8. Bank Owned Life Insurance and Annuities
The Company holds bank-owned life insurance (BOLI), deferred annuities and payout annuities with a combined cash value of $14,848,000 and $14,402,000 at December 31, 2013 and 2012, respectively. As annuitants retire, the deferred annuities may be converted to payout annuities to create payment streams that match certain post-retirement liabilities. The cash surrender value on the BOLI and annuities increased by $446,000, $333,000 and $501,000 in 2013, 2012 and 2011, respectively, from earnings recorded as non-interest income and from premium payments, net of cash payments received. The contracts are owned by the Bank in various insurance companies. The crediting rate on the policies varies annually based on the insurance companies’ investment portfolio returns in their general fund and market conditions. Changes in cash value of BOLI and annuities in 2013 and 2012 are shown below (in thousands):
|
Life Insurance |
Deferred Annuities |
Payout Annuities |
Total |
||||||||
|
Balance as of December 31, 2011 |
$ |
13,718 |
$ |
327 |
$ |
24 |
$ |
14,069 | |||
|
Earnings |
409 | 13 | 1 | 423 | |||||||
|
Premiums on existing policies |
56 | 14 |
- |
70 | |||||||
|
Annuity payments received |
- |
- |
(13) | (13) | |||||||
|
Net proceeds from life insurance claim |
(147) |
- |
- |
(147) | |||||||
|
Balance as of December 31, 2012 |
14,036 | 354 | 12 | 14,402 | |||||||
|
Earnings |
372 | 13 | 1 | 386 | |||||||
|
Premiums on existing policies |
54 | 14 |
- |
68 | |||||||
|
Annuity payments received |
- |
- |
(8) | (8) | |||||||
|
Balance as of December 31, 2013 |
$ |
14,462 |
$ |
381 |
$ |
5 |
$ |
14,848 |