Benefits Funding for Banks

The regulatory requirements set upon banks lead to unique challenges in recruiting and retaining key executives and employees. A well-thought-out and effective compensation and benefits strategy can mean the difference between growing or remaining stagnant in attracting, rewarding, and retaining the key individuals who drive the success of your bank. At SWBC, we understand the complex issues involved in providing a total rewards package that complies with regulations and delivers enough value to make your key employees stay.

To offset employee benefit expenses and enhance executive rewards, banks can choose to allocate assets to institutionally priced, high-cash-value life insurance (bank-owned life insurance or BOLI).

Use Investment Yields to Offset Benefit Expenses

A SERP is an employer-sponsored, non-qualified deferred compensation plan, where you agree to provide supplemental retirement income to selected key executives. You may wish to include a vesting schedule on these benefits to encourage your executives to remain employed with your institution. Some plans may allow for distributions while the executive is still employed and may even offer survivor benefits should the executive die before the SERP benefits are fully distributed. A SERP is a valuable compensation and benefit tool for attracting, retaining, and rewarding key members of your leadership team.

We take a team approach to your benefits funding

Using institutionally priced insurance options, our experienced team of executive benefits and insurance professionals will create a customized strategy that meets your retention objectives and complies with regulatory requirements.

Detailed pre- and post-purchase process

Our team will conduct a thorough pre-purchase analysis of risks and rewards and a post-purchase risk assessment, summarized in a due diligence manual that supplements your bank’s own diligence materials.

Offset costs and reallocate assets

Offset the rising cost of employee benefits by allocating assets in BOLI and moving excess cash or assets currently invested in low-yield federal funds to BOLI.

BOLI regulatory requirements are covered in The Interagency Statement on the Purchase and Risk Management of Life Insurance (OCC 2004-56), which provides general guidelines on bank-owned life insurance for banks and savings associations.

Benefits Throughout theLife of the Policy

Rewards

Your bank can reward key executives by directing any part of BOLI earnings toward a rewards program.

Earnings

Your bank improves the bottom line by retaining earnings not allocated to specific executive benefit programs.

Capital

Your bank’s capital reserves will remain unchanged.

Death Benefits

Policy death benefits can be allocated to insured executives and their beneficiaries, providing more efficient supplemental life insurance than that of group term.

It’s a challenge to balance rewarding the key employees who make your bank successful with protecting profitability and staying compliant. With bank-owned life insurance (BOLI) from SWBC, your bank is able to allocate assets toward high-value life insurance, using favorable yields to offset the high costs of employee benefits and executive rewards. Contact us today for a preliminary discovery report on your bank that will specifically demonstrate the opportunities available to create or revamp an executive benefits program for your institution.

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