Regulators have given the green light to a New Jersey mutual thrift's unique plan to set up a tax-free charitable foundation as part of its conversion to stock form.

But the Office of Thrift Supervision, in approving the plan by Ocean Financial Corp., imposed several restrictions to ensure the charitable foundation isn't simply a way to keep a large block of stock out of unfriendly hands.

The Brick Township thrift wants to form a Delaware-chartered foundation dedicated to charitable contributions in its home county, Ocean. The foundation would be funded by a donation of 8% of the stock from the conversion.

Thrift officials say the goal is not only to help community groups and other causes, but to strengthen the link between the thrift and the local community.

"We're very pleased with the novel idea of it," said president and chief executive John R. Garbarino. "We're competing on a community bank basis, and this will no doubt strengthen our relationship with the community."

But observers have questioned whether thrift officials just wanted to stash a chunk of stock in friendly hands to help ward off unfriendly suitors.

The OTS is requiring that the thrift's depositors approve not only the conversion itself but also the establishment and funding of the foundation, an unusual step. Normally, the depositors would vote only on the conversion itself.

Also, no more than 25% of the directors on the foundation's board may consist of individuals affilated with the thrift.

And the foundation must vote its shares of stock in the same proportions as the thrift's other shareholders, subject to tax and Delaware law. That would mean that if a proxy proposal received 60% of the vote from nonfoundation shares, the foundation must vote 60% of its stake in favor as well.

Those requirements would prevent the foundation from simply rubber- stamping a management proposal.

Finally, the thrift will receive no Community Reinvestment Act credit for establishing the foundation. That was not the intent of the move anyway, Mr. Garbarino said.

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