UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 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) (IRS EMPLOYER IDENTIFICATION NO.)
300 ST. CHARLES AVENUE, NEW ORLEANS, LA 70130
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(504) 889-9400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Common Stock, par value $1.00 per share
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-
affiliates of the registrant was approximately $321,380 as of the close
of business on February 28, 2002. For this purpose, certain executive
officers and directors are considered affiliates.
The number of shares of Common Stock, $1.00 par value, outstanding
as of February 28, 2002 was approximately 179,145.
Cross Reference Index
Page
Part I
Item 1: Business 3
Item 2: Properties 5
Item 3: Legal Proceedings 6
Item 4: Submission of Matters to a Vote of Security Holders 7
Part II
Item 5: Market for Registrant's Common Equity and Related
Stockholder Matters 7
Item 6: Selected Financial Data 8
Item 7: Management's Discussion and Analysis of Financial
Condition and Results of Operation 9
Item 7A: Quantitative and Qualitative Disclosures about
Market Risk 32
Item 8: Financial Statements and Supplementary Data 32
Item 9: Changes in and Disagreements with Accountants
and Financial Disclosure 27
Part III
Item 10: Directors and Executive Officers of the Registrant 28
Item 11: Executive Compensation 29
Item 12: Security Ownership of Certain Beneficial Owners and
Management 31
Item 13: Certain Relationships and Related Transactions 31
Part IV
Item 14: Exhibits, Financial Statement Schedules, and
Reports on Form 8-K
(a) Financial Statement Schedules
Independent Auditor's Report Consolidated Balance
Sheets 35
Consolidated Statements of Income 37
Consolidated Statements of Comprehensive Income 38
Consolidated Statements of Changes in Stockholder's
Equity 39
Consolidated Statements of Cash Flow 40
Notes to Consolidated Financial Statements 42
Independent Auditor's Report on Supplementary
Information
Schedules I, II, III 67
(b) Reports on Form 8-K NONE
(c) Exhibits NONE
Signatures 71
Item 1 Business of the Company and the Bank
Here and after BOL Bancshares, Inc. shall be referred to as the
Company and subsidiary Bank of Louisiana shall be referred to as the
Bank.
History and General Business
The Company was organized as a Louisiana corporation on May 7,
1981, for the purpose of becoming a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHC Act"). The
Company remained inactive until April 29, 1988, when it acquired the Bank
in a three-bank merger of the Bank of Louisiana in New Orleans (the "Old
Bank"), Bank of the South ("South Bank"), and Fidelity Bank &
Trust Company, all Louisiana state-chartered banks. The Old Bank was the
surviving bank in the merger and subsequently changed its name to the
Bank's current name. The merger was originally accounted for as a
"purchase", but after discussions with the Securities and Exchange
Commission, the accounting treatment of the merger was changed
to a manner similar to a "pooling of interests". [Since the change in
accounting treatment, the Company has recast its financial statements, to
reflect "pooling" accounting.] In addition, at the time of the bank's
merger, the Company merged with BOS Bancshares, Inc., a Louisiana
corporation, and the registered bank holding company for South Bank. The
Company was the surviving entity in that merger. The Company is
the sole shareholder and registered bank holding company of the Bank.
Other than owning and operating the Bank, the Company may also
engage, directly or through subsidiary corporations, in those activities
closely related to banking that are specifically permitted under the BHC
Act. See "Supervision and Regulation". The Company, after acquiring the
requisite approval of the Board of Governors of the Federal Reserve
System (the "FRB") and any other appropriate regulatory agency, may
seek to engage de novo in such activities or to acquire companies already
engaged in such activities. The Company has not conducted, and has no
present intent to conduct, negotiations for the acquisition or formation
of any entities to engage in other permissible activities. There can be
no assurance, however, that the Company will not
form or acquire any other entity.
If the Company attempts to form or acquire other entities and
engage in activities closely related to banking, the Company will be
competing with other bank holding companies and companies currently
engaged in the line of business or permissible activity in which the
Company might engage, many of which have far greater assets and financial
resources than the Company and a greater capacity to raise
additional debt and equity capital. See "Business of the Company and the
Bank--Territory Served and Competition".
Banking Industry
The Company derives its revenues largely from dividends from the
Bank. As is the case with any financial institution, the profitability
of the Bank is subject, among other things, to fluctuating availability
of money, loan demand, changes in interest rates, actions of fiscal and
monetary authorities, and economic conditions in general. See "Business
of the Company and the Bank", "Supervision and Regulation", and
"Management's Discussion and Analysis of the Financial Condition and
Results of Operations of the Company and the Bank".
Banking Products and Services
The Bank is a full service commercial bank that provides a wide
range of banking services for its customers. Some of the major services
that it offers include checking accounts, negotiable order of withdrawal
("NOW") accounts, individual retirement accounts ("IRAs"), savings and
other time deposits of various types, and business, real-estate, personal
use, home improvement, automobile, and a variety of other loans, as
discussed more fully below. Other services include letters of credit,
safe deposit boxes, money orders, traveler's checks, credit cards, wire
transfer, electronic banking, night deposit, and drive-in facilities.
Prices and rates charged for services offered are competitive with the
area's existing financial institutions.
The Company offers a wide variety of fixed and variable rate loans
to qualified borrowers. With regard to interest rates, the Bank
continues to meet legal standards while remaining competitive with the
existing financial institutions in its market area. The specific types
of loans that the Bank offers include the following:
Consumer Loans. The Company's consumer loans consist of
automobile, mobile home, recreational vehicle, and boat loans; home
improvement and second-mortgage loans; secured and unsecured personal
expense loans; and educational loans.
Real Estate Loans. The Company's real estate loans consist of
residential first and second mortgage loans on one-to-four family homes;
construction and development loans; multiple dwelling unit loans; housing
rehabilitation loans; loans to purchase developed real property; and
commercial real estate loans.
Commercial Loans (Secured and Unsecured). The Company's commercial
loans consist of working capital loans, secured and unsecured lines of
credit, and small equipment loans.
Credit Cards. The Company offers a variety of nationally
recognized credit cards, in addition to its own Mr. Bol credit card, and
private label credit cards for use at retail establishments nationwide.
As of December 31, 2001, the Company held $16,870,919 in credit card
receivables.
Proprietary Accounts. The Company has a number of proprietary
accounts it services. The Company's proprietary accounts consist largely
of small to medium sized merchants who have issued their own private-
label credit cards. The Company acquires these credit card accounts at a
discount, typically with reserves posted, and requires
the merchant to repurchase accounts 180 days or more past due. As of
December 31, 2001, the Company held $1,482,125 in proprietary accounts.
Mortgage Lending. The Company offers 15- and 30-year fixed and
adjustable rate conventional and jumbo home mortgages. The Company sells
all mortgage loans in the secondary market and does not retain the
servicing rights thereon.
Territory Served and Competition
Market Area. The market area for the Company is defined in the
Company's Community Reinvestment Act Statement as the greater New Orleans
metropolitan area. This area includes all of the City of New Orleans and
surrounding Parishes. The Company has branch offices in Orleans,
Jefferson, and St. Tammany Parishes.
Population. From 1990 to 2000, the population of New Orleans
remained constant with approximately 500,000 persons. The population of
Jefferson and St. Tammany Parishes were approximately 650,000 as of
December 31, 2000.
Competition. The Company competes with other commercial banks in
New Orleans and with savings and loan associations, credit unions, and
other types of financial services providers. The Company is one of the
smallest commercial banks in New Orleans in terms of assets and deposits.
Economy. The economy of New Orleans is supported by the tourism,
shipping, and energy industries. The Company has no material
concentration of deposits from any single customer or group of customers,
nor is a significant portion of its loans concentrated in a single
industry or group of related industries. There are no material seasonal
factors that have any adverse effect on the Company. The Company does
not rely on foreign sources of funds or income, and the Company does not
expend any material percentage of its income in complying with applicable
environmental laws.
Employees
As of December 31, 2001, the Company had approximately 163 full-
time and approximately 15 part-time employees. The Company considers its
relationship with its employees to be very good. The employee benefit
programs provided by the Company include group life and health insurance,
paid vacations, sick leave, and a Section 401(k) savings plan. The
Company has no employees who are not employees of the Company. See "Item
11, Executive Compensation".
Item 2 Property
In addition to its main office, the Company has six branch
locations and an operations center. Set forth below is a description of
the offices of the Company.
Main Office. The main office of the Company is located at 300 St.
Charles Avenue in the central business district of New Orleans,
Louisiana. On September 30, 1991, the Company purchased a four-story
building located at 300 St. Charles Avenue from the Resolution Trust
Corporation (the "RTC") for the price of $402,500. The purchase was
financed by a loan from director Edward J. Soniat to the Company. As of
December 31, 2001, there is a balance of $54,411 in principal and accrued
but unpaid interest outstanding on the loan from Mr. Soniat to the
Company. See "Management--Certain Transactions". The building consists
of approximately 13,100 square feet of office space, and parking is
provided on the streets and commercial lots nearby. The Company occupies
the ground floor and the fourth floor. The second and third floors are
leased to the LeMoyne Bienville Club. Rental income received from the
club is $2,165 per month. The initial term of the club's lease is for 25
years, expiring on December 15, 2003.
Carrollton Branch. The Carrollton Branch of the Company is located
in the Carrollton Shopping Center at 3846 Dublin Street, New Orleans,
Louisiana. The premises consist of approximately 4,700 total square feet
of office space, and parking is provided by the shopping center. The
Company leases the office space on a month-to-month basis from Carrollton
Central Plaza. The Company pays $3,022 per month in lease payments.
Severn Branch. The Severn Branch of the Company is located in the
central business district of Metairie at 3340 Severn Avenue, Metairie,
Louisiana. The premises consist of approximately 4,600 total square feet
of office space on the first floor of a four-story office building, and
parking is provided for approximately 100 cars. The Company leases the
office space from Severn South Partnership, an affiliate of the
Company. See "Certain Relationships and Related Transactions." Pursuant
to an Amendment to Lease dated May 1, 1999, the lease commenced on June
1, 1999, and terminates on May 31, 2003. The lease payments are $12,456,
plus a percentage of operating costs, per month.
Oakwood Branch. The Oakwood Branch of the Company is located in
the Oakwood Shopping Center at 197 Westbank Expressway, Gretna,
Louisiana. The premises consist of approximately 4,160 total square feet
of office space, which includes 1,560 square feet of drive-in facility,
and parking is provided by the shopping center. The Company
leases the building from Oakwood Shopping Center, Ltd. The lease
commenced on June 1, 2001, and terminates on May 31, 2006. The lease
payments are $12,998 per month.
Lapalco Branch. The Lapalco Branch of the Company is located in
the Belle Meade Plaza Shopping Center at 605 Lapalco Boulevard, Gretna,
Louisiana. The premises consist of approximately 2,500 square feet of
office space in a one-story building, and parking is provided by the
shopping center. The Company leases the building from Belle Meade
Developers. The lease commenced on January 1, 2001, and terminates on
December 31, 2005. The lease payments are $6,385 per month.
Gause Branch. The Gause Branch of the Company is located in the
central business district of Slidell at 636 Gause Boulevard, Slidell,
Louisiana. The premises consist of approximately 13,800 total square
feet of office space in a three-story office building, and parking is
provided for approximately 50 cars. The Company owns the building and
underlying land upon which this branch is situated. The Company occupies
approximately 3,300 square feet in this building and leases the remaining
space to various tenants for varying rental rates and terms. Rental
income received during 2001 totaled $110,658.
Tammany Mall Branch. The Tammany Mall Branch of the Company is
located at 3180 Pontchartrain, Slidell, Louisiana. The premises consist
of approximately 4,000 total square feet of office space, and parking is
provided for approximately 40 cars. The Company leases the building on a
month-to-month basis from Tammany Mall Partnership, an affiliate of the
Company. See Item 13, "Certain Relationships and Related Transactions".
The lease payments are $6,200 per month.
Operations Center. The Company's operations center, housing its
data processing, credit card, bookkeeping, and marketing departments, is
located at 3340 Severn Avenue, Metairie, Louisiana. The building
consists of approximately 44,500 total square feet of space in a four-
story office building, and parking is provided for approximately 200
cars. The Company leases 20,770 square feet from Severn South
Partnership, an affiliate of the Company, under two separate leases. See
"Certain Relationships and Related Transactions." Pursuant to an
Amendment to Lease dated May 1, 1999, the leases commenced on June 1,
1999, and will terminate on May 31, 2003. The lease payments total
$27,384, plus a percentage of operating costs, per month.
Item 3 Legal Proceedings
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 December 31,
2001, or (ii) believes the lawsuit is without sufficient merit or
monetary exposure to require the posting of a reserve. 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.
Item 4 Submission of Matters to a Vote of Security Holders
There were no matters submitted, during the fourth quarter of
fiscal year 2001 to a vote of security holders, through the solicitation
of proxies.
Item 5 Market for Registrant's Common Equity and Related Stockholder
Matters
There is no established trading market in the shares of Bank Stock,
as the Company owns 100% of the issued and outstanding shares of Bank
Stock. There is no established trading market in the shares of Company
Common Stock. The Company Common Stock is not listed or quoted on any
stock exchange or automated quotation system. Management is aware,
however, that Dorsey & Company, New Orleans, Louisiana does make a market
in the Company Common Stock. The following table sets forth the range of
high and low sales prices of Company Common Stock since 2000, as
determined by the Company based on trading records of Dorsey & Company.
The following table does not purport to be a listing of all trades in
Company Common Stock during the time periods indicated, but only those
trades of which Dorsey and Company has informed the Company. The prices
indicated below do not reflect mark-ups, mark-downs, or commissions, but
do represent actual transactions. Finally, the prices listed below are
not necessarily indicative of the prices at which shares of Bank Stock
would trade. As of December 31, 2001, the Company had approximately 649
shareholders of record.
2001
High Low
First Quarter $5.00 $5.00
Second Quarter 5.00 5.00
Third Quarter 5.00 5.00
Fourth Quarter 5.00 5.00
2000
First Quarter 7.00 5.00
Second Quarter 7.00 5.00
Third Quarter 7.00 5.00
Fourth Quarter 7.50 4.00
Principal Shareholders
Other than directors, officers, and directors and officers as a
group identified in the table in "Directors and Executive Officers of the
Company", there were no persons who, to the knowledge of management of
the Company, beneficially owned 5% or more of the Company Common Stock as
of December 31, 2001. See "Item 12 Security Ownership of Certain
Beneficial Owners and Management".
Item 6 Selected Consolidated Financial Data of the Company
For The Years Ended
December 31,
2001 2000 1999 1998 1997
(Dollars in thousands, except per share data)
Operations:
Net Interest Income $7,313 $7,727 $7,502 $7,827 $8,189
Prov for (Recovery Of) Loan Losses 556 308 (154) 1,085 3,630
Other Income 3,201 2,123 2,134 2,249 2,938
Other Expense 9,470 8,993 9,650 9,123 10,643
Income Tax Expense (Benefit) 152 170 46 96 (1,171)
Net Income (Loss) 336 379 94 (228) (1,975)
Per Share:
Common Shares Outstanding 179,145 179,145 179,145 179,145 179,145
Net Income (Loss) 1.88 2.11 0.53 (1.27) (11.03)
Cash Dividends - Common 0.00 0.00 0.00 0.00 0.00
Book Value at End of Period 21.78 19.88 16.89 16.46 16.62
Preferred Shares Outstanding 2,300,871 2,302,811 2,302,811 2,302,811 2,302,811
Cash Dividends - Preferred Stock 0.00 0.00 0.00 0.00 0.00
Balances at End of Period:
Investment Securities 15,908 3,370 3,370 4,789 10,567
Fed Funds Sold 16,160 25,905 24,785 26,950 21,150
Loans, Net of Unearned Interest 59,197 57,727 58,781 61,542 57,619
Allowance for Loan Losses 1,800 1,800 1,800 1,800 1,800
Other Real Estate Owned 0 1,074 1,274 1,357 1,473
Total Assets 100,891 94,846 100,109 103,886 102,709
Total Deposits 91,612 85,164 90,555 94,583 93,941
Shareholders' Equity 6,200 5,861 5,329 5,185 5,280
Ratios:
Return on Average Assets 0.14% 0.18% 0.09% -0.23% -1.95%
Return on Average Equity 2.16% 3.10% 1.93% -4.18% -34.49%
Primary Capital to Total Assets &
Allowance for Possible Loan Losses 6.26% 6.16% 5.42% 5.12% 5.23%
Allowance for Possible Loan Losses
as a Percentage of Loans, Net 3.04% 3.12% 3.06% 2.92% 3.12%
Non-Performing Loans as a
Percentage of Loans, Net (1) 1.75% 0.09% 0.07% 0.13% 0.15%
Non-Performing Loans as a
Percentage of Total Assets (2) 0.99% 1.19% 1.31% 1.38% 1.51%
Capital Ratios: Bank
Tier 1 Risk Based Capital Ratio 12.84% 12.27% 10.50% 10.27% 10.61%
Risk Based Capital Ratio 14.11% 13.54% 11.77% 11.54% 11.88%
Tier 1 Leverage Ratio 8.09% 7.81% 6.80% 6.89% 6.84%
(1) Non-performing loans are comprised of non-accrual loans and
restructured loans. As of dates reported the Company did not have any
restructured loans.
(2) Non-performing assets are comprised of non-performing loans, ORE and
other repossessed assets.
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY
The following discussion and analysis is intended to provide a
better understanding of the consolidated financial condition and results
of operations of BOL Bancshares, Inc. (the "Company") and its bank
subsidiary, (the "Bank") for the years ending December 31, 2001, 2000 and
1999. This discussion and analysis should be read in conjunction with
the consolidated financial statements, related notes, and selected
financial data appearing elsewhere in this report.
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.
The preceding chart reflects the most recent five years of the
Company's operations.
Overview
The Company had total assets of $100,891,000 at December 31, 2001
and $94,846,000 at December 31, 2000. The Company currently operates
through seven locations, five in the metropolitan New Orleans area and
two in St. Tammany Parish.
Loans comprise the largest single component of the Company's
interest earning assets and provide a far more favorable return than
other categories of earnings assets. The Company's loans totaled
$57,397,000 and $55,927,000 net of unearned discount and Allowance for
Loan Losses at December 31, 2001 and 2000, respectively. The Company's
net interest margin was 8.14% for the year ended December 31, 2001.
Historically, credit card loans have been an important part of the
Company's total loan portfolio. At December 31, 2001, credit card loans
were $16,871,000 and represented 29.39% of the Company's loan portfolio
of $57,397,000. At December 31, 2000, credit card loans were $18,292,000
and represented 32.71% of the Company's loan portfolio of $55,927,000.
The decrease in the Company's credit card loans during 2001 was largely
attributable to (i) competition from other banks and non-traditional
credit card issuers such as AT&T and GMAC; (ii) the Company's loss of
proprietary business; and (iii) tightening of the Company's underwriting
standards.
The Company's current strategy is to continue to grow its
traditional banking operations primarily in the metropolitan New Orleans
area and to expand its credit card lending and proprietary accounts. The
Company has initiated an aggressive marketing campaign to acquire several
Visa and MasterCard portfolios and proprietary accounts. The Company
focuses on providing its customers with the financial sophistication and
breadth of products of a regional bank while successfully retaining the
local appeal and level of service of a community bank.
Results of Operations
Net Income
The Company earned $336,000, or $1.88 per share in 2001. In 2000
the net income was $379,000 or $2.11 per share and in 1999 the net income
was $94,000 or $.53 per share.
In 2001, the net income decreased $43,000 over the year 2000.
Non-interest income increased $1,078,000 due primarily to the gain on 3
parcels of ORE sold totaling $1,195,000. Non-interest expense increased
$477,000 due to the writedown of 6 ORE properties totaling $683,000.
In 2000, the increase in net income of $285,000 over 1999 income
was primarily due to the Company recovering $202,000 in the settlement of
a lawsuit against a proprietor. Interest expense decreased $216,000;
non-interest expenses decreased $657,000 primarily from a decrease in
legal fees of $404,000 due to the settlement of the above-mentioned
lawsuit.
Net Interest Income
Net interest income decreased $414,000 due primarily to the decrease in
the rate paid on Federal Funds Sold from an average rate of 6.24% in 2000
to 3.99% in 2001.
Net interest income increased $225,000 or 3.00% to $7,727,000 in
2000 from $7,502,000 in 1999. This increase is mainly due to a decrease
in interest expense on deposits, which decreased $216,000 or 11.70% to
$1,630,000 in 2000 from $1,846,000 in 1999. Total interest bearing
deposits decreased $4,116,000 or 7.45%.
The Company's average balances, interest income and expense and
rates earned or paid for major balance sheet categories are set forth in
the following table:
TABLE 1 Average Balances, Interests and Yields
2001 2000 1999
Average Average Average
(Dollars in Thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
INTEREST-EARNING ASSETS:
Loans, net of unearned income (1)(2)
Taxable 58,156 7,605 13.08% 56,769 7,403 13.04% 57,397 7,638 13.31%
Tax-exempt 0 0 0
Investment securities
Taxable 6,935 327 4.72% 3,318 170 5.12% 4,011 191 4.76%
Tax-exempt 0 0 0 0.00%
Interest-bearing deposits 0 0 0.00% 0 0 0.00% 0 0 0.00%
Federal funds sold 24,698 986 3.99% 28,602 1,784 6.24% 30,645 1,519 4.96%
Total Interest-
Earning Assets 89,789 8,918 9.93% 88,689 9,357 10.55% 92,053 9,348 10.16%
Cash and due from banks 5,354 5,450 5,739
Allowance for loan
Losses (1,799) (1,807) (1,792)
Premises and equipment 1,983 2,324 2,678
Other Real Estate 478 1,165 1,350
Other assets 1,630 1,825 1,130
TOTAL ASSETS 97,435 97,646 101,158
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 17,676 244 1.38% 18,229 288 1.58% 19,873 332 1.67%
Savings deposits 26,661 721 2.70% 25,415 744 2.93% 26,704 784 2.94%
Time deposits 9,888 433 4.37% 9,763 382 3.91% 11,583 520 4.49%
Total Interest-Bearing
Deposits 54,225 1,398 2.58% 53,407 1,414 2.65% 58,160 1,636 2.81%
Federal Funds Purchased
Securities sold under agreements
to repurchase
Other Short-term borrowings 0 0 0
Long-Term debt 2,222 207 9.33% 2,229 216 9.69% 2,249 210 9.34%
Total Int-Bearing
Liabilities 56,447 1,605 2.84% 55,636 1,630 2.93% 60,409 1,846 3.06%
Noninterest-bearing
Deposits 33,719 34,479 34,670
Other liabilities 1,051 1,836 1,210
Shareholders' equity 6,218 5,695 4,869
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 97,435 97,646 101,158
Net Interest Income 7,313 7,727 7,502
Net Interest Spread 7.09% 7.62% 7.10%
Net Interest Margin 8.14% 8.71% 8.15%
(1) Fee income relating to loans of $615,000 in 2001, $709,000 in 2000 and $669,000
In 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
for the three years ended December 31, 2001, 2000, and 1999 using a federal tax rate
of 34%.
TABLE 2 Rate/Volume Analyses (1)
2001 Compared to 2000 2000 Compared to 1999
Change in Change in
Interest Due to Total Interest Due to Total
(Dollars in Thousands) Volume Rate Change Volume Rate Change
Net Loans:
Taxable 21 181 202 (151) (84) (235)
Tax-Exempt (2) - - - - - -
Investment Securities- - - - - - -
Taxable (28) 185 157 12 (33) (21)
Tax-Exempt (2) - - - - - -
Interest-Bearing Deposits - - - - - -
Federal Funds Sold (555) (243) (798) 366 (101) 265
Total Interest Income (562) 123 (439) 227 (218) 9
Deposits:
Demand Deposits (36) (9) (45) (17) (27) (44)
Savings Deposits (60) 36 (24) (2) (38) (40)
Time Deposits 46 5 51 (56) (82) (138)
Total Interest-Bearing Deposits (50) 32 (18) (75) (147) (222)
Federal Funds Purchased - - - - - -
Securities Sold under
Agreements to Repurchase - - - - - -
Other Short-Term Borrowings - - - - - -
Long-Term Debt (8) (1) (9) 8 (2) 6
Total Interest Expense (58) 31 (27) (67) (149) (216)
(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%.
Provision for Loan Losses
Management's policy is to maintain the allowance for possible loan
losses at a level sufficient to absorb estimated 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. At December
31, 2001, the allowance for possible loan losses was $1,800,000 and
was that same amount at December 31, 2000. In 2001, the provision for
loan losses was $556,000 compared to $308,000 in 2000. Net charge-offs
were $556,000 for 2001 compared to net charge-offs of $308,000 in 2000
and net recoveries of $(154,000) in 1999. The increase in provisions for
2001 over 2000 and 1999 primarily resulted from the recovery of $202,000
in 2000 and $1,100,000 in 1999 from the settlement of a major piece of
litigation on a proprietary account, which was previously charged off.
Based on the volume of credit card charges and payments, the credit card
portfolio turns over every eight to nine months, requiring a provision to
loan loss allowance less than annual charge-offs due to recoveries being
contemporaneously made.
TABLE 3 Allowance for Loan Losses
December 31,
2001 2000 1999 1998 1997
(Dollars in Thousands)
Balance at beginning of period $1,800 $1,800 $1,800 $1,800 $1,500
Charge-Offs:
Commercial 9 3 49 24 22
Real estate 4 6 0 6 20
Installment 55 38 41 43 94
Credit Cards 1,010 1,099 1,491 1,877 3,996
Total Charge-offs 1,078 1,146 1,581 1,950 4,132
Recoveries:
Commercial 2 8 11 13 100
Real estate 2 55 2 30 14
Installment 5 4 1 23 24
Credit Cards 513 771 1,705 798 664
Total Recoveries 522 838 1,735 864 802
Net charge-offs 556 308 (154) 1,086 3,330
Provision for (recovery of) 556 308 (154) 1,086 3,630
loan losses
Balance at end of period $1,800 $1,800 $1,800 $1,800 $1,800
Ratio of net charge-offs during period
to average loans outstanding 0.96% 0.54% -0.27% 1.83% 5.35%
Allowance for possible loan losses as a
percentage of loans 3.14% 3.22% 3.16% 3.00% 3.12%
Other Income
An important source of the Company's revenue is derived from other
income. The following table sets forth the major components of other
income for the last three years.
TABLE 4 Other Income
$ Change From
December 31, Prior Year
2001 2000 1999 2001 2000
(Dollars in Thousands)
Service Charges 529 512 545 17 (33)
NSF Charges 587 564 628 23 (64)
Gain on Sale of Securities 0 0 0 0 0
Cardholder & Other Cr Card Inc 597 503 497 94 6
Membership Fees 103 137 176 (34) (39)
Other Comm. & Fees 86 97 97 (11) 0
ORE Income 1 3 9 (2) (6)
Gain on Sale of ORE 1,195 13 27 1,182 (14)
Rev of Litigation Settlement 0 150 0 (150) 150
Other Income 103 144 156 (41) (12)
Total Other Income $3,201 $2,123 $2,135 $1,078 ($12)
Total other income increased to $3,201,000 in 2001 from $2,123,000
in 2000 or a 50.78% increase. This increase was due primarily to the
gain on 3 parcels of ORE sold totaling $1,195,000.
Total other income decreased to $2,123,000 in 2000 from $2,135,000
in 1999 or a 0.56% increase.
Other Expense
The major categories of other expense include salaries and employee
benefits, occupancy and equipment expenses and other operating costs
associated with the day-to-day operations of the Company.
The following table sets forth the major components of other
expense for the last three years:
TABLE 5 Other Expense
$ Change From
December 31, Prior Year
2001 2000 1999 2001 2000
(Dollars in Thousands)
Salaries & Benefits 4,324 4,327 4,158 (3) 169
Occupancy Expense 1,756 1,969 1,969 (213) 0
Advertising Expense 71 108 103 (37) 5
Communications 179 184 199 (5) (15)
Postage 229 263 301 (34) (38)
Loan & Credit Card Expense 993 933 1,031 60 (98)
Professional Fees 172 215 330 (43) (115)
Legal Fees 214 187 591 27 (404)
Insurance & Assessments 96 95 99 1 (4)
Stationery, Forms & Supply 227 239 317 (12) (78)
Promotional Expenses 139 166 179 (27) (13)
ORE Expenses 698 48 68 650 (20)
Misc. Losses 20 22 53 (2) (31)
Other Operating Expense 352 237 252 115 (15)
Total Other Expense $9,470 $8,993 $9,650 $477 ($657)
Total other expense increased 5.30% to $9,470,000 in 2001 from
$8,993,000 in 2000. This increase was due to the writedown of 6 ORE
properties totaling $683,000.
Total other expense decreased 6.81% to $8,993,000 in 2000 from
$9,650,000 in 1999.
Provision for Income Taxes
The income tax provision for the Company and the Bank on a
consolidated basis, for the year 2001 was $152,000 as compared to
$170,000 in 2000 and $46,000 in 1999. The provision for income taxes
consists of provisions for federal taxes only. Louisiana does not have
an income tax for banks.
Financial Condition
The Company manages its assets and liabilities to maximize long-
term earnings opportunities while maintaining the integrity of its
financial position and the quality of earnings. To accomplish this
objective, management strives to effect efficient management of interest
rate risk and liquidity needs. The primary objectives of interest-
sensitivity management are to minimize the effect of interest rate
changes on the net interest margin and to manage the exposure to risk
while maintaining net interest income at acceptable levels. Liquidity is
provided by carefully structuring the balance sheet. The Company's asset
liability committee meets regularly to review both the interest rate
sensitivity position and liquidity.
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 instruments 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.
The interest rate sensitivity structure within the Company's
balance sheet at December 31, 2001, has a net interest sensitive asset
gap of 2.11% when projecting out one year. In the near term, defined as
90 days, the Company currently has a net interest sensitive asset gap of
17.86%. The information represents a general indication of repricing
characteristics over time; however, the sensitivity of certain deposit
products may vary during extreme swings in the interest rate cycle.
Since all interest rates and yields do not adjust at the same velocity,
the interest rate sensitivity gap is only a general indicator of the
potential effects of interest rate changes on net interest income.
The following table illustrates the Company's interest rate
sensitivity analysis at December 31, 2001, as well as the cumulative
position at December 31, 2001.
TABLE 6 Interest Rate Sensitivity Analysis
December 31, 2001
Over
30 60 90 120 180 One One
Days Days Days Days Days Year Year
(Dollars in Thousands)
Total
Earning Assets
Securities-HTM - - - - - - 15,515
Securities - AFS - - - - - - 393
Loans 10,667 2,845 2,701 2,683 4,821 11,090 24,593
Loans held for sale - - - - - - -
Federal funds sold 16,160 - - - - - -
Total Earning Assets 26,827 2,845 2,701 2,683 4,821 11,090 40,501
Non Earning Assets - - - - - - 9,423
TOTAL ASSETS 26,827 2,845 2,701 2,683 4,821 11,090 49,924
Interest-Bearing Liabilities
Savings & Now accounts 41,058 - - - - - -
Money market 4,934 - - - - - -
CD's < $100,000 1,126 824 651 995 1,758 774 1,954
CD's > $100,000 - 117 - - 146 517 503
Federal Funds - - - - - - -
purchased
Repurchase agreements - - - - - - -
Other short-term - - - - - - -
borrowings
Notes payable - - - - - - 2,218
Total Interest-Bearing 47,118 941 651 995 1,904 1,291 4,675
Liabilities
Non Costing
Liabilities - - - - - - 43,316
TOTAL LIABILITIES 47,118 941 651 995 1,904 1,291 47,991
Interest Sensitivity Gap (20,291) 1,904 2,050 1,688 2,917 9,799 1,933
Cumulative Gap (20,291) (18,387) (16,337) (14,649) (11,732) (1,933) -
Cumulative Gap/Total Interest-
Earning Assets -22.18% -20.10% -17.86% -16.02% -12.83% -2.11% 0.00%
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.
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.
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 ensure 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.
Loans
The loan portfolio is the largest category of the Company's earning
assets. The following table summarizes the composition of the loan
portfolio for the last five years:
TABLE 7 Loans Net by Category
December 31,
2001 2000 1999 1998 1997
(Dollars in Thousands)
Commercial, financial, & 3,632 3,095 4,095 4,441 4,281
agricultural
Real estate-mortgage 34,472 32,622 30,976 28,861 24,643
Mortgage Loan Held for Resale 0 0 0 0 0
Personal Loans 3,987 3,917 2,845 3,006 5,106
Credit cards-Visa, MasterCard 15,389 16,547 18,585 21,785 20,302
Credit cards-Proprietary 1,482 1,745 2,429 3,510 2,931
Overdrafts 440 159 128 154 359
Loans 59,402 58,085 59,058 61,757 57,622
Less:
Unearned income 205 358 277 215 2
Deferred loan fees (costs), net 0 0 0 0 0
Allowance for possible loan 1,800 1,800 1,800 1,800 1,800
losses
Loans, net $57,397 $55,927 $56,981 $59,742 $55,820
Total loans, which include loan loss reserves and unearned
interest, increased $1,470,000 or 2.63% to $57,397,000 at December 31,
2001 from $55,927,000 at December 31, 2000. This increase was primarily
attributable to the increase in the Company's real estate loans of
$1,850,000 or 5.67%, and an increase in commercial loans of $537,000 or
17.35%, which is offset by a decrease in the credit card portfolio of
$1,421,000 or 7.77% over December 31, 2000 total loans.
Total loans, which include loan loss reserves and unearned
interest, decreased $1,053,000 or 1.85% to $55,927,000 at December 31,
2000 from $56,981,000 at December 31, 1999. This decrease was primarily
attributable to the decrease in the Company's commercial loans of
$1,000,000 or 24.42%, a decrease in the credit card portfolio of
$2,722,000 or 12.95% which is offset by an increase in real estate loans
of $1,646,000 or 5.31%, an increase in personal loans of $1,072,000 or
37.68% over December 31, 1999 total loans.
The following table shows the maturity distribution and interest rate
sensitivity of the Company's loan portfolio:
TABLE 8 Loan Maturity and Interest Rate Sensitivity
December 31, 2001
Maturing
Within One To Over
One Year 5 Years 5 Years Total
(Dollars in Thousands)
Loan Maturity by Type
Commercial, financial and
Agricultural 2,973 635 24 3,632
Real estate construction, land
and land development 17,677 14,878 1,711 34,266
All other loans 3,502 17,692 105 21,299
Total $24,152 $33,205 $1,840 $59,197
Rate Sensitivity of Loans
Loans:
Fixed rate loans 20,285 33,205 1,840 55,330
Variable rate loans 2,864 0 2,864
Non-Accrual Loans 1,003 0 0 1,003
Total $24,152 $33,205 $1,840 $59,197
Non-performing Assets
Non-performing assets consist of non-accrual and restructured loans
and ORE. Non-accrual 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.
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.
Non-performing assets decreased $120,000 or 10.69% at December 31,
2001, to $1,003,000 from $1,123,000 December 31, 2000. At December 31,
2001 there were no restructured loans.
Non-performing assets decreased $191,000 or 14.54% at December 31,
2000, to $1,123,000 from $1,314,000 December 31, 1999. At December 31,
2000 there were no restructured loans.
Since 1997, the ratio of past due loans to total loans has
decreased from 2.18% to .83%. During that time, the Company
significantly reduced its ratio of nonperforming assets to loans and ORE
from a high of 2.63% of total loans at December 31, 1997, to a low of
1.75% at December 31, 2001.
When a loan is classified as non-accrual, previously accrued
interest is reversed and interest income is decreased to the extent of
all interest accrued in the current year. If any portion of the accrued
interest had been accrued in the previous years, accrued interest is
decreased and a charge for that amount is made to the allowance for
possible loan losses. For 2001, the gross amount of interest income that
would have been recorded on non-accrual loans at December 31, 2001, if
all such loans had been accruing interest at the original contract rate,
was $26,019.
TABLE 9 Non-performing Assets
December 31,
2001 2000 1999 1998 1997
(Dollars in Thousands)
Non-accrual Loans 1,003 49 40 81 83
Restructured Loans 0 0 0 0 0
Other Real Estate Owned 0 1,074 1,274 1,357 1,473
Total Non-performing Assets $1,003 $1,123 $1,314 $1,438 $1,556
Loans past due 90 days or more 478 367 528 852 1,257
Ratio of past due loans to loans 0.83% 0.66% 0.93% 1.42% 2.18%
Ratio of non-performing assets to loans
and other real estate owned 1.75% 1.97% 2.26% 2.34% 2.63%
Impaired Loans
A loan is considered potentially impaired if: a) it is probable
that the Bank will be unable to collect all amounts due (principal and
interest) according to the terms of the loan agreement; b) A loan's
original contractual terms have been modified because of the
collectability concerns.
Impairment assessment is based on the present value of expected
future cash flows related to the particular loan. The Bank discounts
expected net future cash flows or the underlying collateral of a loan to
determine the appropriate loss allowance for the loan.
For impaired loans that have risk characteristics in common with
other impaired loans, the Bank aggregates those loans and uses historical
statistics, such as average recovery period and average amount recovered,
along with a composite effective interest rate as a means of measuring
the impaired loans.
If the measure of the impaired loan is less that the recorded
investment in the loan, including accrued interest net deferred loan fees
or costs, and unamortized premium or discount, the Bank recognizes the
impairment.
The term recorded investment in the loan is distinguished from net
carrying amount of the loan because the latter term is net of a valuation
allowance, while the former term is not. The recorded investment in the
loan does, however, reflect any direct write-down of the investment.
When the Bank recognizes the impairment, we create a valuation
allowance with a corresponding charge to bad-debt expense or adjust an
existing valuation allowance for the impaired loan with a corresponding
charge or credit to bad debt expense.
As of December 31, 2001 and 2000, there was no recorded investment
in loans that are considered impaired under SFAS 114 and 118.
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, and 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 5.21% to $3,152,000 at December 31, 2001
from $2,996,000 at December 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.
Other Real Estate
The Bank's ORE properties, which are held for sale, are recorded on
the Bank's records, at cost, adjusted to the lower of current appraised
value. Any difference is charged to the allowance for loan losses in the
year of foreclosure. Any subsequent writedowns and income and expenses
associated with ORE are included in the income and expense of the Bank.
ORE totaled $0 at December 31, 2001, $1,074,000 at December 31,
2000, and $1,274,000 at December 31, 1999. There were no new parcels
added in 2001.
During the fiscal year 2001 the Bank sold 2 parcels of ORE totaling
$391,000 as compared to 2 parcels sold in 2000 totaling $31,000 and 3
parcels totaling $168,000 in 1999. Historically the Bank has always sold
ORE parcels for a net gain, $509,000 in 2001, $13,000 in 2000, and
$27,000 in 1999. In addition a 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 a gain of $686,000 in 2001 as the
purchaser's payments had reached certain levels outlined by the
regulators. The costs associated with the sales of ORE are minimal as
compared to the gains, $2,000 in 2001, $0 in 2000, and $3,000 in 1999.
The Bank was required by the regulators to write down 6 properties due to
the 10 years limitation that the Bank could hold properties. The total
write down of these properties were $683,000.
The Bank annually obtains a current appraisal from a qualified
appraiser as to the fair market value of all ORE properties and adjusts
the book value accordingly. Management voluntarily recognizes any
writedown due to reductions in the fair market value upon receipt of the
appraisal.
Any expenditure such as maintenance and repairs, etc. is recognized
during the year in which it occurred. The net gain (cost) of operation
of ORE totaled $498,000 in 2001, ($32,000) in 2000, ($32,000) in 1999.
The following table reflects a breakdown of the income and expense
amounts related to ORE operations:
TABLE 11 Other Real Estate Income/Expense
2001 2000 1999
(Dollars in Thousands)
ORE Income
Rental Income 1 3 9
Gain on Sales 1,195 13 27
Total Income 1,196 16 36
ORE Expenses
Maintenance, Repairs, Upkeep & Security 2 15 20
Real Estate Fees, Advertising & Appraisals 0 5 7
Insurance 5 10 18
Sheriff Sale 0 3 0
Legal Fees 2 1 4
Taxes 6 14 13
Writedowns 683 0 6
Loss on Sale 0 0 0
Total Expenses 698 48 68
Net Gain or Loss $498 ($32) ($32)
Allocation of Allowance for Possible Loan Losses
Allocation of the allowance for loan losses is based primarily on
previous credit loss experience, adjusted for changes in the risk
characteristics of each category. Additional amounts are allocated based
on the evaluation of the loss potential of individual troubled loans and
the anticipated effect of economic conditions on both
individual loans and loan categories. Since the allocation is based on
estimates and subjective judgment, it is not necessarily indicative of
the specific amounts of loan categories in which losses may ultimately
occur.
Table 12 Allocation of Allowance for Possible Loan Losses
December 31, 2001 December 31, 2000 December 31, 1999
Allowance % * Allowance % * Allowance % *
(Dollars in Thousands)
Commercial, financial
and agricultural 351 64.90% 330 61.49% 324 55.53%
Real Estate-Construction - - - - - -
Real Estate-Mortgage - - - - - -
Consumer Installment 120 6.70% 124 6.70% 103 8.89%
Credit Cards 1,329 28.40% 1,346 31.81% 1,373 35.58%
Unallocated - - - - - -
Total 1,800 1,800 1,800
December 31, 1998 December 31, 1997
Allowance % * Allowance % *
(Dollars in Thousands)
Commercial, financial
and agricultural 314 53.92% 285 50.20%
Real Estate-Construction - - - -
Real Estate-Mortgage - - - -
Consumer Installment 99 5.12% 110 9.48%
Credit Cards 1,387 40.96% 1,405 40.32%
Unallocated - - - -
Total 1,800 1,800
* Percentage of respective loan type to total loans.
Investment Securities
The Company's investment portfolio policy is to maximize income
consistent with liquidity, asset quality, regulatory constraints, and
asset/liability objectives. The Company's Board of Directors reviews the
policy not less than annually. The levels of taxable and tax-exempt
securities and short-term investments reflect the Company's strategy of
maximizing portfolio yields while providing for liquidity needs. The
investment securities totaled $15,908,000 at December 31, 2001,
$3,370,000 at December 31, 2000, and $3,370,000 at December 31, 1999.
The majority of the holdings are backed by U.S. Government or federal
agency guarantees limiting the credit risks associated with these
securities. The average maturity of the Company's securities portfolio
was two through five years at December 31, 2001. At December 31, 2001
securities classified as available-for-sale were $393,000 and $388,000 at
December 31, 2000. The gross unrealized holding gains on these
securities at December 31, 2001 was $102,000 before taxes compared to net
unrealized holding gains of $97,000 before taxes at December 31, 2000.
At December 31, 2001 securities classified as held-to-maturity were
$15,500,000 and $3,000,000 at December 31, 2000. The gross unrealized
holding gains on these securities before taxes at December 31, 2001 was
$35,000 and gross unrealized holding losses before taxes were $51,000
compared to net unrealized holding gains of $3,000 before taxes at
December 31, 2000 and $0 gross unrealized holding losses.
At December 31, 2001, the Company classified all of its U. S.
Treasury securities and obligations of U.S. government corporations and
federal agencies as held-to-maturity.
The following table sets forth the carrying and approximate market
values of investment securities for the last three years:
TABLE 13 Investment Securities
December 31,
2001 2000 1999
Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value
(Dollars in Thousands)
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies 15,515 15,498 2,982 2,984 3,004 3,000
Other investments 291 393 291 388 90 367
Total $15,806 $15,891 $3,273 $3,372 $3,094 $3,367
TABLE 14 Securities Maturities and Yields
December 31, 2001
Amortized Fair Average
Cost Value Yield (2)
Available-for-Sale
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies
Due in 1 year or less - -
Due 1-5 years - -
Total - - -
Held-to-Maturity
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies
Due in 1 year or less - - -
Due 1-5 years 15,515 15,498 4.24%
Total $15,515 $15,498 4.24%
(1) This table excludes equity investments, which have no maturity date.
(2) Weighted average yields are calculated on the basis of the carrying
value of the security. The weighted average yields on tax-exempt
obligations are compounded on a fully taxable-equivalent basis assuming a
federal tax rate of 34%.
Included in Investment Securities are equity securities acquired
through foreclosure, which have no maturity date. Below is a table of
these securities at December 31,2001 (dollars in thousands):
TABLE 15 Other Securities
Mississippi River Bank 299,860
Liberty Financial Services, Inc. 73,548
Business Resource Capital 20,000
Total Other Securities $393,408
Deposits
Total deposits increased $6,448,000 or 7.57% to $91,612,000 at
December 31, 2001 from $85,164,000 at December 31, 2000. Core deposits,
the Company's largest source of funding, consist of all interest-bearing
and noninterest bearing deposits except certificates of deposits over
$100,000. Core deposits are obtained from a broad range of customers.
Average interest-bearing core deposits increased .17% in 2001. Average
market rate core deposits, primarily CD's of less of $100,000 and money
market accounts, decreased 1.65% in 2001.
Total deposits decreased $5,391,000 or 5.95% to $85,164,000 at
December 31, 2000 from $90,555,000 at December 31, 1999. Core deposits,
the Company's largest source of funding, consist of all interest-bearing
and noninterest bearing deposits except certificates of deposits over
$100,000. Core deposits are obtained from a broad range of customers.
Average interest-bearing core deposits decreased 7.78% in 2000. Market
rate core deposits, primarily CD's of less of $100,000 and money market
accounts, decreased 15.19% in 2000.
Noninterest bearing deposits are comprised of business accounts,
including correspondent bank accounts, escrow deposits, as well as
individual accounts. Average noninterest bearing demand deposits
represented 38.94% of average core deposits in 2001 compared to 39.89% of
average core deposits in 2000.
The average amount of, and average rate paid on deposits by
category for the period shown are presented below:
TABLE 16 Selected Statistical Information
December 31,
2001 2000 1999
Average Average Average
Amount Rate Amount Rate Amount Rate
(Dollars in Thousands)
Noninterest-bearing
Deposits $33,719 N/A $34,479 N/A $34,670 N/A
Interest-bearing
Demand Deposits 17,676 1.38% 18,229 1.58% 19,873 1.67%
Savings Deposits 26,661 2.70% 25,415 2.93% 26,704 2.94%
Time Deposits 9,888 4.37% 9,763 3.91% 11,583 4.49%
Total Average Deposits
$87,944 $87,886 $92,830
The composition of average deposits for the last three years are
presented below:
TABLE 17 Deposit Composition
December 31,
2001 2000 1999
(Dollars in Thousands)
Average % Of Average % Of Average % Of
Balances Deposits Balances Deposits Balances Deposits
Demand, noninterest-
Bearing 33,719 38.34% 34,479 39.23% 34,670 37.35%
NOW accounts 13,241 15.06% 13,360 15.20% 14,091 15.18%
Money market deposit
Accounts 4,435 5.04% 4,869 5.54% 5,782 6.23%
Savings accounts 26,661 30.32% 25,415 28.92% 26,704 28.77%
Other time deposits 8,527 9.70% 8,312 9.46% 9,760 10.51%
Total core deposits 86,583 98.45% 86,435 98.35% 91,007 98.04%
Certificates of deposit of
$100,000 or more 1,361 1.55% 1,451 1.65% 1,823 1.96%
Total deposits $87,944 100.00% $87,886 100.00% $92,830 100.00%
The following table sets forth maturity distribution of Time Deposits of
$100,000 or more for the past three years:
TABLE 18 Maturity Distribution of Time Deposits $100,000 or More
December 31,
2001 2000 1999
(Dollars in Thousands)
Three months or less 680 801 633
After three months through one year 603 400 851
After one year through three years 0 0 200
Total $1,283 $1,201 $1,684
Other Assets and Other Liabilities
The following are summaries of other assets and other liabilities
for the last three years:
TABLE 19 Other Assets & Other Liabilities
December 31,
2001 2000 1999
(Dollars in Thousands)
Interest Receivable 119 64 108
Prepaid Expenses 420 358 314
Accounts Receivable 1,197 254 1,122
Cash Surrender Value 418 411 394
Other Assets 40 39 31
Total Other Assets $2,194 $1,126 $1,969
December 31,
2001 2000 1999
(Dollars in Thousands)
Accrued Expenses Payable 150 229 228
Deferred Membership Fees 46 40 53
Blanket Bond Fund 50 50 50
Other Liabilities 14 698 920
Total Other Liabilities $260 $1,017 $1,251
Borrowings
The Company's long-term debt is comprised primarily of debentures.
Each $500 debenture is secured by a pledge of 40.79 shares of the 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 and also has a commitment from an upstream
correspondent that will increase our Federal Funds line of credit over
and above the normal amount by pledging unused securities. The Bank can
borrow the amount of unpledged securities at the discount window at the
Federal Reserve Bank by pledging those securities.
Shareholders' Equity
Shareholders' equity increased $339,000 or 5.78% to $6,200,000 at
December 31, 2001 from $5,861,000 at December 31, 2000. This increase in
shareholders' equity since December 31, 2000, was attributable to
$336,000 in net income and an increase in accumulated other comprehensive
income of $4,000.
Shareholders' equity increased $392,000 or 7.17% to $5,861,000 at
December 31, 2000 from $5,469,000 at December 31, 1999. This increase in
shareholders' equity since December 31, 1999, was attributable to
$379,000 in net income and an increase in accumulated other comprehensive
income of $14,000.
The leverage ratio (Tier 1 capital to total assets) at December 31,
2001, was 8.09% compared to 7.81% at December 31, 2000, which are
compared to the minimum capital requirement of 4.00%.
The leverage ratio (Tier 1 capital to total assets) at December 31,
2000, was 7.81% compared to 6.80% at December 31, 1999, which are
compared to the minimum capital requirement of 4.00%.
At December 31, 2001, based on the Federal Reserve Board's
guidelines, the Company's Tier 1 risk based capital ratio was 12.84%, and
the risk based capital ratio was 14.11%.
At December 31, 2000, based on the Federal Reserve Board's
guidelines, the Company's Tier 1 risk based capital ratio was 12.27%, and
the risk based capital ratio was 13.54%.
The ratio of average shareholders' equity to average assets was
6.38% in 2001, 5.83% in 2000, and 4.81% in 1999.
Supervision and Regulation Enforcement Action
The Bank is currently subject to an enforcement action from its primary
regulators, the Federal Deposit Insurance Corporation (FDIC), and the
Office of Financial Institutions (OFI), in the form of a Memorandum of
Understanding. See Note X "Regulatory Matters."
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 10 Directors and Executive Officers of the Company
Principal
Occupation For
Company Stock Beneficially Owned Last Five Years
Common Preferred If Not With The
Name (Age) Position Held Number Percent Number Percent Company
G. Harrison Scott Director; 59,754 33.36% (1) 94,706 4.12% N/A
(78) Chairman of the
Board of the
Company and the Bank
James A. Comiskey Director; 35,467 19.80% (2) 94,706 4.12% N/A
(75) President of the
Company and the Bank
Douglas A. Schonacher Director of the 2,740 1.53% (3) 18,537 (*) President,
(71) Company and the Bank V.I.P. Dist.
Gordon A. Burgess Director of the 1,015 (*) 36,164 1.57% President,
(68) Company and the Bank Tangipahoa
Parish Council
Lionel J. Favret, Sr. Director of the 571 (*) 31,656 1.38% Retired
(90) Company and the Bank
Leland L. Landry Director of the 3,800 2.12% 2,387 (*) President,
(75) Company and the Bank Landry Realty
Edward J. Soniat Director of the 10,381 5.79% 257,326 11.18% President,
(89) Company and the Bank Blaise
and Secretary of the Parking
Company Enterprise
Corp.
Shannon R. Scott Director of the Bank 1,041 (*) - - Exec. Assistant
(32) Sales
Edison Choest
Offshore
Non-Director Executive Officers
Peggy L. Schaefer Treasurer of 100 (*) 2,772 (*) N/A
(50) the Company and Senior
Vice President, and Chief
Financial Officer of the Bank
All Directors & Executive Officers 114,869 64.12% 538,254 23.39%
as a group (9 persons)
(*) Represents less than 1% of the shares outstanding.
(1) Includes 2,431 common shares owned by Scott Family Limited
Liability Partnership.
(2) Includes 47 common shares and 2,661 preferred shares owned by
Director Comiskey's spouse.
(3) Includes 2,525 common shares and 9,213 preferred shares owned by
Director Schonacher's spouse.
Directors of the Company each serve for a term of one year.
Messrs. Scott, Comiskey, Favret, and Soniat have served as
directors since 1981. Messrs. Burgess, Landry, and Schonacher have
served as directors since 1988. Mr. Scott has served as Chairman of the
Board of the Company since 1981. Mr. Soniat has served in his capacity
as Secretary of the Company since 1988. Ms. Schaefer has served in her
capacity as Treasurer of the Company since 1988 and as a Bank officer
since 1983. Ms. Shannon Scott has served as director of the Bank since
January 2, 2002.
No family relationships exist among the executive officers of the
Company or the Bank. There is one family relationship that exists among
the current directors, that of Mr. G. Harrison Scott and Ms. Shannon R.
Scott. Except for service as directors of the Company, no director of
the Company is a director of any other company with a class of securities
registered pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(b) of that act or any company registered as an
investment company under the Investment Company Act of 1940.
The Company does not have standing nominating, or compensation
committees of the Board of Directors, or committees performing similar
functions. In lieu thereof, the Board of Directors as a group performs
the foregoing functions.
Item 11 Executive Compensation
The Company pays no salaries or other compensation to its directors
and executive officers. The Bank pays each director, other than Messrs.
Scott and Comiskey, an honorarium for attending each meeting of the Board
of Directors, and each meeting of the Bank's Audit and Finance Committee
and Executive Committee, in the amount of $400,
$300, and $300, respectively.
From October 1, 1990, through June 30, 1992, the director-
recipients loaned these honorariums to the Company. The total amount
loaned to the Company since October 1, 1990, and as of December 31, 2001,
was $586,728, including accrued and unpaid interest at the rate of 10%
per annum. At this time, there is no maturity date on these loans.
The following table sets forth compensation for the Bank's executive
officers for the calendar years 2001, 2000, and 1999:
Annual Compensation
Other
Annual All Other
Name and Principal Year Salary Compensation Compensation
Position ($) ($) ($)
G. Harrison Scott, 2001 89,800 41,000 19,494
Chairman of the Board 2000 89,800 41,000 19,494
1999 93,254 41,000 19,494
James A. Comiskey, 2001 89,800 41,000 19,000
President 2000 89,800 41,000 19,000
1999 93,254 41,000 19,000
In addition to the cash compensation shown in the foregoing table,
the Bank provides an automobile and certain club memberships for Messrs.
Scott and Comiskey. The Bank also provides life insurance policies for
Messrs. Scott and Comiskey. Upon the death of the insured, the Company
is entitled to receive, from the death proceeds, all of the premiums it
has paid for such policy, but in no event more than $150,000 per man,
with the remaining death benefit being paid to the named beneficiary.
The Bank has also provided Messrs. Scott and Comiskey with life insurance
policies in which each is entitled to name their own respective
beneficiaries. The cost of these benefits borne by the Bank in 2001 were
$19,494 for Mr. Scott's policy and $19,000 for Mr. Comiskey's policy as
reflected in the "All Other Compensation" column in the foregoing table.
Committees of the Board of Directors of the Company and the Bank
During fiscal year 2001, the Board of Directors of the Company held a
total of 4 meetings, and the Board of Directors of the Bank held a total
of 14 meetings. Each director attended at least 75% of the aggregate of
the meetings of the Board of Directors and of the committees on which
such director served. Neither the Board of Directors of the Company nor
the Bank has a standing compensation committee or committee performing
similar functions. In lieu thereof, the Board of Directors as a group
performs the foregoing function.
The Board of Directors of the Bank has an Audit and Finance
Committee. This committee also serves as the Audit and Finance Committee
for the Company. It is a five-member body consisting of three permanent
members and two rotating members. The permanent members are Messrs.
Favret (chairman), Landry, and Soniat. The two rotating
members are Messrs. Burgess, and Schonacher.
By its charter, this committee meets monthly on the first Tuesday of the
month. The Audit and Finance Committee reviews information from
management; reviews financial and delinquency reports; reviews the work
performed by the Bank's internal auditor and by the independent certified
public accountant firm. In addition this committee also reviews capital
expenditures in excess of $5,000; analyzes the Loan Loss Reserve
adequacy; and approves charge offs. The Audit and Finance Committee met
12 times in 2001.
The Audit and Finance Committee discloses the following:
1. They have reviewed and discussed the audited financial statements
with management, and with the independent auditors.
2. They have received a letter and written disclosure from the
independent auditors, and have discussed the independence of the
auditors.
3. They have recommended to the Board of Directors that the financial
statements prepared by the independent auditors be included in the
Annual Report.
The Bank also has an Executive Committee consisting of five permanent
members and two rotating members. The permanent members of the Executive
Committee in 2001 were Messrs. Scott (chairman), Comiskey, Favret,
Soniat, and Burgess, and the rotating members were selected from Messrs.
Landry, and Schonacher. The Executive Committee formulates policy
matters for determination by the Board of Directors and reviews
financial reports, loan reports, new business, and other real estate
owned information. The Executive Committee met 27 times in 2001.
Item 12 Security Ownership Of Certain Beneficial Owners and Management
As of December 31, 2001, the following persons were known to be the
beneficial owners of more than 5% of the Company's stock.
Name & Address Of Title Of Amount Beneficially Percent
Beneficial Owners Class Owned Of Class
G. Harrison Scott Common 59,754 (1) 33.36%
55481 Hwy.433 Preferred 94,706 4.12%
Slidell, LA 70461
James A. Comiskey Common 35,467 (2) 19.80%
1100 City Park Ave. Preferred 94,706 4.12%
New Orleans, LA 70119
Edward J. Soniat Common 10,381 5.79%
49 Oriole Street Preferred 257,326 11.18%
New Orleans, LA 70124
(1) Includes 2,431 common shares owned by Scott Family Limited
Liability Partnership.
(2) Includes 47 common shares and 2,661 preferred shares owned by
Director Comiskey's spouse.
Item 13 Certain Relationships and Related Transactions
The Bank makes loans in the ordinary course of business to its directors
and executive officers, on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and do not involve more than
the normal risk of collectability or present other unfavorable features.
The aggregate amount borrowed by all officers, directors, and their
associates totaled $501,512 at December 31, 2001 and the highest
aggregate amount borrowed during the year totaled $943,503. These
aggregate amounts represented 6.23% and 11.73% of the total capital of
the Bank, respectively.
On September 30, 1991, the Bank purchased a four-story building
located at 300 St. Charles Avenue from the RTC for a price of $402,500.
The building serves as the Bank's main office. The purchase was financed
by a loan from Mr. Soniat to the Company, which in turn sold the building
to the Bank. As of December 31, 2001, there was a balance of $54,411 in
principal and accrued but unpaid interest on the loan, which bears
interest at the rate of 13.50% per annum. The loan matured on September
30, 1996, however, Mr. Soniat agreed to renew this loan at the same
interest rate and repayment schedule, on a month-to-month basis, which
unless changed, would fully amortize such loan on September 30, 2006.
The Bank leases office space from Severn South Partnership and
Tammany Mall Partnership. The general partners of these Partnerships are
majority shareholders in BOL BANCSHARES, INC. Rent paid to Severn South
Partnership for the years ended December 31, 2001, 2000 and 1999 totaled
$478,080, $478,970, and $490,244 respectively. An annual rent of $74,400
was paid to Tammany Mall Partnership for the years ended
December 31, 2001, 2000 and 1999.
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.
Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
BOL BANCSHARES, INC.
& SUBSIDIARY
December 31, 2001
Audits of Financial Statements
December 31, 2001
and
December 31, 2000
To the Board of Directors
BOL Bancshares, Inc. & Subsidiary
Independent Auditor's Report
We have audited the accompanying consolidated balance sheets of
BOL BANCSHARES, INC. and its wholly-owned subsidiary, Bank of Louisiana,
as of December 31, 2001 and 2000, and the related consolidated
statements of income, comprehensive income, changes in stockholders'
equity, and cash flows for the years ended December 31, 2001, 2000 and
1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As described in Note B to the financial statements, during 1999,
the banks' 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 had excluded from income in the accompanying
consolidated income statement for the year ended December 31, 1999, an
amount received from litigation settlement, that in our opinion, should
have been included to conform with generally accepted accounting
principles. This settlement has been included in the consolidated
income statement for the year ended December 31, 2000. If the
settlement was accounted for properly, other liabilities would be
decreased by $201,292, deferred tax assets would be decreased by
$68,440, retained earnings would be increased by $132,852 as of December
31, 1999, and net income would be increased by $132,852 ($.75 per
share), for the year then ended. In addition, net income for the year
ended December 31, 2000, would be decreased by $132,852 ($.75 per
share).
In our opinion, except for the effects of not including the amount
received from litigation settlement, as discussed in the preceding
paragraph, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of BOL
BANCSHARES, INC. and its wholly-owned subsidiary, Bank of Louisiana, as
of December 31, 2001 and 2000, and the results of their operations and
their cash flows for the years ended December 31, 2001, 2000 and 1999,
in conformity with accounting principles generally accepted in the
United States of America.
LaPorte, Sehrt, Romig & Hand
LaPorte, Sehrt, Romig & Hand
A Professional Accounting Corporation
Metairie, LA
January 10, 2002
A Professional Accounting Corporation
110 Veterans Memorial Boulevard, Suite 200, Metairie, LA 70005-4958
(504)835-5522 FAX (504)835-5535
724 East Boston Street Covington, LA 70433(504)892-5850
FAX (504)892-5956
E-Mail Address: laporte@laporte.com Internet Address:
http://www.laporte.com/
Member of AICPA Division for CPA Firms-Private Companies Practice
Section and SEC Practice Section Affiliation with CPAmerica
International
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
2001 2000
Cash and Due from Banks
Non-Interest Bearing Balances and Cash $ 7,141,342 $4,909,060
Federal Funds Sold 16,160,000 5,905,000
Investment Securities
Securities Held-to-Maturity (Fair Value of
$15,498,334in 2001 and $2,984,427 in 2000) 15,514,924 2,981,849
Securities Available-for-Sale, at Fair Value 393,408 387,960
Loans - Less Allowance for Loan Losses of
$1,800,000 in 2001 and 2000, and
Unearned Discounts of $205,473 in 2001
and $358,437 in 2000 57,397,183 5,926,682
Property, Equipment and Leasehold Improvements (Net
of Depreciation and Amortization) 1,829,764 2,131,262
Other Real Estate - 1,074,012
Other Assets 2,194,002 1,126,435
Deferred Taxes 199,188 350,237
Letters of Credit 61,380 53,980
Total Assets $100,891,191 $4,846,477
The accompanying notes are an integral part of these financial
statements.
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
2001 2000
LIABILITIES
Deposits
Non-Interest Bearing $ 36,254,901 $34,030,683
Interest Bearing 55,357,163 51,133,401
Notes Payable 2,218,165 2,225,827
Other Liabilities 259,570 1,017,113
Letters of Credit Outstanding 61,380 53,980
Accrued Interest 539,557 524,194
Total Liabilities 94,690,736 88,985,198
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,300,871 Shares Issued and Outstanding in 2001
2,302,811 Shares Issued and Outstanding in 2000
2,300,871 2,302,811
Common Stock - Par Value $1
179,145 Shares Issued and
Outstanding in 2001 and 2000 179,145 179,145
Accumulated Other Comprehensive Income 200,512 196,917
Capital in Excess of Par - Retired Stock 16,052 14,888
Retained Earnings 3,503,875 3,167,518
Total Stockholders' Equity 6,200,455 5,861,279
Total Liabilities and Stockholders' Equity $100,891,191 $94,846,477
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended
December 31,
2001 2000 1999
INTEREST INCOME $ 8,918,085 $ 9,357,443 $9,348,210
INTEREST EXPENSE 1,605,048 1,630,450 1,846,456
Net Interest Income 7,313,037 7,726,993 7,501,754
PROVISION FOR (RECOVERY OF)
LOAN LOSSES 555,811 308,194 (154,231)
Net Interest Income After
Provision for Loan Losses 6,757,226 7,418,799 7,655,985
OTHER INCOME
Service Charges on Deposit Accounts 1,116,019 1,125,943 1,228,330
Other Non-Interest Income 2,085,321 847,275 906,224
Reversal of Litigation Settlement - 150,000 -
Total Other Income 3,201,340 2,123,218 2,134,554
OTHER EXPENSES
Salaries and Employee Benefits 4,324,160 4,327,373 4,148,212
Occupancy Expense 1,755,662 1,969,464 1,978,669
Other Non-Interest Expense 3,390,302 2,696,115 3,523,229
Total Other Expenses 9,470,124 8,992,952 9,650,110
INCOME BEFORE INCOME TAX 488,442 549,065 140,429
EXPENSE
INCOME TAX EXPENSE 152,085 170,494 46,272
NET INCOME $ 336,357 $ 378,571 $ 94,157
EARNINGS PER SHARE OF
COMMON STOCK $ 1.88 $ 2.11 $ 0.53
The accompanying notes are an integral part of these financial
statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended
December 31,
2001 2000 1999
NET INCOME $ 336,357 $ 378,571 $ 94,157
OTHER COMPREHENSIVE INCOME,
NET OF TAX:
Unrealized Holding Gains on
Investment Securities Available-for-
Sale, Arising During the Period 3,595 14,134 49,596
Less: Reclassification Adjustment for
Gains Included in Net Income - - -
OTHER COMPREHENSIVE INCOME 3,595 14,134 49,596
COMPREHENSIVE INCOME $ 339,952 $ 392,705 $143,753
The accompanying notes are an integral part of these financial
statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated Capital In
Other Excess of
Preferred Common Comprehensive Par Retained
Stock Stock Income Retired Stock Earnings Total
BALANCE -
December 31, 1998 $2,302,811 $179,145 $133,187 $14,888 $2,694,790 $5,324,821
(As Restated)
Other Comprehensive Income,
Net of Applicable Deferred
Income Taxes - - 49,596 - - 49,596
Net Income for
the Year 1999 - - - - 94,157 94,157
BALANCE -
December 31, 1999 2,302,811 179,145 182,783 14,888 2,788,947 5,468,574
Other Comprehensive Income,
Net of Applicable Deferred
Income Taxes - - 14,134 - - 14,134
Net Income for
the Year 2000 - - - - 378,571 378,571
BALANCE -
December 31, 2000 2,302,811 179,145 196,917 14,888 3,167,518 5,861,279
Preferred Stock
Retired (1,940) 1,164 (776)
Other Comprehensive Income,
Net of Applicable Deferred
Income Taxes - - 3,595 - - 3,595
Net Income for
the Year 2001 - - - - 336,357 336,357
BALANCE -
December 31, 2001 $2,300,871 $179,145 $200,512 $16,052 $3,503,875 $6,200,455
The accompanying notes are an integral part of these financial
statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Years Ended
December 31,
2001 2000 1999
OPERATING ACTIVITIES
Net Income $ 336,357 $ 378,571 $ 94,157
Adjustments to Reconcile Net Income to Net
Cash Provided by (Used in) Operating Activities:
Provision for (Recovery of) Loan Losses
555,811 308,194 (154,231)
Depreciation and Amortization Expense 362,634 510,066 540,745
Provision for Other Real Estate Losses 683,012 - -
Amortization of Investment
Security Premiums 2,879 3,546 18,220
Accretion of Investment Security Discounts
(10,359) (3,833) (2,263)
Decrease in Deferred Income Taxes 149,196 164,287 46,272
Gain on Sale of Other Real Estate (1,195,026) (13,114) (27,206)
(Increase) Decrease in Other Assets (1,077,668) 830,987 (657,181)
Increase (Decrease) in Other Liabilities, Accrued
Interest and Accrued Loss Contingency (56,154) (346,506) 126,387
Net Cash Provided by (Used in)
Operating Activities (249,318) 1,832,198 (15,100)
INVESTING ACTIVITIES
Proceeds from Held-to-Maturity
Investment Securities
Released at Maturity 7,989,032 5,917,843 4,500,000
Purchases of Held-to-Maturity
Investment Securities (20,514,627) (5,895,858) (3,021,562)
Proceeds from Sale of Property
and Equipment 621 244 410
Purchases of Property and Equipment (51,656) (89,909) (576,000)
Proceeds from Sale of Other Real Estate 900,000 244,500 168,000
Purchases of Loans (1,852,239) (418,500) (764,353)
Net (Increase) Decrease in Loans (174,073) 1,132,890 3,621,850
Net Cash Provided by (Used in)
Investing Activities (13,702,942) 891,210 3,928,345
The accompanying notes are an integral part of these financial
statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For The Years Ended
December 31,
2001 2000 1999
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing
and Interest Bearing Deposits 6,447,980 (5,391,611) (4,027,417)
Proceeds from Issuance of
Long-Term Debt - 1,753,000 -
Preferred Stock Retired (776) - -
Principal Payments on Long-Term Debt (7,662) (1,759,701) (39,859)
Net Cash Provided by (Used in)
Financing Activities 6,439,542 (5,398,312) (4,067,276)
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS (7,512,718) (2,674,904) (154,031)
CASH AND CASH EQUIVALENTS -
BEGINNING OF YEAR 30,814,060 33,488,964 33,642,995
CASH AND CASH EQUIVALENTS -
END OF YEAR $ 23,301,342 $30,814,060 $33,488,964
SUPPLEMENTAL DISCLOSURES:
Additions to Other Real Estate
through Foreclosure $ - $ 31,385 $ 62,663
Cash Paid During the Year for
Interest $ 1,589,685 $ 1,592,619 $ 1,886,062
Cash (Paid) Received During
the Year for Income Taxes $ (9,120)$ (5,000)$ -
Market Value Adjustment for Unrealized Gain
on Securities Available-for-Sale $ 5,448 $ 21,415 $ 75,145
Accounting Policies Note:
Cash Equivalents Include Amounts Due from Banks
and Federal Funds Sold. Generally, Federal Funds
are Purchased and Sold for One Day Periods.
The accompanying notes are an integral part of these financial
statements.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS OF THE COMPANY
BOL BANCSHARES, INC. was organized as a Louisiana
corporation on May 7, 1981 for the purpose of becoming a registered bank
holding company under the Bank Holding Company Act. The Company was
inactive until April 29, 1988, when it acquired Bank of Louisiana,
BOS Bancshares, Inc. and its wholly-owned subsidiary, Bank of the
South, and Fidelity Bank and Trust Company of Slidell, Inc., and its
wholly-owned subsidiary, Fidelity Land Co. in a business reorganization
of entities under common control in a manner similar to a pooling of
interest. The acquired companies are engaged in the banking industry.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, Bank of
Louisiana and its wholly-owned subsidiary, BOL Assets, LLC. In
consolidation, significant inter-company accounts, transactions, and
profits have been eliminated.
INVESTMENT SECURITIES
Debt securities that management has the ability and intent
to hold to maturity are classified as held-to-maturity and carried at
cost, adjusted for amortization of premium and accretion of
discounts using methods approximating the interest method. Other
marketable securities are classified as available-for-sale and are
carried at fair value. Realized gains and losses on securities are
included in net income. Unrealized gains and losses on securities
available-for-sale are recognized as direct increases or decreases
in stockholders' equity. Cost of securities sold is recognized
using the specific identification method.
LOANS AND UNEARNED INCOME
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 collectibility 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 that
the collectibility of the principal is unlikely. The allowance is
an amount that management believes will be adequate to absorb
possible losses on existing loans that may become uncollectible,
based on evaluation of the collectibility 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.
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 borrowers'
financial condition is such that collection of interest is doubtful.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Buildings, office equipment and leasehold improvements are
stated at cost, less accumulated depreciation and amortization
computed principally on the straight-line and modified accelerated
cost recovery methods over the estimated useful lives of the assets.
Maintenance and repairs are expensed as incurred while major
additions and improvements are capitalized. Gains and losses on
dispositions are included in current operations.
INCOME TAXES
The Company and its consolidated subsidiary file a
consolidated Federal income tax return. Federal income taxes are
allocated between the companies, in accordance with a written
agreement.
MEMBERSHIP FEES
Membership fees are collected in the anniversary month of
the cardholder and are amortized over a twelve-month period using the
straight-line method.
CASH AND DUE FROM BANKS
The Bank considers all amounts Due from Banks and Federal
Funds Sold to be cash equivalents.
The Subsidiary Bank is required to maintain non-interest
bearing reserve balances to fulfill its reserve requirements. The
average amount of the required reserve balance was approximately
$1,352,000 and $1,491,885 for the years ended December 31, 2001 and
2000, respectively.
NON-DIRECT RESPONSE ADVERTISING
The Bank expenses advertising costs as incurred.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
ACCOUNTING STANDARDS NOT YET ADOPTED
Statement of Financial Accounting Standards No. 140 (SFAS
140), "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", a replacement of SFAS 125.
This statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of
liabilities. Those standards are based on consistent application of
a financial-components approach that focuses on control. Under this
approach, after a transfer of financial assets, an entity recognizes
the financial and servicing assets it controls and the liabilities
it has incurred, derecognizes financial assets when control has been
surrendered, and derecognizes liabilities when extinguished. This
statement provides consistent standards for distinguishing transfers
of financial assets that are sales from transfers that are secured
borrowings. This statement is effective for transfers and servicing
of financial assets and extinguishments of liabilities occurring
after March 31, 2001 and for recognition and reclassification of
collateral and for disclosures relating to securitization
transactions and collateral for years ending after December 15,
2000. The adoption of this pronouncement had no effect on the
financial position and results of operations of the Company.
Statement of Financial Accounting Standards No. 144 (SFAS
144), "Accounting for the Impairment of Disposal of Long-Lived
Assets" a replacement of SFAS 121. This statement provides
accounting and reporting standards for the recognition and
measurement of the impairment of long-lived assets to be held and
used and the measurement of long-lived assets to be disposed of by
abandonment or sale. This statement requires that long-lived assets
(excluding goodwill) to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable and
requires a probability-weighted cash flow estimation approach, and
introduces a "primary-asset" approach to determine the cash flow
estimation period. In addition, this statement requires that long-
lived assets to be disposed of be reported at the lower of carrying
amount or fair value less cost to sell, and includes accounting
guidance for disposal of a segment of a business that is considered
a discontinued operation. This statement is effective for financial
statements issued for fiscal years beginning after December 15,
2001. The adoption of this pronouncement had no effect on the
financial position and results of operations of the Company.
NOTE B
RESTATEMENT OF PRIOR PERIOD
During 1999, the Banks' 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 effect of the restatement for 1998 was a decrease in
income before income tax expense of $901,282 ($5.03 per share), a
decrease in income tax expense of $306,349 ($1.71 per share), for an
overall decrease in net income of $594,933 ($3.32 per share).
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B
RESTATEMENT OF PRIOR PERIOD (Continued)
Under the cost recovery method, the bank would not recognize
the gain on the sale of this piece of other real estate or interest
income on the loan made to the purchasers, until the total payments
made by the purchaser reach certain levels. Since all scheduled
payments were made in accordance with the loan agreement, the
transaction reverted to the full accrual method on January 25, 2001,
resulting in recognition of a $686,026 gain and approximately
$145,000 in interest income.
NOTE C
OTHER REAL ESTATE
The Subsidiary Bank has acquired various parcels of real
estate in connection with the default and foreclosure on certain
loans. These properties, which are held for sale, are recorded on
the Subsidiary Bank's records at the lower of the loan balance or
net realizable value. Any difference is charged to the allowance
for loan losses in the year of foreclosure.
The net income (expense) from Other Real Estate totaled
$498,589 in 2001, ($32,309) in 2000 and ($31,640) in 1999.
NOTE D
LOANS
Major classification of loans are as follows:
December 31,
2001 2000
Real Estate Mortgages $ 34,471,841 $ 32,621,620
Commercial 3,632,151 3,094,802
Personal 3,987,432 3,916,773
Credit Cards 16,870,919 18,291,947
Overdrafts 440,313 159,977
59,402,656 58,085,119
Unearned Discounts 205,473 358,437
59,197,183 57,726,682
Allowance for Loan Losses 1,800,000 1,800,000
$ 57,397,183 $ 55,926,682
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE D
LOANS (Continued)
The following is a classification of loans by rate and
maturity: (Dollar amounts in thousands)
December 31,
2001 2000
Fixed Rate Loans:
Maturing in 3 Months or Less $ 8,377 $ 5,563
Maturing Between 3 and 12 Months 11,907 15,271
Maturing Between 1 and 5 Years 33,411 31,540
Maturing After 5 Years 1,840 2,969
55,535 55,343
Variable Rate Loans:
Maturing Quarterly or More Frequently 2,864 2,599
Maturing Between 3 and 12 Months - 94
Non-Accrual Loans 1,003 49
59,402 58,085
Less: Unearned Discount 205 358
Less: Allowance for Loan Losses 1,800 1,800
Net Loans $57,397 $55,927
As of December 31, 2001 and 2000, there was no recorded
investment in loans that are considered impaired under SFAS 114 and
118.
The Bank purchases credit card portfolios occasionally
resulting in premiums or discounts. Premiums and discounts are being
amortized as an adjustment to interest income over a three year
period following the purchase date. Unamortized premiums at
December 31, 2001 and 2000 totaled $65,799 and $93,044,
respectively.
NOTE E
NON-PERFORMING ASSETS
Non-performing assets include real estate acquired through
foreclosure or deed taken in lieu of foreclosure. These assets are
included on the accompanying consolidated balance sheets under the
account caption, "Other Real Estate", and amount to $-0- at December
31, 2001 and $1,074,012 at December 31, 2000.
Loans are placed on non-accrual status when, in management's
opinion, the collection of additional interest is questionable.
Thereafter no interest is taken into income unless received in cash
or until such time as the borrower demonstrates the ability to pay
principal and interest.
At December 31, 2001, $1,003,224 of loans were in the
non-accrual status and $26,019 of interest was foregone in the year
then ended. At December 31, 2000, $49,177 of loans were in the non-
accrual status and $4,298 of interest was foregone in the year then
ended.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE F
INVESTMENT SECURITIES
Carrying amounts and approximate market values of investment
securities are summarized as follows:
Securities held-to-maturity consisted of the following at
December 31, 2001:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Agency Securities $15,514,924 $34,708 $51,298 $15,498,334
Securities available-for-sale consisted of the following at
December 31, 2001:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Equity Securities $291,400 $102,008 $ - $393,408
Securities held-to-maturity consisted of the following at
December 31, 2000:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury Securities $2,981,849 $2,578 $ - $2,984,427
Securities available-for-sale consisted of the following at
December 31, 2000:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Equity Securities $291,400 $96,560 $ - $387,960
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE F
INVESTMENT SECURITIES (Continued)
The maturities of investment securities at December 31, 2001
are as follows:
Securities Held-to-Maturity Securities Available-for-Sale
Amortized Market Amortized Market
Cost Value Cost Value
Amounts maturing in:
One year or less $ - $ - $291,400 $393,408
After one year through
five years 15,514,924 15,498,334 - -
$ 15,514,924 $15,498,334 $291,400 $393,408
Securities of $1,011,581 at December 31, 2001 and $995,212
at December 31, 2000 were pledged to secure public funds.
NOTE G
INCOME TAXES
The components of the provision for income tax expense are:
2001 2000 1999
Current $ - $ 6,207 $ -
Deferred 152,085 164,287 46,272
Total Provision for
Income Tax $ 152,085 $ 170,494 $ 46,272
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE G
INCOME TAXES (Continued)
A reconciliation of income tax at the statutory rate to
income tax expense at the Company's effective rate is as follows:
2001 2000 1999
Computed Tax at the Expected
Statutory Rate $166,071 $186,682 $ 47,746
Other Adjustments (13,986) (16,188) (1,474)
Income Tax Expense (Benefit)
for Operations $152,085 $170,494 $ 46,272
Certain income and expense items are accounted for
differently for financial reporting purposes than for income tax
purposes. Provisions for deferred taxes are made in recognition of
these temporary differences and are measured using the income tax rates
applicable to the period when the differences are expected to be
realized or settled.
There were net deferred tax assets of $199,188 and $350,237
as of December 31, 2001 and 2000, respectively. The major temporary
differences, which created deferred tax assets and liabilities, are
as follows:
2001 2000
Deferred Tax Assets:
Other Real Estate $101,322 $ 41,752
Allowance for Loan Loss 195,757 71,921
Deferred Gain on Sale of
Other Real Estate - 306,349
Net Operating Loss and Tax
Credit Carryforward 61,265 77,183
Contributions Carryforward 3,995 21,181
Other 437 -
Total Deferred Tax Assets 362,776 518,386
Deferred Tax Liabilities:
Unrealized Gain on Securities
FASB 115 Adjustment (84,380) (81,680)
Accumulated Depreciation (79,208) (86,469)
Total Deferred Tax Liabilities (163,588) (168,149)
Deferred Tax Assets, Net of
Deferred Tax Liabilities $ 199,188 $350,237
The net operating loss carryforwards totaling $42,134 and the
tax credit carryforwards totaling $46,939 expire in the year 2019.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE H
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
December 31,
2001 2000
Furniture and Equipment $ 4,506,639 $ 4,462,555
Bank Owned Vehicles 77,357 77,357
Leasehold Improvements 411,056 404,106
Land 468,425 468,425
Buildings 1,334,075 1,334,075
6,797,552 6,746,518
Less: Accumulated Depreciation and Amortization
4,967,788 4,615,256
$ 1,829,764 $ 2,131,262
Depreciation and amortization expense aggregated $362,634 in
2001, $510,066 in 2000, and $540,745 in 1999.
NOTE I
ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses were as follows:
For The Years Ended
December 31,
2001 2000 1999
Balance - January 1 $1,800,000 $1,800,000 $1,800,000
Provision Charged to:
Operations 555,811 308,194 (154,231)
Loans Charged Off (1,077,956) (1,146,684) (1,581,595)
Recoveries 522,145 838,490 1,735,826
Balance - December 31 $1,800,000 $1,800,000 $1,800,000
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE J
STOCKHOLDERS' EQUITY
PREFERRED STOCK
8%, non-cumulative, non-participating, non-convertible, par
value $1; 3,000,000 shares authorized, 2,300,871 shares issued and
outstanding in 2001 and 2,302,811 shares issued and outstanding in
2000. Preferred stock ranks prior to common stock as to dividends
and liquidation.
COMMON STOCK
Par value $1; 1,000,000 shares authorized, 179,145 shares
issued and outstanding in 2001 and 2000.
On August 10, 1999, the Company declared a dividend
distribution of one purchase right for each outstanding share of
common stock. Each right entitles the holder, at any time following
the "Distribution Date" to purchase one share of common stock of
the Company at an exercise price of $7.50 per share. A
"Distribution Date" occurs either ten days following certain
actions designed to acquire 20% or more of the Company's voting
securities or ten days following a determination by the Board of
Directors that a person having beneficial ownership of at least 10%,
is an adverse person. The rights will expire on August 9, 2009.
NOTE K
EARNINGS PER COMMON SHARE
Earnings per share are computed using the weighted average
number of shares outstanding, which were 179,145 in 2001, 2000 and
1999. There was no provision for dividends for the years ended
December 31, 2001, 2000 or 1999.
NOTE L
CONTINGENT LIABILITIES AND COMMITMENTS
The Subsidiary Bank's financial statements do not reflect
various commitments and contingent liabilities which arise in the
normal course of business and which involve elements of credit risk,
interest rate risk and liquidity risk. These commitments and
contingent liabilities are commitments to extend credit. A summary
of the Bank's commitments and contingent liabilities are as follows:
2001 2000 1999
Credit Card Arrangements $67,828,000 $62,401,000 $52,025,000
Commitments To Extend Credit 2,941,000 1,373,000 2,017,293
Commitments to extend credit, credit card arrangements and
commercial letters of credit all include exposure to some credit
loss in the event of nonperformance of the customer. The Bank's
credit policies and procedures for credit commitments and financial
guarantees are the same as those for extension of credit that are
recorded on the statements of condition. Because these instruments
have fixed maturity dates, and because many of them expire without
being drawn upon, they do not generally present any significant
liquidity risk to the Bank.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE L
CONTINGENT LIABILITIES AND COMMITMENTS (Continued)
The Subsidiary Bank in the course of conducting its
business, becomes involved as a defendant or plaintiff in various
lawsuits. In one such case, the Subsidiary Bank is a defendant in a
lawsuit filed by another bank. Outside counsel for the Subsidiary Bank
has advised that at this stage in the proceedings he believes the
probable outcome to be favorable to Bank of Louisiana. The Subsidiary
Bank has filed a counter-claim in this case and believes the suits are
without merit and intends to defend vigorously its position.
The Subsidiary Bank is a defendant in a lawsuit filed by one
of its proprietary customers for alleged breach of contract. In
1997, a judgment was rendered against the bank, and accordingly, a
provision for loss of $150,000 was charged to operations. During
2000, the subsidiary bank was successful in its appeal, resulting in
a reversal of the $150,000 litigation settlement in the accompanying
consolidated financial statements for 2000.
NOTE M
RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Subsidiary Bank
makes loans to its directors, officers and principal holders of equity
securities. These loans are made on substantially the same terms
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. An analysis of
loans made to directors, officers and principal holders of equity
securities, including companies in which they have a significant
ownership interest, is as follows:
2001 2000
Balance - January 1 $817,717 $986,583
New Loans Made and Renewals 125,785 463,089
Repayments and Maturities (441,990) (631,955)
Balance - December 31 $501,512 $817,717
The Subsidiary Bank leases office space from Severn South
Partnership and Tammany Mall Partnership. The general partners of
these Partnerships are majority shareholders in BOL BANCSHARES, INC.
Rent paid to Severn South Partnership for the years ended December
31, 2001, 2000 and 1999 totaled $478,080, $478,970 and $490,244,
respectively. An annual rent of $74,400 was paid to Tammany Mall
Partnership for the years ended December 31, 2001, 2000 and 1999.
At December 31, 2001 and 2000 amounts due to Officers and
Directors of the Company, including accrued interest, totaled
$586,728 and $556,257, respectively. These amounts which are
included in Notes Payable and Accrued Interest Payable in the
accompanying consolidated balance sheets, are payable on demand and
bear interest at 10% per annum. Of the debentures payable at
December 31, 2001 and 2000, $190,500 and $140,500, respectively,
were to Directors of the Company (see Note R). Another note payable
to Director totaled $54,411 and $62,073 at December 31, 2001 and
2000, respectively, and is also disclosed in Note R.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE N
LEASES
The Subsidiary Bank leases office space under agreements
expiring in various years through December 31, 2006. Two of the
leases are with related parties, as discussed in Note M. In
addition, the Subsidiary Bank rents office space on a month-to-month
basis from non-related groups. Various pieces of data processing
equipment are also leased.
The total minimum rental commitment at December 31, 2001,
under the leases is $1,533,160, which is due as follows:
December 31,
2002 $ 669,295
2003 397,274
2004 206,076
2005 208,515
2006 52,000
$1,533,160
For the years ended December 31, 2001, 2000 and 1999, $811,233,
$800,947 and $792,323 was charged to rent expense, respectively.
The Subsidiary Bank is the lessor of office space under
operating leases expiring in various years through 2004.
Minimum future rentals to be received on non-cancelable
leases as of December 31, 2001 are:
December 31,
2002 $ 77,600
2003 44,868
2004 1,482
$123,950
NOTE O
LETTERS OF CREDIT
Outstanding letters of credit were $61,380 and $53,980 as of
December 31, 2001 and 2000, respectively.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE P
INTEREST BEARING DEPOSITS
Major classifications of interest bearing deposits are as
follows:
December 31,
2001 2000
NOW Accounts $12,805,353 $12,738,496
Money Market Accounts 4,933,799 5,004,015
Savings Accounts 28,004,928 24,834,795
Certificates of Deposit Greater
Than $100,000 1,282,719 1,200,954
Other Certificates of Deposit 8,330,364 7,355,141
$55,357,163 $51,133,401
The maturities of Certificates of Deposit Greater than
$100,000 at December 31, 2001 and 2000 are as follows: (Dollar
amounts in thousands)
Three Months or Less $ 680 $ 801
After Three Months Through One Year 603 400
After One Year Through Three Years - -
$1,283 $1,201
NOTE Q
FUNDS AVAILABLE FOR DIVIDENDS
The Subsidiary Bank is restricted under applicable laws and
regulatory authority in the payment of cash dividends. Such laws
generally restrict cash dividends to the extent of the Subsidiary
Bank's earnings.
The Subsidiary Bank has been further restricted by
regulatory authorities from paying dividends without prior regulatory
approval. During the year ended December 31, 2001, the Bank received
approval and paid BOL Bancshares, Inc. dividends totaling $143,000.
Refer to Note X.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE R
NOTES PAYABLE
The following is a summary of notes payable at December 31,
2001 and 2000:
December 31,
2001 2000
Notes payable to current and past Directors
of the Company, payable on demand,
interest at 10%. $ 410,754 $ 410,754
Notes payable to Director, interest at
13.5%, maturing September 30, 2006,
monthly payments of $1,298. 54,411 62,073
Debentures payable, due July 2003, interest at
9%, callable at 103%, 102% and 101% of
face value during the first, second, and third
years, respectively, following the closing date,
interest payable semi-annually, each $500
debenture secured by 40.79 shares of the
Subsidiary Bank's stock. 1,753,000 1,753,000
$2,218,165 $2,225,827
Following are maturities of long-term debt:
December 31,
2002 $ 419,517
2003 1,763,023
2004 11,463
2005 13,109
2006 11,053
Subsequent to 2006 -
$2,218,165
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE S
INTEREST INCOME AND INTEREST EXPENSE
Major categories of interest income and interest expense are as
follows:
December 31,
2001 2000 1999
INTEREST INCOME
Interest and Fees on Loans:
Real Estate Loans $ 3,020,092 $ 2,644,013 $ 2,451,875
Installment Loans 385,806 368,048 358,530
Credit Cards and Related Plans 3,638,687 3,870,716 4,382,728
Commercial and all
Other Loans 560,378 520,616 445,326
Interest on Investment Securities -
U.S. Treasury and Other
Securities 327,301 170,477 191,231
Interest on Federal Funds Sold 985,821 1,783,573 1,518,520
$ 8,918,085 $ 9,357,443 $ 9,348,210
INTEREST EXPENSE
Interest on Time Deposits
of $100,000 or More $ 54,506 $ 60,280 $ 78,057
Interest on Other Deposits 1,343,347 1,353,433 1,558,521
Interest on Other Borrowed
Funds - 7,798 -
Interest on Notes Payable 207,195 208,939 209,878
$ 1,605,048 $ 1,630,450 $ 1,846,456
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE T
NON-INTEREST INCOME AND NON-INTEREST EXPENSES
Major categories of other non-interest income and non-
interest expenses are as follows:
December 31,
2001 2000 1999
OTHER NON-INTEREST INCOME
Cardholder and Other Charge Card
Income $ 699,560 $ 639,894 $ 672,941
Data Processing and Items Processing - - 75
Other Commission and Fees 86,096 86,248 92,282
Other Real Estate Income 1,196,286 15,702 36,036
Other Income 103,379 105,431 104,890
$ 2,085,321 $ 847,275 $ 906,224
OTHER NON-INTEREST EXPENSE
Loan and Charge Card Expenses $ 992,514 $ 932,617 $1,031,232
Communications 407,758 447,126 500,349
Stationery, Forms and Supplies 226,617 238,946 317,017
Professional Fees 386,728 401,413 921,007
Insurance and Assessments 95,968 94,809 98,717
Advertising 70,673 108,496 102,935
Miscellaneous Losses 20,389 22,545 52,977
Promotional Expenses 138,872 166,005 178,902
Other Real Estate Expenses 697,696 48,010 67,677
Other Expenses 353,087 236,148 252,416
$ 3,390,302 $2,696,115 $3,523,229
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U
CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY
December 31,
2001 2000
ASSETS
Due from Banks $ 449,798 $ 384,835
Due from Subsidiary 71,781 81,892
Securities Available-for-Sale,
at Fair Value 373,408 367,960
Other Assets 29,069 39,170
Investment in Bank of Louisiana 8,045,917 7,732,911
$ 8,969,973 $ 8,606,768
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes Payable $ 2,218,165 $ 2,225,827
Deferred Taxes 34,683 32,830
Accrued Interest 448,058 418,221
Shareholders' Equity 6,269,067 5,929,890
$ 8,969,973 $ 8,606,768
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U
CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (Continued)
BOL BANCSHARES, INC.
STATEMENTS OF INCOME
December 31,
2001 2000 1999
INCOME
Dividend Income - Bank of Louisiana $ 143,000 $ - $ -
Interest Income 7,513 8,704 13,595
Miscellaneous Income 25,520 59,972 12,760
176,033 68,676 26,355
EXPENSES
Interest 207,195 208,939 209,878
Other Expenses 16,325 12,675 15,570
223,520 221,614 225,448
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARY (47,487) (152,938) (199,093)
Equity in Undistributed
Earnings of Subsidiary 313,006 465,237 222,521
INCOME BEFORE
INCOME TAX BENEFIT 265,519 312,299 23,428
INCOME TAX BENEFIT 70,839 66,272 70,728
NET INCOME $ 336,358 $ 378,571 $ 94,156
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U
CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (Continued)
BOL BANCSHARES, INC.
STATEMENTS OF CASH FLOWS
December 31,
2001 2000 1999
OPERATING ACTIVITIES
Net Income $ 336,358 $ 378,571 $ 94,156
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities
Equity in Undistributed (Earnings)
of Subsidiary (313,006) (465,237) (222,521)
Net (Increase) Decrease in Other
Assets 10,101 (19,858) 12,648
Net Increase (Decrease) in Other
Liabilities 29,837 52,427 (34,879)
Net Cash Provided by (Used in) Operating
Activities 63,290 (54,097) (150,596)
INVESTING ACTIVITIES
Investment in Available-for-Sale
Securities - - -
Net Cash Used in Investing Activities - - -
FINANCING ACTIVITIES
Preferred Stock Retired (776) - -
Decrease in Due From Subsidiary 10,111 17,744 19,102
Proceeds from Issuance of Long-Term Debt - 1,753,000 -
Repayment of Long-Term Debt (7,662) (1,759,701) (39,858)
Net Cash Provided by (Used in) Financing
Activities 1,673 11,043 (20,756)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 64,963 (43,054) (171,352)
CASH AND CASH EQUIVALENTS -
BEGINNING OF YEAR 384,835 427,889 599,241
CASH AND CASH EQUIVALENTS -
END OF YEAR $ 449,798 $ 384,835 $ 427,889
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE V
CONCENTRATIONS OF CREDIT
All of the Bank's loans, commitments, and commercial and
standby letters of credit have been granted to customers in the
Bank's market area. All such customers are depositors of the Bank.
The concentrations of credit by type of loan are set forth in Note
D. Commercial letters of credit were granted primarily to
commercial borrowers.
NOTE W
COMPREHENSIVE INCOME
Comprehensive income was comprised of changes in the
Company's unrealized holding gains or losses on securities
available-for-sale during 2001, 2000 and 1999. The following
represents the tax effects associated with the components of
comprehensive income:
December 31,
2001 2000 1999
Gross Unrealized Holding Gains
Arising During the Period $ 5,448 $ 21,415 $ 75,145
Tax (Expense) (1,853) (7,281) (25,549)
3,595 14,134 49,596
Reclassification Adjustment for
Gains Included in Net Income - - -
Tax Benefit - - -
- - -
Net Unrealized Holding Gains
Arising During the Period $ 3,595 $ 14,134 $ 49,596
NOTE X
REGULATORY MATTERS
On December 14, 1999, the Bank consented to a revised
Memorandum of Understanding issued by the Federal Deposit Insurance
Corporation (FDIC) and the Office of Financial Institutions (OFI).
The Memorandum was issued by the FDIC and OFI as a result of their
examination of the Bank as of August 9, 1999 and replaces the
Memorandum of Understanding dated March 12, 1996. The Memorandum
of Understanding is an arrangement between the Bank and the FDIC
and OFI in which the Bank agrees to perform, among other things,
the following within specified time periods:
a) The Bank shall maintain a Tier I leverage capital ratio
equal to or greater than seven percent, including
restricting dividends, pending regulatory approval,
b) Eliminate from its books certain criticized assets and
reduce other criticized assets to specified levels,
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE X
REGULATORY MATTERS (Continued)
c) Initiate and implement a marketing program to dispose
of its other real estate in a timely manner,
d) Formulate and implement a written strategic plan,
management plan, management succession plan, and profit
plan,
e) Perform a quarterly review of the adequacy of the
Bank's loan valuation reserve,
f) Revision of the Bank's loan policy and loan review
program,
g) Restatement of 1998 income for accounting for a gain
recognized on the sale of other real estate.
While no assurance can be given, Bank management believes it
has taken action toward complying with the provisions of the
Memorandum of Understanding. 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.
As of December 31, 2001, the most recent notification from
the FDIC categorized the Bank as "well capitalized" under the
regulatory framework for prompt corrective action. To be
categorized "well capitalized" the Bank must maintain minimum
leverage capital ratios and minimum amounts of capital to total
"risk weighted" assets, as set forth in the table. Management
philosophy and plans are directed to enhancing the financial
stability of the Subsidiary Bank to ensure the continuity of
operations.
The Bank's actual capital amounts and ratios are also
presented in the table. (Dollars in thousands).
December 31, 2001
Required
To Be Well
Required Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
Tier I Capital (to
Average Assets) $ 8,039 8.09% $3,973 4.00% $4,967 5.00%
Tier I Capital (to Risk-
Weighted Assets) $ 8,039 12.84% $2,504 4.00% $3,756 6.00%
Total Capital (to
Risk-Weighted
Assets) $ 8,834 14.11% $5,008 8.00% $6,260 10.00%
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE X
REGULATORY MATTERS (Continued)
December 31, 2000
Required
To Be Well
Required Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
Tier I Capital (to
Average Assets) $ 7,401 7.81% $3,790 4.00% $4,738 5.00%
Tier I Capital (to Risk-
Weighted Assets) $ 7,401 12.27% $2,413 4.00% $3,620 6.00%
Total Capital (to
Risk-Weighted
Assets) $ 8,168 13.54% $4,826 8.00% $6,033 10.00%
NOTE Y
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.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Y
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
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 are as follows:
December 31, 2001
Carrying Fair
Amount Value
Financial Assets:
Cash and Short-Term Investments $ 23,301,342 $ 23,301,342
Investment Securities 15,802,884 15,886,294
Loans 59,197,183 59,451,120
Less: Allowance for Loan Losses 1,800,000 1,800,000
$ 96,501,409 $ 96,838,756
Financial Liabilities:
Deposits $ 91,612,064 $ 91,762,104
Unrecognized Financial Instruments:
Commitments to Extend Credit $ 2,879,197 $ 2,879,197
Commercial Letters of Credit 61,380 61,380
Credit Card Arrangements 67,828,000 67,828,000
$ 70,768,577 $ 70,768,577
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Y
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
December 31, 2000
Carrying Fair
Amount Value
Financial Assets:
Cash and Short-Term Investments $ 30,814,060 $ 30,814,060
Investment Securities 3,369,809 3,372,387
Loans 57,726,682 57,245,981
Less: Allowance for Loan Losses 1,800,000 1,800,000
$ 90,110,551 $ 89,632,428
Financial Liabilities:
Deposits $ 85,164,084 $ 85,132,230
Unrecognized Financial Instruments:
Commitments to Extend Credit $ 1,319,020 $ 1,319,020
Commercial Letters of Credit 53,980 53,980
Credit Card Arrangements 62,401,000 62,401,000
$ 63,774,000 $ 63,774,000
NOTE Z
EMPLOYEE BENEFITS
Effective January 1, 2001, the Bank adopted a Section 401(k)
savings plan. The Plan covers substantially all employees who are
at least eighteen years old and have completed six months of
continuous service and have worked at least 1,000 hours. The Bank
may make discretionary contributions and is not required to match
employee contributions under the plan. The Bank made no
contributions to the plan during the year ended December 31, 2001.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE AA
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
The following sets forth condensed results of operations for
2001 and 2000 (dollar amounts in thousands, except per share data):
First Second Third Fourth
2001 Quarter Quarter Quarter Quarter
Interest Income $ 2,408 $ 2,227 $ 2,167 $ 2,116
Interest Expense 426 442 416 321
Net Interest Income 1,982 1,785 1,751 1,795
Provision for Loan Losses 97 165 84 210
Other Income 1,218 922 543 518
Other Expense 2,578 2,221 2,432 2,238
Income Tax Expense 187 104 (58) (81)
Net Income $ 338 $ 217 $ (164) $ (54)
Net Income per Common Share (1)
Basic $ 1.89 $ 1.21 $ (0.92) $ (0.30)
Dilluted $ 1.89 $ 1.21 $ (0.92) $ (0.30)
(1) Quarterly per share amounts do not add to total for the year ended due to rounding.
First Second Third Fourth
2000 Quarter Quarter Quarter Quarter
Interest Income $ 2,306 $ 2,349 $ 2,339 $ 2,363
Interest Expense 404 402 401 423
Net Interest Income 1,902 1,947 1,938 1,940
Provision for Loan Losses (80) 108 122 158
Other Income 503 474 482 664
Other Expense 2,062 2,274 2,231 2,426
Income Tax Expense 146 13 41 (30)
Net Income $ 277 $ 26 $ 26 $ 50
Net Income per Common Share (1)
Basic $ 1.55 $ 0.14 $ 0.14 $ 0.28
Dilluted $ 1.55 $ 0.14 $ 0.14 $ 0.28
(1) Quarterly per share amounts do not add to total for the year ended due to rounding.
To the Board of Directors
BOL Bancshares, Inc. & Subsidiary
Independent Auditor's Report
on Supplementary Information
Our report on our audits of the basic financial statements of BOL
BANCSHARES, INC. and its wholly-owned subsidiary, Bank of Louisiana, for
the years ended December 31, 2001 and 2000 appears on page 1. These
audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information
contained in Schedules I, II and III is presented for the purposes of
additional analysis and is not a required part of the basic financial
statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
LaPorte, Sehrt, Romig & Hand
LaPorte, Sehrt, Romig & Hand
A Professional Accounting Corporation
January 10, 2002
A Professional Accounting Corporation
110 Veterans Memorial Boulevard, Suite 200, Metairie, LA 70005-4958
(504)835-5522 FAX (504)835-5535
724 East Boston Street Covington, LA 70433(504)892-5850
FAX (504)892-5956
E-Mail Address: laporte@laporte.com Internet Address:
http://www.laporte.com/
Member of AICPA Division for CPA Firms-Private Companies Practice
Section and SEC Practice Section Affiliation with CPAmerica
International
BANK OF LOUISIANA
SUPPLEMENTARY INFORMATION
SCHEDULE I
BALANCE SHEETS
UNCONSOLIDATED
ASSETS
December 31,
2001 2000
Cash and Due from Banks
Non Interest Bearing Balances and Cash $ 7,141,342 $ 4,909,060
Federal Funds Sold 16,160,000 25,905,000
Investment Securities
Securities Held-to-Maturity (Fair Value
of $15,498,334 in 2001 and
$2,984,427 in 2000) 15,514,924 2,981,849
Securities Available-for-Sale, at Fair Value 20,000 20,000
Loans: Less Allowance for Loan Losses of
$1,800,000 in 2001 and 2000 and Unearned
Discount of $205,473 in 2001 and $358,437
in 2000 57,397,183 55,926,682
Property, Equipment and Leasehold
Improvements (Net of Depreciation and
Amortization) 1,829,764 2,131,262
Other Real Estate - 1,074,012
Other Assets 2,164,934 1,087,265
Deferred Taxes 302,483 451,679
Letters of Credit 61,380 53,980
Total Assets $100,592,010 $ 94,540,789
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Non-Interest Bearing $ 36,256,239 $ 34,036,725
Interest Bearing 55,805,624 51,512,194
Other Liabilities 330,409 1,017,114
Letters of Credit Outstanding 61,380 53,980
Due to Parent 942 81,892
Accrued Litigation Settlement - -
Accrued Interest 91,499 105,973
Total Liabilities 92,546,093 86,807,878
STOCKHOLDERS' EQUITY
Common Stock - 143,000 Shares Issued
and Outstanding 1,430,000 1,430,000
Surplus 4,616,796 4,616,796
Retained Earnings 1,999,121 1,686,115
Total Stockholders' Equity 8,045,917 7,732,911
Total Liabilities and Stockholders' Equity $100,592,010 $ 94,540,789
See independent auditor's report on supplementary information.
BANK OF LOUISIANA
SUPPLEMENTARY INFORMATION
SCHEDULE II
STATEMENTS OF INCOME
UNCONSOLIDATED
For The Years Ended
December 31,
2001 2000 1999
INTEREST INCOME $ 8,918,085 $ 9,357,443 $9,348,210
INTEREST EXPENSE 1,405,366 1,430,215 1,650,173
Net Interest Income 7,512,719 7,927,228 7,698,037
PROVISION FOR (RECOVERY OF)
LOAN LOSSES 555,811 308,194 (154,231)
Net Interest Income After Provision
For Loan Losses 6,956,908 7,619,034 7,852,268
OTHER INCOME
Service Charges on Deposit Accounts 1,116,019 1,125,943 1,228,330
Other Non-Interest Income 2,059,801 787,303 893,464
Reversal of Litigation Settlement - 150,000 -
3,175,820 2,063,246 2,121,794
OTHER EXPENSES
Salaries and Employee Benefits 4,324,160 4,327,373 4,148,212
Occupancy Expense 1,755,662 1,969,464 1,978,669
Other Non-Interest Expense 3,373,976 2,683,440 3,507,660
9,453,798 8,980,277 9,634,541
INCOME BEFORE INCOME
TAX EXPENSE 678,930 702,003 339,521
INCOME TAX EXPENSE 222,924 236,766 117,000
NET INCOME $ 456,006 $ 465,237 $ 222,521
EARNINGS PER SHARE
OF COMMON STOCK $ 3.19 $ 3.25 $ 1.56
See independent auditor's report on supplementary information.
BANK OF LOUISIANA
SUPPLEMENTARY INFORMATION
SCHEDULE III
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
UNCONSOLIDATED
Accumulated
Other
Common Comprehensive Retained
Stock Income Surplus Earnings Total
BALANCE - December 31, 1998 $1,430,000 $ - $4,616,796 $ 998,357 $7,045,153
(As Restated)
Net Income for the Year 1999 - - - 222,521 222,521
BALANCE - December 31, 1999 1,430,000 - 4,616,796 1,220,878 7,267,674
Net Income for the Year 2000 - - - 465,237 465,237
BALANCE - December 31, 2000 1,430,000 - 4,616,796 1,686,115 7,732,911
Dividends Paid - $1 Per Share - - - (143,000) (143,000)
Net Income for the Year 2001 - - - 456,006 456,006
BALANCE - December 31, 2001 $1,430,000 $ - $4,616,796 $1,999,121 $8,045,917
See independent auditor's report on supplementary information.
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.
Peggy L. Schaefer
Peggy L. Schaefer
Treasurer
March 26, 2002
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 26, 2002.
Gordon A. Burgess Edward J. Soniat
Gordon A. Burgess Edward J. Soniat
Director Director
Lionel J. Favret, Sr. G. Harrison Scott
Lionel J. Favret, Sr. G. Harrison Scott
Director Director