Randolph Bancorp, the holding company of Randolph Savings Bank, will lay off 8 percent of its workforce, or about 16 employees, before year’s end. The move is “intended to better align staffing levels with the current volume of residential mortgage loan originations,” according to a recent regulatory filing.
The staff reductions would reduce the company’s annual operating expenses by approximately $1.13 million. The company also expects to recognize a non-recurring pre-tax charge of approximately $600,000 in the fourth quarter of 2017 attributed to severance benefits.
The lay-offs come as Randolph Savings Bank struggles to turn a profit. After a successful year in 2016, during which the bank reported $2.64 million in net income, its first profitable year since 2012, the bank has reported a loss of $434,000 through the first nine months of 2017, according to FDIC data.
In its third quarter earnings report, that number was $548,000.
Randolph executives took a number of steps to get the bank back on track last year. The bank converted from a mutual bank to a publicly traded bank, issuing 5.6 million shares of common stock, representing the adjusted maximum of the offering range, at $10 per share. The money raised in the public offering was then used to purchase First Eastern Mortgage.
With the acquisition, Randolph Savings Bank doubled its work force, reaching 208 employees, according to their call report from the third quarter of 2016. Between the third quarter of 2016 and the third quarter of 2017, the bank had increased its salary and employee benefits from $9.9 million to $14.1 million through the first nine months of this year.
The company appeared to be reaping benefits from the acquisition, reporting strong residential mortgage origination volume in the second quarter of 2016, fueled by a decline in long-term interest rates and an increase in the proportion of such loans sold in the secondary market.
But this year, the bank’s mortgage operations took a hit as the housing inventory shrunk and refinancing activity slowed.
According to the bank’s third quarter earnings report, residential loan originations in 2017 were down 35 percent.
Through Sept. 30, 74 percent of the bank’s loan originations funded home purchases and 26 percent funded the refinancing of loans. For all of 2016, loan refinancing activity accounted for 45 percent of total originations.
“We continue to make investments in our mortgage banking capabilities and to take actions to improve our market share to address the challenges of lower loan refinancing activity and a shortage of homes being marketed for sale in our lending area,” James P. McDonough, president and CEO of Randolph Bancorp, said in a statement in the company’s third quarter earnings report.
