Berkshire Bank is among the institutions that recently have provided more competition for West Springfield-based United Bank, which has mailed out offers to depositors to buy the remaining 53 percent of its stock.

Full stock conversion of a bank is rare in Massachusetts. And it’s rarer still for a bank to make not one, but two, public stock offerings.

But that’s what’s happened at United Bank, a $1 billion-asset, partially stock-owned bank in West Springfield that two weeks ago mailed out offers to its depositors to buy the remaining 53 percent of its stock.

The 125-year-old former co-operative bank, which converted to ownership by a mutual holding company in April 2004 and made its initial stock offering – selling 47 percent of its shares to the public – in July 2005, was approved for the second in mid-October.

President and Chief Executive Officer Richard Collins said the competitive environment in the western part of the state and the bank’s shrinking capital ratios drove the second-step decision.

“For some reason, [western Massachusetts] is a pretty exciting market,” he said, noting that banks coming into the area in the last couple of years include NewAlliance Bank and Webster Bank, both based in Connecticut; Berkshire Bank, which two years ago bought another local bank; and Nuvo Bank, which is still in organization. Larger regional banks including Citizens, TD Banknorth and Bank of America also have an area presence.

Those factors, combined with loan-and-deposit growth at United Bank that drove its capital ratios down, forced Collins and the bank’s board to wonder: “Do we want to continue to be an also-ran or be able to be a competitor?”

Collins said they chose to compete by gaining new capital with the stock offering. The first offering two years ago garnered $72 million, which United Financial Bancorp, the holding company created the year before, then used to open two new branches in Westfield and Northampton, purchase Levine Financial Group, create a $4 million charitable foundation to benefit the communities it serves, and create an employee stock-ownership plan.

The bank hopes to gain approximately $110 million more this time around, which it will use to compensate staff better, and finance construction of at least two more branches in Agawam and East Longmeadow.

Collins joked that United also might want to “repay the favor” that Connecticut-based banks granted western Massachusetts by moving here.

“I think, eventually, it would be safe to say we’ll find a way to be in northern Connecticut,” he said, adding that the new capital could give the bank an opportunity to acquire another institution.

Some in the banking community are skeptical of any stock conversion. They suggest that when a mutual or partially mutual bank converts to public ownership, it is more likely to be acquired – and disappear, along with its community roots – than to do its own acquiring.

“The loss of a local bank typically leads to a larger and sometimes foreign company acquisition and results in a change of focus to the bank, away from the community,” said Jason Adkins, co-owner of the Boston law firm Adkins, Kelston & Zavez. Adkins represented depositors at Cambridgeport Bank, which converted from mutual to stock-owned in 2000 and was sold to Citizens Bank three years later. Citizens subsequently laid off about half the bank’s employees, according to a Boston Business Journal report at the time, and Cambridgeport’s chief executive officer earned nearly $10 million in the transaction.

Adkins said bank depositors generally don’t take advantage of the option to purchase shares during a stock offering, even though it’s offered to them first. Some don’t understand the chance to get a good return is only on offer for a relatively short time, he noted.

Those who do take advantage of the offering tend to be bank employees and management, and the employees’ pension fund, he added.

‘Too Many Banks’

Paul Bechet, chief financial officer of the $2.2 billion Brookline Bank, who was involved in that bank’s mutual holding company conversion in 1998 and full stock conversion in 2002, said it’s true many banks that convert to stock-owned eventually do “sell out.”

But bank consolidation will continue, he said, as long as there are “too many banks.”

Mergers of mutual banks, driven by banks’ need to relieve the burden of compliance costs or belief that growth opportunities will be better in combination, are growing more common, he noted.

Brookline Bank decided to convert from partially to fully stock-owned because the bank thought it would have “more flexibility to pursue business strategies” under that type of ownership, he said. Being stock-owned removes some complexities from the picture. With the capital the bank raised from its conversion, Bechet said, Brookline Bank acquired Mystic Financial, another stock-owned bank, in 2005.

Decisions about converting or not converting are not “right or wrong,” but rather “a question of what objectives management and the board might have,” he added.

Eric Luse, a partner in the Washington, D.C.-based law firm Luse, Gorman, Pomerenk & Schick, which assisted both Brookline and United Bank in their conversions, said dozens of Massachusetts banks exist under a mutual holding company structure.

Meanwhile, only about 650 mutually owned banks are left in the United States, he said. The structure is the most popular one in Massachusetts, which has 205 total banks and less than a dozen stock-owned.

Most convert to mutual holding company structure to facilitate the possibility of raising capital, Luse noted, but some haven’t yet sold any stock to the public, so they’re relatively low-profile. But companies that are partially stock-owned are better performers, he said.

“As a stock company, there is a heightened awareness of your performance compared to your peers,” he said. “Typically, both the boards and the management of those companies are better off as a result.”

If a mutual bank wants to maintain control of the bank but is not ready to convert fully to stock, Luse added, a mutual holding company may be the perfect solution.

Arthur Warren, a Walpole executive compensation consultant who has advised United Bank, voiced similar sentiments. He said the holding company structure is perfect for a bank that wants to learn what it is like to be publicly owned, without taking the potentially dangerous plunge all at once.

Collins, meanwhile, said being fully owned by the public will, indeed, increase the compliance burden at United Bank.

“The auditors are much more concerned that everything is done exactly right” when a bank is publicly owned, he said, and an additional new regulator – the Securities and Exchange Commission – will now be looking over United’s shoulder.

“The level of oversight is much greater,” he said.

But Collins and bank management are hoping that the profits that will pay for them will be greater, too.