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

SI will sell a 62% stake in the eastern Connecticut bank to the public. The rest is already publicly held; the company sold a stake in 2004.

Account holders 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. SI 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 year-earlier loss caused by higher income and lower loan-loss provisions.

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

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