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FDIC Data Reveals Continued Growth of BOLI

Oklahoma Banker | August, 2014

For many financial institutions, BOLI has become an attractive and prudent investment to help offset and recover the costs of employee benefit programs such as health care and retirement. It is not surprising, therefore, when the data released earlier this year by the FDIC showed that the BOLI holdings by Oklahoma and U.S. banks, once again, increased last year.

The FDIC reported there were 6,812 banks operating as of Dec. 31, 2013. According to the 2014 Equias Alliance/Michael White BOLI Holdings Report, an analysis of the FDIC data revealed that:

  • Bank-owned life insurance (BOLI) assets reached nearly $143.84 billion in 2013, reflecting a 4.3 percent increase from $137.95 billion in BOLI assets held in 2012 by commercial banks, savings banks and savings associations.
  • Total BOLI assets reported by Oklahoma banks increased to $902.6 million, an increase of 3.3 percent from 2012 to 2013. According to the FDIC and Equias Alliance research, 60 percent of all Oklahoma banks report BOLI holdings as of Dec. 31, 2013.
  • Nationwide, 56.4 percent of all banks reported holding BOLI assets in 2013, a 1.5 percent increase in comparison to the number of banks holding BOLI at the end of 2012.
  • The largest portion of BOLI assets was held in Separate Account Life Insurance (“SALI”) which the marketplace also refers to as Variable Separate Account Life Insurance. SALI assets totaled $70.43 billion representing 49.0 percent of all BOLI assets. Although SALI assets account for the largest portion of total BOLI assets, they were actually held by the fewest number of banks.
  • The type of BOLI assets most widely held by banks in 2013 was General Account Life Insurance (“GALI”). Ninety-three percent (93.4 percent) or 3,585 of the 3,840 holding BOLI assets reported having at least some of their assets in GALI policies. GALI assets totaled $58.78 billion as of the end of last year and represented 40.9 percent of total BOLI assets in 2013.
  • The fastest growing type of BOLI assets in 2013, in terms of the number of banks holding them, was Hybrid assets. • The highest rate of BOLI ownership occurred among banks and thrifts with assets between $1 billion and $10 billion, as 446 of 559 banks and thrifts or 79.8 percent reported having them in 2013.
  • Nationally, mean bank BOLI assets as a percent of the sum of Tier 1 capital and the loss allowances increased (2.0 percent) from 15.60 percent in 2012 to 15.92 percent in 2013.

FDIC data over the past several years shows that both the number of banks and the amount of BOLI assets held by banks continues to grow. 

Securities offered through ProEquities, Inc., a Registered Broker/Dealer, and member FINRA and SIPC. Equias Alliance LLC is independent of ProEquities, Inc.

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