Dime Community Bancshares in Brooklyn, N.Y., will record a one-time charge after approving changes to its employee stock ownership plan.
The company's ESOP will prepay an $11.6 million loan from 1996 that was used to purchase shares of Dime common stock. The loan had a maturity date of December 2025 and a balance of $2.8 million. Additionally, the ESOP will be merged into the bank's 401(k) plan, Dime said Wednesday.
The prepayment will result in a roughly $11 million charge to the company's fourth-quarter results. The changes are also expected to reduce annual expenses by roughly $1.1 million, the $5.8 billion-asset Dime said.
The changes were made to "distribute future employee benefits more equitably among both our long-standing employees and those employees who joined the bank within the past several years," Dime President Kenneth Mahon said in a press release. Mahon will take over next week as the company's CEO, succeeding Vincent Palagiano, who is retiring.
The ESOP trustee will repay the loan by transferring to Dime shares of common stock with a value equal to the outstanding loan balance. Those shares will be then be treated as treasury stock.
After the prepayment, the roughly 560,000 shares remaining in the ESOP trust will be distributed to participants based on their account balance.