To attract more commercial customers and investors, Prime Bancorp has converted its principal subsidiary from a thrift to a commercial bank.

"We have felt for a long time that customers perceive commercial banks differently than thrifts," said Walter J. Tillman Jr., executive vice president of the Fort Washington, Pa., holding company.

Mr. Tillman said $965 million-asset Prime Bancorp has been considering a conversion since it went public in 1988.

Changes in thrift tax law and an acquisition of a commercial bank finally spurred the switch. Legislation passed last year says thrifts that convert to commercial banks no longer have to pay taxes on bad debt reserves taken before 1988.

Prime acquired First Sterling Bancorp, Devon, Pa., on Dec. 31 in a $29 million stock deal. Since the deal closed, Prime Bank has operated as a savings bank subsidiary, and First Sterling Bank has operated as a commercial bank subsidiary.

Prime Bank and First Sterling Bank were scheduled to be merged Wednesday, with the survivor, Prime, operating as a state-chartered commercial bank. Prime runs 23 branches in Philadelphia and four neighboring counties.

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