Bill White has been banking on Rhode Island for a long time.
And judging from past experience, he believes Coastway Community Bank customers will go along with the institution’s latest venture. Last week, the bank mailed about 26,000 ballots asking depositors to vote on converting the mutual bank into a publicly traded company on the NASDAQ stock market. In addition to ballots, bank customers also received applications to buy up to $200,000 of stock in the company at $10 a share.
Voting has already started by mail, phone and online ballots. Orders to buy stock are also starting to come in, although if bank customers don’t approve the conversion, they would not be completed.
White had no idea Friday where either the vote or commitments to buy stock stood at this point.
Nonetheless, he didn’t sound too worried. He said historically customer trust in the actions of the board has strengthened with time. He said the vote to convert the institution from a credit union to a mutual savings bank was 5-1 in favor in 2009. Then less than two years ago, depositors approved the conversion to a mutual holding company by a margin of 9-1. A simple majority of votes is required for approval of the conversion.
“We are looking to grow and stay local … do more of what the bank has been doing,” White said.
In an August interview, White said Coastway needs to keep growing. However, he is not looking to add to the bank’s nine branches centered in Kent and Providence counties. He said additional branches would increase expenses, whereas the intent is to increase capital so as to make more loans and “fuel the engine of our internal growth.”
According to the prospectus sent to customers, Coastway could boost bank assets by 10 percent if the stock sale is successful. With a favorable vote, Coastway would be able to sell up to 4,827,125 shares of common stock to raise $48.2 million. Current bank assets are about $375 million.
Further, in order for the sale to qualify, a minimum of 3,105,500 shares must be sold. The $10 per share price is a subscription offering to qualified depositors as of July 30, 2012. Coastway board members are eligible to buy stock under the same conditions of the offer to all customers. Board members and bank officers, a total of 15, have subscribed to buy 87,500 shares at $10 a share. Customers will have up to Dec. 16 to subscribe for stock. A special meeting to which all depositors are invited is planned for Jan. 2 at Quidnessett Country Club for the vote.
White is hopeful the bank’s reorganization to a publicly traded company will gain approval whether customers choose to subscribe to the stock sale or not.
“Everybody has to make their own decision whether it is a good investment or not,” he said.
In an unrelated matter to the conversion, the bank is already committed to an investment of about $8.8 million in Warwick. Construction on corporate headquarters in Metro Center is proceeding rapidly. White said he is hopeful the building will be ready to occupy by May of next year. He said the bank’s current offices at One Coastway Plaza in Cranston have been listed and there have been “several interested buyers.”
In addition, customers are asked to vote on the creation of a Coastway charitable foundation that would be created with $300,000 in cash and 3.15 percent of the gross offering, which could range from $677,290 to $1 million depending on the shares sold.
The conversion, being handled by Sandler O’Neill & Partners, L.P., has gained the required federal and state regulatory approvals.
Conversion costs not to exceed $2.5 million would come out of the proceeds of the sale of stock.