UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Amendment No. 1)
x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
o 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 x No o
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 filero | Accelerated filero | |
| Non-accelerated filer o | Smaller reporting companyx |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
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 August 15, 2011.
EXPLANATORY NOTE
The sole purpose of this Amendment No. 1 to BOL Bancshares, Inc. Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 19, 2011 (the Form 10-Q), is to 1) correct the heading of NOTE D SUBSEQUENT EVENTS to NOTE E SUBSEQUENT EVENTS, 2) furnish a futher disclosure in NOTE F REGULATORY MATTERS and 3) furnish Exhibit 101 in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).
No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
BOL BANCSHARES, INC. & SUBSIDIARY
| Page No. | |||
| PART I. Financial Information | |||
| Item 1. | Financial Statements | ||
| Consolidated Statements of Condition | 4 | ||
| Consolidated Statements of Income | 5 | ||
| Consolidated Statements of Comprehensive Income | 6 | ||
| Consolidated Statements of Cash Flow | 7 | ||
| Notes to Consolidated Financial Statements | 8 | ||
| Item 2. | Management's Discussion and Analysis | 18 | |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk, Catastrophic Events and Future Growth | 20 | |
| Item 4. | Submission of Matters to a Vote of Security Holders | 21 | |
| Item 4T. | Controls and Procedures | 21 | |
| PART II. Other Information | |||
| Item 6. | Exhibits | 22 | |
| Signatures | 23 | ||
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATEDSTATEMENT OFCONDITION
| June 30, | Dec. 31, | |||||||
| (Amounts in Thousands) | 2011 | 2010 | ||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Cash and Due from Banks | ||||||||
| Non-Interest Bearing Balances and Cash | $ | 2,825 | $ | 3,834 | ||||
| Federal Funds Sold | 16,775 | 14,950 | ||||||
| Certificates of Deposit | 3,953 | 4,203 | ||||||
| Investment Securities | ||||||||
| Securities Held to Maturity | 0 | 0 | ||||||
| Securities Available for Sale | 878 | 878 | ||||||
| Loans-Less Allowance for Loan Losses of $1,800 in 2011 and in 2010 | 57,141 | 60,236 | ||||||
| Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization) | 5,755 | 5,856 | ||||||
| Other Real Estate | 4,153 | 3,137 | ||||||
| Other Assets | 813 | 1,282 | ||||||
| TOTAL ASSETS | $ | 92,294 | $ | 94,376 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| LIABILITIES | ||||||||
| Deposits: | ||||||||
| Non-Interest Bearing | 30,562 | 31,867 | ||||||
| NOW Accounts | 10,597 | 11,184 | ||||||
| Money Market Accounts | 4,180 | 3,948 | ||||||
| Savings Accounts | 20,065 | 20,157 | ||||||
| Time Deposits, $100,000 and over | 2,835 | 5,248 | ||||||
| Other Time Deposits | 10,325 | 8,173 | ||||||
| TOTAL DEPOSITS | 78,563 | 80,577 | ||||||
| Notes Payable | 1,144 | 1,144 | ||||||
| Other Liabilities | 762 | 882 | ||||||
| TOTAL LIABILITIES | 80,470 | 82,603 | ||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Preferred Stock - Par Value $1 | ||||||||
| 1,808,911 Shares Issued and Outstanding at June 30, 2011 | ||||||||
| 1,810,296 Shares Issued and Outstanding at December 31, 2010 | 1,809 | 1,810 | ||||||
| Common Stock - Par Value $1 | ||||||||
| 179,145 Shares Issued and Outstanding in 2011 and 2010 | 179 | 179 | ||||||
| Accumulated Other Comprehensive Income | 513 | 513 | ||||||
| Capital in Excess of Par - Retired Stock | 195 | 195 | ||||||
| Undivided Profits | 9,075 | 8,777 | ||||||
| Current Earnings | 53 | 299 | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 11,824 | 11,773 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 92,294 | $ | 94,376 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Amounts in Thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| INTEREST INCOME | ||||||||||||||||
| Interest and Fees on Loans | $ | 1,493 | $ | 1,554 | $ | 2,970 | $ | 3,041 | ||||||||
| Interest on Investment Securities | 2 | 6 | 4 | 9 | ||||||||||||
| Interest on Federal Funds Sold | 4 | 5 | 10 | 8 | ||||||||||||
| Interest on Certificates of Deposit | 9 | 14 | 18 | 31 | ||||||||||||
| Total Interest Income | 1,507 | 1,579 | 3,002 | 3,089 | ||||||||||||
| INTEREST EXPENSE | ||||||||||||||||
| Interest on Deposits | 89 | 88 | 177 | 179 | ||||||||||||
| Interest Expense on Notes Payable and Debentures | 19 | 19 | 37 | 37 | ||||||||||||
| Total Interest Expense | 108 | 107 | 214 | 216 | ||||||||||||
| NET INTEREST INCOME | 1,399 | 1,472 | 2,788 | 2,873 | ||||||||||||
| Provision for Loan Losses | 32 | 109 | 51 | 184 | ||||||||||||
| NET INTEREST INCOME AFTER PROVISION | ||||||||||||||||
| FOR LOAN LOSSES | 1,367 | 1,363 | 2,737 | 2,689 | ||||||||||||
| NON-INTEREST INCOME | ||||||||||||||||
| Service Charges on Deposit Accounts | 108 | 114 | 217 | 226 | ||||||||||||
| Cardholder & Other Credit Card Income | 105 | 106 | 206 | 207 | ||||||||||||
| Other Operating Income | 19 | 210 | 59 | 525 | ||||||||||||
| Total Non-interest Income | 232 | 430 | 481 | 958 | ||||||||||||
| NON-INTEREST EXPENSE | ||||||||||||||||
| Salaries and Employee Benefits | 597 | 653 | 1,197 | 1,277 | ||||||||||||
| Occupancy Expense | 233 | 267 | 457 | 535 | ||||||||||||
| Communications | 57 | 60 | 114 | 107 | ||||||||||||
| Outsourcing Fees | 380 | 390 | 726 | 709 | ||||||||||||
| Loan & Credit Card Expense | 30 | 31 | 58 | 57 | ||||||||||||
| Professional Fees | 68 | 66 | 150 | 120 | ||||||||||||
| ORE Expense | 65 | 123 | 109 | 234 | ||||||||||||
| Other Operating Expense | 158 | 233 | 316 | 246 | ||||||||||||
| Total Non-interest Expense | 1,589 | 1,823 | 3,126 | 3,285 | ||||||||||||
| Income Before Tax Provision | 10 | (30 | ) | 92 | 362 | |||||||||||
| Provision for (Benefit) Income Taxes | 7 | (85 | ) | 39 | 51 | |||||||||||
| NET INCOME | $ | 3 | $ | 55 | $ | 53 | $ | 310 | ||||||||
| Earnings Per Share of Common Stock | $ | 0.02 | $ | 0.31 | $ | 0.29 | $ | 1.73 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| (Amounts in thousands) | 2011 | 2010 | ||||||
| NET INCOME | $ | 53 | $ | 310 | ||||
| OTHER COMPREHENSIVE INCOME, NET OF TAX | ||||||||
| Unrealized Holding Losses on Investment Securities Available-for-Sale, Arising During the Period | - | - | ||||||
| COMPREHENSIVE INCOME | $ | 53 | $ | 310 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | June 30, | |||||||
| (Amounts in thousands) | 2011 | 2010 | ||||||
| OPERATING ACTIVITIES | ||||||||
| Net Income | $ | 53 | $ | 310 | ||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||
| Provision for Loan Losses | 51 | 184 | ||||||
| Depreciation and Amortization Expense | 157 | 194 | ||||||
| Gain on Sale of Other Real Estate | - | (395 | ) | |||||
| Decrease in Other Assets | 468 | 730 | ||||||
| Decrease in Other Liabilities and Accrued Interest | (120 | ) | (296 | ) | ||||
| Net Cash Provided by Operating Activities | 609 | 727 | ||||||
| INVESTING ACTIVITIES | ||||||||
| Proceeds from Held-to-Maturity Investment Securities | ||||||||
| Released at Maturity | - | 1,000 | ||||||
| Purchases of Held-to-Maturity Investment Securities | - | (3,000 | ) | |||||
| Purchases of Property and Equipment | (56 | ) | (63 | ) | ||||
| Capitalized Construction Costs for ORE | (17 | ) | (432 | ) | ||||
| Increase in Certificate of Deposit with Other Banks | 250 | 499 | ||||||
| Net Decrease (Increase) in Loans | 2,045 | (2,435 | ) | |||||
| Net Cash Provided by (Used in) Investing Activities | 2,222 | (4,431 | ) | |||||
| FINANCING ACTIVITIES | ||||||||
| Net Decrease in Non-Interest Bearing and Interest Bearing Deposits | (2,014 | ) | (395 | ) | ||||
| Preferred Stock Retired | (1 | ) | (22 | ) | ||||
| Net Cash Used in Financing Activities | (2,015 | ) | (417 | ) | ||||
| Net (Decrease) in Cash and Cash Equivalents | 816 | (4,121 | ) | |||||
| Cash and Cash Equivalents - Beginning of Year | 18,784 | 17,591 | ||||||
| Cash and Cash Equivalents - End of Period | $ | 19,600 | $ | 13,470 | ||||
| SUPPLEMENTAL DISCLOSURES: | ||||||||
| Cash Paid During the Year for Interest | $ | 94 | $ | 257 | ||||
| Cash (Received) Paid During the Year for Income Taxes | $ | 11 | $ | (225 | ) | |||
| Market Value Adjustment for Unrealized Loss on Securities Available-for-Sale | $ | - | $ | - | ||||
| Additions to Other Real Estate Thru Foreclosure | $ | 999 | $ | 601 | ||||
The accompanying notes are an integral part of these financial statements.
| 7 |
BOL BANCSHARES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note A Summary of Accounting Policies
Principles of Consolidation and 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.
Loans
Loans are stated at the amount of unpaid principal, reduced by unearned discount and an allowance for loan losses. Unearned discounts on loans are recognized as income over the term of the loans on the interest method. Interest on other loans is calculated and credited to operations on a simple-interest basis. Loans are charged against the allowance for loan losses when management believes that collectability of the principal is unlikely. Loan origination fees and certain direct origination costs, when material, are capitalized and recognized as an adjustment of the yield on the related loan.
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan losses charged to expenses. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb known and inherent losses on existing loans that may become uncollectible, based on evaluation of the collectability of loans and prior loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrowers’ ability to pay. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired.
For loans individually evaluated for impairment, the estimated amount of loss is based on several factors, which include fair value of collateral and expected cash flows from the loan.
| 8 |
Note B 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.
Investment Securities
For securities and marketable equity securities held-for-investment purposes, fair values are based on quoted market prices.
Loan Receivables
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 June 30, 2011 and December 31, 2010, are as follows (amounts in thousands):
| June 30, 2011 | ||||||||
| ` | Carrying | Fair | ||||||
| Amount | Value | |||||||
| (In Thousands) | ||||||||
| Financial Assets: | ||||||||
| Cash and Short-Term Investments | $ | 2,825 | $ | 2,838 | ||||
| Certificates of Deposit | 3,953 | 3,853 | ||||||
| Investment Securities | 878 | 878 | ||||||
| Loans | 58,941 | 58,698 | ||||||
| Less: Allowance for Loan Losses | (1,800 | ) | (1,800 | ) | ||||
| $ | 64,797 | $ | 64,467 | |||||
| Financial Liabilities: | ||||||||
| Deposits | $ | 78,563 | $ | 79,043 | ||||
| Unrecognized Financial Instruments: | ||||||||
| Commitments to Extend Credit | $ | 974 | $ | 974 | ||||
| Credit Card Arrangements | 13,109 | 13,109 | ||||||
| $ | 14,083 | $ | 14,083 | |||||
| 9 |
| December 31, 2010 | ||||||||
| Carrying | Fair | |||||||
| Amount | Value | |||||||
| (In Thousands) | ||||||||
| Financial Assets: | ||||||||
| Cash and Short-Term Investments | $ | 3,834 | $ | 3,834 | ||||
| Certificates of Deposit | 4,203 | 4,203 | ||||||
| Investment Securities | 878 | 878 | ||||||
| Loans | 62,036 | 62,054 | ||||||
| Less: Allowance for Loan Losses | (1,800 | ) | (1,800 | ) | ||||
| $ | 69,151 | $ | 69,169 | |||||
| Financial Liabilities: | ||||||||
| Deposits | $ | 80,577 | $ | 80,675 | ||||
| Unrecognized Financial Instruments: | ||||||||
| Commitments to Extend Credit | $ | 1,763 | $ | 1,763 | ||||
| Credit Card Arrangements | 14,626 | 14,626 | ||||||
| $ | 16,389 | $ | 16,389 | |||||
Note C Loans and Allowance for Loans Losses
Major classifications of loans as of June 30, 2011 and December 31, 2010 are as follows:
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| Real Estate Mortgages: | ||||||||
| Residential 1-4 Family | $ | 20,813,797 | $ | 19,541,387 | ||||
| Commercial | 18,595,350 | 20,281,907 | ||||||
| Construction | 6,714,135 | 9,023,499 | ||||||
| Second Mortgages | 893,398 | 948,686 | ||||||
| Other | 1,668,276 | 1,724,934 | ||||||
| 48,684,956 | 51,520,413 | |||||||
| Commercial | 2,625,311 | 2,726,278 | ||||||
| Personal | 1,540,159 | 1,191,139 | ||||||
| Credit Cards | 5,941,645 | 6,321,359 | ||||||
| Overdrafts | 148,452 | 276,932 | ||||||
| 58,940,523 | 62,036,121 | |||||||
| Allowance for Loan Losses | 1,800,000 | 1,800,000 | ||||||
| Net Loans | $ | 57,140,523 | $ | 60,236,121 | ||||
| 10 |
The following is a classification of loans by rate and maturity:
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (In Thousands) | ||||||||
| Fixed Rate Loans: | ||||||||
| Maturing in 3 Months or Less | $ | 12,042 | $ | 13,785 | ||||
| Maturing Between 3 and 12 Months | 28,364 | 29,769 | ||||||
| Maturing Between 1 and 5 Years | 15,616 | 14,154 | ||||||
| Maturing After 5 Years | 596 | 631 | ||||||
| Variable Rate Loans: | ||||||||
| Maturing Quarterly or More Frequently | 1,352 | 723 | ||||||
| Maturing Between 3 and 12 Months | - | 698 | ||||||
| Maturing Between 1 and 5 Years | - | - | ||||||
| Non accrual Loans | 971 | 2,276 | ||||||
| Less: Allowance for Loan Losses | (1,800 | ) | (1,800 | ) | ||||
| Net Loans | $ | 57,141 | $ | 60,236 | ||||
Loans are considered past due if the required principal and interest payments have not been received as of the date of such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet the payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due.
Non-accruals loans, segregated by class of loan, are as follows:
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (in thousands) | ||||||||
| Real Estate Mortgages | ||||||||
| Residential 1-4 Family | $ | 727,438 | $ | 793,000 | ||||
| Commercial | - | 100,567 | ||||||
| Construction | 220,200 | 1,370,856 | ||||||
| Second Mortgages | - | - | ||||||
| Other | - | - | ||||||
| Commercial | 11,305 | - | ||||||
| Personal | 11,793 | 11,793 | ||||||
| Credit Cards | - | - | ||||||
| Overdrafts | - | - | ||||||
| Total | $ | 970,736 | $ | 2,276,216 | ||||
| 11 |
An aging analysis of past due loans, segregated by class of loans, as of June 30, 2011 and December 31, 2010, is as follows:
| ACCRUING | ||||||||||||||||||||||||
| 30-89 | 90-MORE | TOTAL | CURRENT | TOTAL | 90-MORE | |||||||||||||||||||
| June 30, 2011 | DAYS | DAYS | PAST DUE | LOANS | LOANS | PAST DUE | ||||||||||||||||||
| Real Estate | ||||||||||||||||||||||||
| 1-4 Family Res. | $ | 1,500,249 | $ | 970,901 | $ | 2,471,150 | $ | 18,342,647 | $ | 20,813,797 | $ | 243,463 | ||||||||||||
| Commercial | 128,649 | - | 128,649 | 18,466,701 | 18,595,350 | - | ||||||||||||||||||
| Construction | 622,371 | 492,286 | 1,114,657 | 5,599,478 | 6,714,135 | 272,086 | ||||||||||||||||||
| Second Mortgages | 27,559 | - | 27,559 | 865,839 | 893,398 | - | ||||||||||||||||||
| Other | - | - | - | 1,668,276 | 1,668,276 | - | ||||||||||||||||||
| Commercial | 25,938 | 16,049 | 41,987 | 2,583,324 | 2,625,311 | 4,744 | ||||||||||||||||||
| Personal | 32,151 | 100,970 | 133,121 | 1,407,038 | 1,540,159 | 89,177 | ||||||||||||||||||
| Credit Cards | 53,713 | 101,667 | 155,380 | 5,786,265 | 5,941,645 | 101,667 | ||||||||||||||||||
| Overdrafts | 1,905 | 55,496 | 57,401 | 91,051 | 148,452 | 55,496 | ||||||||||||||||||
| �� | ||||||||||||||||||||||||
| Total | $ | 2,392,535 | $ | 1,737,369 | $ | 4,129,904 | $ | 54,810,619 | $ | 58,940,523 | $ | 766,633 | ||||||||||||
| ACCRUING | ||||||||||||||||||||||||
| 30-89 | 90-MORE | TOTAL | CURRENT | TOTAL | 90-MORE | |||||||||||||||||||
| December 31, 2010 | DAYS | DAYS | PAST DUE | LOANS | LOANS | PAST DUE | ||||||||||||||||||
| Real Estate | ||||||||||||||||||||||||
| 1-4 Family Res. | $ | 1,467,116 | $ | 2,410,231 | $ | 3,877,347 | $ | 15,664,040 | $ | 19,541,387 | $ | 1,617,230 | ||||||||||||
| Commercial | 327,960 | 100,567 | 428,527 | 19,853,380 | 20,281,907 | - | ||||||||||||||||||
| Construction | 406,363 | 1,370,855 | 1,777,218 | 7,246,281 | 9,023,499 | - | ||||||||||||||||||
| Second Mortgages | 28,730 | - | 28,730 | 919,956 | 948,686 | - | ||||||||||||||||||
| Other | 278,725 | 278,725 | 1,446,209 | 1,724,934 | - | |||||||||||||||||||
| Commercial | 461,279 | 1,441 | 462,720 | 2,263,558 | 2,726,278 | 1,441 | ||||||||||||||||||
| Personal | 62,838 | 22,493 | 85,331 | 1,105,808 | 1,191,139 | 10,700 | ||||||||||||||||||
| Credit Cards | 129,317 | 55,518 | 184,835 | 6,136,524 | 6,321,359 | 55,518 | ||||||||||||||||||
| Overdrafts | 3,800 | 210,101 | 213,901 | 63,031 | 276,932 | 210,101 | ||||||||||||||||||
| Total | $ | 3,166,128 | $ | 4,171,206 | $ | 7,337,334 | $ | 54,698,787 | $ | 62,036,121 | $ | 1,894,990 | ||||||||||||
Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Impaired loans, or portions thereof, are charged off when deemed uncollectible.
| 12 |
Impaired loans as of June 30, 2011 are set forth in the following table:
| Unpaid Contractual Principal Balance | Recorded Investment with No Allowance | Recorded Investment with Allowance | Total Recorded Investment | Related Allowance | ||||||||||||||||
| Real Estate | ||||||||||||||||||||
| Residential 1-4 Family | $ | 3,725,308 | $ | - | $ | 3,725,308 | $ | 3,725,308 | $ | 748,113 | ||||||||||
| Commercial | - | - | - | - | - | |||||||||||||||
| Construction | 574,171 | - | 574,171 | 574,171 | 91,128 | |||||||||||||||
| Second Mortgages | - | - | - | - | - | |||||||||||||||
| Other | 11,793 | - | 11,793 | 11,793 | 5,323 | |||||||||||||||
| Commercial | 6,614 | - | 6,614 | 6,614 | - | |||||||||||||||
| Personal | 82,088 | - | 82,088 | 82,088 | 7,845 | |||||||||||||||
| Credit Cards | - | - | - | - | - | |||||||||||||||
| Overdrafts | 46,718 | - | 46,718 | 46,718 | 7,008 | |||||||||||||||
| Total | $ | 4,446,692 | $ | - | $ | 4,446,692 | $ | 4,446,692 | $ | 859,417 | ||||||||||
Impaired loans as of December 31, 2010 are set forth in the following table:
| Unpaid Contractual Principal Balance | Recorded Investment with No Allowance | Recorded Investment with Allowance | Total Recorded Investment | Related Allowance | ||||||||||||||||
| Real Estate | ||||||||||||||||||||
| Residential 1-4 Family | $ | 3,061,009 | $ | - | $ | 3,061,009 | $ | 3,061,009 | $ | 532,438 | ||||||||||
| Commercial | - | - | - | - | - | |||||||||||||||
| Construction | 1,573,321 | - | 1,573,321 | 1,573,321 | 382,261 | |||||||||||||||
| Second Mortgages | - | - | - | - | - | |||||||||||||||
| Other | 115,856 | - | 115,856 | 115,856 | 11,284 | |||||||||||||||
| Commercial | 7,303 | - | 7,303 | 7,303 | 820 | |||||||||||||||
| Personal | 108,894 | - | 108,894 | 108,894 | 5,362 | |||||||||||||||
| Credit Cards | - | - | - | - | - | |||||||||||||||
| Overdrafts | 205,751 | - | 205,751 | 205,751 | 30,863 | |||||||||||||||
| Total | $ | 5,072,134 | $ | - | $ | 5,072,134 | $ | 5,072,134 | $ | 963,028 | ||||||||||
| 13 |
Changes in the allowance for loan losses by portfolio segment for the six months ended June 30, 2011 are as follows:
| Real Estate | Commercial | Personal | Credit Cards | Overdrafts | Unallocated | Total | ||||||||||||||||||||||
| Balance at January 1, 2011 | $ | 970,452 | $ | 45,287 | $ | 17,763 | $ | 367,544 | $ | 31,171 | $ | 367,783 | $ | 1,800,000 | ||||||||||||||
| Provision for Possible Loan Losses | (108,888 | ) | 11,883 | 7,830 | 32,466 | (23,545 | ) | 131,695 | 51,441 | |||||||||||||||||||
| Charge-Offs | (19,153 | ) | (15,959 | ) | (6,060 | ) | (135,737 | ) | (1,242 | ) | (25 | ) | (178,176 | ) | ||||||||||||||
| Recoveries | 43,364 | - | 2,930 | 79,747 | 694 | 126,735 | ||||||||||||||||||||||
| Net Charge-Offs | 24,211 | (15,959 | ) | (3,130 | ) | (55,990 | ) | (548 | ) | - | (51,441 | ) | ||||||||||||||||
| Ending Balance | $ | 885,775 | $ | 41,211 | $ | 22,463 | $ | 344,020 | $ | 7,078 | $ | 499,453 | $ | 1,800,000 | ||||||||||||||
| Period-End Amount Allocated To: | ||||||||||||||||||||||||||||
| Loans Individually Evaluated for Impairment | $ | 844,564 | $ | - | $ | 7,845 | $ | - | $ | 7,008 | $ | - | $ | 859,417 | ||||||||||||||
| Loans Collectively Evaluated for Impairment | 41,211 | 41,211 | 14,618 | 344,020 | 70 | 499,453 | 940,583 | |||||||||||||||||||||
| Ending Balance | $ | 885,775 | $ | 41,211 | $ | 22,463 | $ | 344,020 | $ | 7,078 | $ | 499,453 | $ | 1,800,000 | ||||||||||||||
Changes in the allowance for loan losses by portfolio segment for the year ended December 31, 2010 are as follows:
| Real Estate | Commercial | Personal | Credit Cards | Overdrafts | Unallocated | Total | ||||||||||||||||||||||
| Balance at January 1, 2010 | $ | 1,229,554 | $ | 125,487 | $ | 67,616 | $ | 360,976 | $ | 13,033 | $ | 3,334 | $ | 1,800,000 | ||||||||||||||
| Provision for Possible Loan Losses | (256,220 | ) | (105,250 | ) | (43,117 | ) | 312,444 | 32,382 | 364,449 | 304,688 | ||||||||||||||||||
| Charge-Offs | (4,371 | ) | - | (6,736 | ) | (476,737 | ) | (16,704 | ) | - | (504,548 | ) | ||||||||||||||||
| Recoveries | 1,489 | 25,050 | - | 170,861 | 2,460 | - | 199,860 | |||||||||||||||||||||
| Net Charge-Offs | (2,882 | ) | 25,050 | (6,736 | ) | (305,876 | ) | (14,244 | ) | - | (304,688 | ) | ||||||||||||||||
| Ending Balance | $ | 970,452 | $ | 45,287 | $ | 17,763 | $ | 367,544 | $ | 31,171 | $ | 367,783 | $ | 1,800,000 | ||||||||||||||
| Period-End Amount Allocated To: | ||||||||||||||||||||||||||||
| Loans Individually Evaluated for Impairment | $ | 925,985 | $ | 820 | $ | 5,363 | $ | - | $ | 30,862 | $ | - | $ | 963,030 | ||||||||||||||
| Loans Collectively Evaluated for Impairment | 44,467 | 44,467 | 12,400 | 367,544 | 309 | 367,783 | 836,970 | |||||||||||||||||||||
| Balance at December 31, 2010 | $ | 970,452 | $ | 45,287 | $ | 17,763 | $ | 367,544 | $ | 31,171 | $ | 367,783 | $ | 1,800,000 | ||||||||||||||
From a credit risk standpoint, the Company classifies it loans in one four categories: (i) pass, (ii) watch, (iii) substandard or (iv) doubtful.
The classification of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on credits monthly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. The methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).
| 14 |
Credits ratedwatch show clear signs of financial weakness or deterioration in credit worthiness; however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.
Credits ratedsubstandard are those in which the normal repayment of principal and interest may be, or has been jeopardized by reason of adverse trends or developments in financial, managerial, economic or political nature, or important weaknesses exist in collateral. Corrective action is required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits.
Credits rateddoubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on nonaccrual.
At June 30, 2011, the following table summarizes the Company’s internal ratings of its loans:
| Real Estate | Commercial | Personal | Credit Cards | Overdrafts | Total | |||||||||||||||||||
| Pass | $ | 43,707,625 | $ | 908,134 | $ | 1,467,153 | $ | 5,941,645 | $ | - | $ | 52,024,557 | ||||||||||||
| Watch | 653,893 | 1,710,563 | 3,084 | - | 101,734 | 2,469,274 | ||||||||||||||||||
| Substandard | 4,323,438 | 6,614 | 69,922 | - | 46,718 | 4,446,692 | ||||||||||||||||||
| Doubtful | - | - | - | - | - | - | ||||||||||||||||||
| Totals | $ | 48,684,956 | $ | 2,625,311 | $ | 1,540,159 | $ | 5,941,645 | $ | 148,452 | $ | 58,940,523 | ||||||||||||
At December 31, 2010, the following table summarizes the Company’s internal ratings of its loans:
| Real Estate | Commercial | Personal | Credit Cards | Overdrafts | Total | |||||||||||||||||||
| Pass | $ | 44,399,289 | $ | 1,546,798 | $ | 1,082,245 | $ | 6,321,359 | $ | - | $ | 53,349,691 | ||||||||||||
| Watch | 2,382,733 | 1,160,384 | - | - | 71,181 | 3,614,298 | ||||||||||||||||||
| Substandard | 2,473,968 | 7,303 | 108,894 | - | 205,751 | 2,795,916 | ||||||||||||||||||
| Doubtful | 2,264,423 | 11,793 | - | - | - | 2,276,216 | ||||||||||||||||||
| Totals | $ | 51,520,413 | $ | 2,726,278 | $ | 1,191,139 | $ | 6,321,359 | $ | 276,932 | $ | 62,036,121 | ||||||||||||
Note D 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.
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:
| 15 |
| · | 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 June 30, 2011 and December 31, 2010 (amounts in thousands):
| June 30, 2011 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Net Balance | |||||||||||||
| Assets | ||||||||||||||||
| Equity Securities | $ | - | $ | 814 | $ | - | $ | 814 | ||||||||
| Total | $ | - | $ | 814 | $ | - | $ | 814 | ||||||||
| December 31, 2010 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Net Balance | |||||||||||||
| Assets | ||||||||||||||||
| Equity Securities | $ | - | $ | 814 | $ | - | $ | 814 | ||||||||
| Total | $ | - | $ | 814 | $ | - | $ | 814 | ||||||||
Note E 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 June 30, 2011. In preparing these financial statements, the Company evaluated the events and transactions that occurred from June 30, 2011 through the date these financial statements were issued.
| 16 |
Note F Regulatory Matters
On April 19, 2011, the Bank consented to a Memorandum of Understanding (the “MOU”) issued by the Federal Deposit Insurance Corporation (FDIC) and the Office of Financial Institutions (OFI). The MOU provides for, among other things, the following items within specified time periods:
| · | The Bank shall reduce its level of adversely classified assets. |
| · | The Bank shall reduce its level of past due loans. |
| · | The Bank shall eliminate the extension of credit until all appropriate underwriting documentation is obtained. |
| · | The Bank shall eliminate the extension of credit to borrowers for whom the Bank holds an uncollected charged-off asset or for which their credit is classified as “Substandard”. |
| · | The Bank shall strengthen its loan review program. |
| · | The Bank shall maintain an appropriate Allowance for Loan and Lease Losses. |
| · | The Bank shall maintain a Tier I leverage capital ratio equal of at least 9%, a Tier 1 Risk Based Capital Ratio of 11%, and a Total Risk Based Capital Ratio of 13% |
| · | The Bank shall not declare or pay any cash dividend without regulatory approval |
| · | The Bank shall review and amend its interest rate risk policy and procedures. |
| · | The Bank shall provide for an independent evaluation of its management and information systems. |
| · | The Bank shall review and update the Bank’s written strategic plan and profit plan. |
In addition, the Company entered into an agreement on August 9, 2011, with the Federal Reserve Bank (FRB) whereby the Company will not incur additional debt, declare or pay dividends without approval of the FRB, reduce its capital position by purchasing or redeeming treasury stock, make any distributions of interest or principal on subordinated debentures or trust preferred securities without prior written approval of the FRB and the Louisiana Office of Financial Institutions (OFI), provide the FRB and OFI with quarterly financial updates and provide written confirmation that the Company has complied with all resolutions on a quarterly basis.
While no assurance can be given, Bank management believes it has taken action toward complying with the provisions of the MOU. It is not presently determinable what actions, if any, bank regulators might take if requirements of the Memorandum are not complied with in the specified time periods.
| 17 |
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2011 COMPARED WITH DECEMBER 31, 2010
BALANCE SHEET
Total assets at June 30, 2011 were $92,294,000 compared to $94,376,000 at December 31, 2010, for a decrease of $2,082,000, or 2.21%. Federal Funds Sold increased $1,825,000 from $14,950,000 at December 31, 2010 to $16,775,000 at June 30, 2011. Certificates of Deposit decreased $250,000 from $4,203,000 at December 31, 2010 to $3,953,000 at June 30, 2011. Both the increase in Federal Funds Sold and the decrease in Certificates of Deposit are due to normal fluctuations. Investment securities remained the same. Total loans decreased $3,095,000, or 5.14%, to $57,141,000 at June 30, 2011 from $60,236,000 at December 31, 2010. The decrease in the loan portfolio is due primarily to a decrease in decrease in commercial real estate loans of $1,686,000, a decrease in construction loans of $2,309,000, a decrease in second mortgage loans of $55,000, a decrease in other real estate loans of $57,000, a decrease in commercial loans of $101,000, a decrease in credit card loans of $380,000, and a decrease in overdrafts of $128,000. These decreases were offset by an increase in 1-4 residential loans of $1,272,000, and an increase in personal loans of $349,000. The credit card portfolio decrease was largely attributable to tightening of the Bank’s underwriting standards, normal attrition, and the cyclical nature of the business.
Total deposits decreased $2,014,000, or 02.50%, to $78,563,000 at June 30, 2011 from $80,577,000 at December 31, 2010. Total non-interest bearing deposits decreased $1,305,000 and interest-bearing accounts decreased $709,000. The decrease of interest earning deposits was mainly attributable to a decrease in NOW accounts of $587,000, an increase in money market accounts of $232,000, a decrease in savings accounts of $92,000 and a decrease of $262,000 in time deposits.
Other liabilities decreased $120,000 from $882,000 at December 31, 2010 to $762,000 at June 30, 2011. This decrease is due mainly to a decrease of $230,000 in deferred taxes offset by an increase in other liabilities of $96,000 and $14,000 in accrued interest.
Shareholder’s Equity increased $51,000 from $11,773,000 at December 31, 2010 to $11,824,000 at June 30, 2011. This increase is due mainly to net income for the six months ended June 30, 2011 of $52,000 and partially offset by a decrease in Preferred Stock of $1,000.
SIX MONTHS ENDED JUNE 30, 2011 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2010
The Company’s net income for the six months ended June 30, 2011 was $53,000, or $0.29 per share, a decrease of $257,000 from the Company’s total net income of $310,000, or $1.73 per share, for the same period last year.
Interest income decreased $87,000 for the six months ended June 30, 2011 over the same period last year. Interest on federal funds sold increased $2,000 primarily due to an increase in the average balance of $3,581,000. Interest on investment securities decreased $5,000 due mainly to a decrease in the average balance from $2,428,000 at June 30, 2010 to $878,000 at June 30, 2011. Interest in the loan portfolio decreased $71,000 due mainly to a decrease in the average interest rate of 10.41% at June 30, 2010 to 10.18% at June 30, 2011 and a decrease in the average balance of $106,000. Interest on Certificates of Deposit purchased decreased $13,000 due to a decrease in the average balance of $3,967,000 with an average rate of 0.91% for 2011 as compared to an average balance of $4,805,000 with an average rate of 1.29% in 2010.
| 18 |
Interest expense decreased $2,000 for the six months ended June 30, 2011 over the same period last year. This was caused primarily by a decrease in the average interest rate paid on interest-bearing deposits from .77% at June 30, 2010 to .73% as of June 30, 2011. 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 $46,424,000 at June 30, 2010 to $48,344,000 at June 30, 2011. The average interest rate on interest-bearing liabilities decreased from .90% at June 30, 2010 to .86% at June 30, 2011.
Net interest income decreased $85,000 for the six months ended June 30, 2011 compared to the same period last year. Our interest rate spread decreased from 6.91% at June 30, 2010 to 6.62% at June 30, 2011. The decrease in the rate spread was due to an decrease of .32% on the yield on interest-earning assets from 7.81% for the six months ended June 30, 2010 to 7.49% for the six months ended June 30, 2011, and a decrease of .04% on the average rate paid out on interest bearing liabilities from .90% paid for the six months ended June 30, 2010 as compared to .86% paid during the six months ended June 30, 2011.
Non-interest income decreased $477,000 between the six month periods from $958,000 at June 30, 2010 to $481,000 at June 30, 2011. Income from Service Charges on deposit accounts decreased $9,000, Cardholder and Other Credit Card income decreased $1,000 and Other Operating income decreased $467,000. The decrease in Other Operating income is primarily due to the 2010 sale of ORE property for $395,000 and $78,000 of Dividend income received during the six months ended June 30, 2010.
Non-interest expense decreased $159,000 for the six month period of 2011 as compared to the same period last year. Salaries and Employee Benefits decreased $80,000 from $1,277,000 at June 30, 2010 to $1,197,000 at June 30, 2011. This decrease was due mainly to a reduction in the number of employees. Occupancy expense decreased by $78,000 due to lower building repairs and depreciation expenses. Communications increased by $7,000, Outsourcing fees increased by $17,000, Loan and Credit Card expense increased by $1,000, Professional fees increased $30,000 primarily due to an increase in Consulting Fees, ORE expenses decreased $125,000 due to a reduction in repairs expense incurred during the six months ended June 30, 2011 as compared to the six months ended June 30, 2010, and Other Operating expenses increased $70,000 due primarily to increases in our FDIC assessment and Telephone/Communications expense.
THREE MONTHS ENDED JUNE 30, 2011 COMPARED WITH THREE MONTHS ENDED JUNE 30, 2010
Net income for the second quarter of 2011 was $3,000, or $.02 per share, compared to $55,000, or $.31 per share, for the same period last year for a decrease of $52,000.
Interest income decreased $72,000 over the same period last year. Interest on the loan portfolio decreased $61,000 from $1,554,000 at June 30, 2010 to $1,493,000 at June 30, 2011. This was caused mainly by a decrease in the average balance of loans from $58,587,000 at June 30, 2010 to $57,754,000 at June 30, 2011. Interest on investment securities decreased $4,000 due mainly to a decrease in the average balance of investments from $2,995,000 at June 30, 2010 to $878,000 at June 30, 2011. Interest on certificates of deposit decreased $5,000 due mainly to a decrease in the interest rate of 1.20% in 2010 to 0.81% in 2011 and a decrease in the average balance from $4,683,000 to $3,953,000. Interest on federal funds sold decreased $1,000 due mainly to a decrease in the interest rate of 0.16% in 2010 to 0.09% in 2011 and offset by an increase in the average balance from $12,902,000 to $18,138,000.
| 19 |
Interest expense increased $1,000 for the three months ended June 30, 2010 over the same period last year. This was caused by an increase in the average balance of interest bearing deposits from $46,418,000 in 2010 to $48,438,000 in 2011 and was partially offset by a decrease in the interest rate from 0.76% to 0.73%.
Net interest income decreased $73,000 due primarily to a decrease in interest rate on earning assets of 0.51% and a decrease in interest bearing liabilities of 0.03%.
Non-interest income decreased $198,000 for the three-month period ended June 30, 2011 compared to the prior year period. Service Charges on Deposit accounts decreased $6,000 due mainly to NSF charges, Cardholder and Other Credit Card income decreased by $1,000 and Other operating income decreased by $191,000 due mainly to a gain on the sale of ORE recognized during the three months ended June 30, 2011.
Non-interest expense decreased $234,000 for the three-month period ended June 30, 2011 compared to the prior year period. Salaries and Employee benefits decreased $56,000 due to a reduction in number of employees. Occupancy expense decreased $34,000 due primarily to lower depreciation expenses along with lower building and maintenance repairs. Communications decreased $3,000 and Outsourcing fees decreased $10,000 due mainly to lower credit card interchange fees. ORE expense decreased $58,000 primarily due to a reduction of repair costs for the Bank’s ORE properties, and Other Operating expense decreased $75,000 primarily due to the recognition during the three months ended June 30, 2010 of a loss on the sale of a repossessed RV. Professional fees increased $2,000 for legal fees on foreclosures which occurred during the three months ended June 30, 2011.
The provision for income taxes decreased $92,000 compared to the same period last year from a provision of a benefit $85,000 at June 30, 2010 to a liability of $7,000 at June 30, 2011.
Item3 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.
| 20 |
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.
Item 4 Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of BOL BANCSHARES, INC. was held on April 12, 2011. Five nominees were elected to serve one year terms as directors. Laporte, Sehrt, Romig and Hand was approved as the independent auditors. There were no other matters voted upon at the meeting.
Below are the names of the nominees who were elected as directors and the number of shares cast for each. The total shares voting were 123,919.
| Number of Shares | ||||||||||||
| Nominee | For | Against | Abstain | |||||||||
| G. Harrison Scott | 123,644 | 99 | 176 | |||||||||
| Johny C. Crow | 123,644 | 99 | 176 | |||||||||
| Franck F. LaBiche | 123,644 | 99 | 176 | |||||||||
| Sharry r. Scott | 123,644 | 99 | 176 | |||||||||
| A. Earle Cefalu, Jr. | 123,644 | 99 | 176 | |||||||||
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’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.
| 21 |
PART II - OTHER INFORMATION
Item6 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 |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| 22 |
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. | ||
| August 30, 2011 | /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) | ||
| 23 |
