Smaller banks are slowly adopting bank-owned life insurance as a way to counter shrinking loan margins and diminished returns on other investments.

Community banks have traditionally been reluctant to buy life insurance on key employees, a common practice among big banks. But since the recession, higher capital requirements and other factors have made bank-owned life insurance, or BOLI, increasingly attractive. The insurance offers tax breaks and counts as Tier 1 capital, while producing higher yields than most Tier 1 investments.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access