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 September 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 OCTOBER
31, 2006.
Transitional Small Business Disclosure Format (Check one): Yes / / No /X/
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 10
PART II. Other Information
Item 6: Exhibits and Reports on Form 8-K 10
A. Exhibits 10
B. Reports on Form 8-K 10
Signatures 11
Part I. Financial Information
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CONDITION
Sept 30, Dec. 31,
(Amounts in Thousands) 2006 2005
(Unaudited) (Audited)
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash $4,923 $9,167
Federal Funds Sold 29,150 35,865
Investment Securities
Securities Held to Maturity 16,000 19,000
Securities Available for Sale 536 618
Loans-Less Allowance for Loan Losses of
$1,800 in 2006 and $1,913 in 2005 56,124 57,269
Property, Equipment and Leasehold Improvements
(Net of Depreciation and Amortization) 2,318 2,231
Other Real Estate 954 658
Other Assets 1,239 1,146
TOTAL ASSETS $111,244 $125,954
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-Interest Bearing $49,454 $61,105
NOW Accounts 13,166 14,467
Money Market Accounts 3,620 3,516
Savings Accounts 27,644 30,906
Time Deposits, $100,000 and over 310 409
Other Time Deposits 5,492 5,013
TOTAL DEPOSITS 99,686 115,416
Notes Payable 1,544 2,145
Federal Funds Purchased 0 0
Other Liabilities 1,335 1,328
TOTAL LIABILITIES 102,565 118,889
SHAREHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,115,471 Shares Issued and Outstanding
in 2006 2,115 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 277 332
Capital in Excess of Par - Retired Stock 127 126
Undivided Profits 4,311 3,843
Current Earnings 1,670 468
TOTAL SHAREHOLDERS' EQUITY 8,679 7,065
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $111,244 $125,954
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
Sept 30, Sept 30,
(Amounts in Thousands) 2006 2005 2006 2005
INTEREST INCOME
Interest and Fees on Loans $1,694 $1,662 $5,055 $5,192
Interest on Investment Securities 137 130 403 363
Interest on Federal Funds Sold 449 39 1,411 106
Total Interest Income $2,280 1,831 6,869 5,661
INTEREST EXPENSE
Interest on Deposits 110 89 327 221
Other Interest Expense 4 10 23 30
Interest on Federal Funds Purchased - 2 - 2
Interest Expense on Notes Payable - 1 1 2
Interest Expense on Debentures 25 30 86 91
Total Interest Expense 139 132 437 346
NET INTEREST INCOME 2,141 1,699 6,432 5,315
Provision for Loan Losses 107 99 482 384
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,034 1,600 5,950 4,931
NON-INTEREST INCOME
Service Charges on Deposit Accounts 167 205 444 684
Cardholder & Other Credit Card Income 150 162 456 488
ORE Income 1 - 1 238
Other Operating Income 18 17 1,052 259
Total Non-interest Income 336 384 1,953 1,669
NON-INTEREST EXPENSE
Salaries and Employee Benefits 674 837 1,950 2,499
Occupancy Expense 287 306 900 1,027
Communications 56 37 188 156
Outsourcing Fees 322 345 1,108 1,119
Loan & Credit Card Expense 39 30 92 96
Professional Fees 65 33 178 174
ORE Expense 339 67 365 153
Other Operating Expense 173 155 591 596
Total Non-interest Expense 1,955 1,810 5,372 5,820
Income Before Tax Provision 415 174 2,531 780
Provision For Income Taxes 141 59 861 266
NET INCOME $274 $115 $1,670 $514
Earnings Per Share of Common Stock $1.53 $0.64 $9.32 $2.87
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Sept 30, Sept 30,
(Amounts in thousands) 2006 2005
NET INCOME $1,670 $514
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains (Loss) on Investment
Securities Available-for-Sale, Arising
During the Period (55) 35
COMPREHENSIVE INCOME $1,615 $549
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30
(Amounts in thousands) 2006 2005
OPERATING ACTIVITIES
Net Income 1,670 514
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Provision for Loan Losses 482 384
Depreciation and Amortization Expense 218 172
Amortization of Investment Security Premiums - -
Accretion of Investment Security Discounts - -
Decrease in Deferred Income Taxes (28) 18
Loss on Property and Equipment Disposed 53 -
(Gain) on Sale of Other Real Estate (1) (235)
Decrease (Increase) in Other Assets 312 (388)
(Decrease) Increase in Other Liabilities
and Accrued Interest (79) (215)
Net Cash Provided by Operating Activities 2,627 678
INVESTING ACTIVITIES
Proceeds from Held-to-Maturity Investment Securities
Released at Maturity 3,000 -
Purchases of Held-to-Maturity Investment Securities - -
Proceeds from Sale of Property and Equipment - 1
Purchases of Property and Equipment (359) (56)
Proceeds from Sale of Other Real Estate 380 585
Net (Increase) Decrease in Loans (276) 2,902
Net Cash Provided by Investing Activities 2,745 3,432
FINANCING ACTIVITIES
Net (Decrease) Increase in Non-Interest Bearing
and Interest Bearing Deposits (15,729) 4,768
Proceeds from Issuance of Long-Term Debt 1,400 -
Preferred Stock Retired (1) (16)
Principal Payments on Long Term Debt (2,001) (39)
Net Cash (Used in) Provided by Financing Activities
(16,331) 4,713
Net (Decrease) Increase in Cash and Cash Equivalents
(10,959) 8,824
Cash and Cash Equivalents - Beginning of Year 45,032 6,350
Cash and Cash Equivalents - End of Period $34,073 $15,173
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 767 187
Cash (Paid) Received for Income Taxes (444) (56)
Market Value Adjustment for Unrealized Gain (Loss)
on Securities Available-for-Sale (82) 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 September 30, 2006 compared to December 31, 2005 and
the results of operations for the three and nine months periods ended September
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 location. Management has renewed the
Lapalco lease and repairs are underway and the branch is scheduled to re-open
during the 4th quarter of 2006. The Oakwood branch will be reopening at an
adjacent site within the Oakwood Shopping Center and is scheduled to reopen in
the 4th quarter of 2006 or the 1st quarter of 2007. 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.
SEPTEMBER 30, 2006 COMPARED WITH DECEMBER 31, 2005
BALANCE SHEET
Total Assets at September 30, 2006 were $111,244,000 compared to
$125,954,000 at December 31, 2005 for a decrease of $14,710,000 or 11.68%.
Federal Funds Sold decreased $6,715,000 at September 30, 2006 from $35,865,000
at December 31, 2005 to $29,150,000 at September 30, 2006. Cash and due from
banks decreased $4,244,000 to $4,923,000 at September 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 $4,966,000 which was offset by an increase in
Cash of $525,000. Total loans decreased $1,145,000 or 2.00% to $56,124,000 at
September 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
$2,500,000, a decrease of $332,000 in the personal loan portfolio and a
decrease of $98,000 in the commercial loan portfolio. This was offset by an
increase in real estate loans of $1,616,000, and an increase of $56,000 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 personal
loan portfolio and the commercial loan portfolio was due mainly to normal
attrition. The increase in the real estate loan portfolio was primarily due to
the concerted effort of the bank's lenders to bring in new loans. The non-farm
non residential loans increased $2,772,000 along with an increase of $571,000
in the multifamily and construction loans. The 1-4 family category decreased
$1,727,000 due to FEMA and other monies used to pay off these loans. Other
Real Estate increased $296,000 from $658,000 at December 31, 2005 to $954,000
at September 30, 2006. This was due to one parcel repossessed for $940,000, a
write-down of the parcel for $265,000 and one sale of ORE for $380,000 in 2006.
Total deposits decreased $15,730,000 or 13.63% to $99,686,000 at
September 30, 2006 from $115,416,000 at December 31, 2005. Total non-interest
bearing deposits decreased $11,651,000 and interest-bearing accounts decreased
$4,079,000.
Shareholder's Equity increased $1,614,000 due mainly to net income at
September 30, 2006.
NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 2005
INCOME
The Company's net income for the nine months ended September 30, 2006 was
$1,670,000 or $9.32 per share, an increase of $1,156,000 from the Company's
total net income of $514,000 for the same period last year.
Interest income increased $1,208,000 for the nine months ended September
30, 2006 over the same period last year. Interest on federal funds sold
increased $1,305,000 due to an increase in the interest rate from 2.89% at
September 30, 2005 to 4.79% at September 30, 2006, and an increase of
$34,417,000 in the average balance from $4,889,000 at September 30, 2005 to
$39,306,000 at September 30, 2006. Interest on the loan portfolio decreased
$137,000. This was caused mainly by a decrease in the average balance of loans
of $3,643,000. Interest expense increased $91,000 for the nine months ended
September 30, 2006 over the same period last year. This was caused by an
increase in the interest rate on interest-bearing liabilities from .62% at
September 30, 2005 to .77% as of September 30, 2006. Net interest income
increased $1,117,000 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 7.90% at September 30, 2005 to 6.93% at September 30, 2006.
Non-interest income increased $284,000 for the nine month period from
$1,669,000 at September 30, 2005 to $1,953,000 at September 30, 2006. Other
income increased $793,000 for the nine months ended September 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 $240,000 of which $177,000 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 $1 for the nine months ended September 30,
2006.
Non-interest expense decreased $448,000 for the nine month period as
compared to the same period last year. Salaries and employee benefits
decreased $549,000. 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 $127,000. 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 $176,000 in 2006 on
these 3 branches. Depreciation expense increased $47,000 due to the 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 increased $212,000 due mainly to $265,000 write-down of
one ORE property in 2006 and a decrease of $45,000 in ORE taxes from 2005 and
the day to day upkeep of the properties in OREO.
The provision for income taxes increased $595,000 compared to the same
period last year from $266,000 at September 30, 2005 to $861,000 at September
30, 2006 due to an increase in income before taxes.
THIRD QUARTER 2006 COMPARED WITH THIRD QUARTER 2005
INCOME
Net income for the third quarter of 2006 was $274,000 compared to
$115,000 for the same period last year.
Interest income increased $449,000 over the same period last year.
Interest on the loan portfolio increased $32,000 from $1,662,000 at September
30, 2005 to $1,694,000 at September 30, 2006. This was caused mainly by an
increase in the interest rate from 11.09% for the three months ending September
30, 2005 to 11.81% for the three months ending September 30, 2006, which was
partially offset by a decrease of $2,580,000 in the average outstanding loans
from $59,971,000 at September 30, 2005 to $57,391,000 at September 30, 2006.
Interest on federal funds sold increased $410,000 due to an increase in the
interest rate from 3.22% at September 30, 2005 to 5.27% at September 30, 2006,
and an increase of $29,201,000 in the average balance from $4,851,000 at
September 30, 2005 to $34,052,000 at September 30, 2006. Interest expense
increased $7,000 for the three months ended September 30, 2006 over the same
period last year. This was caused by an increase in the interest rate on
interest-bearing liabilities from .76% at September 30, 2005 to .83% as of
September 30, 2006. Net interest income increased $442,000 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 7.60% at September 30,
2005 to 7.43% at September 30, 2006.
Non-interest income decreased $48,000 for the three-month period as
compared to the same period last year. This decrease was due mainly to deposit
related fees of $38,000 of which $29,000 was due to a decrease in fees
collected on overdrawn accounts and a $12,000 decrease in cardholder & other
credit card income.
Non-interest expense increased $145,000 for the three-month period as
compared to the same period last year. Salaries and employee benefits decreased
$163,000. 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. ORE expenses increased
$272,000 due mainly to $265,000 write-down of one ORE property, the payment of
$50,000 of tax liens on another ORE property in the third quarter of 2006 and a
decrease of $40,000 in ORE taxes from 2005. Professional fees increased
$32,000 due to increases in audits and exams $7,000, legal fees $17,000 and
director fees $10,000 over the same period last year.
The provision for income taxes increased $82,000 compared to the same
period last year from $59,000 at September 30, 2005 to $141,000 at September
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 September 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
reporting for the quarter ended September 30, 2006 that have materially
affected, or are reasonably likely to materially affect, such controls.
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
BOL 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
November 16, 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)