UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
Commission file Number 01-16934
BOL BANCSHARES, INC.
(Exact name of registrant as specified in its charter.)
Louisiana 72-1121561
(State of incorporation) (I. R. S. Employee Identification No.)
300 St. Charles Avenue, New Orleans, La. 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 889-9400
Indicate by check mark whether the registrant (1) has 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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of October 31, 2000.
Common Stock, $1 Par Value - 179,145 shares.
BOL BANCSHARES, INC. & SUBSIDIARY
INDEX
Page No.
PART 1. Financial Information
Item 1: Financial Statements
Consolidated Statement of Condition 3
Consolidated Statements of Income 5
Consolidated Statements of Comprehensive Income (Loss) 6
Consolidated Statements of Changes in
Stockholder's Equity 7
Consolidated Statement of Cash Flow 8
Notes to Consolidated Financial Statements 9
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operation 13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule 24
B. Reports on Form 8-K
No reports have been filed on Form 8-K
during this quarter.
Part I. - Financial Information
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION
(Unaudited)
Sept 30 Dec. 31, Sept 30
(Amounts in Thousands) 2000 1999 1999
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash $6,713 $8,704 $7,546
Interest Bearing Balances - - -
Investment Securities
Securities Held to Maturity (Fair Values at
9/30/00, 12/31/99, & 9/30/99 respectively 2,957 3,004 3,009
were
$2,956,000, $3,000,000, and $3,004,000)
Securities Available for Sale 338 367 374
Federal Funds Sold 24,915 24,785 29,926
Loans, net of Unearned Discount 59,202 58,781 57,249
Allowance for Loan Losses (1,800) (1,800) (1,800)
Property, Equipment and Leasehold
Improvements
(Net of Depreciation and Amortization) 2,212 2,540 2,674
Other Real Estate 1,074 1,274 1,337
Deferred Taxes 191 382 426
Letters of Credit 197 104 76
Other Assets 1,020 1,968 965
TOTAL ASSETS $97,019 $100,109 $101,782
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION (Continued)
Sept 30 Dec. 31, Sept 30
(Amounts in Thousands) 2000 1999 1999
LIABILITIES
Deposits:
Non-Interest Bearing $35,293 $35,306 $34,459
Interest Bearing 52,013 55,250 58,795
TOTAL DEPOSITS 87,306 90,556 93,254
Notes Payable 2,228 2,233 2,234
Letters of Credit Outstanding 197 104 76
Accrued Litigation Settlement - 150 150
Accrued Interest 483 486 463
Other Liabilities 1,166 1,251 1,021
TOTAL LIABILITIES 91,381 94,780 97,198
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,302,811 Shares Issued and Outstanding at
9/30/00, 12/31/99, and 9/30/99 2,303 2,303 2,303
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding at
9/30/00, 12/31/99, and 9/30/99 179 179 179
Accumulated Other Comprehensive Income 164 183 188
Capital in Excess of Par - Retired Stock 15 15 15
Undivided Profits 2,649 2,555 2,556
Current Earnings 329 94 (657)
TOTAL STOCKHOLDERS' EQUITY 5,639 5,329 4,584
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $97,019 $100,109 $101,782
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three months Nine months
ended ended
Sept 30 Sept 30
(Amounts in Thousands) 2000 1999 2000 1999
INTEREST INCOME
Interest and Fees on Loans $1,818 $2,014 $5,500 $5,837
Interest on Time Deposits - - - -
Interest on Securities Held to Maturity 44 44 124 155
Interest & Dividends on Securities - - - 2
Available for Sale
Interest on Federal Funds Sold 477 419 1,370 1,143
Other Interest Income - - - -
Total Interest Income 2,339 2,477 6,994 7,137
INTEREST EXPENSE
Interest on Deposits 349 418 1,049 1,266
Interest on Federal Funds Purchased - - - -
Other Interest Expense 10 10 31 31
Interest Expense on Notes Payable 2 2 7 7
Interest Expense on Debentures 40 39 119 118
Total Interest Expense 401 469 1,206 1,422
NET INTEREST INCOME 1,938 2,008 5,788 5,715
Provision for Loan Losses 122 237 151 662
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,816 1,771 5,637 5,053
NONINTEREST INCOME
Service Charges on Deposit Accounts 285 308 820 886
Cardholder & Other Credit Card Income 157 168 473 497
ORE Income 11 4 15 19
Other Operating Income 29 48 152 190
Gain on Sale of Securities - - - -
Total Noninterest Income 482 528 1,460 1,592
NONINTEREST EXPENSE
Salaries and Employee Benefits 1,111 959 3,265 2,952
Occupancy Expense 447 481 1,351 1,473
Loan & Credit Card Expense 208 231 667 761
ORE Expense 10 2 48 57
Other Operating Expense 455 741 1,236 2,059
Total Noninterest Expense 2,231 2,414 6,567 7,302
Income Before Tax Provision 67 (115) 530 (657)
Provision (Benefit) For Income Taxes 41 - 201 -
NET INCOME $26 ($115) $329 ($657)
Earnings Per Share of Common Stock $0.14 ($0.64) $1.84 ($3.67)
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Sept 30 Dec. 31 Sept 30
(Amounts in thousands) 2000 1999 1999
NET INCOME (LOSS) $329 $94 ($657)
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains (Losses) on
Investment Securities Available-for-Sale,
Arising During the Period (19) 50 55
Less: Reclassification Adjustment for
Gains
Included in Net Income
OTHER COMPREHENSIVE INCOME (19) 50 55
COMPREHENSIVE INCOME (LOSS) $310 $144 ($602)
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
(Amounts in Thousands) ACCUMULATED CAPITAL IN
OTHER EXCESS OF
COMPREHEN- PAR
PREFERRED COMMON SIVE RETIRED RETAINED
STOCK STOCK INCOME STOCK EARNINGS TOTAL
Balance December 31, 2,303 179 133 15 2,556 5,186
1998
Other Comprehensive
Income, net of
applicable deferred income
taxes 55 55
Net Income (Loss) (657) (657)
Balance - Sept 30, 2,303 179 188 15 1,899 $4,584
1999
Balance December 31, 2,303 179 183 15 2,649 5,329
1999
Other Comprehensive
Income, net of
applicable deferred income
taxes (19) (19)
Net Income (Loss) 329 329
Balance - Sept 30, 2,303 179 164 15 2,978 $5,639
2000
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For The Nine Months Ended Sept 30
(Amounts in Thousands) 2000 1999
OPERATING ACTIVITIES
Net Income (Loss) 329 (615)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Provision for Loan Losses 151 661
Depreciation and Amortization Expense 389 396
Amortization of Investment Security Premiums 3 13
Accretion of Investment Security Discounts (1) (2)
Decrease(Increase)in Deferred Income Taxes 201 28
(Gain) Loss on Sale of Property and Equipment - -
(Gain) Loss on Sale of Other Real Estate (13) (12)
Decrease(Increase) in Other Assets & Prepaid Taxes 948 275
(Decrease)Increase in Other Liabilities, Accrued Interest,
and Accrued Loss Contingency (238) (80)
Net Decrease(Increase) in Mortgage Loans Held for - -
Resale
Net Cash Provided by (Used in) Operating Activities 1,769 664
INVESTING ACTIVITIES
Proceeds from Sale of Available-for-Sale - -
Securities
Purchases of Available-for-Sale Securities - -
Proceeds from Available-for-Sale Securities
Released at Maturity - -
Proceeds from Held-to-Maturity Investment Securities
Released at Maturity 5,918 4,500
Purchases of Held-to-Maturity Investment (5,873) (3,022)
Securities
Proceeds from Sale of Property and Equipment 0 0
Purchases of Property and Equipment (61) (564)
Proceeds from Sale of Other Real Estate 45 90
Purchases of Other Real Estate (31) (63)
Net Decrease (Increase) in Loans (373) 3,591
Net Cash Provided by (Used in) Investing Activities (375) 4,532
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing and
Interest Bearing Deposits (3,250) (1,329)
Proceeds from Issuance of Long-Term Debt - -
Retirement of Stock - -
Principal Payments on Long Term Debt (5) (38)
Net Cash Provided by (Used in) Financing Activities (3,255) (1,367)
Net Increase (Decrease) in Cash and Cash (1,861) 3,829
Equivalents
Cash and Cash Equivalents at Beginning of Year 33,489 33,643
Cash and Cash Equivalents at End of Period $31,628 $37,472
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine-month period ended
September 30, 2000, are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000. For further
information, refer to the audited consolidated financial statements and
notes included in the Registrant's annual report on Form 10-K for the year
ended December 31, 1999.
Note 2. RESTATEMENT OF PRIOR PERIOD
During 1999, the Bank's regulators advised that the Company
incorrectly applied the full accrual method of accounting for the sale of
Other Real Estate in 1998. Accordingly, the accompanying consolidated
financial statements have been restated from those originally reported to
reflect the change to the cost recovery method. The Company amended Form
10-K for December 31, 1998 on February 25, 2000, Form 10-Q for March 31,
1999 was amended on April 25, 2000, Form 10-Q for June 30, 1999 was amended
on May 3, 2000 and Form 10-q for September 30, 1999 was amended on May 4,
2000.
Note 3. PER SHARE DATA
Income per common share data are based on the weighted average number
of shares outstanding of 179,145 at September 30, 2000 and 1999
respectively.
Note 4. CONTINGENCIES
Because of the nature of the banking industry in general, the Company
and the Bank are each parties from time to time to litigation and other
proceedings in the ordinary course of business, none of which (other than
those described below), either individually or in the aggregate, have a
material effect on the Company's and/or the Bank's financial condition.
Other than the lawsuits described below, the Company has either (i)
posted reserves adequate to pay any judgments that may be rendered against
the Company and such posting is reflected in the Company's consolidated
financial statements for the period ending September 30, 1999, or (ii)
believes the lawsuit is without sufficient merit or monetary exposure to
require the posting of a reserve. The Company has not provided a judicial
interest that may be awarded on a judgment pending the conclusion of the
appeals procedure. Indeed, should the Company be successful in any of
those lawsuits in which it has posted reserves, recoveries would be
realized and the Company's consolidated net income would be positively
impacted.
The following actions, however, have been brought against the Company
and, if the claimants were wholly successful on the merits, could result in
significant exposure to the Bank:
The Company is a defendant in a lawsuit filed by a proprietary
merchant alleging that the Company mishandled the Plaintiff's proprietary
credit card portfolio. The Plaintiff seeks to recover in excess of
$1,800,000. The Bankruptcy Court has established an escrow account, in
which $270,404 was on deposit as of October 31, 1996, for the protection of
the Company. This amount would significantly reduce any losses incurred by
the Company in the event the Plaintiff is wholly successful on the merits.
During 1997, a judgment was rendered against the Bank, and accordingly, a
provision for loss of $150,000 has been charged to operation. The Bank has
countersued and is presently appealing the judgment. The appeal has been
pending since June, 1998. In March 2000, a decision was rendered in favor
of the Bank and accordingly, the $150,000 was reversed and is reflected in
operations. Outside counsel has filed a motion with the Bankruptcy Court
requesting that the $243,000 deposit for bond together with interest is
ordered returned to the Bank.
Expected Results: Outside counsel advises that the Plaintiff will not
prevail at all against the Company and that the Company will be able to
fully recover all of its losses in this matter.
Note 5. 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 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 creditworthiness of the
counterparties.
The estimated fair values of the Bank's financial instruments are as
follows:
Sept 30, 2000
Carrying Fair
(Amounts in Thousands) Amount Value
Financial Assets:
Cash and Short-Term Investments $31,628 $31,628
Investment Securities 3,295 3,294
Loans 59,202 58,679
Less: Allowance for Loan Losses 1,800 1,800
$92,324 $91,800
Financial Liabilities:
Deposits $87,306 $87,300
Unrecognized Financial Instruments:
Commitments to Extend Credit $1,794 $1,794
Commercial Lines of Credit 197 197
Credit Card Arrangements 56,680 56,680
$58,671 $58,671
QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA
Three Months Ended Nine Months Ended
(Amounts in Thousands, Sept 30 June 30 Sept 30 Sept 30 Sept 30
Except Per Share Data) 2000 2000 1999 2000 1999
Interest Income $2,339 $2,349 $2,477 $6,994 $7,137
Interest Expense 401 402 469 1,206 1,422
Net Interest Income 1,938 1,947 2,008 5,788 5,715
Provision for Loan 122 108 237 151 662
Losses
Net Interest Income 1,816 1,839 1,771 5,637 5,053
after Provision
Noninterest Income:
Noninterest Income 482 474 528 1,460 1,592
Securities Gains - - - - -
Noninterest Income 482 474 528 1,460 1,592
Noninterest Expense 2,231 2,274 2,414 6,567 7,302
Income before Taxes 67 39 (115) 530 (657)
Income Tax Expense 41 13 - 201 -
(Benefit)
Net Income (Loss) $26 $26 ($115) $329 ($657)
Income per Common Share $0.14 $0.14 ($0.64) $1.84 ($3.67)
Average Common Shares 179 179 179 179 179
Outstanding
Selected Quarter-End Balances
Loans $59,202 $55,418 $57,249
Deposits 87,306 90,232 93,254
Long-Term Debt 2,228 2,229 2,234
Stockholders' Equity 5,639 5,663 4,584
Total Assets 97,019 99,796 101,782
Selected Average
Balances
Loans $55,845 $55,512 $56,128 $56,095 $55,988
Deposits 86,983 89,841 93,341 88,614 93,664
Long-Term Debt 2,228 2,230 2,235 2,230 2,254
Stockholders' Equity 5,709 5,676 5,389 5,677 5,623
Total Assets 96,786 99,474 102,146 98,337 102,657
Selected Ratios
Return on Average Assets 0.03% 0.03% -0.09% 0.33% -0.60%
Return on Average Equity 0.45% 0.45% -1.70% 5.80% -10.94%
Tier 1 Risk-Based 12.13% 12.24% 10.19%
Capital
Risk-Based Capital 13.40% 13.51% 11.46%
Tier 1 Leverage 7.82% 7.47% 6.27%
BOL BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 2000
Management's Discussion presents a review of the major factors and
trends affecting the performance of BOL BANCSHARES, INC. (the "Company")
and its bank subsidiary (the Bank) and should be read in conjunction with
the accompanying consolidated financial statements, notes and tables.
THIRD QUARTER 2000 HIGHLIGHTS
BOL BANCSHARES' third quarter 2000 results showed improvement in
earnings over the third quarter of 1999 and the first nine months of 1999.
Net income for the third quarter of 2000 totaled $26,000 ($0.14 per
share), up 122.61% compared to a net loss of $115,000 (-$0.64 per common
share) for the third quarter of 1999. Net income for the first nine months
of 2000 totaled $329,000 ($1.84 per common share) up 150.08% compared to a
net loss of $657,000 (-$3.67 per common share) for the first nine months of
1999.
Pre-tax, pre-provision earnings were $189,000, an increase from the
third quarter 1999 profit of $122,000. Pre-tax, pre-provision earnings were
$681,000, an increase from the first nine months of 1999 profit of $5,000.
The third quarter and first nine months of 2000 included provisions for
loan losses totaling $122,000 and $151,000, respectively, compared to
$237,000 and $662,000 for the same period of 1999.
Total assets declined $4,763,000 (4.68%) to $97,019,000 at September
30, 2000 compared to September 30, 1999. Shareholders' equity increased
$1,055,000 (23.01%)to $5,639,000 at September 30, 2000 compared to
September 30, 1999.
Total loans increased $1,953,000 (3.41%) from September 30, 1999 to
$59,202,000 at September 30, 2000. Real Estate Mortgage loans grew
$5,708,000 (20.03%) to $34,202,000, while credit card loans declined
$2,876,000 (14.00%) to $17,674,000.
Deposits declined $5,948,000 (6.38%) to $87,306,000 at September 30,
2000 compared to September 30, 1999.
FINANCIAL CONDITION:
EARNING ASSETS
Interest earning assets averaged $88,248,000 in the third quarter of
2000, a $4,501,000 decrease from the third quarter of 1999 average of
$92,749,000. Compared to the third quarter of 1999, average loans
increased $283,000 (0.50%) while average investment securities decreased
$497,000 (13.07%), and average federal funds sold decreased $3,721,000
(11.34%).
Table 1 presents the Company's loan portfolio by major
classifications. Total loans increased $1,953,000 (3.41%)over the third
quarter of 1999.
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO
Sept 30, 2000 June 30, 2000 Sept 30, 1999
(Amounts in Loans % Loans % Loans %
Thousands)
Commercial, $3,025 5.11% $3,722 6.72% $4,763 8.32%
Financial, &
Agricultural
Real Estate Mortgage 34,202 57.77% 30,047 54.22% 28,494 49.77%
Mortgage Loan Held - 0.00% - 0.00% - 0.00%
for Resale
Personal Loans 4,184 7.07% 3,235 5.84% 3,293 5.75%
Credit Cards-Visa, 16,091 27.18% 16,542 29.85% 18,713 32.69%
MasterCard
Credit Cards- 1,583 2.67% 1,729 3.12% 1,837 3.21%
Proprietary
Overdrafts 117 0.20% 143 0.26% 149 0.26%
Loans $59,202 100.00% $55,418 100.00% $57,249 100.00%
Securities Held to Maturity. Average securities held to maturity
decreased $543,000 (15.46%) from the third quarter of 1999. Securities
held to maturity are carried as cost, adjusted for amortization of premium
and accretion of discounts using methods approximating the interest method.
Securities Available for Sale. Average securities available for sale
increased $47,000 (16.15%) from the third quarter of 1999. Securities
available for sale are carried at fair value.
Short Term Investments. Average federal funds sold decreased
$3,721,000 (11.34%) down from the third quarter of 1999. This decrease is
mainly due to the increase in the loan portfolio.
ASSET QUALITY
Table 2 presents a summary of nonperforming assets for the past five
quarters.
Nonperforming assets consist of nonaccrual and restructured loans and
ORE. Nonaccrual loans are loans on which the interest accruals have been
discontinued when it appears that future collection of principal or
interest according to the contractual terms may be doubtful. Interest on
these loans is reported on the cash basis as received when the full
recovery of principal is anticipated or after full principal has been
recovered when collection of interest is in question. The loan process
ensures that all loans which meet the criteria for nonaccrual status are
placed on nonaccrual. Restructured loans are those loans whose terms have
been modified, because of economic or legal reasons related to the debtors'
financial difficulties, to provide for a reduction in principal, change in
terms, or fixing of interest rates at below market levels. ORE is real
property acquired by foreclosure or directly by title or deed transfer in
settlement of debt.
Nonperforming assets, totaled $1,127,000 at September 30, 2000 as
compared to $1,372,000 at September 30, 1999. Other real estate totaled
$1,074,000 at September 30, 2000 as compared to $1,337,000 at September 30,
1999.
Table 2. NONPERFORMING ASSETS
(Amounts in 09/30/00 06/30/00 03/31/00 12/31/99 09/30/99
Thousands)
Nonaccrual Loans $53 $53 $1 $40 $35
Restructured Loans - - - - -
Other Real Estate Owned 1,074 1,105 1,305 1,274 1,337
Total Nonperforming Assets $1,127 $1,158 $1,306 $1,314 $1,372
Loans Past Due 90 Days or More $393 $354 $434 $528 $605
Ratio of Past Due Loans to 0.66% 0.64% 0.79% 0.90% 1.05%
Loans
Ratio of Nonperforming Assets to Loans
and Other Real Estate Owned 1.87% 2.05% 2.32% 2.19% 2.33%
IMPAIRED LOANS
As of September 30, 2000, the recorded investment in loans that are
considered impaired under SFAS 114 and 118 was $0. The related allowance
for credit losses for the impaired loans is not specifically identified,
but is included in the percentages allocated to the portfolio.
WATCH LIST
The Bank's watch list includes loans which, for management purposes,
have been identified as requiring a higher level of monitoring due to risk.
The Bank's watch list includes both performing and nonperforming loans.
The majority of watch list loans are classified as performing, because they
do not have characteristics resulting in uncertainty about the borrower's
ability to repay principal and interest in accordance with the original
terms of the loans.
The watch list consists of classifications, identified as Type 1
through Type 4. Types 1, 2 and 3 generally parallel the regulatory
classifications of loss, doubtful and substandard, respectively. Type 4
generally parallels the regulatory classification of Other Assets
Especially Mentioned (OAEM). These loans require monitoring due to
conditions which, if not corrected, could increase credit risk. Total
watch list loans increased 53.78% to $3,254,000 at September 30, 2000 from
$2,116,000 at September 30, 1999.
Management is not aware of any potential problem loans other than
those disclosed above, which includes all loans recommended for
classification by regulators, which would have a material impact on asset
quality.
ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES
Table 3 presents an analysis of the activity in the allowance for loan
losses for the three month and nine month period ending September 30, 2000
and 1999. The allowance for loan losses as a percentage of loans decreased
from 3.13% at September 30, 1999 to 3.04% at September 30, 2000. The net
charge-off (recoveries) as a percentage of average loans decreased from
1.18% at September 30, 1999 to .22% at September 30, 2000.
The allowance for loan losses is established through a provision for
loan losses charged to expenses. Management's policy is to maintain the
allowance for possible loan losses at a level sufficient to absorb losses
inherent in the loan portfolio. The allowance is increased by the
provision for loan losses and decreased by charge-offs, net of recoveries.
Management's evaluation process to determine potential losses includes
consideration of the industry, specific conditions of individual borrowers,
historical loan loss experience and the general economic environment. As
these factors change, the level of loan loss provision changes. Loans are
charged against the allowance for loan losses when management believes that
the collectibility of the principal is unlikely. Accrual of interest is
discontinued and accrued interest is charged off on a loan when management
believes, after considering economic and business conditions and collection
efforts, that the borrower's financial condition is such that collection of
interest is doubtful. Ultimate losses may vary from the current estimates.
These estimates are reviewed periodically and, as adjustments become
necessary, they are reflected in current operations.
TABLE 3 - RESERVE FOR LOAN LOSSES ACTIVITY
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
(Amounts in Thousands) 2000 1999 2000 1999
Balance at Beginning of Period $1,800 $1,800 $1,800 $1,800
Loans Charged Off (241) (382) (837) (1,161)
Recoveries 119 145 686 499
Net (Charge Offs) Recoveries (122) (237) (151) (662)
Provision for Loan 122 237 151 662
Losses
Balance at End of Period $1,800 $1,800 $1,800 $1,800
Allowance for Loan Losses as a
Percentage of Loans 3.04% 3.13% 3.04% 3.13%
Net (Charge Offs) Recoveries as a Percentage
of Average Loans 0.22% 0.42% 0.27% 1.18%
FUNDING SOURCES:
DEPOSITS
Average deposits totaled $86,982,000 in the third quarter of 2000, a
decrease of $6,359,000 (6.81%) from $93,341,000 in the third quarter of
1999. Average core deposits were $85,804,000 for the third quarter of 2000
down from $91,407,000 in the third quarter of 1999. Table 4 presents the
composition of average deposits for the three quarters ending September 30,
2000, June 30, 2000, and September 30, 1999.
TABLE 4. DEPOSIT COMPOSITION
For The Three Months Ended
Sept 30, Jun 30, Sept 30,
2000 2000 1999
Average % of Average % of Average % of
(Amounts in Balances Deposits Balances DepositsBalances Deposits
Thousands)
Demand, Noninterest- $34,151 39.26% $35,206 39.19% $33,649 36.05%
Bearing
NOW Accounts 12,734 14.64% 13,197 14.69% 14,175 15.19%
Money Market Deposit 5,490 6.31% 5,097 5.67% 6,658 7.13%
Accounts
Savings Accounts 25,082 28.84% 26,121 29.07% 26,661 28.56%
Other Time Deposits 8,346 9.60% 8,533 9.50% 10,264 11.00%
Total Core Deposits $85,803 98.64% 88,154 98.12% 91,407 97.93%
Certificates of Deposit of
$100,000 or more 1,179 1.36% 1,687 1.88% 1,934 2.07%
Total Deposits $86,982 100.00% $89,841 100.00% $93,341 100.00%
BORROWINGS
The Company's long-term debt is comprised primarily of debentures
which are secured by 40.79 shares of the Subsidiary Bank's stock. The Bank
has no long-term debt. It is the Bank's policy to manage its liquidity so
that there is no need to make unplanned sales of assets or to borrow funds
under emergency conditions. The Bank maintains a Federal Funds line of
credit in the amount of $1,000,000 with a correspondent bank. The Bank can
borrow the amount of unpledged securities at the discount window at the
Federal Reserve Bank by pledging those securities.
INTEREST RATE SENSITIVITY
The Bank has established, as bank policy, an asset/liability
management system that protects Bank profits from undue exposure to
interest rate risks. The major elements used to manage interest rate risk
include the mix of fixed and variable rate assets and liabilities and the
maturity pattern of assets and liabilities. It is the Company's policy not
to invest in derivatives in the ordinary course of business. The Company
performs a monthly review of assets and liabilities that reprice and the
time bands within which the repricing occurs. Balances are reported in the
time band that corresponds to the instrument's next repricing date or
contractual maturity, whichever occurs first. Through such analysis, the
Company monitors and manages its interest sensitivity gap to minimize the
effects of changing interest rates.
GAP & INTEREST MARGIN SPREAD
By Bank policy we limit the Bank's earnings exposure due to interest
rate risk by setting limits on positive and negative gaps within the next
12 months. These limits are set so that this year's profits will not be
unduly impacted no matter what happens to interest rates during the year.
In addition, we extend the scenarios out five years to monitor the risks
associated on a longer term.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Net interest income, the difference between interest income and
interest expense, is a significant component of the performance of a
banking organization. Data used in the analysis of net interest income are
derived from the daily average levels of earnings assets and interest
bearing deposits as well as from the related income and expense. Net
interest income is not developed on a taxable equivalent basis because the
level of tax exempt income is not material. The primary factors that
affect net interest income are the changes in volume and mix of earning
assets and interest-bearing liabilities, along with the change in market
rates.
Net interest income for the third quarter of 2000 decreased $70,000
over the same period last year, and decreased $73,000 from the first nine
months of 1999. The net interest margin increased to 2.20% for the third
quarter of 2000 from 2.16% for the third quarter of 1999.
The Company's average balances, interest income and expense and rates
earned or paid for major categories are set forth in the following tables:
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST, RATE
AND NEW YIELDS
THIRD QUARTER 2000 THIRD QUARTER 1999
Average Average
(Amounts in Thousands) Balance Interest Rate Balance Interest Rate
ASSETS
INTEREST-EARNING ASSETS:
Loans, Net of Unearned Income(1)(2)
Taxable $55,845 1,818 3.26% $56,128 2,014 3.59%
Tax-Exempt - -
Investment Securities
Taxable 3,307 44 1.33% 3,804 44 1.15%
Tax-Exempt - -
Interest-Bearing Deposits - -
Federal Funds Sold 29,096 477 1.64% 32,817 419 1.28%
Total Interest-Earning 88,248 2,339 2.65% 92,749 2,477 2.67%
Assets
Cash and Due from Banks 5,298 5,377
Allowance for Loan Losses (1,805) (1,795)
Premises and Equipment 2,253 2,740
Other Real Estate 1,082 1,337
Other Assets 1,710 1,738
TOTAL ASSETS $96,786 $102,146
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 18,224 72 0.40% 20,833 84 0.40%
Savings Deposits 25,082 184 0.73% 26,661 194 0.73%
Time Deposits 9,525 93 0.97% 12,198 140 1.15%
Total Interest-Bearing 52,831 349 0.66% 59,692 418 0.70%
Deposits
Federal Funds Purchased
Securities sold under Agreements to
Repurchase
Other Short-Term Borrowings - -
Long-Term Debt 2,228 52 2.33% 2,235 51 2.29%
Total Int-Bearing 55,059 401 0.73% 61,927 469 0.76%
Liabilities
Noninterest-Bearing 34,151 33,649
Deposits
Other Liabilities 1,867 1,181
Shareholders' Equity 5,709 5,389
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $96,786 $102,146
Net Interest Income 1,938 2,008
Net Interest Income/Spread 1.92% 1.91%
Net Interest Margin 2.20% 2.16%
(1) Fee income relating to loans of $190,000 at Sept 30, 2000, and $167,000 at
Sept 30, 1999 is included in interest income.
(2) Nonaccrual loans are included in average balances and income on such
loans, if recognized, is recognized on the cash basis.
(3) Interest income does not include the effects of taxable-equivalent
adjustments using a federal tax rate of 34%.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST, RATE
AND NEW YIELDS
Nine Months Ended 9/00 Nine Months Ended 9/99
Average Average
(Amounts in Thousands) Balance Interest Rate Balance Interest Rate
ASSETS
INTEREST-EARNING ASSETS:
Loans, Net of Unearned Income(1)(2)
Taxable $56,095 5,500 9.81% $55,988 5,837 10.43%
Tax-Exempt - -
Investment Securities
Taxable 3,317 124 3.75% 4,243 157 3.65%
Tax-Exempt - -
Interest-Bearing Deposits - -
Federal Funds Sold 29,741 1,370 4.61% 31,489 1,143 3.63%
Total Interest-Earning 89,153 6,994 7.84% 91,720 7,137 7.78%
Assets
Cash and Due from Banks 5,541 5,693
Allowance for Loan Losses (1,808) (1,791)
Premises and Equipment 2,369 2,698
Other Real Estate 1,196 1,375
Other Assets 1,886 2,962
TOTAL ASSETS $98,337 $102,657
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 18,398 195 1.06% 20,107 266 1.32%
Savings Deposits 25,647 552 2.15% 26,957 601 2.23%
Time Deposits 10,027 302 3.01% 11,717 399 3.41%
Total Interest-Bearing 54,072 1,049 1.94% 58,781 1,266 2.15%
Deposits
Federal Funds Purchased
Securities sold under Agreements to
Repurchase
Other Short-Term Borrowings - -
Long-Term Debt 2,230 157 7.03% 2,254 156 6.94%
Total Int-Bearing 56,302 1,206 2.14% 61,035 1,422 2.33%
Liabilities
Noninterest-Bearing 34,542 34,883
Deposits
Other Liabilities 1,816 1,116
Shareholders' Equity 5,677 5,623
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $98,337 $102,657
Net Interest Income 5,788 5,715
Net Interest Income/Spread 5.70% 5.45%
Net Interest Margin 6.49% 6.23%
(1) Fee income relating to loans of $540,000 at Sept 30, 2000, and $466,000 at
Sept 30, 1999 is included in interest income.
(2) Nonaccrual loans are included in average balances and income on such
loans, if recognized, is recognized on the cash basis.
(3) Interest income does not include the effects of taxable-equivalent
adjustments using a federal tax rate of 34%.
ANALYSES OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE (1)
Sept, 2000 Compared to Sept, 1999
Change in
Interest Due to Total
(Amounts in Thousands) Volume Rate Change
Net Loans:
Taxable (348) 11 (337)
Tax-Exempt(2) - - -
Investment Securities - - -
Taxable 1 (34) (33)
Tax-Exempt(2) - - -
Interest-Bearing Deposits - - -
Federal Funds Sold 290 (63) 227
Total Interest-Earning Assets (57) (86) (143)
Deposits:
Demand Deposits (48) (23) (71)
Savings Deposits (20) (29) (49)
Time Deposits (40) (58) (98)
Total Interest-Bearing Deposits (108) (110) (218)
Federal Funds Purchased - - -
Securities Sold under Agreements - - -
to Repurchase
Other Short-Term Borrowings - - -
Long-Term Debt 2 (2) 0
Total Interest-Bearing (106) (112) (218)
Liabilities
(1) The change in interest due to both rate and volume has been allocated
to the components in proportion to the relationship of the dollar amounts of
the change in each.
(2) Reflects fully taxable equivalent adjustments using a federal tax
rate of 34%.
NONINTEREST INCOME
An important source of the Company's revenue is derived from noninterest
income.
Noninterest income for the third quarter of 2000 decreased $46,000 or
8.71% from the same period last year. Table 5 presents noninterest income
for the three months and nine months ended September 30, 2000 and 1999.
TABLE 5. NONINTEREST INCOME
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Increase Sept 30, Sept 30, Increase
(Amounts in 2000 1999 (Decrease) 2000 1999 (Decrease)
Thousands)
Service Charges $135 $137 ($2) $387 $411 ($24)
NSF Charges 150 171 (21) 433 475 (42)
Gain on Sale of - - - - - -
Securities
Cardholder & Other 125 127 (2) 361 362 (1)
Credit Card Income
Membership Fees 32 41 (9) 112 135 (23)
Other Comm & Fees (6) 27 (33) 76 74 2
ORE Income 1 2 (1) 2 7 (5)
Gain on Sale of ORE 11 2 9 13 12 1
Other Income 34 21 13 76 116 (40)
Total Noninterest $482 $528 ($46) $1,460 $1,592 ($132)
Income
NONINTEREST EXPENSE
The major categories of noninterest expenses include salaries and
employee benefits, occupancy and equipment expenses and other operating
costs associated with the day-to-day operations of the Company.
Noninterest expense for the third quarter of 2000 decreased $183,000
or 7.58% from the same period last year. Table 6 presents the activity for
the three months and nine months ended September 30, 2000 and 1999.
TABLE 6. NONINTEREST EXPENSE
Three Months Ended Nine Months Ended
Sept 30, Sept 30, Increase Sept 30, Sept 30, Increase
(Amounts in 2000 1999 (Decrease) 2000 1999 (Decrease)
Thousands)
Salaries & Benefits $1,111 $959 $152 $3,265 $2,952 $313
Loss on Litigation - - - (150) - (150)
Occupancy Expense 447 481 (34) 1,351 1,473 (122)
Advertising Expense 27 17 10 74 81 (7)
Communications 49 51 (2) 144 152 (8)
Postage 57 71 (14) 190 233 (43)
Loan & Credit Card 208 231 (23) 667 761 (94)
Expense
Professional Fees 24 81 (57) 138 284 (146)
Legal Fees 60 118 (58) 132 429 (297)
Insurance & 24 21 3 72 76 (4)
Assessments
Stationery, Forms & 55 77 (22) 175 249 (74)
Supply
ORE Expenses 10 2 8 48 57 (9)
Other Operating 159 305 (146) 461 555 (94)
Expense
Total Noninterest $2,231 $2,414 ($183) $6,567 $7,302 ($735)
Expense
INCOME TAXES
The Company recorded a provision for income taxes of $41,000 for the
third quarter of 2000 and $0 for the same period in 1999. The provision
for income taxes consists of provisions for federal taxes only. Louisiana
does not have an income tax for banks.
CAPITAL
The Bank is required to maintain minimum amounts of capital to total
"risk weighted" assets, as defined by banking regulators. Table 7 presents
these ratios for the most recent five quarters.
TABLE 7. QUARTERLY SELECTED CAPITAL RATIOS
Sept 30, June 30, March 31 Dec. 31, Sept. 30
2000 2000 2000 1999 1999
Risk-Based Capital
Tier 1 Risk Based Capital 12.13% 12.24% 12.08% 10.50% 10.19%
Ratio
Risk Based Capital Ratio 13.40% 13.51% 13.35% 11.77% 11.46%
Tier 1 Leverage Ratio 7.82% 7.47% 7.44% 6.80% 6.27%
LIQUIDITY
The purpose of liquidity management is to ensure that there is
sufficient cash flow to satisfy demands for credit, deposit withdrawals,
and other corporate needs. Traditional sources of liquidity include asset
maturities and growth in core deposits. The Company has maintained
adequate liquidity through cash flow from operating activities and
financing activities to fund loan growth, and anticipates that this will
continue even if the Company expands.
Liquidity and capital resources are discussed weekly by the management
committee, the assets and liability committee and at the monthly executive
committee meeting. Bank of Louisiana maintains adequate capital to meet
its needs in the foreseeable future. The liquidity ratio for the Bank was
38.76% at September 30, 2000, 44.38% at June 30, 2000, and 41.68% at
September 30, 1999.
Measuring liquidity and capital on a weekly basis enables management
to constantly monitor loan growth, and shifting customer preferences. The
committee's in-depth reviews of current, projected, and worse case
scenarios through various reports ensures the availability of funds and
capital adequacy.
The Bank intends on increasing capital by implementing an extensive
marketing program and evaluating all pricing fees and investing in
proprietary accounts which will maximize the highest yield possible and
thereby improve earnings.
There are no known trends, events, regulatory authority
recommendations, or uncertainties that the Company is aware of that will
have or that are likely to have a material adverse effect on the Company's
liquidity, capital resources, or operations.
PART II - OTHER INFORMATION
Item #6 Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter.
BOL BANCSHARES, INC.
SIGNATURES
Pursuant to the requirements 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 to sign on behalf of the
registrant.
BOL BANCSHARES, INC.
(Registrant)
/s/ G. Harrison Scott
November 13, 2000 G. Harrison Scott
Date 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)