Client: Billion Dollar California Bank

Current Problems: Large post-retirement liabilities on books incurred over the years due to healthcare, retirement and death benefits they didn’t feel they could eliminate. Narrowing profits due to interest rate spread environment. Tier I Capital was at $300,000,000.00 They had not been properly educated with respect to Bank Owned Life Insurance (BOLI). They believed insurance products were basically the same as retail or “off the street” policies.

Solution: The installation of $75,000,000 single investment into specifically designed BOLI contracts yielding tax exempt return of 4.75%.



Immediate Benefits: Major balance sheet improvement due to offsetting assets to ameliorate post retirement liabilities. Annual increased profits of at least $1,600,000 as a result of the following; their current $75,000,000 invested at 4% was yielding $1,950,000 after-tax. The same $75,000,000 invested in BOLI at 4.75% yielded a net of $3,562,500 for a net improvement of $1,612,500. Tax-free insurance proceeds to the bank were in addition to the profit and balance sheet improvements.

Best of All: Charge to earnings for all of the above benefits was ZERO (“0”) !