Bank Owned Life Insurance
We have purchased life insurance policies on the lives of certain officers designated by the Board of Directors to finance employee benefit programs as of December 31, 2013. Death benefits provided under the specific terms of these programs are estimated to be $63.3 million at December 31, 2013 and the benefits to employees' beneficiaries are limited to the employee's active service period. The investment in the Bank owned life insurance (“BOLI”) policies are reported in interest receivable and other assets at their cash surrender value of $27.8 million and $22.7 million at December 31, 2013 and December 31, 2012, respectively. The cash surrender value includes both the original premiums we paid in the life insurance policies and the accumulated accretion of policy income since inception of the policies. Income of $954 thousand, $762 thousand and $752 thousand was recognized on the life insurance policies in 2013, 2012 and 2011, respectively, and is reported in non-interest income. The increase in BOLI income in 2013 relates to a $228 thousand benefit realized on the death of an insured employee in 2013. We regularly monitor the credit ratings of our insurance carriers to ensure that they are in compliance with our policy.
