Bank Owned Life Insurance
In May 2013, Peoples initiated a partial surrender of its bank owned life insurance ("BOLI") contracts, resulting in the receipt of $5.2 million in cash and a reduction of the BOLI asset. In July 2013, Peoples requested the full surrender of BOLI contracts reported at $42.8 million, with a cost basis of $36.5 million at June 30, 2013. Peoples received $36.2 million in July 2013 in partial satisfaction of the surrender request, and recorded the remainder as a receivable with the expectation of receiving it within six months of the surrender notification. The remaining cash surrender value of $6.6 million was recorded as a receivable at December 31, 2013, of which $3.1 million was received January 23, 2014 with the remaining expected to be paid out by the end of first quarter of 2014 in accordance with the terms of the BOLI policies.
As a result of this transaction, Peoples recorded an additional $2.2 million in income tax expense in the third quarter of 2013.
