Coastway niche as local alternative to big banks

COASTWAY BANCORP PRESIDENT AND CEO William A. White said that HarborOne Bancorp.'s purchase of Coastway should not involve any significant job reductions. / PBN FILE PHOTO/RUPERT WHITELEY
COASTWAY BANCORP PRESIDENT AND CEO William A. White said that HarborOne Bancorp.'s purchase of Coastway should not involve any significant job reductions. / PBN FILE PHOTO/RUPERT WHITELEY

Coastway Bankcorp Inc. became a publicly traded commodity on the Nasdaq stock exchange this year, retaining William A. White in the top position as president, director and CEO. Originally organized as a credit union in 1920 and converted to a community bank and mutual holding company in 2009, Coastway has nine local branches in Cranston, Providence, Warwick, East Providence, East Greenwich and Lincoln.
White has led Coastway and its predecessor, Warwick Credit Union, since 1994. According to White, deposits have grown 29 percent over the last three years, through Sept. 30, 2013, from $262 million to $338 million; loan portfolios have grown 23 percent, from $257 million to $318 million; capital on hand has grown 8.9 percent, from $25 million to $27.5 million. Assets have grown 23 percent, from $309 million to $380 million.

PBN: Coastway Bancorp Inc. has been publicly traded since Jan. 15. What is the most important advantage that going public has brought to Coastway so far?
WHITE: The additional capital to support additional growth. Basically, this will allow us to continue the successes we’ve had in both commercial and residential lending and continue to fill that need for a community bank.

PBN: How much has that additional capital amounted to?
WHITE: Gross proceeds from the offering were $48.3 million. We did OK. We’re allowed as a bank to leverage that capital. We’ll be using that as our basis to make additional loans.

PBN: Are there other advantages you are seeking or will seek to leverage through the IPO?
WHITE: No. Our plan basically calls for us to just use it to continue growth.

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PBN: You have said the IPO was intended to raise more capital to meet the high demand for lending. How do you measure this high demand and what evidence do you have of it?
WHITE: If you go back and look at the numbers in the loan portfolio itself, in the three-year period from Dec. 30, 2010, it’s over $61 million [worth] of growth. To put those kinds of numbers on the books, you’ve got to have demand: in mortgage lending, first mortgages and in the commercial [area]. Demand comes from being available. We’ve got a good branch network. We’re out in the community making ourselves known. That results in demand coming in the door. We’ve certainly got the ability now and we did back then to meet that demand. PBN: IPOs are often launched to foster expansion. Are acquisitions in Coastway’s future and to what extent?
WHITE: We don’t have anything on the horizon. For us, it’s more a matter of taking care of what’s on the plate right now: Looking to deploy capital in other ways just has not been dealt with. We have no plans at this point.

PBN: You have indicated in the past the bank will remain independent and is not for sale. Is that still true?
WHITE: That is absolutely true.

PBN: How do you think you are doing given the overall fluctuation in stock value so far?
WHITE: We’re pleased so far. That’s one thing I’m not allowed to comment on in detail.

PBN: Is demand higher on the residential or commercial side of the business, and what are your goals for growing each area?
WHITE: Demand has been higher on the residential end, but that’s kind of just a function in terms of what’s out there with mortgage originations. Commercial has also kept up in terms of demand. Historically our portfolio has been centered one-third, one-third and one-third between consumer lending, commercial and residential. That’s a good balance for us, and it makes good business sense to see some diversification like that.

PBN: Have there been any disadvantages to going public, whether in fees, time spent managing the conversion or anything else?
WHITE: It’s not inexpensive to be a publicly traded company, and we certainly have figured that into our business plan on a go-forward basis. We certainly feel, however, that the advantages of having the increased level of capital will outweigh the expense that it took to get there. PBN: Tell us about the charitable foundation you established with $300,000 during the conversion. Why did you set it up and what will be its mission?
WHITE: We set up a charitable foundation called Coastway Cares Charitable Foundation II. We’ve always had a charitable foundation here. This was funded with some of the proceeds of the IPO. The mission of Coastway Cares has always been to give back to the local community. It’s been very active in supporting things like the Rhode Island Mentoring Partnership, various local charities like boys and girls clubs, and health care. The money put into the foundation will be expended to continue that work.
Last year alone, Coastway employees donated [more than] 4,000 hours of volunteer work and that’s right here in the Coastway marketplace.

PBN: How has the IPO affected your professional development or retention policies, if at all?
WHITE: It certainly gives the employees the chance to gain ownership in the company through the stock-option plan and will help keep them focused on what we’re trying to do here. They now are owners as well.
PBN: How does the IPO make you stand out from your competitors – Citizens Bank, Bank of America, Washington Trust and Bank Rhode Island?
WHITE: We’re still the smallest of that bunch. Our focus will remain on the community. When you look at Bank of America and Citizens, they obviously have a global focus. Coastway is going to continue to focus right here in Rhode Island and try and position ourselves as a viable alternative to the bigger banks.

PBN: Does that mean your lending criteria will be redefined?
WHITE: We never ratcheted down our lending criteria and we don’t feel the need to expand it. It’s been constant, it’s been steady and it’s produced, we think, good results. •

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