Bol Bancshares (BOLB) 10-Q 2010 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C.  20549

FORM 10-Q

T QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended          Sep. 30, 2010

£ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from      to

Commission file Number      00-16934

BOL BANCSHARES, INC.

(Exact name of registrant as specified in its charter.)

Louisiana	72-1121561
(State of incorporation)	(I.R.S. Employer Identification No.)

300 St. Charles Avenue, New Orleans, La. 70130

(Address of principal executive offices)

(504) 889-9400

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes T No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer £	Accelerated filer £
Non-accelerated filer £	Smaller reporting company T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).              Yes £    No T

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: 179,145 shares as of October 31, 2010.

1

BOL BANCSHARES, INC. & SUBSIDIARY

INDEX

	Page No.
PART I.  Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition	3
Consolidated Statements of Income	4
Consolidated Statements of Comprehensive Income	5
Consolidated Statements of Cash Flow	6
Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis	11
Item 3. Quantitative and Qualitative Disclosures about Market Risk, Catastrophic Events and Future Growth	14
Item 4. Submission of Matters to a Vote of Security Holders	15
Item 4T. Controls and Procedures	15
PART II.  Other Information
Item 6. Exhibits	15
Signatures	16

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BOL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CONDITION

	Sept 30		Dec. 31,
(Amounts in Thousands)	2010		2009
	(Unaudited)		(Audited)
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash	$	3,331	$	3,041
Federal Funds Sold		14,925		14,550
Certificates of Deposit		4,450		5,194
Investment Securities
Securities Held to Maturity		0		1,000
Securities Available for Sale		878		814
Loans-Less Allowance for Loan Losses of $1,800 in 2009 and in 2008		59,634		58,302
Property, Equipment and Leasehold Improvements
(Net of Depreciation and Amortization)		5,940		6,141
Other Real Estate		3,099		2,012
Other Assets		673		1,598
TOTAL ASSETS	$	92,930	$	92,652
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-Interest Bearing		32,568		32,107
NOW Accounts		10,562		11,816
Money Market Accounts		4,258		3,772
Savings Accounts		20,791		20,780
Time Deposits, $100,000 and over		2,715		3,810
Other Time Deposits		8,551		6,802
TOTAL DEPOSITS		79,445		79,087
Notes Payable		1,144		1,144
Other Liabilities		652		968
TOTAL LIABILITIES		81,241		81,199
SHAREHOLDERS' EQUITY
Preferred Stock - Par Value $1
1,810,296 Shares Issued and Outstanding in 2010 1,837,089 Shares Issued and Outstanding in 2009		1,810		1,837
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding in 2010 and 2009		179		179
Accumulated Other Comprehensive Income		514		471
Capital in Excess of Par - Retired Stock		195		190
Undivided Profits		8,777		8,641
Current Earnings		214		135
TOTAL SHAREHOLDERS' EQUITY		11,689		11,453
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	92,930	$	92,652

The accompanying notes are an integral part of these financial statements.

3

BOL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three months ended					Nine months ended
	Sept 30					Sept 30
(Amounts in Thousands)	2010			2009		2010		2009
INTEREST INCOME
Interest and Fees on Loans	$	1,463		$	1,475	$	4,504	$	4,537
Interest on Investment Securities		5			11		14		38
Interest on Federal Funds Sold		5			5		13		21
Interest on Certificates of Deposit		13			17		44		41
Total Interest Income		1,486			1,508		4,575		4,637
INTEREST EXPENSE
Interest on Deposits		91			109		270		291
Interest Expense on Notes Payable and Debentures		19			19		56		75
Total Interest Expense		110			128		326		366
NET INTEREST INCOME		1,376			1,380		4,249		4,271
Provision for Loan Losses		103			114		287		454
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		1,273			1,266		3,962		3,817
NON-INTEREST INCOME
Service Charges on Deposit Accounts		124			100		350		290
Cardholder & Other Credit Card Income		105			110		311		320
Other Operating Income		11			371		535		926
Total Non-interest Income		240			581		1,196		1,536
NON-INTEREST EXPENSE
Salaries and Employee Benefits		657			687		1,934		2,070
Occupancy Expense		264			247		799		776
Communications		56			55		162		168
Outsourcing Fees		318			315		1,027		1,045
Loan & Credit Card Expense		30			35		87		100
Professional Fees		86			55		206		166
ORE Expense		57			30		291		65
Other Operating Expense		177			236		423		623
Total Non-interest Expense		1,645			1,660		4,929		5,013
Income/(Loss) Before Tax Provision		(132	)		187		229		340
Provision For Income Taxes		(36	)		63		15		59
NET INCOME/(LOSS)	$	(96	)	$	124	$	214	$	281
Earnings Per Share of Common Stock	$	(0.53	)	$	0.69	$	1.20	$	1.57

The accompanying notes are an integral part of these financial statements.

4

BOL BANCSHARES, INC. & SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Nine Months Ended
	Sept 30		Sept 30
(Amounts in thousands)	2010		2009
NET INCOME	$	214	$	281
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains (Losses) on Investment Securities Available-for-Sale, Arising During the Period		22		(6	)
COMPREHENSIVE INCOME	$	236	$	275

The accompanying notes are an integral part of these financial statements.

5

BOL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30

(Amounts in thousands)	2010			2009
OPERATING ACTIVITIES
Net Income	$	214		$	281
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Loan Losses		287			454
Depreciation and Amortization Expense		290			300
Amortization of Investment Security Premiums		-			(1	)
Decrease in Deferred Income Taxes		(21	)		3
(Gain) Loss on Sale of Other Real Estate		(395	)		(9	)
Decrease in Other Assets		925			143
Decrease in Other Liabilities and Accrued Interest		(315	)		(579	)
Net Cash Provided by Operating Activities		985			592
INVESTING ACTIVITIES
Proceeds from Held-to-Maturity Investment Securities
Released at Maturity		4,000			2,000
Purchases of Held-to-Maturity Investment Securities		(3,000	)		(1,000	)
Purchases of Property and Equipment		(89	)		(24	)
Capitalized Construction Costs for ORE		(486	)		-
Proceeds from Sale of Other Real Estate		395			70
Decrease (Increase) in Certificate of Deposit with   other Banks		743			(5,447	)
Net Increase in Loans		(2,219	)		(3,309	)
Net Cash Used in Investing Activities		(656	)		(7,710	)
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing and Interest Bearing Deposits		358			(1,792	)
Preferred Stock Retired		(22	)		(128	)
Proceeds from Issuance of Long-Term Debt		-			1,000
Principal Payments on Long-Term Debt		-			(1,399	)
Net Cash Provided by (Used) in Financing Activities		336			(2,319	)
Net Increase (Decrease) in Cash and Cash Equivalents		665			(9,437	)
Cash and Cash Equivalents - Beginning of Year		17,591			28,479
Cash and Cash Equivalents - End of Period	$	18,256		$	19,042

The accompanying notes are an integral part of these financial statements.

6

BOL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

SUPPLEMENTAL DISCLOSURES:	2010			2009
Cash Paid During the Year for Interest	$	261		$	415
Cash Paid During the Year for Income Taxes	$	(225	)	$	0
Market Value Adjustment for Unrealized (Loss) Gain on Securities Available-for-Sale	$	33		$	(9	)
Additions to Other Real Estate Through Foreclosure	$	601		$	493

The accompanying notes are an integral part of these financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A Summary of Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Bank of Louisiana (the Bank), and the Bank’s wholly owned subsidiary, BOL Assets, LLC.  These consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X, and do not include information or footnotes for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America.  However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included.

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses.

Cash and Cash Equivalents

Cash equivalents include amounts due from banks and federal funds sold.  Generally, federal funds are purchased and sold for one-day periods.

Disclosure about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value:

Cash and Short-Term Investments

For cash, the carrying amount approximates fair value.  For short-term investments, fair values are calculated based upon general investment market interest rates for similar maturity investments.

7

Investment Securities

For securities and marketable equity securities held-for-investment purposes, fair values are based on quoted market prices.

LoanReceivables

For certain homogeneous categories of loans, such as residential mortgages, credit card receivables and other consumer loans, fair value is estimated using the current U.S. treasury interest rate curve, a factor for cost of processing and a factor for historical credit risk to determine the discount rate.

Deposit Liabilities

The fair value of demand deposits, savings deposits and certain money market deposits are calculated based upon general investment market interest rates for investments with similar maturities.  The value of fixed maturity certificates of deposit is estimated using the U.S. treasury interest rate curve currently offered for deposits of similar remaining maturities.

Commitments to Extend Credit

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties.

The estimated fair values of the Company’s financial instruments at September 30, 2010 and December 31, 2009, are as follows (amounts in thousands):

	September 30, 2010
	Carrying			Fair
	Amount			Value
Financial Assets:
Cash and Short-Term Investments	$	3,331		$	3,331
Certificates of Deposit		4,451			4,451
Investment Securities		878			878
Loans		61,434			61,352
Less:  Allowance for Loan Losses		(1,800	)		(1,800	)
	$	68,294		$	68,212
Financial Liabilities:
Deposits	$	79,445		$	79,512
Unrecognized Financial Instruments:
Commitments to Extend Credit	$	2,269		$	2,269
Credit Card Arrangements		15,352			15,352
	$	17,621		$	17,621

8

	December 31, 2009
	Carrying			Fair
	Amount			Value
Financial Assets:
Cash and Short-Term Investments	$	4,040		$	4,040
Certificates of Deposit		5,194			5,194
Investment Securities		302			814
Loans		60,102			60,294
Less:  Allowance for Loan Losses		(1,800	)		(1,800	)
	$	67,839		$	68,543
Financial Liabilities:
Deposits	$	79,087		$	79,197
Unrecognized Financial Instruments:
Commitments to Extend Credit	$	2,627		$	2,627
Credit Card Arrangements		16,758			16,758
	$	19,385		$	19,385

Financial Instruments

On January 1, 2008, the Company adopted the FASB fair value guidance  pertaining to all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  This guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The fair value guidance defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.  The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.  In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

9

In addition to defining fair value, the fair value guidance expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs.  The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.  Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

· Level 1 - Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets

· Level 2 - Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market date for substantially the full term of the assets or liabilities

· Level 3 - Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.  The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2010 and December 31, 2009 (amounts in thousands):

September 30, 2010
	Level 1		Level 2		Level 3		Net Balance
Assets
Equity Securities	$	-	$	878	$	-	$	878
Total	$	-	$	878	$	-	$	878

December 31, 2009
	Level 1		Level 2		Level 3		Net Balance
Assets
Equity Securities	$	-	$	814	$	-	$	814
Total	$	-	$	814	$	-	$	814

10

Subsequent Events

In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements.  The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of September 30, 2010.  In preparing these financial statements, the Company evaluated the events and transactions that occurred from September 30, 2010 through the date these financial statements were issued.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS

SEPTEMBER 30, 2010 COMPARED WITH DECEMBER 31, 2009

BALANCE SHEET

Total assets at September 30, 2010 were $92,930,000 compared to $92,652,000 at December 31, 2009, for an increase of $278,000, or 0.30%.  Federal Funds Sold increased $375,000 from $14,550,000 at December 31, 2009 to $14,925,000 at September 30, 2010.  Certificates of Deposit decreased $744,000 from $5,194,000 at December 31, 2009 to $4,450,000 at September 30, 2010. This decrease was due to the inability to secure a good yield.  Investment securities show a decrease of $936,000 from $1,814,0000 at December 31, 2009 to $878,000 at September 30, 2010. Securities held to maturity decreased $1,000,000 due to bonds being called. Securities available for sale increased by $64,000 reflecting updated market values. Total loans increased $1,332,000, or 2.28%, to $59,63 4,000 at September 30, 2010 from $58,302,000 at December 31, 2009. This increase in the loan portfolio is due mainly to an increase in 1-4 residential loans of $1,915,000, an increase in construction loans of $223,000, an increase in commercial loans of $70,000, an increase in personal loans of $57,000 and an increase in customer overdrafts $92,000. These increases were offset by a decrease in commercial real estate loans of $10,000, a decrease in second mortgage loans of $79,000, a decrease in other real estate loans of $71,000 and a decrease in credit card loans of $865,000. The credit card portfolio decrease was largely attributable to (i) competition from other banks and non-traditional credit card issuers; (ii) tightening of the Bank’s underwriting standards; and (iii) normal attrition, in addition to the cyclical nature of the business.

Total deposits increased $358,000, or 0.45%, to $79,445,000 at September 30, 2010 from $79,087,000 at December 31, 2009.  Total non-interest bearing deposits increased $461,000 and interest-bearing accounts decreased $103,000. The decrease of interest earning deposits was mainly attributable to a decrease in NOW accounts of $1,254,000, an increase in money market accounts of $486,000, an increase in savings accounts of $11,000 and an increase of $654,000 in time deposits.

Other liabilities decreased $316,000 from $968,000 at December 31, 2009 to $652,000 at September 30, 2010. This decrease is due mainly to a decrease in other liabilities, a decrease in deferred taxes and a decrease in accrued interest. These decreases were partially offset by an increase in deferred membership fees.

Shareholder’s Equity increased $236,000 from $11,453,000 at December 31, 2009 to $11,689,000 at September 30, 2010. This increase is due mainly to an increase in accumulated other comprehensive income of $43,000, net income for the nine months ended September 30, 2010 of $214,000 and an increase in capital in excess of par-retired Preferred Stock of $5,000. These increases were partially offset by a decrease in Preferred Stock of $27,000.

11

NINE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2009

INCOME

The Company’s net income for the nine months ended September 30, 2010 was $214,000, or $1.20 per share, a decrease of $67,000 from the Company’s total net income of $281,000, or $1.57 per share, for the same period last year.

Interest income decreased $62,000 for the nine months ended September 30, 2010 over the same period last year. Interest on federal funds sold decreased $8,000 primarily due to a decrease in the average interest rate paid from .16% at September 30, 2009 to .13% at September 30, 2010.  The average balance of federal funds sold decreased $4,384,000 from $17,395,000 at September 30, 2009 to $13,011,000 at September 30, 2010.  Interest on investment securities decreased $24,000 due mainly to a decrease in the average balance from $2,744,000 at September 30, 2009 to $2,437,000 at September 30, 2010. Interest in the loan portfolio decreased $33,000 due mainly to a decrease in the average interest rate of 10.53% at September 30, 2009 to 10.17% at September 30, 2010. The average balance of Certificates of Deposit purchased was $4,785,000 at an average interest rate of 1.23% for the nine months ended September 30, 2010 as compared to an average balance of Certificates of Deposit of $3,982,000 with an average interest rate of 1.37% for the nine months ended September 30, 2009.

Interest expense decreased $40,000 for the nine months ended September 30, 2010 over the same period last year.  This was caused primarily by a decrease in the average interest rate paid on interest-bearing deposits from .87% at September 30, 2009 to .77% as of September 30, 2010. The impact of the decrease in the average interest rate paid on interest-bearing deposits was partially offset by an increase in the average balance of interest bearing deposits from $44,513,000 at September 30, 2009 to $46,475,000 at September 30, 2010.  The average interest rate on interest-bearing liabilities decreased from 1.06% at September 30, 2009 to .91% at September 30, 2010.

Net interest income decreased $22,000 for the nine months ended September 30, 2010 compared to the same period last year.  Our interest rate spread increased from 6.52% at September 30, 2009 to 6.78% at September 30, 2010. The increase in the rate spread was due to an increase of .11% on the yield on interest-earning assets from 7.58% for the nine months ended September 30, 2009 to 7.69% for the nine months ended September 30, 2010, and a decrease of .15% on the average rate paid out on interest bearing liabilities from 1.06% paid for the nine months ended September 30, 2009 as compared to .91% paid during the nine months ended September 30, 2010.

Non-interest income decreased $340,000 between the nine month periods from $1,536,000 at September 30, 2009 to $1,196,000 at September 30, 2010.  Other income decreased $391,000 for the nine months ended September 30, 2010. This decrease is due mainly to a decrease in miscellaneous income of $814,000 pertaining to insurance proceeds relating to Hurricane Katrina that were not needed for repairs and recognized as miscellaneous income for the nine months ended September 30, 2009. This decrease was partially offset by an increase in gain on sale of ORE properties of $395,000 and increase of $38,000 in dividend income for the nine months ended September 30, 2010.

Non-interest expense decreased $84,000 for the nine month period of 2010 as compared to the same period last year.  Salaries and Employee Benefits decreased $136,000 from $2,070,000 at September 30, 2009 to $1,934,000 at  September 30, 2010.  This decrease was due mainly to a reduction in number of employees subsequent to the first quarter of 2009. Occupancy expense increased by $23,000 and communications decreased by $6,000.  Outsourcing fees decreased $18,000 and loan and credit card expense decreased $13,000 due mainly to a decrease in credit card sales.  Professional fees increased $40,000 due mainly to foreclosures occurring in 2010. ORE expenses increased $226,000 for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 due primarily to expenses associated with the repairs and remodeling of ORE properties. Other operating expenses decreased $200,000 primarily due to a decrease in bank stock taxes.

12

THIRD QUARTER 2010 COMPARED WITH THIRD QUARTER 2009

INCOME

Net loss for the third quarter of 2010 was $(96,000), or $(0.53) per share, compared to $124,000, or $.69 per share, for the same period last year for a decrease of $220,000.

Interest income decreased $22,000 over the same period last year.  Interest on the loan portfolio decreased $12,000 from $1,475,000 at September 30, 2009 to $1,463,000 at September 30, 2010. This was caused mainly by an increase in the average balance from $58,580 at September 30, 2009 to $60,237 at September 30, 2010.

Interest on investment securities decreased $6,000 due mainly to a decrease in the yield on investment securities from 1.69% at September 30, 2009 to 0.81% at September 30, 2010.  Interest on certificates of deposit decreased $4,000 due mainly to a decrease in the interest rate of 1.38% in 2009 to 1.10% in 2010 and a decrease in the average balance from $4,918,000 to $4,746,000.

Interest expense decreased $18,000 for the three months ended September 30, 2010 over the same period last year.  This was caused by a decrease in the average interest rate paid on interest-bearing deposits from 0.96% at September 30, 2009 to .78% as of September 30, 2010. The impact of the decrease in the average interest rate paid on interest bearing deposits was partially offset by an increase in the average balance of interest-bearing deposits from $45,517,000 at September 30, 2009 to $46,577,000 at September 30, 2010.

Net interest income decreased $4,000 due primarily to a decrease in the interest earning assets average balances from $81,525,000 in 2009 to an average balance of $79,609,000 in 2010.

Non-interest income decreased $341,000 for the three month period ended September 30, 2010 compared to the prior year period. Cardholder and other credit card income decreased by $5,000. Other operating income decreased by $360,000 due mainly to insurance proceeds of $354,000 credited in the third quarter of 2009 to miscellaneous income for Hurricane Katrina repairs that were not needed and an ORE gain on sale of $9,000. These decreases were offset by an increase in deposit related fees of $24,000 due mainly to an increase in the fees collected on overdrawn accounts.

Non-interest expense decreased $15,000 for the three month period ended September 30, 2010 compared to the prior year period.  Occupancy expense increased $17,000 primarily due to a rent adjustment of $10,000 related to Katrina expenses, a utilities expense increase of $6,000 and an increase in equipment repairs of $1,000. Communications increase of $1,000, outsourcing fees increased $3,000, professional fees increased $31,000 due to higher legal fees on foreclosures and ORE increased $27,000 due to maintenance and repairs on the additional ORE properties. These increases were offset by a decrease in salaries and employee benefits of $30,000 due mainly to a reduction in the number of employees, a decrease in loan and credit card expenses of $5,000 and a decrease of $59,000 in othe r operating expenses primarily due to lower FDIC assessment of $46,000 a decrease in loss on litigation of $8,000 and a decrease in stationary, forms and supplies of $5,000.

The provision for income taxes decreased $99,000 compared to the same period last year from a provision of a liability of $63,000 at September 30, 2009 to a benefit of $36,000 at September 30, 2010.

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Item 3 Quantitative and Qualitative Disclosures about Market Risk, Catastrophic Events, and Future Growth

Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.  Difficult conditions in the financial services markets may materially and adversely affect the business and results of operations of the Bank and the Company.

Dramatic declines in the housing market during the past year, along with falling home prices and increasing foreclosures and unemployment, have resulted in significant write downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks.  These write-downs, initially of mortgage-backed securities by spreading to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, and, in some cases, to fail.  Many lenders and institutional investors have reduced, and in some cases, ceased to provide funding to borrowers, including other financial institutions.  This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility, and widespread reduction of business activity generally, which could have a material adverse effect on our business and operations.  A worsening of these conditions would likely exacerbate any adverse effects of these difficult market conditions on us and others in the financial institutions industry.  However, the majority of small community banks, such as Bank of Louisiana, have strong reserve positions and are well capitalized.

The occurrence of catastrophic events such as hurricanes, tropical storms, earthquakes, windstorms, floods, severe winter weather, fires and other catastrophes could adversely affect our consolidated financial condition or results of operations.  Unpredictable natural and other disasters could have an adverse effect on us in that such events could materially disrupt our operations or the ability or willingness of our customers to access financial services offered by us.  The incidence and severity of catastrophic events could nevertheless reduce our earnings and cause volatility in our financial results for any fiscal quarter or year and have a material adverse effect on our financial condition or results of operation.

The Company is a customer-focused organization.  Future growth is expected to be driven in a large part by the relationships maintained with customers.  The Company has assembled an experienced management team, and has management development plans in place.

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Item 4T Controls and Procedures

Under the supervision and with the participation of our management, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934) as of the end of the period covered by this report.  Based upon that evaluation, the certifying officers of the Company have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act of 1934, is recorded, processed, summarized and reported within the applicable time periods specified by the Securities and Exchange Commission&# 8217;s rules and forms.  There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 6 Exhibits

Exhibits

31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32 Certification Pursuant to 18 U.S.C. Section 1350

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BOL BANCSHARES, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BOL BANCSHARES, INC.
November 15, 2010	/s/ G. Harrison Scott
Date	G. Harrison Scott
	Chairman
	(in his capacity as a duly authorized officer of the Registrant)
	/s/ Peggy L. Schaefer
	Peggy L. Schaefer
	Treasurer
	(in her capacity as Chief Accounting Officer of the Registrant)

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