Pub. 7 2017-2018 Issue 2

8 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S Holdings by U.S. Banks TheCSVof BOLI policies heldbybanks stoodat $161.8billion as of December 31, 2016, reflecting a 3.6 percent increase from $156.2 billion as of December 31, 2015, according to the Equias Alliance/Michael White Bank-Owned Life Insurance (BOLI) Holdings Report™. The report revealed that: • Of the 5,913 banks in the survey, 3,680 or 62.2 percent reported holding BOLI assets as of December 31, 2016, and total BOLI CSV increased by $5.62 billion (3.6 percent) from $156.18 billion as of December 31, 2015, to $161.80 billion as of December 31, 2016. • With a balance of $72.46 billion (44.8 percent of all BOLI CSV) as of December 31, 2016, VSABOLI continues to lead when measured by dollar amount. At the same time, only 464 or 7.9 percent of all banks hold VSA assets. • Nearly thirteen hundred (1,261) or 21.3 percent of all banks reported holding HSA assets as of December 31, 2016. These banks held $17.40 billion in HSA assets, representing 10.8 percent of total BOLI assets. • The type of BOLI assets most widely held by banks as of December 31, 2016 was GA policies. Of the 3,680 banks reporting BOLI assets, 3,537 (96.1 percent) of them held $71.94 billion in general account life insurance assets, representing 44.4 percent of total BOLI assets as of De- cember 31, 2016. BOLI Growth Continues BOLI remains appealing to banks for several reasons: • It provides attractive tax-equivalent yields compared to alternative investments of a similar risk and duration; • The bank receives book value accounting so that changes in the market values of the underlying investment port- folio do not flow through to the bank. • The bank receives the life insurance proceeds tax-free upon the death of an insured employee; and • The bank can use the earnings to help offset and recover employee benefit costs, including non-qualified plans used to attract and retain key employees. • BOLI currently offers a net yield ranging from approxi- mately 2.50 percent to 3.75 percent. For a bank in the 38 percent tax bracket, this translates into a tax equivalent yield of 4.03 percent to 6.05 percent. Thus, BOLI remains an attractive investment alternative for banks. Equias Alliance offers securities through ProEquities, Inc. member FINRA & SIPC. Equias Alliance is independent of Pro- Equities, Inc. n   continued from page 7 David Shoemaker, CPA/PFS, CFP®, is a principal of Equias Alli- ance, which through consultants has assisted over 800 banks in the design of nonqualified benefit plans, performance based compensation and (BOLI). To learn more, contact David Shoe- maker at 901-754- 4924 or dshoemaker@equiasalliance.com. Ken Derks is a principal of Equias Alliance, which through consultants has assisted over 800 banks in the design of non- qualified benefit plans, performance based compensation and (BOLI). To learn more, contact Ken Derks at 469-252-1037 or kderks@equiasalliance.com . WE’VE GOT YOU COVERED Coan, Payton & Payne, LLC provides a full range of legal services to the banking industry. Together with our clients, we create and implement Rock Solid ® strategies for success. WWW.CP2LAW.COM Denver | Fort Collins | Greeley