Beneficial Mutual Bancorp's long-awaited announcement came Thursday: the Philadelphia-based mutual thrift plans to convert to a publicly owned company.
Though the move had been expected eventually, the timing was unclear given market conditions and a government investigation of the $4.4 billion-asset company. It announced a year ago that the Justice Department was conducting a probe into its residential real estate lending after a referral from the Federal Deposit Insurance Corp. But that probe is now concluded, Beneficial said.
"Following the recent closure of the fair lending investigation we have evaluated market conditions and the changing regulatory environment, particularly the impact of regulatory change on mutual holding companies, and we believe it is in the best interests of both the company and our stockholders to move forward with our conversion," the board said in a press release Thursday.
Conversions, and speculation that more mutuals will make the move, have been big news in recent years.
Investors Bancorp in Short Hills, N.J., and Clifton Bancorp (CSBK) in Clifton, N.J., completed second-step conversions this year. Meridian Interstate Bancorp (EBSB) in Boston has announced plans to convert, and the buzz had increased about other possible candidates, too, including TFS Financial in Cleveland.
Under the so-called second-step conversion, Beneficial's holding company would sell its majority ownership in the thrift to the public. Beneficial would then reorganize as a fully public-stockholder company. Stock held by current shareholders other than the mutual holding company is to be converted into shares of the new company at an exchange rate meant to preserve their current level of ownership, the release said.
Also, depositors in the Beneficial Bank unit with qualifying deposits as of June 30, 2013, will have first priority to purchase shares of the new company.
The conversion plan includes a $1 million contribution to The Beneficial Foundation, a charitable organization.
The conversion "will provide us with additional capital to pursue our strategic and growth objectives," Gerard Cuddy, Beneficial's president and chief executive, said in the release.
Depositors, existing shareholders and the Federal Reserve Board must approve the plan.
Beneficial reported net income in the first half of the year of $7 million, up 15% from the same period a year earlier.
Beneficial Bank was founded in 1853. It has 58 branches in greater Philadelphia and southern New Jersey.