BOLI Funding Alternatives

IRR Analysis

	Taxable Asset	BOLI Asset*	Taxable vs. BOLI Difference
Gross Rate:	6.50%	6.50%	-
Investment Mgt. Fees:	-0.25%	-0.25%	-
Taxes @ 40%:	-2.50%	0.00%	2.50%
Other Insurance Costs:	0.00%	-1.03%	-1.03%
Net IRR:	3.75%	5.22%	1.47%

Value Analysis

	Taxable Asset	BOLI Asset*	Taxable vs. BOLI Difference
Funding Amount:	1,000,000	1,000,000	-
Year 1:	1,037,500	1,050,469	12,969
Year 10:	1,445,044	1,592.359	147,315
Year 20:	2,088,152	2,489,973	401,821
Year 30:	3,017,471	3,985,019	967,548
Year 40:	4,360,379	7,666,057	3,305,678

*Assumes 45 year old male, $1,000,000 single premium, and held until mortality in year 40.
*Hypothetical performance does not take fees and charges into account.

For over three decades, banks have utilized bank owned life insurance (BOLI) portfolios as regulators have provided clear guidance on the use of this asset class by banking organizations. During the past decade, usage rates among banks have soared so that today a majority of banking organizations have BOLI on their balance sheets.