‘Death Benefits’ Rise Significantly at Conway Bank

The Jan. 31 suicide of Home BancShares President and COO Ron Strother was a blow to the Conway bank on several levels.

Its 2009 annual report, filed with the Securities & Exchange Commission in March, noted that his death rendered his 6,400 shares of restricted stock fully vested; expensing those shares cost the company $144,000.

The report also noted that “the loss of his services could in the future materially and adversely affect our business, financial condition, results of operations and future prospects.” That may be as close to an expression of grief as an SEC filing allows.

In part to buffer the company in the event of an executive’s death, banks routinely take out insurance policies – known as bank-owned life insurance, or BOLI – on their top employees.

Even publicly traded banks like Home BancShares don’t disclose the amount of individual employees’ coverage, nor do they put names to amounts when the policies do pay off. But we did notice that in the first-quarter report filed in May, the company’s line item for “death benefits received” jumped from zero in the first quarter of 2009 to $1.585 million in 2010.

That’s about 10 percent of the company’s first-quarter profit of $15.1 million.