New Jersey lender bets big on financing life insurance premiums

Peapack-Gladstone Financial Corp. in Bedminster, New Jersey, has high hopes for the life insurance premium finance division it launched this month. 

Greg Smith, Peapack-Gladstone’s president of commercial banking, said he believes the fledgling unit will emerge as one of the $6.2 billion-asset company’s top business lines in four to six years, and that its impact on the balance sheet should start showing up in 2023.

Life insurance premium finance involves lending money which the borrower then uses to pay for life insurance. It’s most common among executives and high-net-worth individuals who carry large policies and prefer to leverage the high cost of the premiums rather than pay out of pocket.

Anthony LoScalzo, who will serve as senior managing director and chief operating officer of the new division, said its minimum loan size will be $100,000 to $200,000, with the average expected to be in the $500,000 to $800,000 range. 

LoScalzo and Raymond Kim, who will lead the division as senior managing director and president, have made loans into the millions of dollars at Wintrust Financial in Rosemont, Illinois, where both executives worked before Peapack-Gladstone recruited them. Wintrust, an industry leader, reported $8 billion of life insurance premium finance loans on Sept. 30.

Raymond Kim and Anthony LoScalzo

Raymond Kim (left) and Anthony LoScalzo joined Peapack-Gladstone from Wintrust Financial to launch its life insurance premium finance business.

How big can Peapack-Gladstone’s venture get? Primis Financial Corp. in McLean, Virginia, announced its entry into life insurance premium finance in October 2021. Nearly a year later, at the end of the third quarter on Sept. 30, the $3.3 billion-asset Primis had built a $129 million portfolio of life insurance premium finance loans. Peapack-Gladstone anticipates production on a similar or larger scale, according to Smith. 

“We’re going to slow-walk it in the fourth quarter,” but “it will definitely grow

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