With an eye on raising capital to push its growth agenda, Belmont Savings Bank announced today, Aug. 22, that it is beginning the process of converting the 126-year-old institution from a mutual bank to a stock-ownership holding company. 

"We are growing the bank and the way to do that is with capital," said Bob Mahoney, Belmont Savings' president and chief executive officer. 

"And the only way to get that capital to meet our goal of being the most admired bank in the area is by selling stock," said Mahoney, who said the prospectus was sent in the mail to depositors on Friday, Aug. 19. 

Mahoney said the conversion should be completed by the end of September.

Despite the widespread pummeling both national and local banks and their stocks have taken in the past two years, Mahoney said the Belmont Savings' deposits and loans have been increasing.

Mahoney noted recent conversions by Brookline Savings Bank, Cambridge Trust Company and Hingham Institution for Savings that strengthen the those banks financially and increased their profiles in their communites. 

"I think these are great examples of banks that increased their capital and have done very well sticking to their knitting," said Mahoney.

Mahoney's move could also place pressure on mutual banks in the area, such as Watertown Savings Bank and Winchester Savings, to follow suit in converting to stock holding companies to meet the challenge of a growing Belmont Savings.

This is the second reorganization for the bank in two years, having transformed from a savings bank into a mutual holding company in 2009.

The move will create a new stock-holding company, BSB Bancorp, Inc., that will be incorporated in Maryland in which the Belmont Savings Bank will be a wholly-owned subsidiary.

As part of the conversion, the new company will be offering a maximum of 7.8 million shares of common stock for sale including on a subscription basis to customers who have deposits in the bank as of May 31.

It is also likely the subscription plan could include residents of communities the bank does a majority of its business including Arlington, Belmont, Lexington and Watertown.

As part of the subscription plan, depositors will not pay a commission or fee to purchase stock.

Hopes of raising $76 million in capital

Depositors with at least $50 in a bank account can purchase as few as 25 shares to a maximum of 30,000 shares with any single account and up to a limit of 60,000 shares by any one individual or group. 

With an anticipated price of $9.79, the holding company expects to raise $76.5 million when the stock goes to market. 

As of March 31, Belmont Savings had total assets of $529 million with loans of $386 million, deposits of $377 million and total equity of $47 million. Its headquarters is located in Belmont Center and has two branch locations in Belmont and one in Watertown.

Unlike deposits which are insured by the Federal Deposit Insurance, stock values in the bank holding company are not protected by depositor insurance agency. 

Limited on what he could say about the conversion due to federal regulations, Mahoney said the stock holding company has committed $2 million to a new charitable foundation with its sole mission to support non profits and other charitable causes in the community. 

Patricia Brusch, a member of the Warrant, Wellington School Building and the Capital Budget committees, will be on the new foundation's board. 

The bank has established an information hotline at (877) 860-2091, Monday through Friday, 9 a.m. to 7 p.m.

It has also established a stock center at the main branch at 2 Leonard St. in Belmont Center. The center will be open:

• Mondays from noon to 5 p.m.,

• Tuesdays and Thursdays, 8:30 a.m. to 5 p.m.,

• Wednesdays, 8:30 a.m. to 9 p.m., and

• Fridays, 8:30 a.m. to noon.