401	$	105	$	6,563

Impaired loans	$	4,581	$	607	$	7,028	$	—	$	33	$	—	$	12,249	$	3,845	$	423	$	5,779	$	—	$	—	$	—	$	10,047
Non-impaired loans		231,374		47,490		134,834		32,064		20,355		11,696		477,813		235,345		48,650		141,151		29,975		23,869		8,724		487,714

Total loans	$	235,955	$	48,097	$	141,862	$	32,064	$	20,388	$	11,696	$	490,062	$	239,190	$	49,073	$	146,930	$	29,975	$	23,869	$	8,724	$	497,761

December 31, 2019
December 31, 2020

Allowance for impaired loans	$	116	$	—	$	—	$	—	$	—	$	—	$	116	$	133	$	—	$	—	$	—	$	—	$	—	$	133
Allowance for non-impaired loans		980		289		1,840		692		235		128		4,164		1,513		442		3,402		751		416		127		6,651

Total allowance for loan losses	$	1,096	$	289	$	1,840	$	692	$	235	$	128	$	4,280	$	1,646	$	442	$	3,402	$	751	$	416	$	127	$	6,784

Impaired loans	$	5,640	$	407	$	46	$	—	$	—	$	—	$	6,093	$	3,575	$	623	$	4,751	$	—	$	—	$	—	$	8,949
Non-impaired loans		239,071		41,262		125,359		35,485		9,093		15,641		465,911		232,073		47,543		139,142		31,050		20,259		10,289		480,356

Total loans	$	244,711	$	41,669	$	125,405	$	35,485	$	9,093	$	15,641	$	472,004	$	235,648	$	48,166	$	143,893	$	31,050	$	20,259	$	10,289	$	489,305

As described in Note 3 – “Global Pandemic Affecting Randolph Bancorp, Inc. ~~in 2020,~~” the COVID-19 pandemic has affected the Company’s operations starting in the first ~~nine months~~quarter of 2020. This pandemic has severely disrupted normal economic activity in the communities the Company serves along with the rest of the nation. It is impossible to know the full extent of the impact of the COVID-19 pandemic and the continued effects it may have on the Company’s operations.

Management has determined a separate qualitative element of the allowance to represent the estimate of probable incurred losses associated with the impact of the pandemic events on the Company’s loan portfolios. This estimate is judgmental and subject to changes as conditions evolve. This qualitative element of the allowance was determined based on the impact the pandemic has had on ~~current~~ employment levels, economic activity in the Company’s geographic regions, and the time it could take for the affected regions to return to a more normalized operating environment.

The following is a summary of past due and non-accrual loans at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Non-accrual Loans		30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or More Past Due		Total Past Due		Non-accrual Loans
	(In thousands)										(In thousands)
September 30, 2020
March 31, 2021
Residential one- to four-family											$	728	$	—	$	668	$	1,396	$	2,158
Home equity loans and lines of credit												—		—		—		—		383
Commercial real estate												—		—		—		—		5,768
Construction												—		—		—		—		—
Commercial and industrial												—		—		—		—		—
Consumer												10		4		—		14		—
Total											$	738	$	4	$	668	$	1,410	$	8,309

December 31, 2020
Residential one-to-four family	$	267	$	246	$	582	$	1,095	$	2,215	$	-	$	—	$	—	$	—	$	1,876
Home equity loans and lines of credit		—		66		—		66		582		95		—		317		412		584
Commercial real estate		—		—		—		—		6,986		—		—		26		26		4,713
Construction		—		—		—		—		—		—		—		—		—		—
Commercial and industrial		—		—		—		—		33		—		—		—		—		—
Consumer		—		—		—		—		—		38		64		—		102		—

Total	$	267	$	312	$	582	$	1,161	$	9,816	$	133	$	64	$	343	$	540	$	7,173

December 31, 2019
Residential one-to-four family	$	215	$	587	$	—	$	802	$	2,922
Home equity loans and lines of credit		188		244		—		432		336
Commercial real estate		—		—		—		—		—
Construction		—		—		—		—		—
Commercial and industrial		—		—		—		—		—
Consumer		76		11		—		87		—

Total	$	479	$	842	$	—	$	1,321	$	3,258

The following is a summary of impaired loans at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019:~~2020:

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)						(In thousands)
September 30, 2020
March 31, 2021
Impaired loans without a valuation allowance:
Residential one-to-four family	$	3,636	$	3,660
Home equity loans and lines of credit		607		607
Commercial real estate		7,028		7,028
Commercial and industrial		33		33
Total		11,304		11,328

Impaired loans with a valuation allowance:
Residential one-to-four family		945		959	$	79
		945		959		79

Total impaired loans	$	12,249	$	12,287	$	79

December 31, 2019
Impaired loans without a valuation allowance:
Residential one-to-four family	$	3,322	$	3,322
Residential one- to four-family							$	2,276	$	2,296
Home equity loans and lines of credit		407		407				425		423
Commercial real estate		46		46				5,768		5,762
Total		3,775		3,775				8,469		8,481

Impaired loans with a valuation allowance:
Residential one-to-four family		2,318		2,318	$	116
Residential one- to four-family								1,536		1,549	$	132
Commercial real estate								17		17	$	17
								1,553		1,566		149
Total impaired loans							$	10,022	$	10,047	$	149

December 31, 2020
Impaired loans without a valuation allowance:
Residential one- to four-family							$	2,160	$	2,181
Home equity loans and lines of credit								626		623
Commercial real estate								4,753		4,751
Total		2,318		2,318		116		7,539		7,555

Impaired loans with a valuation allowance:
Residential one- to four-family								1,382		1,394	$	133
Total								1,382		1,394		133
Total impaired loans	$	6,093	$	6,093	$	116	$	8,921	$	8,949	$	133

	Average		Interest		Cash Basis		Average		Interest		Cash Basis
	Recorded		Income		Interest		Recorded		Income		Interest
	Investment		Recognized		Recognized		Investment		Recognized		Recognized
	(In thousands)						(In thousands)
Three Months Ended September 30, 2020
Three Months Ended March 31, 2021

Residential one-to-four family	$	4,630	$	144	$	61
Residential one- to four-family							$	3,755	$	18	$	39
Home equity loans and lines of credit		607		25		—		424		—		—
Commercial real estate		7,028		—		—		5,780		—		—
Consumer		33		—		—
Total	$	12,298	$	169	$	61	$	9,959	$	18	$	39

Three Months Ended September 30, 2019
Residential one-to-four family	$	5,497	$	49	$	12
Three Months Ended March 31, 2020
Residential one- to four-family							$	5,336	$	58	$	29
Home equity loans and lines of credit		369		1		—		405		1		—
Commercial real estate		84		2		—
Consumer		33		—		—
Total	$	5,983	$	52	$	12	$	5,741	$	59	$	29
Nine Months Ended September 30, 2020

Residential one-to-four family	$	4,563	$	277	$	131
Home equity loans and lines of credit		559		27		—
Commercial real estate		4,713		—		—
Consumer		15		—		—
Total	$	9,850	$	304	$	131

Nine Months Ended September 30, 2019
Residential one-to-four family	$	5,586	$	175	$	63
Home equity loans and lines of credit		414		10		10
Commercial real estate		153		4		—
Consumer		43		1		—
Total	$	6,196	$	190	$	73

NaN additional funds are committed to be advanced in connection with impaired loans.

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.

~~At September 30, 2020, the Company had 16 residential real estate loans, 1 consumer loan and 1 commercial real estate loan aggregating $2,780,000,~~ $49~~,000 and $42,000, respectively, which were subject to troubled debt restructuring agreements.~~

~~At September 30, 2019, the Company had 19 residential real estate loans and 1 commercial real estate loan aggregating~~ $~~3,679,000 and $48,000, respectively, which were subject to troubled debt restructuring agreements.~~

~~As of September 30, 2020 and 2019,~~$2,875,000 and $3,727,000, respectively, in troubled debt restructurings were performing in accordance with the terms of the modified loan agreements. Included in such amounts are $1,437,000 and $1,563,000, respectively, that are being accounted for as non-accrual loans as they have not yet had six consecutive months of performance.

For the ~~nine~~three months ended ~~Septe~~m~~ber 30,~~March 31, 2021 and 2020, respectively, the Company did 0t enter into any loan modifications meeting the criteria of a troubled debt restructuring. ~~For the n~~in~~e months ended~~ Sep~~tember 30, 2019, the Company entered into 5 loan modifications meeting the criteria of a troubled debt restructuring in which a loan term concession was granted to a borrower.~~

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. Du~~ring~~During theth~~ree~~and~~nine mo~~nths three months ended~~September~~30, March 31, 2021 and 2020, ~~and~~ 2019, th~~ere~~ there were 0 material changes changes to the ~~all~~owance for loan lo~~sses~~ as the allowance for loan losses as a result of lo~~an m~~o~~dificati~~onsresult of loan modifications made wh~~ich~~ w~~ere~~c~~ons~~ideredwhich were considered a troub~~led d~~e~~bt rest~~ru~~cturing.~~

~~NaN additional funds are committed to be advanced in connection with trouble~~troubled debt ~~restructurings.~~restructuring.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ there were 0 troubled debt restructurings that defaulted (over 30 days past due) within twelve months of the restructure date.

At ~~September 30, 2020,~~March 31, 2021 there were ~~two~~2 residential real estate troubled debt restructurings that were granted payment deferral plans. One loan, totaling ~~$300,000,~~$297,000, was performing in accordance with its modified terms, ~~and is currently in repayment,~~ and one loan, for $196,000 was not performing in accordance with its modified terms and is currently still in payment ~~suspension.~~suspense.

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:

	September 30, 2020						December 31, 2019						Residential 1-4 Family		Second Mortgages and HELOC		Commercial Real Estate		Construction		Commercial and Industrial		Consumer
	Commercial Real Estate		Construction		Commercial and Industrial		Commercial Real Estate		Construction		Commercial and Industrial		(In thousands)
	(In thousands)
March 31, 2021
Not Rated													$	237,032	$	48,690	$	—	$	—	$	—	$	8,724
Loans rated 1 - 3B (Pass rated)	$	127,298	$	32,064	$	19,903	$	121,703	$	35,485	$	8,134		—		—		133,014		29,975		23,459		—
Loans rated 4		6,107		—		452		3,702		—		206		1,094		383		8,154		—		410		—
Loans rated 5		8,457		—		33		—		—		753		1,064		—		5,762		—		—		—
													$	239,190	$	49,073	$	146,930	$	29,975	$	23,869	$	8,724
	$	141,862	$	32,064	$	20,388	$	125,405	$	35,485	$	9,093
December 31, 2020
Not Rated													$	233,773	$	47,582	$	—	$	—	$	—	$	10,289
Loans rated 1 - 3B (Pass rated)														—		—		129,925		31,050		19,828		—
Loans rated 4														803		584		9,257		—		431		—
Loans rated 5														1,072		—		4,711		—		—		—
													$	235,648	$	48,166	$	143,893	$	31,050	$	20,259	$	10,289

Residential mortgages, home equity loans and lines of credit, and consumer loans are monitored for credit quality based primarily on their payment status. When one of these loans becomes more than 90 days delinquent, it is assigned an internal loan rating. At September 30, 2020,$1,329,000 and $198,000 in residential mortgages and home equity loans were rated as substandard, respectively, and $1,715,000 and $383,000 in residential mortgage and home equity loans were rated as substandard, respectively. At December 31, 2019, $~~2,925,000~~in~~resi~~den~~tialmort~~gages~~were ra~~tedassub~~standard,~~and $~~1,293,000~~in~~resi~~den~~tialmort~~gages~~and$336,000~~in homeequ~~ity loans~~we~~re rated asspecial m~~en~~tion, respectively.~~

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 ~~$1.59~~$1.94 billion and ~~$1.05~~$1.76 billion at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. In connection with these serviced loans, we maintained $17.0 million and $14.2 million of custodial escrow balances at March 31, 2021 and December 31, 2020, respectively.

The following table summarizes the activity relating to mortgage servicing rights (“MSRs”) for the three ~~and nine~~ months ended~~September 30,~~ March 31, 2021 and 2020 ~~and 2019:~~(in thousands):

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			March 31, 2021			March 31, 2020
	(In thousands)
Mortgage servicing rights:
Balance at beginning of period	$	12,090		$	8,322		$	9,484		$	7,794
Balance at beginning of year													$	15,372		$	9,484
Additions through originations		2,570			1,115			6,131			2,215			2,786			877
Amortization		(807	)		(334	)		(1,762	)		(906	)		(840	)		(383	)
Balance at end of period	$	13,853		$	9,103		$	13,853		$	9,103		$	17,318		$	9,978

Valuation allowance:
Balance at beginning of period	$	3,996		$	121		$	928		$	8
Provision (release)		(1,087	)		523			1,981			636
Balance at beginning of year													$	2,995		$	928
Provision (recovery)														(421	)		1,562
Balance at end of period	$	2,909		$	644		$	2,909		$	644		$	2,574		$	2,490
Amortized cost, net	$	10,944		$	8,459		$	10,944		$	8,459		$	14,744		$	7,488
Fair value	$	11,014		$	8,549		$	11,014		$	8,549		$	15,362		$	7,515

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 the Company decreased the valuation allowance for its MSRs by $421,000. During the three months ended March 31, 2020, ~~and 2019,~~ the Company increased the valuation allowance for its MSRs by ~~$1,981,000 and $636,000, respectively.~~ $1,562,000. 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.

~~Income tax expense for the three months ended September 30, 2020~~re~~prese~~ntsfed~~eral and state tax expense of $2,661,000.~~Income taxexpen~~se f~~ortheth~~ree~~month~~s e~~ndedS~~eptem~~ber30, ~~201~~9rep~~res~~e~~nts$14,000~~ of~~stateincometax~~ exp~~ense. The f~~ede~~ral~~and~~state tax expense is based on the projected tax rates for the year.~~

Incometaxexpensefo~~r the nine months ended S~~eptemb~~er 30, 2020 r~~epre~~sents~~fede~~raland state tax expense of $3,266,000.~~Income~~tax~~ expensefortheninemonthsendedSeptember30,~~201~~9represents$~~97,000~~of~~state~~in~~cometax~~expen~~se. The~~fede~~ral and state~~ta~~x exp~~e~~nseis b~~ased o~~n t~~he p~~roj~~ected~~tax rates~~forthey~~ear. The Company currently has a deferred tax liability position of $2,273,000 at September 30, 2020. There was 0 deferred tax liability position at December 31, 2019.~~

From 2014 to June 30, 2020, the Company has maintained a valuation allowance on its net deferred tax asset based on a determination that it was more likely than not that such assets would not be realized. This determination was based on the Company’s net operating loss carryforward position, its current period operating results exclusive of non-recurring items and its expectations for the upcoming year. As a result, the 100% valuation allowance for deferred tax assets relating to net operating loss carryforwards was maintained. Duetothe~~level~~ofincome~~earned~~duringthe~~firstnine~~monthsof 202~~0 and the Company being in a net deferred tax liability position at September 30, 2020~~,thefullamo~~unt~~ of~~the Company’s net operating loss carryforwards was absorbed and the previously held valuation allowance was reversed~~.

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 ~~$418,903,000~~$239,509,000 and ~~$89,925,000~~$396,551,000 at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The fair value of such commitments at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was ~~$11,967,000~~$2,202,000 and ~~$1,472,000,~~$11,821,000, respectively, and is included in other assets in the consolidated balance sheets.

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 ~~$372,429,000~~$237,778,000 and ~~$85,401,000~~$390,248,000 at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. The fair value of such commitments consisted of liabilities of ~~$924,000~~$0 and ~~$140,000~~$2,180,000 at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, included in other liabilities in the consolidated balance sheets and assets of ~~$121,000~~$3,619,000 and ~~$11,000~~$44,000 at March 31, 2021 and December 31, 2020, respectively, and are included in other assets in the consolidated balance ~~sheets as of September 30, 2020 and December 31, 2019, respectively.~~sheets.

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 nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, the Company recognized compensation expense for the ESOP of ~~$52,000~~$94,000 and ~~$164,000, respectively, while for the three and nine months ended September 30, 2019, the Company recognized compensation expense for the ESOP of $65,000 and $203,000,~~$68,000, respectively. The fair value of the ~~380,319~~370,967 unallocated ESOP shares at ~~September 30, 2020~~March 31, 2021 was ~~$4,727,000.~~$7,419,000.

In ~~September 2017,~~October 2020, the Company’s Board of Directors adopted a share repurchase program under which the Company may repurchase up to 10%, or ~~586,854~~552,000 shares, 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. The repurchase program expi~~red~~may be suspended or terminated at any time without prior notice and is currently set to expire on ~~Septem~~b~~er 1~~4,~~202~~0.October 29, 2021. As of March 31, 2021, the Company had repurchased 159,640 shares at a cost of $3,156,000 in connection with this program.

~~On October 27, 2020, the Company announced a new stock repurchase program. See Note 17, Subsequent Events, for additional information.~~

Basic earnings (loss) per share represents net income (loss) 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 (loss) 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 (loss) per share for the periods indicated:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
Average number of common shares outstanding		5,503,020			5,747,207			5,511,028			5,835,455			5,429,422			5,550,324
Less: Average unallocated ESOP shares		(382,653	)		(401,421	)		(387,323	)		(406,116	)		(373,257	)		(392,030	)
Average number of common shares outstanding used to calculate basic earnings per share		5,120,367			5,345,786			5,123,705			5,429,339			5,056,165			5,158,294
Effect of dilutive stock options		—			—			2,372			—			198,742			—
Average number of common shares outstanding used to calculate dilutive earnings per share		5,120,367			5,345,786			5,126,077			5,429,339			5,254,907			5,158,294

Under the Randolph Bancorp, Inc. 2017 Stock Option and Incentive Plan (the “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 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 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.

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:

During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ 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:

	2020			2019			2021			2020
Options granted		330,118			57,252			40,491			79,000
Vesting period (years)	3-5			1-5				5			5
Expiration period (years)		10			10			10			10
Expected volatility		27.65	%		29.87	%		30.98	%		24.94	%
Expected life (years)		6.2			6.5			6.2			6.0
Expected dividend yield		—			—			—			—
Risk free interest rate	0.45% - 1.10%			2.37% - 2.61%				0.64	%		1.47	%
Option fair value	$2.69 - $4.32			$2.99 - $5.83			$	6.20		$	5.74

A summary of stock option activity for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 is presented in the table below:

For the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019,~~ stock-based compensation expense applicable to stock options was ~~$545,000~~$142,000 and ~~$271,000,~~$309,000, respectively. ~~For the three months ended S~~ep~~tem~~be~~r 30, 2020 and 2019, stock-based compensation expense applicable to stock options was $138,000 and $79,000, respectively.~~

Included in expense for the nin~~e months~~period ended Septembe~~r 30,~~March 31, 2020 is $233,000 attributable to accelerated vesting of options upon the retirement of 2 executive officers.

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 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 Equity Plan for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

	Restricted Stock Awards			Weighted Average Grant Price		Restricted Stock Awards			Weighted Average Grant Price
Restricted stock awards at January 1, 2020		125,861		$	14.76
Restricted stock awards at January 1, 2021							122,012		$	12.72
Granted		63,130			10.84		—			—
Vested		(41,380	)		14.72		(2,500	)		15.00
Forfeited		(9,251	)		14.88		—			—
Restricted stock awards at September 30, 2020		138,360		$	12.97
Restricted stock awards at March 31, 2021							119,512		$	12.67
Unrecognized compensation cost	$	1,421,896				$	1,219,423
Weighted average remaining recognition period (years)		3.40					3.18

For the ninethree months ended Septembe~~r 30,~~March 31, 2021 and 2020 ~~and 2019~~ stock-based compensation expense applicable to restricted stock was ~~$781,000~~$125,000 and ~~$410,000,~~$622,000, respectively. ~~For the three months ended September 30, 2020 and 2019, stock-based compensation expense applicable to restricted stock was $115,000 and $144,000, respectively.~~

Included in expense for the nin~~e months~~period ended Septemb~~er 30,~~March 31, 2020 is $450,000 attributable to accelerated vesting of restricted stock awards upon the retirement of 2 executive officers.

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019)~~2020) 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 are summarized below.

							Total								Total
	Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3		Fair Value
	(In thousands)								(In thousands)
September 30, 2020
March 31, 2021
Assets:
Securities available for sale									$	—	$	54,148	$	—	$	54,148
Portfolio loans (fair value option)										—		17,215		—		17,215
Loans held for sale (fair value option)										—		93,176		—		93,176
Derivative loan commitments										—		2,202		—		2,202
Forward loan sale commitments, including TBAs										—		3,619		—		3,619

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

December 31, 2020
Assets:
Securities available for sale	$	—	$	55,551	$	—	$	55,551	$	—	$	55,366	$	—	$	55,366
Portfolio loans (fair value option)		—		14,384		—		14,384		—		13,780		—		13,780
Loans held for sale (fair value option)		—		87,805		—		87,805		—		119,112		—		119,112
Derivative loan commitments		—		11,967		—		11,967		—		11,821		—		11,821
Forward loan sale commitments		—		121		—		121		—		44		—		44

Liabilities:
Forward loan sale commitments, including TBAs		—		924		—		924		—		2,180		—		2,180

December 31, 2019
Assets:
Securities available for sale	$	—	$	57,503	$	—	$	57,503
Portfolio loans (fair value option)		—		9,826		—		9,826
Loans held for sale (fair value option)		—		62,792		—		62,792
Derivative loan commitments		—		1,472		—		1,472
Forward loan sale commitments		—		11		—		11

Liabilities:
Forward loan sale commitments, including TBAs		—		140		—		140

There were 0 transfers between levels for assets and liabilities recorded at fair value on a recurring basis during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

							Period Ended									Period Ended
	September 30, 2020						September 30, 2020			March 31, 2021						March 31, 2021
	Level 1		Level 2		Level 3		Total Gains (Losses)			Level 1		Level 2		Level 3		Total Gains (Losses)
	(In thousands)									(In thousands)
Collateral dependent
impaired loans	$	—	$	—	$	9,993	$	—		$	—	$	—	$	7,462	$	—
Mortgage servicing rights		—		—		10,944		(1,981	)		—		14,744		—		421
Foreclosed real estate		—		—		132		—			—		—		132		—
										$	—	$	14,744	$	7,594	$	421
	$	—	$	—	$	21,069	$	(1,981	)
										December 31, 2020
	December 31, 2019									Level 1		Level 2		Level 3
	Level 1		Level 2		Level 3					(In thousands)
	(In thousands)
Collateral dependent
impaired loans	$	—	$	—	$	2,250				$	—	$	—	$	6,318
Mortgage servicing rights		—		—		8,556					—		12,377		—
Foreclosed real estate											—		—		132
										$	—	$	12,377	$	6,450
	$	—	$	—	$	10,806

The Company recorded a ~~net increase~~decrease in the valuation allowance for its MSRs of ~~$1,981,000~~$421,000 during the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. 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 ~~increase~~decrease in the valuation allowance during the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was caused by ~~faster~~slower loan prepayment speeds attributable to the ~~drop~~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 0 liabilities measured at fair value on a non-recurring basis at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

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.

	September 30, 2020										March 31, 2021
	Carrying		Fair								Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3		Amount		Value		Level 1		Level 2		Level 3
	(In thousands)										(In thousands)
Financial assets:
Securities available for sale		55,551		55,551		—		55,551		—		54,148		54,148		—		54,148		—
Loans held for sale		87,805		87,805		—		87,805		—		93,176		93,176		—		93,176		—
Loans, net		484,548		483,956		—		—		483,956		491,983		498,850		—		—		498,850
Derivative assets		12,088		12,088		—		12,088		—		5,821		5,821		—		5,821		—

Financial liabilities:
Deposits	$	522,285	$	522,970	$	—	$	522,970	$	—	$	560,258	$	560,498	$	—	$	560,498	$	—
FRB advances		15,318		15,318		—		15,318		—
FHLBB advances		66,903		68,204		—		68,204		—		60,024		60,702		—		60,702		—
Derivative liabilities		924		924		—		924		—		—		—		—		—		—

	December 31, 2019										December 31, 2020
	Carrying		Fair								Carrying		Fair
	Amount		Value		Level 1		Level 2		Level 3		Amount		Value		Level 1		Level 2		Level 3
	(In thousands)										(In thousands)
Financial assets:
Certificates of deposit	$	490	$	492	$	—	$	492	$	—
Securities available for sale		57,503		57,503		—		57,503		—		55,366		55,366		—		55,366		—
Loans held for sale		62,792		62,792		—		62,792		—		119,112		119,112		—		119,112		—
Loans, net		469,131		469,416		—		—		469,416		483,644		490,914		—		—		490,914
Derivative assets		1,483		1,483		—		1,483		—		11,865		11,865		—		11,865		—

Financial liabilities:
Deposits	$	497,042		496,979	$	—	$	496,979	$	—	$	528,307		528,786	$	—	$	528,786	$	—
FRB Advances		—		—		—		—		—
FRB advances												11,431		11,431		—		11,431		—
FHLBB advances		44,403		44,433		—		44,433		—		61,895		63,071				63,071
Derivative liabilities		140		140		—		140		—		2,180		2,180		—		2,180		—

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:

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
	(In thousands)				(In thousands)
Commitments to originate loans	$	439,452	$	117,086	$	251,697	$	411,401
Unused lines and letters of credit		66,997		52,721		75,681		71,458
Unadvanced funds on construction loans		7,192		11,029		12,343		9,110
Overdraft lines of credit		8,004		8,178		7,910		7,969

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.

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.

The Company reports its activities in one of 2 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 5 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 nine~~ months ended ~~September 30, 2020~~March 31, 2021 follows:

For the Three Months Ended September 30, 2020

Envision Bank

Envision
Mortgage

Consolidated
Total

(in thousands)

Net interest income

$
4,032

$
637

$
4,669

Provision for loan losses

546

—

546

Net interest income after provision for loan losses

3,486

637

4,123

Non-interest income:

Customer service fees

309

21

330

Gain on loan origination and sale activities, net ⁽¹⁾

—

18,459

18,459

Mortgage servicing fees, net

(98
)

1,278

1,180

Other

93

169

262

Total non-interest income

304

19,927

20,231

Non-interest expenses:

Salaries and employee benefits

1,959

5,952

7,911

Occupancy and equipment

437

422

859

Other non-interest expenses

1,084

1,197

2,281

Total non-interest expenses

3,480

7,571

11,051

Income (loss) before income taxes and elimination of inter-segment profit

$
310

$
12,993

13,303

Elimination of inter-segment profit

(357
)
Income before income taxes

12,946

Income tax expense

2,661

Net income

$
10,285

Total assets, September 30, 2020

$
573,003

$
149,965

$
722,968

For the Nine Months Ended September 30, 2020

Envision Bank

Envision
Mortgage

Consolidated
Total

(in thousands)

Net interest income

$
11,970

$
1,857

$
13,827

Provision for loan losses

2,338

—

2,338

Net interest income after provision for loan losses

9,632

1,857

11,489

Non-interest income:

Customer service fees

827

75

902

Gain on loan origination and sale activities, net ⁽¹⁾

—

40,667

40,667

Mortgage servicing fees, net

(281
)

(1,147
)

(1,428
)
Other

318

416

734

Total non-interest income

864

40,011

40,875

Non-interest expenses:

Salaries and employee benefits ⁽²⁾

6,983

17,456

24,439

Occupancy and equipment

1,305

1,090

2,395

Other non-interest expenses

3,286

3,269

6,555

Total non-interest expenses

11,574

21,815

33,389

Income (loss) before income taxes and elimination of inter-segment profit

$
(1,078
)

$
20,053

18,975

Elimination of inter-segment profit

(1,051
)
Income before income taxes

17,924

Income tax expense

3,266

Net income

$
14,658

~~(3)~~

~~Before elimination of inter-segment profit.~~

	For the Three Months Ended March 31, 2021
	Envision Bank			Envision Mortgage		Consolidated Total
	(in thousands)
Net interest income	$	4,201		$	890	$	5,091
Provision (credit) for loan losses		(213	)		—		(213	)

Net interest income after provision (credit) for loan losses		4,414			890		5,304

Non-interest income:
Customer service fees		340			27		367
Gain on loan origination and sale activities, net ⁽¹⁾		—			11,674		11,674
Mortgage servicing fees, net		(94	)		873		779
Other		151			133		284
Total non-interest income		397			12,707		13,104

Non-interest expenses:
Salaries and employee benefits		1,802			6,635		8,437
Occupancy and equipment		443			301		744
Other non-interest expenses		1,087			1,683		2,770
Total non-interest expenses		3,332			8,619		11,951

Income before income taxes and elimination of inter-segment profit	$	1,479		$	4,978		6,457

Elimination of inter-segment profit							(681	)
Income before income taxes							5,776

Income tax expense							1,664
Net income						$	4,112

Total assets, March 31, 2021	$	581,954		$	156,234	$	738,188

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:

Segment information as of and for the three and ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 follows:

	For the Three Months Ended September 30, 2019									For the Three Months Ended March 31, 2020
	Envision Bank			Envision Mortgage			Consolidated Total			Envision Bank			Envision Mortgage			Consolidated Total
	(in thousands)									(in thousands)
Net interest income	$	3,781		$	792		$	4,573		$	3,994		$	431		$	4,425
Provision for loan losses		—			—			—			724			—			724

Net interest income after provision for loan losses		3,781			792			4,573			3,270			431			3,701

Non-interest income:
Customer service fees		331			32			363			273			33			306
Gain on loan origination and sale activities, net ⁽¹⁾		—			6,010			6,010			—			7,472			7,472
Mortgage servicing fees, net		(93	)		(88	)		(181	)		(87	)		(1,167	)		(1,254	)
Other		242			97			339			140			115			255
Total non-interest income		480			6,051			6,531			326			6,453			6,779

Non-interest expenses:
Salaries and employee benefits		1,966			5,044			7,010			3,098			5,028			8,126
Occupancy and equipment		367			306			673			404			294			698
Other non-interest expenses		1,184			851			2,035			1,146			989			2,135
Total non-interest expenses		3,517			6,201			9,718			4,648			6,311			10,959

Income before income taxes and elimination of inter-segment profit	$	744		$	642			1,386
Income (loss) before income taxes and elimination of inter-segment profit										$	(1,052	)	$	573			(479	)

Elimination of inter-segment profit								(228	)								(328	)
Income before income taxes								1,158
Loss before income taxes																	(807	)

Income tax expense								14
Net income							$	1,144
Income tax benefit																	11
Net loss																$	(818	)

Total assets, September 30, 2019	$	509,021		$	132,417		$	641,438
Total assets, March 31, 2020										$	543,586		$	109,300		$	652,886

For the Nine Months Ended September 30, 2019

Envision Bank

Envision
Mortgage

Consolidated
Total

(in thousands)

Net interest income

$
12,121

$
1,319

$
13,440

Credit for loan losses

(144
)

—

(144
)

Net interest income after credit for loan losses

12,265

1,319

13,584

Non-interest income:

Customer service fees

948

106

1,054

Gain on loan origination and sale activities, net ⁽¹⁾

—

14,043

14,043

Mortgage servicing fees, net

(273
)

635

362

Other

464

253

717

Total non-interest income

1,139

15,037

16,176

Non-interest expenses:

Salaries and employee benefits

5,292

13,222

18,514

Occupancy and equipment

1,137

835

1,972

Other non-interest expenses

3,434

2,539

5,973

Total non-interest expenses

9,863

16,596

26,459

Income (loss) before income taxes and elimination of inter-segment profit

$
3,541

$
(240
)

3,301

Elimination of inter-segment profit

(605
)
Income before income taxes

2,696

Income tax expense

97

Net income

$
2,599

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:

On October 27, 2020, the Company announced that its Board of Directors has approved a share repurchase program to purchase up to 552,000 shares of its common stock, representing approximately 10.0% of the Company’s outstanding common stock.

Repurchases under this program may be made in open market transactions. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The repurchase program does not obligate the Company to purchase any particular number of shares. The repurchase program will expire on October 29, 2021, and may be suspended or terminated at any time.

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 ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, and its results of operations for the three ~~and~~ nine month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020. 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.~~

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. Forward-looking statements, which are based on certain current assumptions and describe our future plans, strategies and expectations, 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. These statements include, among others, statements regarding the impact of the COVID-19 pandemic; our strategy, goals and expectations; evaluations of future interest rate trends and liquidity; expectations as to growth in assets, deposits and results of operations, future operations, market position and financial position; and prospects, plans and objectives of management. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond our control.

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”; the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; ~~the length and extent of the economic contraction as a result of the COVID-19 pandemic; continued deterioration~~changes in ~~employment levels,~~ general business and economic conditions on a national basis and in the local markets in which we operate; changes in customer behavior due to changing business and economic conditions or legislative or regulatory initiatives leading to changes in demand for loans in our market area; continued turbulence in the capital and debt markets; changes in interest rates; increases in loan defaults and charge-off rates; ~~the possibility that future credits losses are higher than currently expected due to changes in economic assumptions or adverse economic developments;~~ decreases in the value of securities and other assets; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; changes in regulation; reputational risk relating to our participation in the Small Business Administration’s (“SBA’s”) Paycheck Protection Program (“PPP”) and other pandemic-related legislative and regulatory initiatives and programs; risks that goodwill and intangibles recorded in our financial statements will become impaired; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in our financial statements will become impaired; risks related to the implementation of acquisitions, dispositions, and restructurings, including the risk that acquisitions may not produce results at levels or within time frames originally anticipated; the risk that we may not be successful in the implementation of our business strategy; changes in assumptions used in making such forward-looking statements; 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 ~~statements~~statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

On March 27, 2020, Congress passed, and the President signed, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to address the economic effects of the COVID-19 pandemic.

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”).~~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 ~~MSRs.~~mortgage servicing rights (“MSRs”).

~~On March 27, 2020, Congress passed, and the President signed, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to~~ ad~~dressthe econ~~o~~mic effe~~c~~ts of the~~ C~~OVID-19 pan~~demic.

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, ~~2019,~~2020, as filed with the Securities and Exchange Commission.

The ~~Jumpstart our Business Startups~~Tax Cuts and Jobs Act of 2017 contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company”, we have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Accordingly, our unaudited consolidated financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Comparison of Financial Condition at ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020

Total Assets. Total assets increased ~~$92.0~~$17.1 million to ~~$723.0~~$738.2 million at ~~Septe~~mbe~~r 30, 2020~~March 31, 2021 from ~~$631.0~~$721.1 million at December 31, ~~2019. Contributing to asset growth was~~2020, primarily as a $15~~.4 million~~result of an increase in ~~net loans, mainly driven by the origination of $15.4 million of Paycheck Protection Program loans. In addition,~~ cash and cash equivalents ~~increased by $40.8~~of $41.2 million, which reflects strong deposit growth and the sale of mortgage loans in the nin~~e months ended Septe~~m~~ber 30, 2020,~~secondary market from our production pipeline near quarter end. In addition, net loans increased $8.3 million, with increases mainly ~~as a result of strong growth~~ in ~~core deposits~~residential and ~~the timing of cash proceeds from loan sales.~~commercial real estate loans, partially offset by decreases in consumer and construction loans. Loans held for sale ~~increased~~declined by ~~$25.0~~$25.9 million to $87.8$93.2 million at Septembe~~r 30, 2020~~March 31, 2021 from ~~$62.8~~$119.1 million at December 31, ~~2019.~~ 2020, principally because of high loan sale volumes in the three months ended March 31, 2021.

Loans Held for Sale. We are actively involved in the secondary mortgage market and sell most of our residential first mortgage loan production to investors. At ~~September 30, 2020,~~March 31, 2021, loans held for sale totaled ~~$87.8~~$93.2 million compared to ~~$62.8~~$119.1 million at December 31, ~~2019,~~2020, and proceeds from sales of mortgage loans totaled ~~$1.2 billion~~$515.4 million in the ~~nine~~three months ended ~~September 30, 2020. Lower~~March 31, 2021. Low mortgage rates available during the ~~first nine~~trailing six months ~~of 2020~~ favorably impacted loan refinancing activity, which comprised ~~74%~~80% of residential mortgage loan originations in the first ~~nine months~~quarter of ~~2020. With $418.9 million of outstanding customer interest rate lock agreements at September 30, 2020,~~2021 compared to 65% in the ~~balance of loans held for sale is expected to remain at an elevated level throughout the fourth~~first quarter of 2020.

Net Loans. Net loans increased ~~$15.4~~$8.3 million to ~~$484.5~~$492.0 million at ~~September 30, 2020~~March 31, 2021 from ~~$469.1~~$483.6 million at December 31, ~~2019,~~2020, primarily as a result of ~~the origination of Paycheck Protection Program loans, as well as~~ increases in residential and commercial real estate ~~loans. These increases were~~loans, where we have focused our originations in the first quarter of 2021, partially offset by decreases in consumer and ~~other commercial and industrial~~construction 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 ~~$2.0~~$1.2 million to ~~$55.6~~$54.1 million at ~~September 30, 2020~~March 31, 2021 from ~~$57.5~~$55.4 million at December 31, ~~2019,~~2020, primarily due to principal payments on mortgage-backed securities ~~partially offset by~~and a decline in the fair value of securities ~~purchases and an increase in market values~~ attributable to ~~the decline~~an increase in longer-term interest rates, ~~during the~~partially offset by purchases of U.S. Treasury securities in first ~~nine months~~quarter of ~~2020.~~2021. At ~~September 30, 2020, investment securities and cash and cash equivalents,~~March 31, 2021, investments, a primary ~~sources~~source of ~~on-balance sheet~~ liquidity, ~~totaled $104.6 million, or 14.5%~~represented 7.3% of total assets.

Mortgage Servicing Rights. MSRs increased $2.4 million to ~~$10.9~~$14.7 million at ~~September 30, 2020~~March 31, 2021 from ~~$8.6~~$12.4 million at December 31, ~~2019.~~2020. The principal ~~reason~~reasons for the increase ~~was an increase in~~were the origination of new ~~mortgage servicing rights, net~~MSRs and the recognition of ~~amortization. That was partially offset by impairment charges of $2.0 million recognized through~~ a valuation ~~allowance,~~adjustment of $421,000, given expectations of ~~higher~~lower mortgage loan prepayments in the ~~low~~rising interest rate environment. At ~~September 30, 2020,~~March 31, 2021, the Company serviced ~~$1.59~~$1.94 billion of mortgage loans for others, an increase of ~~$0.54 billion~~$18.0 million from ~~$1.05~~$1.76 billion at December 31, ~~2019. Accordingly, the~~2020. The average value of MSRs at ~~September 30, 2020~~March 31, 2021 stood at 6976 basis points, ~~a decrease~~an increase of 125 basis points from the average value of 8171 basis points at December 31, ~~2019.~~2020.

Deposits. Deposits increased ~~$25.2~~$32.0 million, or ~~5.1%~~6.0%, to ~~$522.3~~$560.3 million at ~~September 30, 2020~~March 31, 2021 from ~~$497.0~~$528.3 million at December 31, ~~2019.~~2020. During this period, non-brokered deposits increased by ~~$78.8~~$31.5 million, or ~~19.4%~~6.3%. ~~The~~Driving the growth in non-brokered deposits ~~was directly driven by~~were customers’ receipt of government stimulus ~~payments, Paycheck Protection Program loan proceeds which were deposited with us,~~ and our focus on deposit ~~gathering prior to the onset of the COVID-19 pandemic.~~gathering. Brokered deposits, which management considers to be a source of wholesale funding ~~declined~~at more attractive yields than the local market, increased by ~~$53.6 million~~$496,000, or 1.6%, to ~~$37.3~~$32.2 million at ~~September 30, 2020,~~March 31, 2021, from ~~$90.9~~$31.7 million at December 31, ~~2019.~~

~~FRB Advances.~~ ~~FRB Advances consist of term advances under the Paycheck Protection Program Liquidity Facility which fund Paycheck Protection Program loans and amounted to $15.3 million at September 30,~~ 2020. ~~There were no FRB Advances at December 31, 2019.~~

FHLBB Advances and FRB Advances. FHLBB advances, which consist of term advances ~~increased~~and overnight borrowings, decreased by ~~$22.5~~$1.9 million to ~~$66.9~~$60.0 million at ~~September 30, 2020,~~March 31, 2021, from ~~$44.4~~$61.9 million at December 31, ~~2019. Management elected to increase FHLBB advances because they were a relatively cheaper source of~~2020, as the Company’s deposit gathering activities have reduced the reliance on wholesale ~~funding than brokered deposits.~~

~~Brokered deposits,~~funding. FRB advances, ~~and FHLBB~~which consisted of PPPLF advances ~~make up~~of $11.4 million at December 31, 2020, were paid off during the ~~Bank’s wholesale funding which management targets at a limit of 25% of total assets. At September 30, 2020, wholesale funding amounted to $119.5 million, or 16.5% of total assets.~~three months ended March 31, 2021.

Stockholders’ Equity. Stockholders’ equity increased ~~$16.5~~$1.0 million to ~~$94.9~~$100.9 million at ~~September 30, 2020~~March 31, 2021 compared to ~~$78.5~~$99.8 million at December 31, ~~2019.~~2020. The increase ~~was~~occurred mainly ~~attributed~~due to net income of ~~$10.3~~$4.1 million in the ~~nine~~three months ended ~~September 30, 2020, an increase~~March 31, 2021, partially offset by share repurchases of $2.7 million and a decrease in the fair value of ~~available-for sale~~available-for-sale equity securities, net of ~~$1.6 million, driven by a decline in longer-term interest rates, and $1.3 million~~taxes, of equity adjustments related to the stock benefit plan and employee stock ownership plan. These increases were partially offset by the Company repurchasing $1.2 million of shares during the first nine months of 2020, for a total of 101,131 shares repurchased at an average cost of $12.08 per share.$794,000.

Comparison of Operating Results for the Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~

General. The Company recognized net income of ~~$10.3~~$4.1 million, or ~~$2.01~~$0.78 per diluted share, for the three months ended ~~September 30, 2020~~March 31, 2021 compared to a net ~~income~~loss of ~~$1.1 million,~~$818,000, or ~~$0.21~~$0.16 per diluted share, for the three months ended ~~September 30, 2019,~~March 31, 2020. The improvement in operating results in the first quarter of 2021 compared to the prior year period was primarily attributable to an increase ~~of $9.1 million.~~in net gain on loan origination and sale activities, an increase in net mortgage servicing fees, and a decrease in the provision for loan losses.

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 September 30,

2020

2019

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

(Dollars in thousands)

Balance

Paid

Rate

Balance

Paid

Rate

Interest-earning assets:

Loans ⁽¹⁾

$
559,370

$
5,337

3.82
%

$
573,899

$
6,144

4.28
%
Investment securities ^{(2) (3)}

57,211

305

2.13
%

53,947

377

2.80
%
Interest-earning deposits

48,949

7

0.06
%

4,881

23

1.88
%
Total interest-earning assets

665,530

5,649

3.40
%

632,727

6,544

4.14
%
Noninterest-earning assets

41,037

14,757

Total assets

$
706,567

$
647,484

Interest-bearing liabilities:

Savings accounts

170,762

172

0.40
%

107,764

149

0.55
%
NOW accounts

57,646

41

0.28
%

38,697

47

0.49
%
Money market accounts

72,369

75

0.41
%

64,058

251

1.57
%
Term certificates

131,053

442

1.35
%

182,073

918

2.02
%
Total interest-bearing deposits

431,830

730

0.68
%

392,592

1,365

1.39
%
FHLBB and FRB advances

82,639

249

1.21
%

101,933

603

2.37
%
Total interest-bearing liabilities

514,469

979

0.76
%

494,525

1,968

1.59
%
Noninterest-bearing liabilities:

Noninterest-bearing deposits

88,394

62,456

Other noninterest-bearing liabilities

12,724

10,138

Total liabilities

615,587

567,119

Total stockholders' equity

90,980

80,365

Total liabilities and stockholders' equity

$
706,567

$
647,484

Net interest income

$
4,670

$
4,576

Interest rate spread⁽⁴⁾

2.64
%

2.55
%
Net interest-earning assets⁽⁵⁾

$
151,061

$
138,202

Net interest margin⁽⁶⁾

2.81
%

2.89
%

Ratio of interest-earning assets to interest-
bearing liabilities

129.36
%

127.95
%

~~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.

~~Interest and Dividend Income.~~ Interest and dividend income, inclusive of tax equivalent adjustments on municipal securities, decreased $895,000, or 13.7%, to $5.6 million for the three months ended September 30, 2020 compared to $6.5 million for the three months ended September 30, 2019. The yield on interest-earning assets decreased 74 basis points to 3.40% in the third quarter of 2020 from 4.14% in the same quarter of the prior year, given decreasing earning-asset yields in a declining interest rate environment. Partially offsetting the rate impact was an increase in average interest-earning assets between periods of $32.8 million, or 5.2%, as the Company continued to leverage its capital base.

~~Interest Expense.~~ Interest expense decreased $989,000, or 50.3%, to $979,000 for the three months ended September 30, 2020 compared to $2.0 million for the three months ended September 30, 2019. This decrease resulted in an 83 basis point decrease in the cost of funds to 0.76%, which was partially offset by an increase in average interest-bearing liabilities of $19.9 million. The decrease in cost of funds was principally due to a declining interest rate environment which lowered the cost of money market accounts, term deposits and FHLBB advances.

~~Net Interest Income.~~ Net interest income, inclusive of tax equivalent adjustments on municipal securities, increased $94,000, or 2.1%, to $4.7 million for the three months ended September 30, 2020 compared to $4.6 million for the three months ended September 30, 2019. This increase was primarily due to an increase in the proportion of non-maturity deposits and a decline in the proportion of term certificates from the same period in the prior year. The average balance of savings accounts at the Company increased $63.0 million, or 58.5%, from September 30, 2019 and the average balance of term certificates decreased $51.0 million, or 28.0%, from September 2019.

~~Provision for Loan Losses.~~ The Company recognized a provision for loan losses of $546,000 for the quarter ended September 30, 2020 compared to no provision in the prior year quarter. The allowance for loan losses was 1.34% and 0.90% of total loans at September 30, 2020 and December 31, 2019, respectively, and was 67.2% and 131.4% of non-performing loans at September 30, 2020 and December 31, 2019, respectively.

~~Net Gain on Loan Origination and Sale Activities.~~ The net gain on loan origination and sale activities increased $12.3 million, or 213.1%, to $18.1 million for the three months ended September 30, 2020 compared to $5.8 million for the three months ended September 30, 2019. The lower mortgage rates available during the third quarter of 2020 favorably impacted loan refinancing activity, which comprised 69% of loan sales of $410.4 million in the third quarter of 2020.

~~Other Non-interest Income.~~ Other non-interest income was $1.8 million in the three months ended September 30, 2020 compared to other non-interest income of $521,000 during the three months ended September 30, 2019. The $1.3 million increase between periods is mainly attributed to a positive valuation increase for MSRs which was recognized in the quarter ended September 30, 2020 as loan prepayment speeds were adjusted to reflect more stable interest rates.

~~Non-interest Expenses.~~ ~~Non-interest expense increased $1.3 million, or 13.7%, to $11.1 million for the three months ended September 30, 2020, from $9.7 million for the three months ended September 30, 2019.~~

Salaries and employee benefits increased $901,000 to $7.9 million in the third quarter of 2020 from $7.0 million in the third quarter of 2019. This increase was primarily due to higher commissions and incentives associated with increased residential loan production.

Occupancy and equipment expenses increased $186,000 in the quarter ended September 30, 2020 over the prior year period. This increase resulted from increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate administrative office space in light of prolonged remote working arrangements.

Other non-interest expenses comprising data processing, professional fees, marketing, FDIC insurance and other non-interest expenses increased by $246,000 in the quarter ended September 30, 2020 compared to the prior year period as a result of a combination of factors. FDIC insurance increased during the period as result of an insurance credit expiring in the third quarter of 2019. Other increases were related to higher costs related to elevated mortgage loan production.

~~Income Tax Expense.~~ Income tax expense of $2.6 million for the three months ended September 30, 2020 consisted of a federal and state income tax provision, which was based on the projected effective tax rate for the year. The Company had a net operating loss carryforward (“NOL”) for federal tax purposes of $10.8 million at June 30, 2020. During the quarter ended September 30, 2020, the Company fully absorbed the NOL as a result of the Company’s increased income.

~~Comparison of Operating Results for the Nine Months Ended September 30, 2020 and 2019~~

Net interest income represents the difference between income ~~we earn~~earned on ~~our~~ interest-earning assets and the expense ~~we pay~~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 Nine Months Ended September 30,																For the Three Months Ended March 31,
	2020								2019								2021								2020
	Average			Interest		Average			Average			Interest		Average			Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
(Dollars in thousands)	Balance			Paid		Rate			Balance			Paid		Rate			Balance			Paid		Rate			Balance			Paid		Rate
Interest-earning assets:
Loans ⁽¹⁾	$	555,838		$	16,680		4.00	%	$	549,665		$	17,791		4.32	%	$	594,021		$	5,508		3.71	%	$	531,141		$	5,620		4.23	%
Investment securities ^{(2) (3)}		58,201			1,016		2.33	%		54,350			1,154		2.83	%		57,818			247		1.71	%		58,799			379		2.58	%
Interest-earning deposits		30,177			68		0.30	%		5,132			77		2.00	%		35,492			7		0.08	%		18,458			56		1.21	%
Total interest-earning assets		644,216			17,764		3.68	%		609,147			19,022		4.16	%		687,331			5,762		3.35	%		608,398			6,055		3.98	%
Noninterest-earning assets		37,509								21,228								42,045								31,774
Total assets	$	681,725							$	630,375							$	729,376							$	640,172
Interest-bearing liabilities:
Savings accounts		154,736			689		0.59	%		104,530			337		0.43	%		190,313			98		0.21	%		134,843			284		0.84	%
NOW accounts		54,185			142		0.35	%		39,466			144		0.49	%		69,511			48		0.28	%		39,049			51		0.52	%
Money market accounts		70,712			394		0.74	%		65,609			712		1.45	%		75,994			54		0.28	%		78,394			197		1.01	%
Term certificates		159,540			2,012		1.68	%		171,827			2,552		1.98	%		96,978			238		0.98	%		188,654			893		1.89	%
Total interest-bearing deposits		439,173			3,237		0.98	%		381,432			3,745		1.31	%		432,796			438		0.40	%		440,940			1,425		1.29	%
FHLBB and FRB advances		69,672			696		1.33	%		98,817			1,825		2.46	%		70,857			232		1.31	%		47,102			203		1.72	%
Total interest-bearing liabilities		508,845			3,933		1.03	%		480,249			5,570		1.55	%		503,653			670		0.53	%		488,042			1,628		1.33	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		76,397								62,194								106,929								62,718
Other noninterest-bearing liabilities		11,996								8,681								15,375								9,549
Total liabilities		597,238								551,124								625,957								560,309
Total stockholders' equity		84,487								79,251								103,419								79,863
Total liabilities and stockholders' equity	$	681,725							$	630,375							$	729,376							$	640,172
Net interest income				$	13,831							$	13,452							$	5,092							$	4,427
Interest rate spread⁽⁴⁾							2.65	%							2.61	%							2.82	%							2.65	%
Net interest-earning assets⁽⁵⁾	$	135,371							$	128,898							$	183,678							$	120,356
Net interest margin⁽⁶⁾							2.86	%							2.94	%							2.96	%							2.91	%

Ratio of interest-earning assets to interest- bearing liabilities		126.60	%							126.84	%							136.47	%							124.66	%

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.

	Nine Months Ended September 30, 2020									Three Months Ended March 31, 2021
	Compared to									Compared to
	Nine Months Ended September 30, 2019									Three Months Ended March 31, 2020
	Increase (Decrease)						Total			Increase (Decrease)						Total
	Due to Changes in						Increase			Due to Changes in						Increase
(In thousands)	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
Interest-earning assets:
Loans	$	(29	)	$	(1,080	)	$	(1,109	)	$	623		$	(735	)	$	(112	)
Investment securities		(1	)		(136	)		(137	)		(6	)		(126	)		(132	)
Interest-earning deposits		30			(37	)		(7	)		27			(75	)		(48	)
Total interest-earning assets		—			(1,253	)		(1,253	)		644			(936	)		(292	)
Interest-bearing liabilities:
Savings accounts		197			154			351			85			(271	)		(186	)
NOW accounts		15			(17	)		(2	)		28			(31	)		(3	)
Money market accounts		(12	)		(306	)		(318	)		(6	)		(137	)		(143	)
Term certificates		(173	)		(367	)		(540	)		(329	)		(326	)		(655	)
Total interest-bearing deposits		27			(536	)		(509	)		(222	)		(765	)		(987	)
FHLBB and FRB advances		(441	)		(688	)		(1,129	)		85			(56	)		29
Total interest-bearing liabilities		(414	)		(1,224	)		(1,638	)		(137	)		(821	)		(958	)

Change in net interest income	$	414		$	(29	)	$	385		$	781		$	(115	)	$	666

Interest and Dividend Income. Interest and dividend income, inclusive of tax equivalent adjustments on municipal securities, decreased ~~$1.3 million,~~$292,000, or ~~6.6%~~4.8%, to ~~$17.8~~$5.8 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$19.0~~$6.1 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. This decrease was due to a decrease in interest rates earned on interest-earning assets, partially offset by increases in loan and interest-earning deposit balances. The yield on interest-earning assets decreased 4863 basis points to ~~3.68%~~3.35% in the first ~~nine months~~quarter of ~~2020~~2021 from ~~4.16%~~3.98% in the ~~first nine months~~same quarter of the prior year ~~given decreasing earning-asset yields in~~due principally to a declining interest rate environment. ~~Partially offsetting the rate impact was an increase in average interest-earning assets between periods of $35.1 million, or 5.8%, as the Company continued to leverage its capital base.~~

Interest Expense. Interest expense decreased ~~$1.6 million,~~$958,000, or ~~29.4%~~58.8%, to ~~$3.9~~$670,000 for the three months ended March 31, 2021 compared to $1.6 million for the ~~nine~~three months ended ~~September 30, 2020 compared to $5.6 million for the nine months ended September 30, 2019.~~March 31, 2020. This decrease resulted from ~~a 52~~an 80 basis point decrease in the cost of funds to ~~1.03%~~0.53%, which was partially offset by an increase in the average ~~interest-bearing liabilities~~balance of ~~$28.6 million.~~savings accounts, NOW accounts and FHLBB and FRB advances. The decrease in cost of funds was principally due to a declining interest rate environment which lowered the cost of ~~money market accounts,~~interest-bearing liabilities and a shortening of the funding mix, with a decrease in the average balance of term ~~deposits and FHLBB advances, while the cost of interest-bearing deposits did not adjust downward in all categories given an emphasis on increasing local market share.~~certificates.

Net Interest Income. Net interest income, inclusive of tax equivalent adjustments on municipal securities, increased ~~$379,000,~~$665,000, or ~~2.8%~~15.0%, to ~~$13.8~~$5.1 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$13.5~~$4.4 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. This ~~improvement resulted principally from loan growth~~increase was primarily due to a decrease in deposit costs, complemented by a change in the mix of deposits. The average balance of savings and ~~improved interest rate spread mainly reflecting decreased wholesale funding utilization and cost. The net interest margin decreased 8 basis points to 2.86%~~NOW accounts in the first ~~nine months~~quarter of ~~2020~~2021 increased $55.5 million, or 41.1%, and $30.5 million, or 78.0%, respectively, from ~~2.94%~~the prior year quarter and the average balance of term certificates decreased $91.7 million, or 48.6%, from the prior year quarter, contributing to an 80 basis point decrease in the ~~first nine months~~cost of ~~2019, primarily due~~interest-bearing liabilities. Partially offsetting the decline in the cost of interest-bearing deposits was the increase in FHLB and FRB advances to ~~deposit repricing lagging the decreasing interest-earning asset yields in a declining interest rate environment.~~$70.9 million at March 31, 2021 from $47.1 million at March 31, 2020.

Provision for Loan Losses. The Company recognized a credit for loan losses of $213,000 for the quarter ended March 31, 2021 compared to a provision for loan losses of ~~$2.3 million~~$724,000 for the ~~nine months~~quarter ended ~~September 30, 2020, compared to a~~March 31, 2020. The credit ~~for loan losses of $144,000~~ in the ~~prior year period. The provision~~quarter ended March 31, 2021 was driven by changes in the ~~first nine months of 2020 included $558,000, representing the estimate of probable incurred losses associated with~~qualitative factors related to the impact of the COVID-19 pandemic onand the economic environment used in the Company’s calculation of the allowance for loan ~~portfolio.~~losses. The provision in the quarter ended March 31, 2020 was driven by higher loss factors that were assigned to each major loan portfolio category based on their level of risk determined at the time at the onset of the COVID-19 pandemic.

Net Gain on Loan Origination and Sale Activities. The net gain on loan origination and sale activities increased ~~$26.2~~$3.8 million, or ~~194.8%~~53.9%, to ~~$39.6~~$11.0 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$13.4~~$7.1 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. The lower mortgage rates available during the first ~~nine months~~quarter of ~~2020~~2021 favorably impacted loan refinancing activity, which comprised ~~74%~~80% of loan ~~sales~~production of ~~$1.1 billion~~$487.8 million in the first ~~nine months~~quarter of ~~2020.~~

~~Other Non-interest Income.~~ ~~Non-interest income was $208,000~~2021, compared to 65% in the ~~nine months ended September 30,~~prior year quarter. Accordingly, loan sales proceeds increased by 124.5% to $515.4 million in the first quarter of 2020 compared to $229.6 million in the prior year period.

Other Non-interest Income (Losses). Excluding the net gain on loan origination and sale activities, non-interest income was $1.4 million in the three months ended March 31, 2021, compared to non-interest losses of $693,000 during the three months ended March 31, 2020. The $2.1 million ~~during the nine months ended September 30, 2019. The $1.9 million decrease~~positive variation between periods is mainly attributed to a ~~net~~ provision of ~~$2.0~~$1.6 million to the valuation allowance for MSRs which was recognized in the ~~first nine months of~~quarter ended March 31, 2020 as loan prepayment speeds were adjusted higher to reflect the impact of lower interest rates. In addition, a $421,000 fair valuation increase was recognized in the first quarter of 2021, as loan prepayment speeds were adjusted lower to reflect the impact of higher interest rates.

Non-interest Expenses. Non-interest expenses increased ~~$6.9 million,~~$992,000, or ~~26.2%~~9.1%, to ~~$33.4~~$12.0 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, from ~~$26.5~~$11.0 million for the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020. Non-interest expenses in the first ~~nine months~~quarter of 2020 included one-time charges of $1,375,000 related to the retirement of senior ~~executives as well as $229,000 of COVID-19 pandemic-related expenses, principally related to cleaning.~~executives.

Salaries and employee benefits increased ~~$5.9 million~~$311,000 to ~~$24.4~~$8.4 million in the first ~~nine months~~quarter of ~~2020~~2021 from ~~$18.5~~$8.1 million in the first ~~nine months~~quarter of ~~2019. This~~2020. The increase ~~included one-time charges~~is principally due to an increase in salaries and employee benefits of ~~$1.4~~$1.9 million, ~~for the retirement of senior executives,~~primarily attributed to higher commissions and incentives associated with ~~higher~~increased residential loan production, ~~and COVID-19 pandemic-related compensation~~partially offset by a $1.4 million charge related to the retirement of ~~$101,000 for front-line and quarantined employees.~~senior executives in the first quarter of 2020.

Occupancy and equipment expenses increased ~~$423,000,~~$46,000, or ~~21.5%~~6.6%, to ~~$2.4~~$744,000 in the first quarter of 2021 compared to $698,000 in the first quarter of 2020. This increase was primarily related to increases in seasonal snowplowing expenses.

Professional fees increased $156,000 in the first quarter of 2021 over the prior year period, primarily related to legal fees.

Marketing expenses increased $18,000, or 11.8%, to $170,000 in the first quarter of 2021 from $152,000 in the first quarter of 2020, because of fewer marketing campaigns while our communities were subject to a stay-at-home order during the first quarter of 2020.

Other non-interest expenses increased $396,000, or 29.9% to $1.7 million for the first quarter of 2021 from $1.3 million in the first ~~nine months~~quarter of 2020, ~~compared to $2.0 million in the first nine months~~because of 2019. This increase included spending on cleaning and supplies related to the COVID-19 pandemic of $106,000, as well as increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space in light of prolonged remote working arrangements.

Other non-interest expenses comprising data processing, professional fees, marketing, FDIC insurance and other non-interest expenses increased by $582,000 in the nine months ended September 30, 2020 versus the prior year period as a result of a combination of factors. Marketing and certain operating expenses declined as a result of lower deposit customer activity while stay-at-home orders were in effect. Those reductions were offset by higher costs related to elevated levels of mortgage loan ~~production and management succession planning costs.~~production.

Income Tax Expense. Income tax expense of ~~$3.3~~$1.7 million for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 consisted ~~solely~~ of a federal and state income tax ~~provision,~~expense which was based on the projected effective state 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 ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~

The following table presents a comparison of the results of operations for each segment before ~~incomes~~income taxes and elimination of inter-segment profit, and the changes in those results, for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019.~~2020.

Envision Bank

Envision Mortgage

Three Months Ended September 30,

Increase (Decrease)

Three Months Ended September 30,

Increase (Decrease)

2020

2019

Dollars

Percent

��
2020

2019

Dollars

Percent

(in thousands)

Net interest income

$
4,032

$
3,781

$
251

6.6
%

$
637

$
792

$
(155
)

-19.6
%
Provision (credit) for loan
   losses

546

—

546

-

—

—

—

—

Net interest income after
   provision (credit) for loan
   losses

3,486

3,781

(295
)

(7.8
)

637

792

(155
)

(19.6
)

Non-interest income:

Customer service fees

309

331

(22
)

(6.6
)

21

32

(11
)

(34.4
)
Gain on loan origination
   and sale activities, net ⁽¹⁾

—

—

—

—

18,459

6,010

12,449

207.1

Mortgage servicing fees,
   net

(98
)

(93
)

(5
)

(5.4
)

1,278

(88
)

1,366

(1,552.3
)
Other

93

242

(149
)

(61.6
)

169

97

72

74.2

Total non-interest
   income

304

480

(176
)

(36.7
)

19,927

6,051

13,876

229.3

Non-interest expenses:

Salaries and employee
   benefits

1,959

1,966

(7
)

(0.4
)

5,952

5,044

908

18.0

Occupancy and equipment

437

367

70

19.1

422

306

116

37.9

Other non-interest
   expenses

1,084

1,184

(100
)

(8.4
)

1,197

851

346

40.7

Total non-interest
   expenses

3,480

3,517

(37
)

(1.1
)

7,571

6,201

1,370

22.1

Income (loss) before income
   taxes and elimination of inter
   -segment profit

$
310

$
744

$
(434
)

(58.3
)%

$
12,993

$
642

$
12,351

1923.8
%

Total Assets at September 30,
   2020

$
573,003

$
149,965

Increase (decrease)

$
51,859

$
40,105

	Envision Bank												Envision Mortgage
	Three Months Ended March 31,						Increase (Decrease)						Three Months Ended March 31,						Increase (Decrease)
	2021			2020			Dollars			Percent			2021			2020			Dollars			Percent
	(in thousands)
Net interest income	$	4,201		$	3,994		$	207			5.2	%	$	890		$	431		$	459			106.5	%
Provision (credit) for loan losses		(213	)		724			(937	)		(129.4	)		—			—			—			—
Net interest income
after provision for loan losses		4,414			3,270			1,144			35.0			890			431			459			106.5

Non-interest income:
Customer service fees		340			273			67			24.5			27			33			(6	)		(18.2	)
Gain on loan origination
and sale activities, net ⁽¹⁾		—			—			—			—			11,674			7,472			4,202			56.2
Mortgage servicing fees, net		(94	)		(87	)		(7	)		(8.0	)		873			(1,167	)		2,040			(174.8	)
Other		151			140			11			7.9			133			115			18			15.7
Total non-interest income		397			326			71			21.8			12,707			6,453			6,254			96.9

Non-interest expenses:
Salaries and employee benefits ⁽²⁾		1,802			3,098			(1,296	)		(41.8	)		6,635			5,028			1,607			32.0
Occupancy and equipment		443			404			39			9.7			301			294			7			2.4
Other non-interest expenses		1,087			1,146			(59	)		(5.1	)		1,683			989			694			70.2
Total non-interest expenses		3,332			4,648			(1,316	)		(28.3	)		8,619			6,311			2,308			36.6
Income (loss) before income taxes and
elimination of inter-segment profit	$	1,479		$	(1,052	)	$	2,531			240.6	%	$	4,978		$	573		$	4,405			768.8	%

Total Assets at March 31, 2021	$	581,954											$	156,234
Total Assets at December 31, 2020		537,722												183,350
Increase (decrease)	$	44,232											$	(27,116	)

The Envision Bank segment had income before income taxes and elimination of inter-segment profit of ~~$310,000~~$1.5 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~income~~losses of ~~$744,000~~$1.1 million for the three months ended ~~September 30, 2019.~~March 31, 2020. The ~~decrease~~increase in operating results between periods of ~~$434,000~~$2.5 million was driven by a number of factors as explained below.

Net interest income increased ~~$251,000,~~by $207,000, or ~~6.6%~~5.2%, as a result of a decrease in deposit rates that generated an ~~increase~~80 basis point decrease in ~~interest-earning assets, partially offset by deposit repricing lagging~~ the ~~decreasing earning-asset yields~~cost of funds in ~~a declining interest rate environment.~~the first quarter of 2021, compared to the first quarter of 2020. The Company recognized a credit for loan losses of $213,000 for the quarter ended March 31, 2021 compared to a provision for loan losses of ~~$546,000 for the quarter ended September 30, 2020 compared to no provision~~$724,000 in the prior year quarter.

~~Non-interest income declined by $176,000 between periods, driven by a lower level~~ The first quarter of ~~fees related to decreased economic activity.~~

~~Non-interest expense decreased by $37,000 in~~2020 included salary and benefits for the ~~quarter ended September 30, 2020 as compared to the prior year period as a result of a combination of factors. Salaries~~severance and employee benefits decreased by $7,000, or 0.4%, between periods as a result of a slight decrease in headcount. Occupancy and equipment expenses increased $70,000 in the quarter ended September 30, 2020 over the prior year period, partly as a result of increased spending on cleaning and suppliesvested stock acceleration costs related to the ~~COVID-19 pandemic. Other non-interest expenses decreased by $100,000 between periods, given that marketing~~retirement of the former Chief Executive Officer and ~~certain operating expenses declined as a result~~the former Chief Financial Officer of ~~lower deposit customer activity.~~the Company. The total cost of this event was $1.38 million, of which $1.03 million was allocated to the Envision Bank segment and the remainder, $344,000, was allocated to the Envision Mortgage segment.

Total assets attributable to the Envision Bank segment increased ~~$51.9~~$44.2 million, or ~~10.0%~~8.2%, to ~~$573.0~~$582.0 million at ~~September 30, 2020~~March 31, 2021 from ~~$521.1~~$537.7 million at December 31, ~~2019.~~2020. This increase was principally due to growth in cash and portfolio loans.

The Envision Mortgage segment had income before income taxes and elimination of inter-segment profit of ~~$13.0~~$5.0 million for the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$642,000~~income of $573,000 for the three months ended ~~September 20, 2019. The~~March 31, 2020. This improvement of ~~$12.4~~$4.4 million in operating results occurred as a result of an increase of ~~$12.4~~$4.2 million, or ~~207.1%~~56.3%, in net gains on loan origination and sale activities. ~~In addition, there were increases in~~This was complemented by the ~~mortgage servicing fees, as~~absence of a ~~result of increases in loan production and a more stable interest rate environment.~~valuation allowance for MSRs.

The net gain on loan origination and sale activities, the principal source of revenue for Envision Mortgage, increased ~~$12.4~~$4.2 million to ~~$18.5~~$11.7 million in the ~~third~~first quarter of ~~2020~~2021 from ~~$6.0~~$7.5 million in the ~~third~~first quarter of ~~2019, driven by mortgage loan refinancing in a declining rate environment and higher sale margins.~~

~~Net interest income decreased $155,000, or 19.6%, to $637,000 in the third quarter of~~ 2020, compared to $792,000 in the third quarter of 2019. This was primarily due to a decrease in loan yields, partially offset by an increase in the average balance of loans held for sale and residential construction loans in the 2020 period.

Mortgage servicing fee income increased $1.4 million between periods largely due to a $1.1 million positive adjustment in the valuation allowance for MSRs in the 2020 period due to an increase in the volume of mortgage loans serviced and an expected stabilization in interest rates, versus a negative adjustment of $522,000 in the 2019 period.

Non-interest expenses of Envision Mortgage increased $1.4 million, or 22.1%, to $7.6 million in the third quarter of 2020 from $6.2 million in the third quarter of 2019. This increase is primarily due to an increase of $908,000, or 18.0%, in salaries and employee benefits, largely related to increased loan production volume.

The increase of $116,000 in occupancy and equipment costs in the third quarter of 2020 compared to the prior year period was related to fixtures and equipment that are expected to be retired as we consolidate our administrative office space.

Other non-interest expenses increased $346,000, or 40.7%, to $1.2 million in the third quarter of 2020 from $851,000 in the third quarter of 2019. This increase is mainly due to volume-related cost increases associated with higher residential mortgage loan production, partially offset by reductions in the allocation of certain indirect costs incurred by the Marketing, Finance and Administration cost centers.

~~Total assets attributable to the Envision Mortgage segment were $150.0 million at September 30, 2020, compared to $109.9 million at December 31, 2019.~~

~~Comparison of Segment Results for the Nine Months Ended September 30, 2020 and 2019~~

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 nine months ended September 30, 2020 and 2019.

Envision Bank

Envision Mortgage

Nine Months Ended September 30,

Increase (Decrease)

Nine Months Ended September 30,

Increase (Decrease)

2020

2019

Dollars

Percent

2020

2019

Dollars

Percent

(in thousands)

Net interest income

$
11,970

$
12,121

$
(151
)

(1.2
)%

$
1,857

$
1,319

$
538

40.8
%
Provision (credit) for loan losses

2,338

(144
)

2,482

1,723.6

—

—

—

—

Net interest income after provision
   (credit) for loan losses

9,632

12,265

(2,633
)

(21.5
)

1,857

1,319

538

40.8

Non-interest income:

Customer service fees

827

948

(121
)

(12.8
)

75

106

(31
)

(29.2
)
Gain on loan origination and
   sale activities, net ⁽¹⁾

—

—

—

—

40,667

14,043

26,624

189.6

Mortgage servicing fees, net

(281
)

(273
)

(8
)

(2.9
)

(1,147
)

635

(1,782
)

(280.6
)
Other

318

464

(146
)

(31.5
)

416

253

163

64.4

Total non-interest income

864

1,139

(275
)

(24.1
)

40,011

15,037

24,974

166.1

Non-interest expenses:

Salaries and employee benefits ⁽²⁾

6,983

5,292

1,691

32.0

17,456

13,222

4,234

32.0

Occupancy and equipment

1,305

1,137

168

14.8

1,090

835

255

30.5

Other non-interest expenses

3,286

3,434

(148
)

(4.3
)

3,269

2,539

730

28.8

Total non-interest expenses

11,574

9,863

1,711

17.3

21,815

16,596

5,219

31.4

Income (loss) before income taxes and
   elimination of inter-segment profit

$
(1,078
)

$
3,541

$
(4,619
)

(130.4
)%

$
20,053

$
(240
)

$
20,293

8455.4
%

The Envision Bank segment had losses before income taxes and elimination of inter-segment profit of $1.1 million for the three months ended September 30, 2020 compared to income of $3.5 million for the three months ended September 30, 2019. The decrease in operating results between periods of $4.6 million was driven by a number of factors as explained below.

Net interest income decreased by $151,000, or 1.2%, as a result of deposit repricing which lagged the decreasing earning-asset yields in a declining interest rate environment. The Company recognized a provision for loan losses of $2.3 million for the nine months ended September 30, 2020 compared to a credit for loan losses of $144,000 in the prior year period. The provision in the first nine months of 2020 included $558,000 representing the estimate of probable incurred losses associated with the impact of the COVID-19 pandemic on the loan portfolio.

~~Non-interest income declined between periods by $275,000, driven by a lower level of fees while stay-at-home orders were in effect.~~

Non-interest expense increased by $1.7 million in the nine months ended September 30, 2020 as compared to the prior year period, primarily driven by higher salaries and benefits, of which $1.0 million of the increase related to senior management retirement costs allocated to the Envision Bank segment, and other increases related to annual salary adjustments and the hire of new banking staff, as well as COVID-19 pandemic-related compensation for front-line and quarantined staff. Other non-interest expenses increased by $20,000 between periods.

The Envision Mortgage segment had income before income taxes and elimination of inter-segment profit of $20.1 million for the nine months ended September 30, 2020 compared to a loss of $240,000 for the nine months ended September 30, 2019. The improvement of $20.3 million in operating results occurred as a result of an increase of $26.6 million, or 189.6%, in net gains on loan origination and sale activities. Partially offsetting this increase were an increase in the valuation allowance for MSRs, higher salaries and employee benefits associated with the increase in closed loan production and increased other non-interest expenses related to loan production.

The net gain on loan origination and sale activities, the principal source of revenue for Envision Mortgage, increased $26.6 million to $40.7 million in the nine months ended September 30, 2020 from $14.0 million in the nine months ended September 30, 2019, driven by mortgage loan refinancing in a declining rate environment.

Net interest income increased ~~$538,000,~~$460,000, or ~~40.8%~~106.7%, to ~~$1.9 million~~$891,000 in the first ~~nine months~~quarter of ~~2020~~2021 compared to ~~$1.3 million~~$431,000 in the first ~~nine months~~quarter of ~~2019.~~2020. This was primarily due to an increase in the average balance of loans held for sale and residential construction loans in the ~~2020~~2021 period.

Mortgage servicing fee income ~~decreased $1.8~~increased $2.0 million between periods largely due to a ~~$2.0~~$1.6 million increase in the valuation allowance for MSRs in the 2020 period ~~given~~due to an increase in expected loan prepayment speeds caused by a reduction in interest rates.

Non-interest expenses of Envision Mortgage increased ~~$5.2~~$2.3 million, or ~~31.4%~~36.6%, to ~~$21.8~~$8.6 million in the first ~~nine months~~quarter of ~~2020~~2021 from ~~$16.6~~$6.3 million in the first ~~nine months~~quarter of ~~2019.~~2020. This increase is ~~primarily~~ due to an increase of ~~$4.2~~$1.6 million, or 32.0%, in salaries and employee benefits, largely related to increased loan production volume.

~~The increase of $255,000 in occupancy and equipment costs~~ Additionally, increases in the ~~first nine months~~allocation of ~~2020 compared~~certain indirect costs incurred by Finance and Administration cost centers also contributed to the prior year period was related to increased spending on cleaning and supplies related to the COVID-19 pandemic, as well as increased depreciation of furniture, fixtures and equipment that are expected to be retired as we consolidate our administrative office space.increase in non-interest expenses.

Other non-interest expenses increased ~~$730,000,~~$694,000, or ~~28.8%~~70.2%, to ~~$3.3~~$1.7 million in the first ~~nine months~~quarter of ~~2020~~2021 from ~~$2.5 million~~$989,000 in the first ~~nine months~~quarter of ~~2019.~~2020. This increase is mainly due to volume-related cost increases associated with higher residential mortgage loan production.

Total assets attributable to the Envision Mortgage segment were $156.2 million at March 31, 2021, compared to total assets of $183.4 million at December 31, 2020. This decrease is primarily related to a decrease in loans held for sale.

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

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
Nonaccrual loans:	(In thousands)						(In thousands)
Real estate loans:
One- to four-family residential	$	2,215		$	2,922		$	2,158		$	1,876
Commercial		6,986			—			5,768			4,713
Home equity loans and lines of credit		582			336			383			584
Construction		—			—			—			—
Commercial and industrial loans		33			—			—			—
Consumer loans		—			—			—			—
Total nonaccrual loans		9,816			3,258			8,309			7,173
Delinquent loans (>90 days) accruing interest		828			—			—			—
Total non-performing loans		10,644			3,258			8,309			7,173
Other real estate owned		132			—			132			132
Total nonperforming assets	$	10,776		$	3,258		$	8,441		$	7,305
Performing troubled debt restructurings		1,437			2,149			1,713			1,749
Total nonperforming assets and performing troubled debt restructurings	$	12,213		$	5,407		$	10,154		$	9,054

Total nonperforming loans to total loans⁽¹⁾		2.17	%		0.69	%		1.67	%		1.46	%
Total nonperforming assets to total assets		1.49	%		0.52	%		1.14	%		1.01	%
Total nonperforming assets and performing troubled debt restructurings to total assets		1.69	%		0.86	%		1.38	%		1.26	%

(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 ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 had nonaccruing loans been current according to their original terms amounted to ~~$194,000.~~$101,000. Income related to nonaccrual loans included in interest income for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 amounted to ~~$109,000.~~$58,000.

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

	September 30, 2020		December 31, 2019		March 31, 2021		December 31, 2020
	(In thousands)				(In thousands)
Classified assets:
Substandard	$	10,017	$	3,678	$	6,826	$	5,783
Doubtful		—		—		—		—
Loss		—		—		—		—
Total classified assets	$	10,017	$	3,678	$	6,826	$	5,783
Special mention	$	8,657	$	5,537	$	10,041	$	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 ~~September 30, 2020,~~March 31, 2021, there were ~~$8.7~~$10.0 million of assets designated as special mention compared to ~~$5.5~~$11.1 million at December 31, ~~2019.~~

Included in the above table are $7.0 million in special mention loans which have been granted short-term loan payment deferrals for customers experiencing a hardship due to the COVID-19 pandemic. The $7.0 million in special mention loans relate to commercial real estate loans in the hospitality industry where full repayment of the loan was in question beyond the initial deferral period.2020.

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

	September 30, 2020								December 31, 2019								March 31, 2021								December 31, 2020
			% of Allowance			% of Loans					% of Allowance			% of Loans					% of Allowance			% of Loans					% of Allowance			% of Loans
			Amount to Total			in Category					Amount to Total			in Category					Amount to Total			in Category					Amount to Total			in Category
(Dollars in thousands)	Amount		Allowance			to Total Loans			Amount		Allowance			to Total Loans			Amount		Allowance			to Total Loans			Amount		Allowance			to Total Loans
Real estate loans:
One- to four-family residential	$	1,583		24.00	%		48.15	%	$	1,096		25.61	%		51.85	%	$	1,522		23.19	%		48.05	%	$	1,646		24.26	%		48.16	%
Commercial		3,355		50.86	%		28.95	%		1,840		42.99	%		26.57	%		3,390		51.65	%		29.52	%		3,402		50.15	%		29.41	%
Home equity loans and lines of credit		452		6.85	%		9.81	%		289		6.75	%		8.83	%		425		6.48	%		9.86	%		442		6.52	%		9.84	%
Construction		807		12.23	%		6.54	%		692		16.17	%		7.52	%		720		10.97	%		6.02	%		751		11.07	%		6.35	%
Commercial and industrial loans		246		3.73	%		4.16	%		235		5.49	%		1.93	%		401		6.11	%		4.80	%		416		6.13	%		4.14	%
Consumer loans		154		2.33	%		2.39	%		128		2.99	%		3.30	%		105		1.60	%		1.75	%		127		1.87	%		2.09	%
Total	$	6,597		100.00	%		100.00	%	$	4,280		100.00	%		100.00	%	$	6,563		100.00	%		100.00	%	$	6,784		100.00	%		100.00	%

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

	Nine Months Ended September 30,						March 31,
	2020			2019			2021			2020
	(In thousands)						(In thousands)
Allowance at beginning of period	$	4,280		$	4,437		$	6,784		$	4,280
Provision (credit) for loan losses		2,338			(144	)		(213	)		724
Charge offs:
Consumer loans		(40	)		(171	)		(10	)		(16	)
Total charge-offs		(40	)		(171	)		(10	)		(16	)

Recoveries:
Real estate loans:
One- to four-family residential		7			23			2			4
Commercial and industrial		2			-
Consumer loans		10			8			—			4
Total recoveries		19			31			2			8
Net charge-offs		(21	)		(140	)		(8	)		(8	)
Allowance at end of period	$	6,597		$	4,153		$	6,563		$	4,996
Total loans outstanding⁽¹⁾	$	491,145		$	461,371		$	498,546		$	481,222
Average loans outstanding	$	555,838		$	473,301		$	516,330		$	477,661
Allowance for loan losses as a percent of total loans outstanding⁽¹⁾		1.34	%		0.90	%		1.32	%		1.04	%
Net loans charged off as a percent of average loans outstanding⁽²⁾		0.01	%		0.04	%		0.01	%		0.01	%
Allowance for loan losses to nonperforming loans		67.21	%		120.20	%		78.99	%		152.55	%

At ~~September 30, 2020,~~March 31, 2021, we had ~~$66.9~~$60.0 million of FHLBB advances ~~and $15.3 million of FRB advances outstanding, respectively.~~outstanding. At that date, we had the ability to borrow up to an additional ~~$92.2~~$76.5 million from the FHLBB under a blanket pledge agreement, $4.2 million under a line of credit with the FHLBB, $2.0 million under a line of credit with the Federal Reserve Bank of Boston and $7.5 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 ~~September 30, 2020,~~March 31, 2021, cash and cash equivalents totaled ~~$49.1~~$55.0 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 ~~$25.2~~$32.0 million, or ~~5.1%~~6.0%, to ~~$522.3~~$560.3 million at ~~September 30, 2020~~March 31, 2021 from ~~$497.0~~$528.3 million at December 31, ~~2019.~~2020. During this period, brokered deposits, which management considers to be a source of wholesale funding and an alternative to FHLBB advances, ~~decreased $53.6 million.~~increased $496,000. FHLBB advances ~~increased $22.5~~decreased $1.9 million to ~~$66.9~~$60.0 million at ~~September 30, 2020~~March 31, 2021 from ~~$44.4~~$61.9 million at December 31, ~~2019. The Bank~~ ~~pledged PPP loans as collateral to the Federal Reserve’s Paycheck Protection Program Liquidity Facility and received advances of $15.3 million.~~

2020. Brokered deposits ~~and the FRB~~ and FHLBB advances make up the Bank’s wholesale funding which management targets at a limit of 25% of assets. At ~~September 30, 2020,~~March 31, 2021, wholesale funding amounted to ~~$119.5~~$92.2 million, or ~~16.5%~~12.5% of total assets.

At ~~September 30, 2020,~~March 31, 2021, we had ~~$439.5~~$251.7 million in loan commitments outstanding, including ~~$418.9~~$239.5 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 ~~$67.0~~$75.7 million in unused lines of and letters of credit to borrowers and ~~letters of credit and $7.2~~$12.3 million in undisbursed construction loans. 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 ~~September 30, 2020~~March 31, 2021 totaled ~~$97.7~~$70.7 million, including ~~$20.2~~$12.2 million of brokered deposits. Management expects, based on historical experience, that a substantial portion of the maturing ~~non-brokered~~ certificates of deposit will be ~~renewed.~~renewed or retained in other deposit products.

The Bank is subject to various regulatory capital requirements, including a risk-based capital measure. At ~~September 30, 2020,~~March 31, 2021, the Bank’s Tier 1 capital to average assets ratio was ~~12.17%~~12.2%. The Bank exceeded all regulatory capital requirements and was considered “well capitalized” under regulatory guidelines as of ~~September 30, 2020.~~March 31, 2021.

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

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 ~~September 30, 2020.~~March 31, 2021. 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 ~~September 30, 2020,~~March 31, 2021, 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.

~~This section supplements and updates certain~~There have been no material changes to the risk factors disclosed in Item 1A of the ~~information found under Part I, Item 1A. “Risk Factors” of our~~Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 12, 2020 (“Annual Report”), and Part II. Item 1A. “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, as filed with the SEC on August 7, 2020 (the “Second Quarter 10-Q”) based on information currently known to us and recent developments since the date of the Second Quarter 10-Q filing. The matters discussed below should be read in conjunction with the risks described in Part I. Item 1A. “Risk Factors” of our Annual Report and Part II. Item 1A. “Risk Factors” of our Second Quarter 10-Q. However, the risks and uncertainties that we face are not limited to those described below and those set forth in the Annual Report and the Second Quarter 10-Q. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our securities, particularly in light of the fast-changing nature of the COVID-19 pandemic, containment measures and the related impacts to economic and operating conditions.

The COVID-19 pandemic, and the measures taken to control its spread, will continue to adversely impact our employees, customers, business operations and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted.

The COVID-19 pandemic has impacted and is likely to continue to impact the national economy and the regional and local markets in which we operate, lower equity market valuations, create significant volatility and disruption in capital and debt markets, and increase unemployment levels. Our business operations may be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic. We are subject to heightened cybersecurity, information security and operational risks as a result of work-from-home arrangements that we have put in place for our employees. Federal Reserve actions to combat the economic contraction caused by the COVID-19 pandemic, including the reduction of the target federal funds rate and quantitative easing programs, could, if prolonged, adversely affect our net interest income and margins, and our profitability. The continued closures of many businesses and the institution of social distancing, shelter in place and stay home orders in the states and communities we serve, have reduced business activity and financial transactions. Government policies and directives relating to the pandemic response are subject to change as the effects and spread of the COVID-19 pandemic continue to evolve. It is unclear whether any COVID-19 pandemic-related businesses losses that we or our customers may suffer will be recovered by existing insurance policies. Changes in customer behavior due to worsening business and economic conditions or legislative or regulatory initiatives may impact the demand for our products and services, which could adversely affect our revenue, increase the recognition of credit losses in our loan portfolios and increase our allowance for credit losses. Increases in deposit balances due, among other things, to government stimulus and relief programs could adversely affect our financial performance if we are unable to successfully lend or invest those funds. The measures we have taken to aid our customers, including short-term loan payment deferments, may be insufficient to help our customers who have been negatively impacted by the economic fallout from the COVID-19 pandemic. Loans that are currently in deferral status may become nonperforming loans. Because of adverse economic and market conditions affecting issuers, we may be required to recognize impairments on the securities we hold as well as reductions in other comprehensive income. While the COVID-19 pandemic negatively impacted our results of operations for the first nine months of 2020, the extent to which the COVID-19 pandemic will continue to impact our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic, as well as further actions we may take as may be required by government authorities or that we determine is in the best interests of our employees and customers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the pandemic.2020.

Our participation in the SBA’s PPP may expose us to reputational harm, increased litigation risk, as well as the risk that the SBA may not fund some or all of the guarantees associated with PPP loans.

As of September 30, 2020, we have originated 194 loans aggregating $15.4 million through the PPP. Lenders participating in the PPP have faced increased public scrutiny about their loan application process and procedures, and the nature and type of the borrowers receiving PPP loans. We depend on our reputation as a trusted and responsible financial services company to compete effectively in the communities that we serve, and any negative public or customer response to, or any litigation or claims that might arise out of, our participation in the PPP and any other legislative or regulatory initiatives and programs that may be enacted in response to the COVID-19 pandemic, could adversely impact our business. Other larger banks have been subject to litigation regarding the process and procedures that such banks used in processing applications for the PPP, and we may be subject to the same or similar litigation, in addition to litigation in connection with our processing of PPP loan forgiveness applications. In addition, if the SBA determines that there is a deficiency in the manner in which a PPP loan was originated, funded, or serviced by us, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty, or, if it has already paid under the guaranty, seek recovery of any loss related to the deficiency from us.

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.

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.


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

10 Cabot Place
Stoughton, Massachusetts	02072
(Address of principal executive offices)	(Zip Code)


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

		Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020	1
	Consolidated Statements of Operations for the ~~Three~~three months ended March 31, 2021 and ~~Nine Months Ended September 30,~~ 2020 ~~and 2019~~	2
	Consolidated Statements of Comprehensive Income for the ~~Three~~three months ended March 31, 2021 and ~~Nine Months Ended September 30,~~ 2020 ~~and 2019~~	3
	Consolidated Statements of Changes in Stockholders’ Equity for the ~~Three Months Ended September 30,~~three months ended March 31, 2021 and 2020 ~~and 2019~~	4
	~~Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2020 and 2019~~	54
	Consolidated Statements of Cash Flows for the ~~Nine Months Ended September 30,~~three months ended March 31, 2021 and 2020 ~~and 2019~~	65
	Notes to Unaudited Consolidated Financial Statements	86
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3227
Item 3. Quantitative and Qualitative Disclosures About Market Risk		4737
Item 4. Controls and Procedures		4737
PART II—OTHER INFORMATION		4837
Item 1. Legal Proceedings		4837
Item 1A. Risk Factors		4837
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4938
Item 3. Defaults Upon Senior Securities		4938
Item 4. Mine Safety Disclosures		4938
Item 5. Other Information		4938
Item 6. Exhibits		4938
SIGNATURE		5039

			PPP Loan Balance				FRB Advances
	PPP Loans		Outstanding at		Amount Pledged		Outstanding at
	Originated		March 31, 2021		to PPPLF		March 31, 2021 ⁽¹⁾
	(In thousands)
2020 PPP loans	$	15,387	$	4,557	$	15,387	$	-
2021 PPP loans		10,160		10,160		-		-
Total Activity	$	25,547	$	14,717	$	15,387	$	-

Options	Stock Option Grants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at January 1, 2020		360,207		$	14.82		7.26	$	—
Granted		330,118			12.14
Forfeited		(14,543	)		15.34
Expired		(91,614	)		14.67
Balance at September 30, 2020		584,168		$	13.32		8.65	$	357,681
Exercisable at September 30, 2020		101,993		$	14.92		7.27	$	0
Unrecognized compensation cost (inclusive of directors' options)	$	1,533,857
Weighted average remaining recognition period (years)		3.20

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

	Number of Contracts		TDRs Listed as Accrual		Number of Contracts		TDRs Listed as Non-accrual		Number of Contracts		Total TDRs
	(In thousands)
March 31, 2021
Residential one- to four-family		12	$	1,654		4	$	1,157		16	$	2,811
Home equity loans and lines of credit		1		42		-		—		1		42
Commercial real estate		1		17		-		—		1		17
Total		14	$	1,713		4	$	1,157		18	$	2,870

December 31, 2020
Residential one- to four-family	$	12	$	1,666	$	4	$	1,167		16	$	2,833
Home equity loans and lines of credit		1		42		-		—		1		42
Commercial real estate		1		40		-		—		1		40
Total		14		1,748		4	$	1,167		18	$	2,915

Options	Stock Option Grants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at January 1, 2021		587,168	$	13.32		8.40	$	—
Granted		40,491		20.06
Balance at March 31, 2021		627,659	$	13.75		8.27	$	3,923,110
Exercisable at March 31, 2021		177,788	$	15.01		7.07	$	887,395
Unrecognized compensation cost (inclusive of directors' options)	$	1,565,435
Weighted average remaining recognition period (years)		2.85

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May be Purchased Under the Plans or Programs
January 1, 2021 - January 31, 2021		45,377	$	20.24		45,377		477,278
February 1, 2021 - February 29, 2021		37,524	$	19.94		37,524		439,754
March 1, 2021 - March 31, 2021		47,394	$	20.31		47,394		392,360
		130,295	$	20.17		130,295		392,360


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 ~~September 30, 2020~~March 31, 2021 were formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, (ii) Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ (iii) Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ (iv) Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ (v) Consolidated Statements of Cash Flows for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ and (vi) Notes to Unaudited Consolidated Financial Statements.

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


Date: ~~November 5, 2020~~May 6, 2021	By:	/s/ William M. Parent
		William M. Parent
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: ~~November 5, 2020~~May 6, 2021	By:	/s/ Lauren B. Messmore
		Lauren B. Messmore
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)