HarborOne buys RI bank Coastway for $125.6M

WARWICK, R.I. (WPRI) – Another local bank will soon be under out-of-state ownership.

Coastway Community Bank, the former credit union that became a publicly traded company four years ago, announced Wednesday evening that it has been sold to HarborOne Bancorp Inc. of Brockton, Massachusetts, for $125.6 million in cash.

The companies said they expect the transaction to close in the second half of this year. Stockholders in Warwick-based Coastway’s parent company will receive $28.25 for each share they own.

Coastway had 148 employees, all full-time, as of Dec. 31. In a news release, Coastway President and CEO William White offered no details about what spurred his board to sell, but company officials have previously described competition in the Rhode Island banking market as “intense.”

“This is a great union for both companies, and our customers will benefit with access to expanded mobile banking capabilities, rewards and affinity programs, and new products,” said White, who has led the bank and one of its predecessor institutions since 1994. Coastway’s nine branches in Rhode Island will remain open, he said.

HarborOne President and CEO James Blake described the deal as “a strategic acquisition for HarborOne, and a great fit with our growth plan.” The merged HarborOne-Coastway will rank 12th among New England community banks by assets, with 65 locations across Massachusetts, Rhode Island, New Hampshire and Maine, they said.

“The Rhode Island market is incredibly attractive to us, and Coastway’s established position provides a natural extension of our successful commercial lending business in Rhode Island,” Blake said. “This is a unique opportunity for HarborOne to access excellent customer demographics and grow our business.”

A group of top Coastway officials could receive a sizable amount of money if the deal goes through.

The company established a severance plan in 2014 that would pay officers two times their base salaries plus their highest recent bonus and commissions if they are not offered employment with the merged bank, according to a filing with the Securities and Exchange Commission. It could also trigger some stock awards.

Coastway’s board of directors includes R.I. Supreme Court Associate Justice Francis Flaherty, a former Warwick mayor, and Malcom G. Chace Jr., a member of the prominent Rhode Island banking family.

Coastway got its start in 1920 as the Telephone Workers Credit Union. It merged in 2000 with Ocean State Community Credit Union – formerly Warwick Credit Union – and in 2009, changed its charter from a credit union to a community bank. The company then formed a mutual holding company before joining the Nasdaq stock exchange in 2014.

Coastway’s deposits totaled about $480 million as of last June, making it the eighth-largest bank in Rhode Island by that metric, with about 1.6% of the state’s total deposits, FDIC data shows.

The HarborOne-Coastway merger will leave six of Rhode Island’s top 10 banks owned by out-of-state companies.

The largest local bank by far is Citizens Bank, which maintains its official headquarters in Providence and had $11.4 billion in local deposits as of last June, or 38% of the total, according to the FDIC.

Second-ranked is Bank of America, which has had a major presence locally since it acquired Fleet Financial in 2004. The North Carolina-based banking giant had $7.6 billion in Rhode Island deposits, or 25% of the total, as of last June.

The next eight are Washington Trust, based in Westerly; Santander Bank of Spain; Bank Rhode Island, purchased in 2012 by Brookline Bank of Massachusetts; BankNewport, based in that city; Centreville Bank, based in West Warwick; Coastway; Webster Bank of Connecticut; and T.D. Bank of Toronto.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook