People's Bank of Bridgeport, Conn., touched off a rally in its stock Friday by saying it will file for a federal thrift charter to position itself for growth outside its home state.
The $11 billion-asset company now operates under a state savings bank charter and is supervised by Connecticut's Department of Banking, the Federal Deposit Insurance Corp., and the Federal Reserve. As a federal thrift its regulator would be the Office of Thrift Supervision.
The company said the federal charter would let it "more competitively pursue business expansion across state lines."
It also announced plans to add 15 branches in Westchester County, New York, over the next three years, in addition to the 15 it has said it will open or renovate in Connecticut this year.
All of People's retail banking branches are in Connecticut. It has a commercial mortgage office in Massachusetts and offers such services in New York but has no office there.
People's, with 154 branches, operates under a mutual holding company that owns 58% of its stock. It converted to the mutual holding structure in 1988.
The company had said in the past that it was interested in deals that would make it more like a commercial bank. In March it said it was focusing on acquisition targets in New York, New Jersey, and Massachusetts, but it has not bought a bank since 1998.
It plans to file for the charter this week and expects to be operating under it by August, according to Valerie Carlson, a spokeswoman.
People's shares rose as much as 7.8% Friday morning and closed up 6.5%, at $33.69.
Several analysts said the federal charter is a prelude to a second-step conversion - a topic that has come up at many investor and analyst meetings. Only 42% of People's shares are publicly traded.
Collyn B. Gilbert, an analyst at BankAtlantic Bancorp Inc.'s Ryan Beck & Co., said Friday that a second-step may be be coming "sooner rather than later," because People's needs to "look to de novo or acquisitions to supplement the organic growth activity that is weakening" in Connecticut.
A second-step conversion would provide more capital for an acquisition, Ms. Gilbert said. In fact, it would probably be simultaneous with an acquisition, she said.
She suggested two partners: Valley National Bancorp of Wayne, N.J., which has $12 billion of assets, and the $6.5 billion-asset Chittenden Corp. of Burlington, Vt. Valley National declined Friday to discuss the matter. Chittenden did not return calls.
Thomas Doheny, an analyst at Sandler O'Neill & Partners LP, agreed that a second-step is near but wrote in a note that the timing is still "anyone's guess." If it happened, he wrote, People's stock could go for $45 to $48 a share, or 1.8 to 1.9 times book value.
In the past People's has said it has no plans to complete the conversion soon. Ms. Carlson reiterated that Friday; Peoples is "comfortable" with its mutual holding structure and has no current plans for a conversion, she said.
