SI Financial Group Inc. has approved a process under which it will convert from a mutual-holding company to a stock-holding one.

A host of financial companies the past several months have been undergoing the demutualization process, moving away from a structure under which customers or policyholders own a large chuck of a company.

In its process, SI will sell a 62% stake in the eastern Connecticut bank to the public. The rest is already public held; the company sold a stake in 2004. Accountholders and employees will have first crack at buying the stock to be sold through an initial public offering, as is typical for demutualizations. Current holders will receive new stock once the process is complete at a ratio to be determined.

The demutualization still needs the approval of regulators, SI's customers and current shareholders. The company hopes to complete the process in the fourth quarter.

SI, established in 1842, has 21 branches. It returned to profitability in the second quarter after a prior-year loss caused by higher income and lower loan-loss provisions.

SI shares closed Thursday at $6.22 and were inactive after-hours. The stock is up 18% this year.

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