Republic Bank is bucking the current trend of companies suspending their 401(k) defined contribution matches by increasing its match and shortening the vesting period for its 750-person work force effective Jan. 1, 2009.
This runs counter to what companies such as Motorola Inc. and Starbucks Corp. have all done suspended their respective 401(k) employer matches, citing the difficult economic environment.
Republic Chairman and CEO Steve Trager, in an interview, said the Louisville, Ky.-based bank now will match 100% of an employees total contribution. Previously, the match was 50% for the first 1% of salary and 75% for the next 2% to 5% of salary. Also, it will shorten the full vesting period for employees to two years from six. The actions came about as a result of the companys strong financial performance, Mr. Trager said. The bank posted a third-quarter net income increase of $4.5 million, down from the $6.4 million gain in the second quarter, but still up 6% from the third quarter 2007.
Also, it posted net income for the nine months ended Sept. 30 of $33 million, its best ever nine-month result, a 79% increase from the first nine months of 2007 ($18 million).
Weve been able to do this through many initiatives such as watching carefully our traditional bank business, good performance in our tax business groups performance and keeping the credit quality of loans well above our peers, Mr. Trager said.
Mr. Trager said the banks executive team was happy to reward employees directly and would continue to do so in the future if the bank continues to prosper. He declined to speculate on the future economic climate or how long the increases would last.
Were very proud to do this. When our company does well, well share the prosperity with the people who make it do well, he said.