Facing what it described as a challenging banking climate, Rockville Bank parent Rockville Financial said it will alter the bank’s employee stock ownership plan to save money.
The bank will merge the ESOP — which provides shares of the company as a benefit to employees — into its 401(k) offering. The single, merged plan will permit Rockville to match employee 401(k) contributions with stock, it said.
Rockville said the move will save it $1.2 million next year and reduce administrative costs.
“As we experienced so far in 2013, next year is shaping up to be another difficult and incredibly challenging year for the banking industry,” a Rockville Q&A for employees said. “So in order for Rockville Bank to continue to be a top performer, it is critical we examine all revenue and expense options to position the company for future success.”
Rockville created its ESOP in its 2005 initial public offering and took a loan to buy shares to use as employee benefits. That loan has a final payout scheduled for 2014. A second loan, taken during 2011 offering, becomes a part of the new plan and will be paid out over a 30-year period.
All ESOP shares credited to employees as of Dec. 31 will be 100 percent vested and not subject to a vesting schedule.
