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 March 31, 2001
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 April 30, 2001.
Common Stock, $1 Par Value - 179,145.
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
None
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)
March 31, Dec. 31, March 31,
(Amounts in thousands) 2001 2000 2000
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash 6,682 4,909 7,552
Interest Bearing Balances - - -
Investment Securities
Securities Held to Maturity (Fair Values at
3/31/01, 12/31/00, & 3/31/00 respectively 1,495 2,982 2,933
$1,507,000, $2,984,000, and $2,930,000)
Securities Available for Sale 388 388 367
Federal Funds Sold 25,555 25,905 32,240
Loans, net of Unearned Discount 60,977 57,727 55,099
Allowance for Loan Losses (1,800) (1,800) (1,800)
Property, Equipment and Leasehold Improvements
(Net of Depreciation and Amortization) 2,055 2,131 2,413
Other Real Estate 651 1,074 1,305
Deferred Taxes 27 211 237
Letters of Credit 64 54 104
Other Assets 1,008 1,126 1,121
TOTAL ASSETS $97,102 $94,707 $101,571
See accompanying notes to Financial Statements
BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION (Continued)
March 31, Dec. 31, March 31,
(Amounts in thousands) 2001 2000 2000
LIABILITIES
Deposits:
Non-Interest Bearing 35,230 34,031 35,866
Interest Bearing 52,801 51,133 56,307
TOTAL DEPOSITS 88,031 85,164 92,173
Notes Payable 2,224 2,226 2,231
Letters of Credit Outstanding 64 54 104
Accrued Litigation Settlement - - -
Accrued Interest 502 524 468
Other Liabilities 221 1,017 989
TOTAL LIABILITIES 91,042 88,985 95,965
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,302,811 Shares Issued and Outstanding at
3/31/01, 12/31/00, and 3/31/00 2,303 2,303 2,303
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding at
3/31/01, 12/31/00, and 3/31/00 179 179 179
Accumulated Other Comprehensive Income 197 197 183
Capital in Excess of Par - Retired Stock 15 15 15
Undivided Profits 3,028 2,649 2,649
Current Earnings 338 379 277
TOTAL STOCKHOLDERS' EQUITY 6,060 5,722 5,606
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $97,102 $94,707 $101,571
See accompanying notes to Financial Statements
BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
March 31, March 31,
(Amounts in thousands) 2001 2000
INTEREST INCOME
Interest and Fees on Loans 2,018 1,865
Interest on Time Deposits - -
Interest on Securities Held to Maturity 34 38
Interest and Dividends on Securities
Available for Sale - -
Interest on Federal Funds Sold 356 403
Other Interest Income - -
Total Interest Income 2,408 2,306
INTEREST EXPENSE
Interest on Deposits 375 353
Interest on Federal Funds Purchased - -
Other Interest Expense 10 10
Interest Expense on Notes Payable 2 2
Interest Expense on Debentures 39 39
Total Interest Expense 426 404
NET INTEREST INCOME 1,982 1,902
Provision for Loan Losses 97 (80)
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,885 1,982
NONINTEREST INCOME
Service Charges on Deposit Accounts 260 265
Cardholder & Other Credit Card Income 158 152
ORE Income 687 1
Other Operating Income 113 85
Gain on Sale of Securities - -
Total Noninterest Income 1,218 503
NONINTEREST EXPENSE
Salaries and Employee Benefits 1,047 1,036
Occupancy Expense 392 488
Loan & Credit Card Expense 238 235
ORE Expense 435 26
Other Operating Expense 466 277
Total Noninterest Expense 2,578 2,062
Income Before Tax Provision 525 423
Provision (Benefit) For Income Taxes 187 146
NET INCOME $338 $277
Earnings Per Share of Common Stock $1.89 $1.55
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
March 31, March 31,
(Amounts in thousands) 2001 2000
NET INCOME (LOSS) $338 $277
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains (Losses) on
Investment Securities Available-for-Sale,
Arising During the Period - -
Less: Reclassification Adjustment for Gains
Included in Net Income
OTHER COMPREHENSIVE INCOME
COMPREHENSIVE INCOME (LOSS) $338 $277
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, 1999 2,303 179 183 15 2,649 5,329
Other Comprehensive
Income, net of
applicable deferred income
taxes - -
Net Income 277 277
Balance - March 31, 2000 2,303 179 183 15 2,926 $5,606
Balance December 31, 2000 2,303 179 197 15 3,028 5,722
Other Comprehensive
"Income, net of"
applicable deferred income
taxes -
Net Income (Loss) 338 338
Balance - March 31, 2001 2,303 179 197 15 3,366 $6,060
BOL BANCSHARES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
(Amounts in thousands) 2001 2000
OPERATING ACTIVITIES
Net Income (Loss) 338 277
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Provision for (Recovery of) Loan Losses 98 (80)
Depreciation and Amortization Expense 94 135
Amortization of Investment Security Premiums (4) 4
Accretion of Investment Security Discounts (6) (15)
(Increase)Decrease in Deferred Income Taxes 184 146
(Gain) Loss on Sale of Property and Equipment - -
(Gain) Loss on Sale of Other Real Estate - -
(Increase)Decrease in Other Assets 541 847
(Decrease)Increase in Other Liabilities,
Accrued Interest and Accrued Loss Contingency (818) (431)
Net Decrease(Increase) in Mortgage Loans
Held for Resale - -
Net Cash Provided by (Used in) Operating Activities 427 883
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 1,497 3,000
Purchases of Held-to-Maturity Investment Securities - (2,918)
Proceeds from Sale of Property and Equipment - 0
Purchases of Property and Equipment (18) (8)
Proceeds from Sale of Other Real Estate - -
Purchases of Other Real Estate - (31)
Net (Increase)Decrease in Loans (3,349) 3,761
Net Cash Provided by (Used in) Investing Activities (1,870) 3,804
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing
and Interest Bearing Deposits 2,867 1,617
Proceeds from Issuance of Long-Term Debt - -
Retirement of Stock - -
Principal Payments on Long Term Debt (2) (2)
Net Cash Provided by (Used in) Financing Activities 2,865 1,615
Net Increase (Decrease) in Cash and Cash Equivalents 1,422 6,302
Cash and Cash Equivalents - Beginning of Year 30,814 33,489
Cash and Cash Equivalents - End of Period $32,236 $39,791
See accompanying notes to Financial Statements
BOL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
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 three-month period ended March 31, 2001, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. 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, 2000.
Note 2. PER SHARE DATA
Earning per common share data are computed using the weighted average
number of shares outstanding which were 179,145 at March 31, 2001 and 2000.
Note 3. 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 March 31, 2001, 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:
1. The Company is a defendant in a lawsuit filed by another bank alleging
the Company improperly dishonored checks totaling $979,000. The Company claims
that such checks were properly returned ""nonsufficient funds"". When these
checks were returned to the Plaintiff, of the $979,000, one check for $110,000
was misplaced by the FRB and therefore returned late to the Plaintiff. The
Company was forced to cover the amount of the check. The Company filed a
counter suit against the Plaintiffs for contribution on the $110,000 loss and
for tortuous interference. The Plaintiff filed exceptions to the counter suit.
These exceptions were heard in the district court and the Company's right to
contribution was maintained, however the Company's suit for tortuous
interference was dismissed. On appeal, the appellate court sustained the
Company's right to contribution and overruled the lower court's decision on
tortuous interference, finding that the Company could maintain such a cause of
action. The Louisiana Supreme Court denied writs filed by the Plaintiff. The
case is currently awaiting trial. The Company is vigorously defending all
claims asserted in this suit.
Expected Results: Outside counsel advises that the Company will not pay
any damages in this matter and the likelihood is reasonably high that the
Company will obtain some recovery from the Plaintiff.
2. 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 counter sued and in
March 2000, a decision was rendered in favor of the Bank and accordingly, the
$150,000 was reversed and is reflected in operations. In February 2001 the
$243,000 deposit for bond together with interest has been 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 4. 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:
MARCH 31, 2001
Carrying Fair
(Amounts in thousands) Amount Value
Financial Assets:
Cash and Short-Term Investments $32,237 $32,237
Investment Securities 1,883 1,895
Loans 60,977 60,569
Less: Allowance for Loan Losses 1,800 1,800
$93,297 $92,901
Financial Liabilities:
Deposits $88,031 $88,007
Unrecognized Financial Instruments:
Commitments to Extend Credit $1,168 $1,168
Commercial Lines of Credit 64 64
Credit Card Arrangements 65,823 65,823
$67,055 $67,055
QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA
For Three Months Ended
(Amounts in thousands, except March 31, Dec. 31, March 31,
per share data) 2001 2000 2000
Interest Income $2,408 $2,363 $2,306
Interest Expense 426 423 404
Net Interest Income 1,982 1,940 1,902
Provision for Loan Losses 97 158 (80)
Net Interest Income after Provision 1,885 1,782 1,982
Noninterest Income:
Noninterest Income 1,218 664 503
Securities Gains - - -
Noninterest Income 1,218 664 503
Noninterest Expense 2,578 2,426 2,062
Income before Taxes 525 20 423
Income Tax Expense (Benefit) 187 (30) 146
Net Income (Loss) $338 $50 $277
Income per Common Share $1.89 $0.28 $1.55
Average Common Shares Outstanding 179 179 179
Selected Quarter-End Balances
Loans $60,977 $57,727 $55,099
Deposits 88,031 85,164 92,173
Long-Term Debt 2,224 2,226 2,231
Shareholders' Equity 6,060 5,722 5,606
Total Assets 97,102 94,707 101,571
Selected Average Balances
Loans $57,946 $58,774 $56,933
Deposits 84,665 85,718 89,036
Long-Term Debt 2,225 2,226 2,231
Shareholders' Equity 6,138 5,748 5,647
Total Assets 94,076 95,103 98,769
Selected Ratios
Return on Average Assets 0.36% 0.05% 0.28%
Return on Average Equity 5.51% 0.87% 4.91%
Tier 1 Risk-Based Capital 12.78% 12.27% 12.08%
Risk-Based Capital 14.05% 13.54% 13.35%
Tier 1 Leverage 8.55% 7.81% 7.44%
BOL BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 2001
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."
This discussion may contain certain forward-looking statements, which are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those stated. Readers are cautioned not to place undue reliance on these
forward-looking statements.
FIRST QUARTER 2001 HIGHLIGHTS
BOL BANCSHARES' first quarter 2001 results showed improvement in earnings
over the first quarter of 2000.
Net income for the first quarter of 2001 totaled $338,000 ($1.89 per
share), up 22.02% compared to a net income of $277,000 ($1.55 per common share)
for the first quarter of 2000.
Pre-tax, pre-provision earnings were $622,000, an increase from the first
quarter of 2000 profit of $343,000.
Total assets declined $4,469,000 (4.40%) to $97,102,000,000 at March 31,
2001 compared to March 31, 2000. Shareholders' equity increased $454,000
(8.10%)to $6,060,000 at March 31, 2001 compared TO March 31,2000.
Total loans increased $5,878,000 (10.67%) from March 31, 2000 to
$60,977,000 at March 31, 2001. Real Estate Mortgage loans grew $5,257,000
(17.82%) to $34,762,000, while credit card loans declined $1,195,000 (6.36%) to
$17,603,000.
Deposits declined $4,142,000 (4.49%) to $88,031,000 at March 31, 2001
compared to March 31, 2000.
FINANCIAL CONDITION:
EARNING ASSETS
Interest earning assets averaged $86,198,000 in the first quarter of
2001, a $2,622,000 decrease from the first quarter of 2000 average of
$88,820,000. Compared to the first quarter of 2000, average loans increased
$1,013,000 (1.78%) while investment securities decreased $712,000 (21.32%) an
federal funds sold decreased $2,923,000 (10.24%).
Table 1 presents the Company's loan portfolio by major classifications.
Total loans increased $5,878,000 (10.67%) over the first quarter of 2000. This
increase is mainly attributable to the increase in real estate mortgage loans.
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO
March 31, 2001 Dec. 31, 2000 March 31, 2000
(Amounts in thousands) Loans % Loans % Loans %
Commercial, Financial, &
Agricultural 3,716 6.09% 3,095 5.36% 3,921 7.12%
Real Estate Mortgage 34,762 57.01% 32,264 55.89% 29,505 53.55%
Mortgage Loan Held for Resale - 0.00% - 0.00% - 0.00%
Personal Loans 4,655 7.63% 3,917 6.79% 2,754 5.00%
Credit Cards-Visa, Mastercard 16,184 26.54% 16,547 28.66% 16,918 30.70%
Credit Cards-Proprietary 1,419 2.33% 1,745 3.02% 1,880 3.41%
Overdrafts 241 0.39% 159 0.28% 121 0.22%
Loans $60,977 100.00% $57,727 100.00% $55,099 100.00%
Securities Held to Maturity. Average securities held to maturity
decreased $733,000 (24.66%) from the first quarter of 2000. 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 $21,000 (5.72%) from the first quarter of 2000. Securities available
for sale are carried at fair value.
Short Term Investments. Average federal funds sold decreased $2,923,000
(10.24%) down from the first quarter of 2000.
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 $700,000 at March 31, 2001 as compared to
$1,306,000 at March 31, 2000. Other real estate totaled $651,000 at March 31,
2001 as compared to $1,305,000 at March 31, 2000.
Table 2. NONPERFORMING ASSETS
(Amounts in thousands) 03/31/01 12/31/00 09/30/00 06/30/00 03/31/00
Nonaccrual Loans 49 49 53 53 1
Restructured Loans - - - - -
Other Real Estate Owned 651 1,074 1,074 1,105 1,305
Total Nonperforming Assets $700 $1,123 $1,127 $1,158 $1,306
Loans Past Due 90 days or More 439 367 393 354 434
Ratio of Past Due Loans to Loans0.72% 0.66% 0.66% 0.64% 0.79%
Ratio of Nonperforming Assets to Loans
and Other Real Estate Owned 1.14% 1.97% 1.87% 2.05% 2.32%
IMPAIRED LOANS
As of March 31, 2001, 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 decreased 9.12% to $3,169,000 at
March 31, 2001 from $3,487,000 at March 31, 2000.
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 LOAN LOSSES
Table 3 presents an analysis of the activity in the allowance for loan
losses for the first quarter of 2001 and 2000. The allowance for loan losses
as a percentage of loans decreased from 3.27% at March 31, 2000 to 2.95% at
March 31, 2001. The net (charge-offs) recoveries as a percentage of average
loans increased from -.14% at March 31, 2000 to .17% at March 31, 2001.
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
For The Three Months Ended
March 31, March 31,
(Amounts in thousands) 2001 2000
Balance at Beginning of Period $1,800 $1,800
Loans Charged Off (242) (290)
Recoveries 145 370
Net (Charge Offs) Recoveries (97) 80
Provision for Loan Losses 97 (80)
Balance at End of Period $1,800 $1,800
Allowance for Loan Losses as a
Percentage of Loans 2.95% 3.27%
Net (Charge Offs) Recoveries as a Percentage
of Average Loans 0.17% -0.14%
FUNDING SOURCES:
DEPOSITS
Average deposits totaled $84,665,000 in the first quarter of 2001, a
decrease of $4,371,000 (4.91%) from $89,036,000 in the first quarter of 2000.
Average core deposits were $83,391,000 for the first quarter of 2001 down from
$87,288,000 in the first quarter of 2000. Table 4 presents the composition of
average deposits for the three quarters ending March 31, 2001, December 31,
2000 and March 31, 2000.
TABLE 4. DEPOSIT COMPOSITION
For The Three Months Ended
March 31, Dec. 31, March 31,
2001 2000 2000
Average % of Average % of Average % of
(Amounts in thousands) Balances Deposits Balances Deposits Balances Deposits
Demand, Noninterest-Bearing $33,358 39.40% $34,294 40.01% $34,271 8.49%
NOW Accounts 12,416 14.66% 13,417 15.65% 13,479 5.14%
Money Market Deposit Accounts 5,110 6.03% 4,307 5.02% 5,200 5.84%
Savings Accounts 24,978 29.50% 24,725 28.84% 25,745 8.92%
Other Time Deposits 7,529 8.89% 7,779 9.08% 8,593 9.65%
Total Core Deposits 83,391 98.50% 84,522 98.60% 87,288 8.04%
Certificates of Deposit of
$100,000 or more 1,274 1.50% 1,196 1.40% 1,748 1.96%
Total Deposits $84,665 100.00% $85,718 100.00% $89,036 100.00%
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 first quarter of 2001 increased $80,000 over
the same period last year. The net interest income margin increased to 2.30%
for the first quarter of 2001 from 2.14% for the first quarter of 2000.
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 YIELDS
FIRST QUARTER 2001 FIRST QUARTER 2000
Average Average
(Dollars in thousands) Balance Interest Rate Balance Interest Rate
ASSETS
INTEREST-EARNING ASSETS:
Loans, net of unearned income(1)(2)
Taxable 57,946 2,018 3.48% 56,933 1,865 3.28%
Tax-exempt - -
Investment securities
Taxable 2,628 34 1.29% 3,340 38 1.14%
Tax-exempt - -
Interest-bearing deposits - - - -
Federal funds sold 25,624 356 1.39% 28,547 403 1.41%
Total Interest-Earning Assets 86,198 2,408 2.79% 88,820 2,306 2.60%
Cash and due from banks 5,296 5,749
Allowance for loan Losses (1,805) (1,809)
Premises and equipment 2,096 2,490
Other Real Estate 783 1,282
Other assets 1,508 2,237
TOTAL ASSETS $94,076 $98,769
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 17,526 82 0.47% 18,679 62 0.33%
Savings deposits 24,978 195 0.78% 25,745 185 0.72%
Time deposits 8,803 98 1.11% 10,341 106 1.03%
Total Interest-Bearing Deposits 51,307 375 0.73% 54,765 353 0.64%
Federal Funds Purchased
Securities sold under agreements to repurchase
Other Short-Term borrowings - -
Long-Term debt 2,225 51 2.27% 2,231 51 2.29%
Total Int-Bearing Liabilities 53,532 426 0.80% 56,996 404 0.71%
Noninterest-bearing deposits 33,358 34,271
Other liabilities 1,048 1,855
Shareholders' equity 6,138 5,647
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $94,076 $98,769
Net Interest Income 1,982 1,902
Net Interest Spread 2.00% 1.89%
Net Interest Margin 2.30% 2.14%
(1) Fee income relating to loans of $156,000 at March 31, 2001, and $167,000 at
March 31,2000 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)
March 2001 Compared to March 2000
Change in
Interest Due to Total
(Dollars in thousands) Volume Rate Change
Net Loans:
Taxable 120 33 153
Tax-Exempt(2) - - -
Investment Securities - - -
Taxable 4 (8) (4)
Tax-Exempt(2) - - -
Interest-Bearing Deposits - - -
Federal Funds Sold (6) (41) (47)
Total Interest Income 118 (16) 102
Deposits:
Demand Deposits 24 (4) 20
Savings Deposits 15 (5) 10
Time Deposits 8 (16) (8)
Total Interest-Bearing Deposits 47 (25) 22
Federal Funds Purchased - - -
Securities Sold under Agreements
to Repurchase - - -
Other Short-Term Borrowings - - -
Long-Term Debt (0) (0) (0)
Total Interest Expense 47 (25) 22
(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 first quarter of 2001 increased $715,000 or
142.15% from the same period last year. This increase is attributable to a
gain on the sale of ORE. This parcel was sold in 1998, however the regulators
advised that the Company incorrectly applied the full accrual method of
accounting. Due to this the Company restated all financials. The Company
recognized this gain on the sale of ORE in 2001 as the purchaser's payments
have reached certain levels outlined by the regulators.
Table 5 presents noninterest income for the three months ended March 31,
2001 and 2000.
TABLE 5. NONINTEREST INCOME
For The Three Months Ended
March 31, March 31, Increase
(Amounts in thousands) 2001 2000 (Decrease)
Service Charges $121 $126 ($5)
NSF Charges 139 139 (0)
Gain on Sale of Securities - - -
Cardholder & Other Credit Card Income 132 111 21
Membership Fees 26 41 (15)
Other Commission & Fees 19 23 (4)
ORE Income 1 1 (0)
Gain on Sale of ORE 686 - 686
Other Income 94 62 32
Total Noninterest Income $1,218 $503 $715
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 first quarter of 2001 increased $516,000 or
25.02% from the same period last year. This increase is attributable to the
writedown of 4 parcels of ORE.
Table 6 presents noninterest expense for the three months ended March 31,
2001 and 2000.
TABLE 6. NONINTEREST EXPENSE
For The Three Months Ended
March 31, March 31, Increase
(Amounts in thousands) 2001 2000 (Decrease)
Salaries & Benefits $1,047 $1,036 11
Loss on Litigation - (150) 150
Occupancy Expense 392 488 (96)
Advertising Expense 13 27 (14)
Communications 41 48 (7)
Postage 61 67 (6)
Loan & Credit Card Expense 238 235 3
Professional Fees 33 62 (29)
Legal Fees 69 32 37
Insurance & Assessments 25 25 (0)
Stationery, Forms & Supply 61 57 4
ORE Expenses 435 26 409
Other Operating Expense 163 109 54
Total Noninterest Expense $2,578 $2,062 $516
INCOME TAXES
The Company recorded a provision for income taxes of $187,000 for the
first quarter of 2001 and $146,000 for the first quarter of 2000. 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
March 31, Dec. 31, Sept. 30, June 30, March 31,
2001 2000 2000 2000 2000
Risk-Based Capital
Tier 1 Risk Based Capital Ratio 12.78% 12.27% 12.13% 12.24% 12.08%
Risk Based Capital Ratio 14.05% 13.54% 13.40% 13.51% 13.35%
Tier 1 Leverage Ratio 8.55% 7.81% 7.82% 7.47% 7.44%
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 37.19%
at March 31, 2001, 38.91% at December 31, 2000, and 45.23% at March 31, 2000.
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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management considers interest rate risk to be a market risk that could
have a significant effect on the financial condition of the Company. There
have been no material changes in reported market risks faced by the Company
since the end of the most recent year.
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
______________________
May 14, 2001 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
Resgistrant)