Financing Services

BOLI can be an effective asset that helps diversify investment portfolios and strengthens balances sheets.  It can have significant advantages as an asset-liability matching tool. 

Because BOLI is often used to finance non-qualified retirement plans and is subject to state and federal regulatory scrutiny, most banks should consider only high credit quality insurance products.  This is particularly the case when BOLI transactions involve a single premium investment.

Financial institutions often can structure these purchases so that the bank can book an “other asset” equal to the insurance payment immediately.  If the policies are held until maturity, the other income compounds tax-free.  The bank may also receive death benefit proceeds, adding to the tax-free internal rate of return.

When purchasing BOLI, banks must be careful to adhere to guidelines set by appropriate federal and state regulators.  The Todd Organization assists financial institutions with the documentation that is required by these guidelines.  This includes cash value reporting, documentation for regulatory requests, and appropriate materials for Board meetings.

Such documentation provides assurance to the regulators, bank management and shareholders that the BOLI purchase is appropriate and a prudent financial management action.   

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