The board of directors of Dime Community Bancshares authorized the prepayment of the outstanding balance on the company’s employee stock ownership plan share acquisition loan effective December 31, 2016, and the merger of the ESOP into the bank’s 401(K) plan (KSOP).

In 1996, the ESOP obtained a $11.6 million loan from the company to purchase shares of company common stock. The current maturity date of the share acquisition loan is December 2025, and, as of December 31, 2016, the loan balance will be $2.8 million. The terms and conditions of the loan documents permit prepayment without penalty.

The prepayment of the outstanding loan balance will result in a one-time, non-cash, non-tax deductible charge to earnings of approximately $11.0 million, or $0.30 per diluted share, in Q4/16. While this prepayment will cause bank capital to increase by $2.8 million, overall consolidated stockholders’ equity at the company will not change primarily as a result of the elimination of the contra-equity account.

“The decision to prepay the share acquisition loan and create the KSOP was motivated primarily by our desire 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,” said Kenneth J. Mahon, president and incoming CEO of the company and bank. “In addition, creation of the KSOP will provide participants with greater control over their retirement funds, including the ability to diversify their account balances.”

Brooklyn, NY-based Dime Community Bancshares had $5.82 billion in consolidated assets as of September 30, 2016.