Florida Banking March 2022

Whether the bank’s goal is to align performance with shareholder objectives or to provide a steady source of retirement or a shorter-term deferral of income to key executives, a NQDC program can be designed to suit the needs of the bank and individual. In this way, the NQDC structure becomes a customizable insurance policy for banks to secure their management team, as well as to attract and retain talent in a competitive market. This enables your key employees to focus on growing the bank, rather than searching for their next job opportunity. According to the American Bankers Association, roughly 65 percent of banks in the United States provide some type of NQDC program for their leadership. To finance the expense associated with these plans, banks often look to Bank-Owned Life Insurance (BOLI). This is no coincidence since the attributes of BOLI are uniquely appropriate to offset the expenses of a NQDC program for two main reasons. First, because the expenses in a NQDC plan are predictable and are generally a long-term obligation, the reliable returns from a BOLI program match up effectively over time. And second, BOLI carries death benefit coverage which provides the means to preserve a participant’s full benefit for their selected beneficiary, in the event the participant passes away before the benefit has been fully accrued. Combined, the BOLI and NQDC

strategy is a one-two punch to efficiently reduce risk, grow the bank, and deliver benefits to key employees. In closing, a few questions to consider regarding a NQDC program: • In what way(s) does your bank provide value to retain your talent that your competitors do not? • Does your bank have the right team in place to reach its goals and continue to provide value? • If not, for what positions should your bank be recruiting? • What would happen if one or more key employees were to leave? • Would the key employee be difficult to replace and what would be the lost opportunity if they were to leave? Glenn Blackwood and Joe Schaefer are consultants with NFP Executive Benefits. To learn more, contact Glenn Blackwood at glenn.blackwood@nfp.com or Joe Schaefer at joe.schaefer@nfp.com. Glenn Blackwood is a registered representative with Kes tra Investment Services. Insurance services provided through NFP Executive Benefits, LLC. (NFP EB), a subsidiary of NFP Corp. (NFP). Securities offered through Kestra Investment Services, LLC, member FINRA/SIPC. Kestra Investment Ser vices, LLC is not affiliated with NFP or NFP EB. Investor Disclosures: https://bit.ly/KF-Disclosures

The National Graduate

School of Banking

TM

Session Dates: August 21 – September 2, 2022 Location: University of Washington, Seattle, WA To learn more about PCBS or to apply to the program, call (425) 278-0250

PCBS, in partnership with the Foster School of Business at the ff the University of Washington, o ers a premier three-year ffers a premier three-year grad fi graduate-level educational program focused on the nancial financial services industry. Our full-length courses, taught by outstanding industry experts, provide responsive, practical answers to today’s most critical banking challenges.

or visit www.thePCBS.org We look forward to everyone joining us on campus next year!

WWW.FLORIDABANKERS.COM MARCH 2022 — 15