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Executive Compensation Overview

Attracting and retaining key executives is a primary goal for virtually all credit unions. The competition is greater than ever as institutions grow in asset size and regulatory compliance is ever more complex.

For institutions addressing this issue, there are time tested programs that will virtually guarantee “The Team” stays in place. By addressing the financial concerns of college costs, retirement income needs and the “graying of America” theme of long term care, any credit union board has the ability to custom design a program which allows executives to stay focused on the job at hand without the distractions of these other personal financial planning worries.

Example Programs

  • Supplemental Executive Retirement Plans
  • 457(f)
  • Section 162 bonus arrangements
  • Executive carve out long term care plans
  • Pre and post retirement life insurance

Reducing Employee Benefit Plan Expenses

In 2004, the NCUA opined on the employment of single premium life insurance contracts by Federally Chartered credit unions. In her letter, Associate General Counsel Sheila Albin stated that an FCU may recover its cost of funds and reiterated the NCUA’s position with respect to the purchase of life insurance for the purpose of recovering costs associated with funding an employee benefit obligation.

It is clear that the NCUA is following the lead of the OCC in the ownership of life insurance. A cautious approach is recommended but the opportunity is clear. The ability to re deploy excess liquidity earning 15 to 30 basis points to a Credit Union Owned Life Insurance (CUOLI) contract earning 300 to 350 basis points creates a transaction worthy of analysis.

for a sample pro forma balance sheet which will demonstrate significant increase to income through repositioning of assets on the balance sheet after a CUOLI purchase.

Follow the links below for additional letters written by Sheila Albin related to this subject.

Factoring Arrangements are a relatively new offering and have in common with CUOLI that they have the same counter-party risk: a large, highly rated life insurance company.

Please ask yourself this question:
If we can provide you with

  • cash flowing asset, with an approximate yield of 4.5%
  • S&P rating of A to AA
  • the weighted average life of 4 to 8 years
  • no mark to market accounting
  • No pre-payment risk, would you be interested?

If the answer is yes, please click on the link below and read the Buyer’s Guide provided by our partner Income Stream Funding Partners which details exactly how these instruments work.