Rhode Islanders like to invest in Rhode Island.
That’s one conclusion to be made in the wake of Coastway Community Bank’s initial stock offering, which was oversubscribed, leaving some of those wanting to invest out in the cold. In just a matter of weeks, buyers subscribed to purchase 4,827,125 shares at $10 a share to raise $48.3 million. Bank assets prior to the stock sale were $375 million.
The limit on any one subscriber was 20,000 shares.
But yesterday those who missed out, plus everyone else in the world, gained the chance to buy Coastway shares. For the first time, the stock was listed on the Nasdaq Capital Market under the trading symbol “CWAY.” The stock went on the market at 11 a.m. at $10 a share and jumped to $11 by 1 p.m. By that time, 868,000 shares had been traded.
That’s a significant change for the institution that started off as the Telephone Workers Credit Union of Rhode Island and the Warwick Credit Union, with offices at Warwick and Church avenues. Actually, several credit unions were combined under the Coastway Credit Union banner, which about two years ago transitioned to a mutual savings bank. On a snowy Jan. 2 at a meeting at Quidnessett Country Club, mail-in ballots and the final votes were tallied, clearing the way for the bank to become publicly traded. In order for the conversion, 50 percent plus one had to vote. Those voting in favor of the conversion to a stock holding company – Coastway Bancorp – outnumbered those voting against it by a margin of 8 to 1, Coastway President William White said Tuesday.
White said there were four tiers of potential stock subscribers, starting with bank members who held accounts since last summer. A second tier consisted of bank employees, with the third tier being all other bank customers who weren’t eligible under the first tier, and finally the general public.
When it came to deciding who wouldn’t have the opportunity to subscribe to buy shares at $10 because the demand exceeded supply, the general public “were the ones who took the hair cut,” said White.
“It was a perfect success,” White says of the stock sale.
Such a successful offering boded well for the stock when public trading started yesterday, although White won’t say that. Rather, he stressed there’s a risk that accompanies the purchase of stock and there’s no guarantee that its price will increase.
But he does make one guarantee of how the funds raised will be used.
“Nothing is going to be different … loans, loans and more loans,” he said. As White put it, the infusion of $48.3 million “gives us more fuel for the engine.”
That has been the plan all along. Coastway will do more car loans and home mortgages and more small and medium-sized business loans. It won’t be expanding its branch system, although it will be relocating its headquarters from Cranston to Metro Boulevard in Warwick. The bank has branches in Cranston, East Providence, East Greenwich, Lincoln, Providence and Warwick.
The 45,000-square-foot bank headquarters being built by Michael Integlia is presently “weather tight” and should be available for occupancy by late in the second quarter, said White. The existing building in Cranston, which is about half the size of the new one, is for sale, and while there have been interested parties, there’s no sales agreement at this time.
White does not expect any additional jobs with the conversion to a stock holding company. There could be more jobs with growth of the company.
Those who bought stock through the subscription period that ended Dec. 16 will receive notification of their shares. The shares will be electronically registered and they will be informed how they can be registered with their broker should they have one. Stock certificates will not be issued.
According to a press release issued Tuesday, statements reflecting the shares purchased in the subscription and community offerings, interest checks and refund checks for any persons not receiving all shares ordered are expected to be mailed no later than yesterday. Those wishing to confirm their allocation of shares may contact the stock information center at 736-7353. The stock information center is open weekdays from 10 a.m. until 4 p.m.
Also, as part of the transaction, Coastway contributed 122,054 shares and $300,000 in cash to a charitable foundation established by the bank. Conversion costs are not to exceed $2.5 million that will come out of the stock sale.
Asked what he thought of the conversion, White said, “none of this was easy.” He explained the process required multiple agency reviews and approvals.
“It was an educational process,” he said, “but all the work is worth it.”
With news that the stock was up a dollar within the first two hours of being publicly traded, White was asked how he feels now.
“No better than I did yesterday, even though I’ll probably sleep better.”