Employee retirement plan holdings in company stock in banks have declined in the last two decades, but employees at Silicon Valley Bank (SVB) and several other banks saw significant losses following SVB’s implosion, according to analysis in a March 13 article by Pensions and Investments. SVB had a combined ESOP and 401(k) plan that held about 19% of its assets in 2021 (the latest data available), valued at about $245 million at that time. Several other bank retirement plans were significantly invested in company stock, including Zions Bancorp, which held 23% of its assets in bank stock as of the end of 2021. Its stock fell 36% from March 8 to March 13. Many other banks have between 5% and 10% of their assets in company stock. Recent federal action will probably ameliorate the sort-term losses in stock price for most of these banks, but SVB employees are not likely to recoup their losses.
Overall, company stock in 401(k) plans, including plans that are combined with an ESOP, has become less common over the last two decades, now at under 7% of all assets in public companies. Outside of banks, it is very rare for ESOPs to own more than 5% of any public company’s stock. Private company ESOPs (about 95% of all ESOPs are in private companies) are much more likely to own most or all of a company’s stock and generally offer a secondary diversified retirement plan outside of the ESOP.
Despite the losses at the banks, data on ESOPs shows that, overall, employees who are in these plans have about two to three times the retirement assets as employees in other retirement plans.