UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2006
/ / TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
Commission file Number 00-16934
BOL BANCSHARES, INC.
(Exact name of small business issuer 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
(Issuer?s telephone number)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 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 / /
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: 179,145 SHARES AS OF JULY
30, 2006.
Transitional Small Business Disclosure Format (Check one): Yes / / No /X/
1
BOL BANCSHARES, INC. & SUBSIDIARY
INDEX
Page
No.
PART I. Financial Information
Item 1: Financial Statements
Consolidated Statements of Condition 3
Consolidated Statements of Income 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flow 6
Item 2: Management's Discussion and Analysis 7
Item 3: Controls and Procedures 9
PART II. Other Information
Item 4: Submission of Matters to a Vote of Security Holders 10
Item 6: Exhibits and Reports on Form 8-K 10
A. Exhibits 10
B. Reports on Form 8-K 10
Signatures 11
2
Part I. Financial Information
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CONDITION
June 30 Dec. 31,
(Amounts in Thousands) 2006 2005
(Unaudited) (Audited)
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash $5,527 $9,167
Federal Funds Sold 38,825 35,865
Investment Securities
Securities Held to Maturity 19,000 19,000
Securities Available for Sale 618 618
Loans-Less Allowance for Loan Losses of $1,800
in 2006 and $1,913 in 2005 53,654 57,269
Property, Equipment and Leasehold Improvements
(Net of Depreciation and Amortization) 2,262 2,231
Other Real Estate 1,598 658
Other Assets 1,267 1,146
TOTAL ASSETS $122,751 $125,954
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-Interest Bearing $54,725 $61,105
NOW Accounts 15,350 14,467
Money Market Accounts 3,500 3,516
Savings Accounts 30,881 30,906
Time Deposits, $100,000 and over 310 409
Other Time Deposits 5,400 5,013
TOTAL DEPOSITS 110,166 115,416
Notes Payable 2,134 2,145
Federal Funds Purchased 0 0
Other Liabilities 1,990 1,328
TOTAL LIABILITIES 114,290 118,889
SHAREHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,116,413 Shares Issued and Outstanding in 2006 2,116 2,117
2,117,244 Shares Issued and Outstanding in 2005
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding 179 179
Accumulated Other Comprehensive Income 332 332
Capital in Excess of Par - Retired Stock 127 126
Undivided Profits 4,311 3,843
Current Earnings 1,396 468
TOTAL SHAREHOLDERS' EQUITY 8,461 7,065
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $122,751 $125,954
3
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Six months ended
June 30 June 30
(Amounts in Thousands) 2006 2005 2006 2005
INTEREST INCOME
Interest and Fees on Loans $1,666 $1,765 $3,361 $3,530
Interest on Investment Securities 136 118 266 233
Interest on Federal Funds Sold 514 50 962 67
Total Interest Income 2,316 1,933 4,589 3,830
INTEREST EXPENSE
Interest on Deposits 107 70 217 132
Other Interest Expense 10 10 19 20
Interest Expense on Notes Payable 1 - 1 1
Interest Expense on Debentures 31 31 61 61
Total Interest Expense 149 111 298 214
NET INTEREST INCOME 2,167 1,822 4,291 3,616
Provision for Loan Losses 299 116 375 285
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,868 1,706 3,916 3,331
NON-INTEREST INCOME
Service Charges on Deposit Accounts 141 243 277 479
Cardholder & Other Credit Card Income 154 168 306 326
ORE Income - - - 238
Other Operating Income 993 30 1,034 242
Total Non-interest Income 1,288 441 1,617 1,285
NON-INTEREST EXPENSE
Salaries and Employee Benefits 680 867 1,276 1,662
Occupancy Expense 312 370 613 721
Communications 67 64 132 119
Outsourcing Fees 396 395 786 774
Loan & Credit Card Expense 36 34 53 66
Professional Fees 57 68 113 141
ORE Expense 22 17 26 86
Other Operating Expense 189 229 418 441
Total Non-interest Expense 1,759 2,044 3,417 4,010
Income Before Tax Provision 1,397 103 2,116 606
Provision For Income Taxes 475 36 720 207
NET INCOME $922 $67 $1,396 $399
Earnings Per Share of Common Stock $5.15 $0.37 $7.79 $2.23
4
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
June 30 June 30
(Amounts in thousands) 2006 2005
NET INCOME $1,396 $399
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains on Investment
Securities Available-for-Sale, Arising
During the Period - 35
COMPREHENSIVE INCOME $1,396 $434
5
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30
(Amounts in thousands) 2006 2005
OPERATING ACTIVITIES
Net Income 1,396 399
Adjustments to Reconcile Net Income to Net
Cash Provided by (Used in) Operating Activities:
Provision for Loan Losses 375 285
Depreciation and Amortization Expense 144 109
Amortization of Investment Security Premiums - -
Accretion of Investment Security Discounts - -
Decrease in Deferred Income Taxes (0) 18
Loss on Property and Equipment Disposed 53 -
(Gain) on Sale of Other Real Estate - (235)
(Increase) in Other Assets (120) (34)
Increase (Decrease) in Other Liabilities
and Accrued Interest 660 (148)
Net Cash Provided by Operating Activities 2,508 394
INVESTING ACTIVITIES
Proceeds from Held-to-Maturity Investment Securities
Released at Maturity - -
Purchases of Held-to-Maturity Investment Securities - -
Proceeds from Sale of Property and Equipment - 1
Purchases of Property and Equipment (228) (49)
Proceeds from Sale of Other Real Estate - 585
Net Decrease in Loans 2,300 3,487
Net Cash Provided by Investing Activities 2,072 4,024
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing
and Interest Bearing Deposits (5,249) 1,589
Proceeds from Issuance of Long-Term Debt - -
Preferred Stock Retired (0) (16)
Principal Payments on Long Term Debt (11) (6)
Net Cash Provided by (Used in) Financing Activities (5,260) 1,567
Net Increase (Decrease)in Cash and Cash Equivalents (680) 5,985
Cash and Cash Equivalents - Beginning of Year 45,032 6,350
Cash and Cash Equivalents - End of Period $44,352 $12,335
6
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
SUPPLEMENTAL DISCLOSURES: 2006 2005
Additions to Other Real Estate through Foreclosure 940 279
Cash Paid for Interest 280 187
Cash (Paid) Received for Income Taxes - (56)
Market Value Adjustment for Unrealized Gain on
Securities Available-for-Sale - 52
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.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis is intended to provide a better
understanding of the consolidated financial condition of BOL Bancshares, Inc.
and its bank subsidiary at June 30, 2006 compared to December 31, 2005 and
the results of operations for the three and six months periods ended June 30,
2006 with the same periods in 2005. This discussion and analysis should be
read in conjunction with the interim consolidated financial statements and
footnotes included herein.
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.
Internal Control and Assessment Disclosure
Hurricane Katrina Disclosure
Management expects insurance proceeds for storm damages caused by Hurricane
Katrina to cover the majority of damages sustained to the Bank?s branches.
The branch locations that the bank owned directly or indirectly, St. Charles,
Severn, Gause and Tammany, are open and operating, however, branch locations,
wherein the Bank leased the premises, Carrolton, Lapalco, and Oakwood, are
still closed with the exception of the drive-thru facility at the Oakwood
location. Management is diligently reviewing new sites to purchase or lease
in an effort to replace the Carrollton and Oakwood locations, and will re-
open the Lapalco branch during the 3rd or 4th quarter of 2006. The Company?s
management team and employees have and are continuing to work diligently to
control operating expenses and costs while restoring normal business
operations.
JUNE 30, 2006 COMPARED WITH DECEMBER 31, 2005
BALANCE SHEET
Total Assets at June 30, 2006 were $122,751,000 compared to
$125,954,000 at December 31, 2005 for a decrease of $3,203,000 or 2.54%.
Federal Funds Sold increased $2,960,000 at June 30, 2006 from $35,865,000 at
December 31, 2005 to $38,825,000 at June 30, 2006. Cash and due from banks
decreased $3,640,000 to $5,527,000 at June 30, 2006 from $9,167,000 at
December 31, 2005. This was mainly attributable to a decrease in the Bank?s
Federal Reserve Bank account of $4,374,000 which was offset by an increase in
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Cash of $660,000. Total loans decreased $3,615,000 or 6.31% to $53,654,000
at June 30, 2006 from $57,269,000 at December 31, 2005. This decrease in the
loan portfolio is due mainly to a decrease in the credit card portfolio of
$2,109,000, a decrease in real estate loans of $1,540,000, and a decrease of
$628,000 in the personal loan portfolio. This was offset by an increase of
$29,000 in the commercial loan portfolio, and an increase of $628,000 in
overdrafts. The credit card portfolio decrease was largely attributable to
(i) competition from other banks and non-traditional credit card issuers;
(ii) tightening of the Bank?s underwriting standards; and (iii) normal
attrition, in addition to the cyclical nature of the business. The
decrease in the real estate loan portfolio was primarily due to interim
construction loans that matured. When a construction loan matures, it is
taken by a permanent lender. The decrease in the personal loan portfolio
was due mainly to normal attrition. Other Real Estate increased $940,000
from $658,000 at December 31, 2005 to $1,598,000 at June 30, 2006. This was
due to one parcel repossessed in the second quarter of 2006.
Total deposits decreased $5,250,000 or 4.55% to $110,166,000 at June
30, 2006 from $115,416,000 at December 31, 2005. Total non-interest bearing
deposits decreased $6,380,000 and interest-bearing accounts increased
$1,130,000.
Shareholder?s Equity increased $1,396,000 due to net income at June 30,
2006.
SIX MONTHS ENDED JUNE 30, 2006 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2005
INCOME
The Company?s net income for the six months ended June 30, 2006 was
$1,396,000 or $7.79 per share, an increase of $997,000 from the Company?s
total net income of $399,000 for the same period last year.
Interest income increased $759,000 for the six months ended June 30,
2006 over the same period last year. Interest on federal funds sold increased
$895,000 due to an increase in the interest rate from 2.73% at June 30, 2005
to 4.58% at June 30, 2006, and an increase of $37,069,000 in the average
balance from $4,908,000 at June 30, 2005 to $41,977,000 at June 30, 2006.
Interest on the loan portfolio decreased $169,000. This was caused mainly by
a decrease in the average balance of loans of $4,183,000. Interest expense
increased $84,000 for the six months ended June 30, 2006 over the same period
last year. This was caused by an increase in the interest rate on interest-
bearing liabilities from .86% at June 30, 2005 to .99% as of June 30, 2006.
Net interest income increased $675,000 due to the additional monies the Bank
was able to invest in Federal Funds. However this produced a lower rate
spread as opposed to if the Bank invested in higher yielding loans. The
interest rate spreads declined from 8.11% at June 30, 2005 to 6.76% at June
30, 2006.
Non-interest income increased $332,000 for the six month period from
$1,285,000 at June 30, 2005 to $1,617,000 at June 30, 2006. Other income
increased $792,000 for the six months ended June 30, 2006. This increase was
due mainly to $600,000 in insurance proceeds received on an OREO property in
2006 that the Bank had no plans to repair. The Bank had a purchase offer and
the property was sold in July, 2006. In addition, $369,000 in insurance
proceeds was received as reimbursement of expenses incurred and the excess of
disposal of fixed assets due to Hurricane Katrina. This was offset by a
decrease in deposit related fees of $202,000 of which $148,000 was due to a
decrease in fees collected on overdrawn accounts. In 2005 the Bank
recognized $141,000 as beneficiary of two insurance policies on the life of
the Bank?s president, Mr. James Comiskey, who passed on in February 2005.
During the first quarter of 2005 there was a gain of $235,000 from the sale
of an ORE property as compared to a gain of $0 for the six months ended June
30, 2006.
Non-interest expense decreased $593,000 for the six month period as
compared to the same period last year. Salaries and employee benefits
decreased $386,000. This decrease is directly attributable to the Bank
outsourcing its credit card operations and the Bank?s core processing,
thereby reducing staff, and also staff not returning after Hurricane Katrina.
Occupancy expense decreased $108,000. This is mainly due to 2 branch offices
that were not able to reopen and one branch office that only the drive-in
facility was operating. The rental expense was reduced by $135,000 in 2006
on these 3 branches. Depreciation expense increased $33,000 due to the
8
purchase of equipment necessary to outsource the Bank?s core processing, in
addition to the replacement of equipment, furniture and fixtures destroyed by
Hurricane Katrina. ORE expenses decreased $60,000 due mainly to expenses
incurred from the sale of the aforementioned ORE property and the day to day
upkeep of the properties in OREO in 2005.
The provision for income taxes increased $513,000 compared to the same
period last year from $207,000 at June 30, 2005 to $720,000 at June 30, 2006
due to an increase in income before taxes.
SECOND QUARTER 2006 COMPARED WITH SECOND QUARTER 2005
INCOME
Net income for the second quarter of 2006 was $922,000 compared to
$67,000 for the same period last year.
Interest income increased $383,000 over the same period last year.
Interest on the loan portfolio decreased $99,000 from $1,765,000 at June 30,
2005 to $1,666,000 at June 30, 2006. This was caused mainly by a decrease of
$3,450,000 in the average outstanding loans from $60,441,000 at June 30, 2005
to $56,991,000 at June 30, 2006. Interest on federal funds sold increased
$464,000 due to an increase in the interest rate from 2.85% at June 30, 2005
to 4.84% at June 30, 2006, and an increase of $35,432,000 in the average
balance from $7,024,000 at June 30, 2005 to $42,456,000 at June 30, 2006.
Interest expense increased $38,000 for the three months ended June 30,
2006 over the same period last year. This was caused by an increase in the
interest rate on interest-bearing liabilities from .89% at June 30, 2005 to
1.00% as of June 30, 2006. Net interest income increased $345,000 due to the
additional monies the Bank was able to invest in Federal Funds. However this
produced a lower rate spread as opposed to if the Bank invested in higher
yielding loans. The interest rate spreads declined from 8.05% at June 30,
2005 to 6.82% at June 30, 2006.
Non-interest income increased $847,000 for the three-month period as
compared to the same period last year. This increase was due mainly to
$600,000 in insurance proceeds received on an OREO property and $369,000 in
insurance proceeds as reimbursement of expenses incurred and the disposal of
fixed assets due to Hurricane Katrina in 2006. This was offset by a decrease
in deposit related fees of $102,000 of which $73,000 was due to a decrease in
fees collected on overdrawn accounts.
Non-interest expense decreased $285,000 for the three-month period as
compared to the same period last year. Salaries and employee benefits
decreased $187,000. This decrease is directly attributable to the Bank
outsourcing its credit card operations and the Bank?s core processing,
thereby reducing staff, and also staff not returning after Hurricane Katrina.
Occupancy expense decreased $58,000. This is mainly due to 2 branch offices
that were not able to reopen and one branch office that only the drive-in
facility was operating. The rental expense was reduced by $67,000 on these 3
branches in 2006. Depreciation expense increased $17,000 and software
expense increased $18,000 due to the purchase of equipment and the software
necessary to outsource the Bank?s core processing, in addition to the
replacement of equipment, furniture and fixtures destroyed by Hurricane
Katrina.
The provision for income taxes increased $430,000 compared to the same
period last year from $36,000 at June 30, 2005 to $475,000 at June 30, 2006
due to an increase in income before taxes.
Item 3 Controls and Procedures
The certifying officers of the Company have evaluated the effectiveness
of the Company?s disclosure controls and procedures. They have concluded
after evaluating the effectiveness of the Company?s disclosure controls and
procedures as of June 30, 2006, that as of such date, the Company?s
disclosure controls and procedures were effective and designed to ensure that
material information relating to the Company would be made known to them by
others.
There were no changes in the Company?s internal controls over financial
9
reporting for the quarter ended June 30, 2006 that have materially affected,
or are reasonably likely to materially affect, such controls.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Meeting of Shareholders of BOL BANCSHARES, INC. was held on
April 11, 2006. Six nominees were elected to serve one year terms as
directors. Laporte, Sehrt, Romig and Hand was approved as the independent
auditors. There were no other matters voted upon at the meeting.
Below are the names of the nominees who were elected as directors and
the number of shares cast for each. The total shares voting were 111,987.
Number of Shares
Nominee For Against Abstain
G. Harrison Scott 111,251 485 251
Franck F. LaBiche 111,251 485 251
Henry L. Klein 110,236 1,500 251
Johnny C. Crow 111,201 535 251
Sharry R. Scott 111,251 485 251
Louise C. Bryan 111,251 485 251
At the Executive Committee Meeting of May 16, 2006, Mrs. Louise Bryan
resigned due to personal reasons.
Item 6 Exhibits and Reports on Form 8-K
A. Exhibits
31.1 Section 302 Principal Executive Officer Certification
31.2 Section 302 Principal Financial Officer Certification
32.1 Section 1350 Certification
32.2 Section 1350 Certification
B. Reports on Form 8-K
None
10
BANCSHARES, INC.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BOL BANCSHARES, INC.
(Registrant)
/s/ G. Harrison Scott
August 10, 2006 G. Harrison Scott
Date Chairman
(in his capacity as a duly authorized
officer of the Registrant)
/s/ Peggy L. Schaefer
Peggy L. Schaefer
Treasurer
(in her capacity as Chief Accounting
Officer of the Registrant)
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