Note 21 – Bank Owned Life Insurance
During 2011 and 2010, the Bank purchased life insurance on key employees in the face amount of $21.4 million and $1.3 million, respectively. Per ASC 325, “Investments in Insurance Contracts,” these policies are recorded at their cash surrender value, net of surrender charges and/or early termination charges. As of December 31, 2013, the BOLI cash surrender value was $9.6 million resulting in other income for 2013 of $329 thousand and an annualized net yield after tax of 5.30%.
The Bank also has a Supplemental Executive Retirement Plan (“SERP”) for the benefit of certain key officers. The SERP provides selected employees who satisfy specific eligibility requirements with supplemental benefits upon retirement, death, or disability in certain prescribed circumstances. The Bank recorded expense totaling $119 thousand and $62 thousand, respectively, for each of the years in the two year period ended December 31, 2013. The accrued liability related to the SERP was approximately $222 thousand and $103 thousand as of December 31, 2013 and 2012, respectively.