Reading Co-op Depositors Approve Tougher Conversion Requirements

Depositors at Reading Co-operative in Reading, Mass., approved a plan to make it more difficult for the thrift to convert to a public stock company.

Depositors at the $448 million-asset depositor-owned thrift backed the corporate bylaw change Tuesday by a vote of 72-3, Julieann Thurlow, Reading's president and chief executive, said Wednesday.

The change means that approval from two-thirds of the board, rather than a simple majority, to initiate a conversion. It would also bar any officer, director or employee from owning stock for five years, if a conversion is ever approved.

"Mutual banks just aren't being formed today," Thurlow said. "Every time there's a conversion, there are less of us. We've taken the position that we want to slow that progression."

Mutual conversions have increased in recent years, as thrifts — often under pressure from investors — have looked to raise capital by offering stock.

The $17.8 billion-asset Investors Bancorp in Short Hills, N.J., raised $2.2 billion from its conversion in May. The $4.4 billion-asset Beneficial Bancorp, which announced its plans in August, said on Tuesday that it raised $468 million to $550 million by selling shares to depositors.

But the push among thrifts to change their corporate structure has met resistance in Massachusetts, where depositors have recently fought to preserve mutuals' distinctive culture.

In August, depositors at the $343 million-asset Beverly Bank in Beverly, Mass., rejected the company's plans to convert to a stock-owned bank.

Reading depositors backed the bylaw change by a wide margin, though a handful of members said they wanted the opportunity to buy stock, Thurlow said.

"It was a celebratory event," she said, adding that she hopes the vote offers encouragement to other thrifts.