The parent of Savings Institute Bank and Trust Co. in Willimantic plans to reorganize by converting its mutual holding company parent to stock and combining its two separate arms, The Associated Press reports.
SI Financial Group CEO Rheo A. Brouillard said Friday the reorganization is not an attempt to make the bank more attractive as an acquirer or a takeover target.
When Savings Institute reorganized in 2004, a two-tier mutual holding company was created with two parents: SI Bancorp MHC, which holds about 62 percent, and SI Financial Group Inc., whose 38 percent stake is publicly traded.
That same year, then New Haven Savings Bank converted from a lender partly owned by idepositors intto a capital stock bank so it could merge with the former Savings Bank of Manchester and former Tolland Bank, forming NewAlliance Bank.
NewAlliance now awaits a $1.5 billion merger with First Niagara Financial Group of Buffalo, N.Y.
In February Naugatuck Valley Mutual announced that it would convert from an institution partly owned by its depositors to a stock bank, paving the way for its parent Naugatuck Valley Financial Corp. to acquire Southern Connecticut Bancorp.
“This is not a move to position us to be acquired,” Brouillard told HBJ Today on Friday. “In fact, this is the opposite — we want to be a survivor.”
He said the action is a response to recently adopted banking regulation in which the Office of Thrift Supervision, the principal regulator for mutually owned lenders like Savings Institute, is being dissolved.
Under the new plan, the two parents will combine into a new stock holding company, also named SI Financial Group Inc.
In the process, the new company will offer and sell shares of common stock in an amount equal to the mutual holding company’s 62 percent stake. Eligible account holders and the company’s employee stock ownership plan will have first opportunity to buy the shares in a subscription offering. Depositors with accounts established before June 30, 2009 will have the highest offering priority.
Any shares that remain unsold will then be offered to the public.
Current shareholders will receive stock in the new company based on an exchange ratio calculated to preserve their 38 percent stake.
The reorganization plan also calls for the bank to contributed $500,000 in cash to the SI Financial Group Foundation, a charitable foundation established in 2004.
The plan is subject to approval by depositors, shareholders and regulatory agencies. The bank said it will have no impact on normal business operations.
Savings Institute Bank has assets of about $880 million.
