The Heartland Building Society, the subsidiary of sharemarket listed Heartland New Zealand which earlier this week was granted banking registration by the Reserve Bank, says it'll shed its mutually owned building society status now it has become a bank.

Heartland said today Heartland Building Society will convert from a building society into a company, with its name changing to Heartland Bank Limited. It expects the conversion and name change to take effect from late January or early February.

"This is a change in legal form only, and the process will be a seamless one for customers," Heartland says.

The move contrasts to that of the Southland Building Society, the last building society to become a bank back in 2008. Now known as SBS Bank, it remains a mutually-owned building society although is also registered as a bank.

The Heartland plans were announced in June 2010 with the entity created in January 2011 through the merger of Marac Finance, which was spun out of Pyne Gould Corporation, with CBS Canterbury and the Southern Cross Building Society. Since then Heartland has added the good loans of specialist rural lender PGG Wrightson Finance.

The Heartland merger plans envisaged a sharemarket listed "Heartland Bank" that would aim to double its NZ$2.2 billion asset base within five years through growing lending to families, small business and the rural sector.

CEO Jeff Greenslade says Heartland is targeting niche products that are high margin and low risk. These include motor vehicle financing, stock finance, invoice finance, asset finance, insurance, and deposits. See more on Heartland's strategy here.

Heartland had total assets of NZ$2.34 billion as of June 30 making it bigger than the Co-operative Bank (formerly PSIS), which had total assets of NZ$1.48 billion at September 30, but smaller than SBS with total assets of NZ$2.87 billion at September 30. Heartland is slightly bigger than ANZ's UDC Finance, which has about NZ$2.1 billion of assets, but smaller than the country's biggest finance company, GE Capital, which has total assets of about NZ$2.5 billion.