Articles

BOLI Considerations During Mergers and Acquisitions

Jun 10, 2021

In April 2021, there was an uptick in mergers and acquisition in the bank space, according to S&P Global. Given the challenging earnings environment, high bank liquidity, and weak loan demand, we expect that trend to continue. Bank consolidations are complex, time consuming and costly with focus justifiably on systems, branch network and employee culture.
 
One area that is frequently overlooked is the acquired Bank Owned Life Insurance (BOLI) portfolio. Bank portfolios can vary widely in terms of size, complexity and age.

Many BOLI policies have been in place for years or even decades, and those with knowledge of the BOLI purchase have left the bank.   

A merger/consolidation presents a unique opportunity to conduct a deep dive on acquired policies with the goal of ensuring all acquired policies are functioning efficiently, all documentation is in order and potentially make material changes to the portfolio to cure any policy deficiencies. 

Newport’s well-tested portfolio review process includes pre-close, at-close and post-close steps tailored to the acquired portfolio characteristics. Areas of focus include separate account/stable value review/optimization, BOLI related benefit plan review with a particular focus on change of control issues and overall policy performance review. Action plans are developed with a goal of improving policy performance and reducing risk, all in light of purchase accounting and tax considerations.  

Written by Scott Bethune of Newport's BOLI team. If your bank is in the process of completing an acquisition or considering one, please contact Scott (336-369-2270) or Justin Robertson (336-369-2275) to discuss how Newport can assist in your review of the target bank’s BOLI program.  

      

This material has been prepared for informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Consult your own tax, legal and accounting advisors before making any decisions. Newport and its affiliates do not provide tax, legal or accounting advice.

Securities are offered through Newport Group Securities, Inc., a dually-registered investment advisor and broker dealer, member FINRA and affiliate of Newport Group, Inc. Securities in California are offered through Newport Securities Insurance Services. For more information on Newport Group Securities, Inc. or Newport Securities Insurance Services and services offered, please visit our website at www.newportgroup.com


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Securities are offered through Newport Group Securities, Inc., a dually registered investment advisor and broker dealer, member FINRA and affiliate of Newport Group, Inc. Securities in California are offered under the Newport Securities Insurance Services. See BrokerCheck for more information. Other insurance products may be offered by Newport Group, Inc.
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