UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1996
Commission file Number 01-16934
BOL BANCSHARES, INC.
(Exact name of registrant as specified in its charter.)
Louisiana 72-1121561
(State of incorporation) (I. R. S. Employee
Identification No.)
300 St. Charles Avenue, New Orleans, La. 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(504) 889-9400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date:
Common Stock, $1 Par Value - 179,145 shares as of Sept 30, 1996.
<PAGE>
BOL BANCSHARES, INC. & SUBSIDIARY
INDEX
Page No.
PART 1. Financial Information
Item 1: Financial Statements
Consolidated Statement of Condition 3
Consolidated Statements of Income 4
Consolidated Statements of Changes in
Stockholder's Equity 5
Consolidated Statement of Cash Flow 6
Notes to Consolidated Financial Statements 7
Item 1: Management's Discussion and Analysis of
Financial Condition and Results of
Operation 11
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule 22
B. Reports on Form 8-K
No reports have been filed on Form 8-K
during this quarter.
<PAGE>
<TABLE>
Part I. - Financial Information
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION
(Unaudited)
(Amounts in thousands)
<CAPTION>
Sept 1996 December 1995 Sept 1995
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks
Non-Interest Bearing
Balances and Cash $ 6,901 $ 6,742 $ 6,405
Interest Bearing Balances 0 0 100
Investment Securities
Securities Held to Maturity
(Fair Values at 9/30/96,
12/31/96, and 9/30/95,
respectively were
$7,975,976, $10,015,625,
and $9,993,437) 7,968 10,014 10,021
Securities Available
for Sale 1,077 1,122 1,119
Federal Funds Sold 11,450 10,725 11,075
Loans, net of unearned income 72,280 74,943 73,674
Reserve for possible loan loss (1,500) (1,500) (958)
Property, Equipment, and Lease-
hold Improvements (Net of
Depreciation & Amortization) 2,756 2,575 2,508
Other Real Estate 1,699 1,994 2,446
Deferred Taxes 371 0 8
Investment in Subsidiary 0 0 0
Other Assets 2,031 1,974 1,518
TOTAL ASSETS $ 105,033 $108,589 $107,916
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C> <C>
Deposits:
Non-Interest Bearing 33,982 35,822 32,412
Interest Bearing 59,857 61,564 63,580
TOTAL DEPOSITS 93,839 97,386 95,992
Deferred Taxes 0 0 0
Notes Payable 496 499 500
Senior Secured Debentures 1,890 1,890 1,890
Accrued Litigation Settlement 390 390 390
Other Liabilities 1,071 1,056 1,208
TOTAL LIABILITIES $ 97,686 $101,221 $ 99,980
STOCKHOLDER'S EQUITY
Common Stock-Par Value $1,
Authorized-1,000,000,000 shares;
issued 179,145, 179,145, &
179,145 at 9/30/96, 12/31/95, &
9/30/95 179 179 179
Preferred Stock-Par Value
$1, Authorized 3,000,000,000
shares; issued 2,302,811,
2,302,811 & 2,302,811 at
9/30/96, 12/31/95, & 9/30/95 2,303 2,303 2,303
Undivided Profits 4,852 4,708 4,708
Capital in Excess of Par-
Retired Stock 15 15 15
Unrealized Gain on Securities
Available for Sale, net of
applicable Deferred Income
Taxes (8) 18 20
Current Earnings 6 145 711
TOTAL STOCKHOLDERS' EQUITY 7,347 7,368 7,936
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 105,033 $ 108,589 $107,916
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
Three months ended Nine months ended
Sept 30 Sept 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $2,848 $2,540 $8,567 $7,410
Interest on time deposits 0 2 0 4
Interest on security-HTM 113 149 347 526
Interest & dividends on
security-AFS 13 18 42 50
Interest on federal funds sold 130 205 389 394
Other Interest Income 0 1 0 1
TOTAL INTEREST INCOME 3,104 , 2,915 9,345 8,385
INTEREST EXPENSE
Interest on deposits 485 580 1,477 1,593
Interest on federal funds
purchased 0 0 0 0
Other interest expense 1 1 5 3
Interest expense on notes
payable 14 13 40 40
Interest expense on debentures 42 43 128 128
TOTAL INTEREST EXPENSE 542 637 1,650 1,764
NET INTEREST INCOME 2,562 2,278 7,695 6,621
Provision for loan losses 627 288 1,459 619
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,935 1,990 6,236 6,002
OTHER INCOME
Service charge on deposit accts 353 368 1,079 1,096
Cardholder & other credit cd
income 162 158 498 518
ORE income 5 36 24 120
Other operating income 56 65 202 246
Equity in earnings of
unconsolidated subsidiary 0 0 0 (35)
Gain on sale of securities 0 0 0 0
TOTAL OTHER INCOME 576 627 1,803 1,945
OTHER EXPENSE
Salaries and employee benefits 1,065 951 3,131 2,833
Occupancy expense 503 437 1,372 1,272
Loan & credit card expense 298 198 893 620
ORE expense 59 38 194 145
Other operating expense 909 602 2,362 1,845
TOTAL OTHER EXPENSES 2,834 2,226 7,952 6,715
Income Before Tax Provision (323) 391 87 1,232
Provision for taxes (104) 168 81 521
NET INCOME $ (219) $ 223 $ 6 $ 711
Earnings Per Share of Common
Stock ($1.22) $1.25 $0.03 $3.97
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
(Amounts in thousands)
<CAPTION>
UNREALIZED
GAIN ON CAPITAL IN
INVESTMENT EXCESS OF
SECURITIES PAR RETIRED
COMMON PREFERRED AVAILABLE UNDIVIDED RETIRED
STOCK STOCK FOR SALE PROFITS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCE 12/31/95 $179 $2,303 $19 $4,852 $15 $7,368
Cancellation
of Stock 0
Capital in
Excess of Par
Retired 0
Change in
unrealized
gain on
securities AFS (27) (27)
Net Income 6 6
Balance 09/30/96 $179 $2,303 $(8) $4,858 $15 $7,347
BALANCE 12/31/94 $179 $2,309 $52 $4,708 $9 $7,257
Cancellation
of stock (6) (6)
Capital in
Excess of Par
Retired 6 6
Change in
unrealized
gain on
securities AFS (32) (32)
Net Income 711 711
Balance 9/30/95 $179 $2,303 $20 $5,419 $15 $7,936
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
STATEMENTS OF CASH FLOWS(1)
FOR THE NINE MONTHS ENDED SEPT 30, 1996 AND 1995
(Unaudited)
(Amounts in thousands)
<CAPTION>
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 6 $ 711
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
(Used in) Operating Activities:
Provision for Loan Losses 1,459 619
Depreciation & Amortization Expense 261 141
Amortization of Investment Security
Premiums (42) 20
Accretion of Investment Security
Discounts 2 (35)
(Decrease)Increase in Deferred
Income Taxes (374) (53)
(Gain) Loss on Sale of Property &
Equipment 2 (22)
(Gain) Loss on Sale of Other Real
Estate 3 (80)
Decrease (Increase) in Other Assets
and Prepaid Taxes (237) 1,689
(Decrease) Increase in Other
Liabilities & Accrued Interest (310) 58
Net Decrease (Increase) in Mortgage
Loans Held for Resale 159 (0)
Undistributed Equity Method Income 0 34
Gain on Sale of AFS Securities 0 0
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 929 3,082
INVESTING ACTIVITIES
Proceeds from Sale of AFS Securities 7 0
Proceeds from AFS Securities
Released at Maturity 978 0
Purchases of AFS Securities (1,000) (984)
Proceeds from HTM Investment
Securities Released at Maturity 7,558 5,000
Purchases of HTM Investment Security (5,453) 0
Proceeds from Sale of Property &
Equipment 3 28
Purchases of Property & Equipment (449) (780)
Proceeds from Sale of Other Real
Estate 293 405
Purchases of Other Real Estate (3) 0
Net Decrease (Increase) in Loans 1,612 (6,466)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 3,546 (2,797)
FINANCING ACTIVITIES
Net Increase (Decrease) in Demand
Deposits, Interest Bearing Deposits
Savings Accounts, & CD's (3,532) 4,229
Proceeds from Issuance of Long-Term Debt 0 0
Retirement of Stock 0 (6)
Dividends Paid 0 0
Principal Payments on Long Term Debt (3) (32)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (3,535) 4,191
Net Increase (Decrease) in Cash &
Cash Equivalents 940 4,476
Cash & Cash Equivalents at Beginning
of Year 17,411 13,104
CASH & CASH EQUIVALENTS AT END
OF PERIOD $ 18,351 $ 17,580
<FN>
(1) Prior periods have been conformed to current-period presentation.
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sept 30, 1996
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended Sept 30,
1996, are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996. For further information, refer to the
audited consolidated financial statements and notes included in the
Registrant's annual report on Form 10-K for the year ended December 31, 1995.
Note 2. PER SHARE DATA
Income per common share data are based on the weighted average number of
share outstanding of 179,145 and 179,145 at Sept 30, 1996 and 1995
respectively.
<PAGE>
Note 3. CONTINGENCIES
The Subsidiary Bank in the course of conducting its business, becomes
involved as a defendant or plaintiff in various lawsuits.
A) The Subsidiary Bank was a defendant in a lawsuit filed by a party
owning land that other real estate is built on, for back lease payments.
In a prior lawsuit, the appellate court held that the rights of the
landowner were subordinated to those of the Bank. Notwithstanding this prior
decree, the plaintiffs instituted a new proceeding for bank due rental and
judgement in the amount of $390,00 was rendered against the Subsidiary Bank
for which a separate contingency account was set up. The Subsidiary Bank has
appealed. The appellate court sustained the judgment of the district court
and the Subsidiary Bank appealed for a writ of review to the Louisiana
Supreme Court. The writ was granted.
EXPECTED RESULTS
Since the writ was granted, we believe the Subsidiary Bank has a better
than average opportunity to reverse the above judgement.
B) The Subsidiary Bank was a defendant in a lawsuit filed by a
proprietary merchant for breach of contract in that the Subsidiary Bank did
not diligently handle its accounts receivables. A hearing was held on July
10, 1996, at which time numerous exceptions were filed by the Subsidiary
Bank.
EXPECTED RESULTS
The Subsidiary Bank feels that the chances of defeating this claim are
better than average.
Note 4. IMPAIRED LOANS
The Financial Accounting Standards Board (FASB) issued SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan" in May, 1993. In October,
1994, the FASB issued SFAS No. 118, "Accounting by Creditors for Impairment
of a Loan-Income Recognition and Disclosures" which amends SFAS No. 114.
These standards require the measurement of certain impaired loans based on
the present value of expected future cash flows discounted at the loan's
effective interest rates. Adoption of SFAS Nos. 114 and 118 is required for
fiscal years beginning after December 15, 1994. The Bank adopted these
statements beginning January 1, 1995; the adoption had no material impact on
the Company's consolidated financial statements.
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 collect 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 than the recorded investment
in the loan, including accrued interest, net deferred loan fees or costs, and
unamortized premium or discount, the Bank recognized 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 Sept 30, 1996, the Bank did not have any impaired loans.
<PAGE>
Note 5. WATCH LIST
The Bank's watch list includes loans which, for management purposes,
have been identified as requiring a higher level of monitoring due to risk.
The Bank's watch list includes both performing and nonperforming loans. The
majority of watch list loans are classified as performing, because they do
not have characteristics resulting in uncertainty about the borrower's
ability to repay principal and interest in accordance with the original terms
of the loans.
The watch list consists of classifications, identified as Type 1 through
Type 4. Types 1, 2 and 3 generally parallel the regulatory classifications
of loss, doubtful and substandard, respectively. Type 4 generally parallels
the regulatory classification of Other Assets Especially Mentioned (OAEM).
These loans require monitoring due to conditions which, if not corrected,
could increase credit risk. Total watch list loans increased 115.25% from
$1,980 thousand at Sept 30, 1995 to $4,262 thousand at Sept 30, 1996.
Note 6. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate the value:
CASH AND SHORT-TERM INVESTMENTS
For cash, the carrying amount approximates fair value. For short-term
investments, fair values are calculated based upon general investment market
interest rates for similar maturity investments.
INVESTMENT SECURITIES
For securities and marketable equity securities held-for-investment
purposes, fair values are based on quoted market prices.
LOAN RECEIVABLES
For certain homogeneous categories of loans, such as residential
mortgages, credit card receivables and other consumer loans, fair value is
estimated using the current U.S. Treasury interest rate curve, a factor for
cost of processing and a factor for historical credit risk to determine the
discount rate.
DEPOSIT LIABILITIES
The fair value of demand deposits, savings deposits and certain money
market deposits are calculated based upon general investment market interest
rates for investments with similar maturities. The value of fixed maturity
certificates deposit is estimated using the U.S. Treasury interest rate curve
currently offered for deposits of similar remaining maturities.
COMMITMENTS TO EXTEND CREDIT
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the
counterparties.
<PAGE>
The estimated fair values of the Bank's financial instruments are as follows:
<TABLE>
(Amounts in thousands)
<CAPTION> Sept 30, 1996
Carrying Amount Fair Value
<S> <C> <C>
Financial Assets:
Cash and Short Term Investments $ 18,351 $ 18,351
Investment Securities 9,045 9,053
Loans 72,280 72,132
Less: Allowance for Loan Losses 1,500 1,500
$ 98,176 $ 98,036
Financial Liabilities:
Deposits $ 94,438 $ 94,487
Unrecognized Financial Instruments:
Commitments to Extend Credit $ 279 $ 279
Commercial Lines of Credit 146 146
Credit Card Arrangements 76,592 76,592
$ 77,017 $ 77,017
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (1)
(Amounts in thousands)
<CAPTION>
Third Quarter 1996 Second Quarter 1996
Interest Interest
Average Income/ Yield Average Income/ Yield
Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (2) $ 73,346 $ 2,848 3.88% $ 75,975 $2,865 3.77%
Securities (HTM) 8,062 113 1.40% 7,988 112 1.40%
Securities (AFS) 1,093 13 1.19% 1,109 13 1.17%
Interest Bearing Deposits 0 0 0 0
Federal Funds Sold 9,969 130 1.30% 9,845 129 1.31%
TOTAL INTEREST-EARNING ASSETS 92,470 3,104 3.36% 94,917 3,119 3.29%
Allowance for loan losses (1,453) (1,526)
Non interest-earning assets:
Cash and due from banks 5,657 5,978
Premises and equipment 2,689 2,652
Other real estate 1,699 1,851
Other assets 2,698 1,997
TOTAL NONINTEREST-EARNING
ASSETS 12,743 12,478
TOTAL ASSETS $ 103,760 $105,869
LIABILITIES AND STOCKHOLDERS EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 12,535 $ 77 .61% $ 12,301 $ 68 .55%
Money market deposit a/c 7,417 51 .69% 7,314 45 .62%
Savings and other consumer
time deposits 38,516 344 .89% 40,259 378 .94%
Certificates of deposits
of $100,00 or more 1,136 13 1.14% 1,260 12 .95%
TOTAL INTEREST-BEARING
DEPOSITS 59,604 485 .81% 61,134 503 .82%
Long-term debt 2,387 57 2.39% 2,388 57 2.39%
TOTAL INTEREST-BEARING
LIABILITIES 61,991 542 .87% 63,522 560 .88%
Noninterest-bearing liabilities:
Demand deposits 32,891 33,244
Other liabilities 1,602 1,522
TOTAL NONINTEREST-BEARING
LIABILITIES 34,493 34,766
Total stockholders' equity 7,276 7,581
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 103,760 $105,869
SPREAD AND NET YIELD
Interest rate spread 2.48% 2.40%
Net interest income/margin $ 2,562 2.77% $2,559 2.70%
<FN>
(1) Prior periods have been conformed to current-period presentation
(2) Excludes unearned income. For purposes of yield computations, nonaccrual
loans are included in loans outstanding.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES (1) (Continued)
<Amounts in thousands)
<CAPTION>
Nine Months Ended Nine Months Ended
Sept 30, 1996 Sept 30, 1995
Interest Interest
Average Income/ Yield Average Income/ Yield
Balance Expense Rate Balance Expense Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans (2) $ 74,358 $ 8,567 11.52% $ 69,227 $7,411 10.70%
Securities (HTM) 8,346 347 4.16% 13,067 526 4.03%
Securities (AFS) 1,108 42 3.79% 920 50 5.43%
Interest Bearing Deposits 0 0 81 4 5.54%
Federal Funds Sold 9,846 389 3.95% 9,003 394 4.38%
TOTAL INTEREST-EARNING ASSETS 93,658 9,345 9.98% 92,298 8,385 9.08%
Allowance for loan losses (1,402) (980)
Non interest-earning assets:
Cash and due from banks 5,895 5,761
Premises and equipment 2,632 2,172
Other real estate 1,861 2,594
Other assets 2,083 2,224
TOTAL NONINTEREST-EARNING
ASSETS 12,471 12,751
TOTAL ASSETS $ 104,727 $104,069
LIABILITIES AND STOCKHOLDERS EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
NOW accounts $ 12,187 $ 194 1.59% $ 11,536 $ 203 1.76%
Money market deposit a/c 7,435 152 2.04% 7,938 170 2.14%
Savings and other consumer
time deposits 39,485 1,092 2.77% 39,567 1,174 2.97%
Certificates of deposits
of $100,00 or more 1,180 39 3.31% 1,627 49 3.01%
TOTAL INTEREST-BEARING
DEPOSITS 60,287 1,477 2.45 60,668 1,596 2.63%
Long-term debt 2,388 173 7.24% 2,397 168 7.01%
TOTAL INTEREST-BEARING
LIABILITIES 62,675 1,650 2.63% 63,065 1,764 2.80%
Noninterest-bearing liabilities:
Demand deposits 33,106 31,747
Other liabilities 1,502 1,570
TOTAL NONINTEREST-BEARING
LIABILITIES 34,608 33,317
Total stockholders' equity 7,444 7,687
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 104,727 $104,069
SPREAD AND NET YIELD
Interest rate spread 7.35% 6.29%
Net interest income/margin $ 7,695 8.22% $6,621 7.17%
<FN>
(1) Prior periods have been conformed to current-period presentation
(2) Excludes unearned income. For purposes of yield computations, nonaccrual
loans are included in loans outstanding.
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sept 30, 1996
Management's Discussion presents a review of the major factors and
trends affecting the performance of BOL BANCSHARES, INC. (the "Company") and
its bank subsidiary (the Bank) and should be read in conjunction with the
accompanying consolidated financial statements, notes and tables.
FINANCIAL CONDITION:
EARNING ASSETS
Interest earning assets averaged $93,658 thousand in the third quarter
of 1996, a $1,360 thousand increase from the third quarter of 1995 average of
$92,298 thousand. Compared to the third quarter of 1995 average loans
decreased $5,131 thousand (7.41%) and federal funds sold increased $843
thousand (9.36%) while investment securities decreased $4,533 thousand
(32.41%).
Table 1 presents the Company's loan portfolio by major classifications.
Total loans decreased $1,394 thousand (1.89%) over the third quarter of 1995.
<TABLE>
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO
(Amounts in thousands)
<CAPTION>
9/30/96 % of 6/30/96 % of 9/30/95 % of
Total Total Total
<S> <C> <C> <C> <C> <C> <C>
Real Estate Mortgages $23,065 31.91% $23,588 31.14% $21,832 29.63%
Commercial Loans 5,494 7.60% 5,222 6.89% 5,732 7.78%
Mortgage Loans Held
for Resale 97 .13% 95 .14% 0 .00%
Personal Loans 4,332 5.99% 4,435 5.85% 6,454 8.76%
Credit Cards 39,146 54.17% 42,149 55.64% 39,226 53.25%
Overdrafts 146 .20% 261 .34% 430 .58%
TOTAL LOANS $72,280 100.00% $75,750 100.00% $73,674 100.00%
</TABLE>
Securities Held to Maturity. Average securities held to maturity
decreased $4,721 thousand (36.13%) from the third quarter of 1995.
Securities held to maturity are carried as cost, adjusted for amortization of
premium and accretion of discounts using methods approximating the interest
method.
Securities Available for Sale. Average securities available for sale
increased $188 thousand 20.43% from the third quarter of 1995. Securities
available for sale are carried at fair value.
Short Term Investments. Average federal funds sold increased $843
thousand 9.36% up from the third quarter of 1995. This increase is mainly
due to the decrease in the investment security portfolio.
<PAGE>
ASSET QUALITY
Table 2 presents a summary of nonperforming assets for the past five
quarters.
Loans are placed on a nonaccrual status when there is uncertainty about
the timely payment of principal and interest. When a loan is on nonaccrual
status, interest income is no longer accrued and is only recognized when
received. The loan process ensures that all loans which meet the criteria
for nonaccrual status are placed on nonaccrual.
Nonperforming assets, which include nonaccrual loans and foreclosed
assets, totaled $2,015 thousand at Sept 30, 1996 as compared to $3,076
thousand at Sept 30, 1995. Other real estate totaled $1,699 thousand at Sept
30, 1996 as compared to $2,446 thousand at Sept 30, 1995.
<TABLE>
Table 2 - NONPERFORMING ASSETS
(Amounts in thousands)
<CAPTION>
09/96 06/96 03/96 12/95 09/95
<S> <C> <C> <C> <C> <C>
Nonaccrual Loans $ 316 $ 288 $ 139 $ 235 $ 630
Other Real Estate 1,699 1,699 2,052 1,994 2,446
TOTAL NONPERFORMING 2,015 1,987 2,191 2,229 3,076
ASSETS
Accruing loans past due
90 days or more 1,754 4,289 2,074 1,062 1,715
Reserve for loan losses 1,500 1,502 1,505 1,500 958
Nonperforming assets as
a percentage of loans
plus foreclosed assets 2.72% 2.57% 2.82% 2.90% 4.20%
Reserve for loan losses
as a percentage of
nonperforming loans 74.44% 75.59% 68.72% 67.30% 31.15%
</TABLE>
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
Table 3 presents an analysis of the activity in the reserve for possible
loan losses for the third quarter and the first nine months of 1996 and 1995.
The reserve for loan losses as a percentage of loans increased from 1.35% at
Sept 30, 1995 to 2.08% at Sept 30, 1996. The net charge-off (recoveries) as
a percentage of average loans decreased from 0.88% at Sept 30, 1995 to 0.83%
at Sept 30, 1996.
<PAGE>
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 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 borrower's financial condition is
such that collection of interest is doubtful. Ultimate losses may vary from
the current estimates. These estimates are reviewed periodically and, as
adjustments become necessary, they are reflected in current operations.
Beginning December 1, 1994 a new proprietary merchant began submitting
credit card deposits and based upon their contract, the Bank began
withholding a percentage of their deposits to set aside for any possible
charge offs. This is a non recourse proprietor. This reserve amount is
reflected in the below schedule, listed as Additional Reserve from
proprietor. This amount has been excluded from the income statement as this
money has been received from the proprietor by deducting a certain percentage
from their daily sales. As of December 31, 1995, these amounts have been
reclassified and have been removed from this category.
TABLE 3 - RESERVE FOR POSSIBLE LOAN LOSSES
<TABLE>
(Amounts in thousands)
<CAPTION>
Three Months Ended Nine Months Ended
Sept 30 Sept 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Balance at beginning of period $1,502 $ 940 $1,500 $935
Loans charged off (905) (370) (2,052) (900)
Recoveries 276 95 593 294
Net (charge-offs) recoveries (629) (275) (1,459) (606)
Provision for loan losses 627 288 1,459 619
Additional Reserve from Proprietors 0 5 0 10
BALANCE AS END OF PERIOD 1,500 958 1,500 958
Reserve for possible loan losses
as a percentage of loans 2.08% 1.35% 2.08% 1.35%
Net (charge-offs) recoveries as a
percentage of average loans 0.83% 0.40% 1.92% 0.88%
</TABLE>
FUNDING SOURCES:
DEPOSITS
Deposits. Average deposits totaled $93,393 thousand in the third
quarter of 1996, an increase of $978 thousand (1.06%) from $92,415 thousand
in the third quarter of 1995. Average core deposits were $92,213 thousand
for the third quarter of 1996 down from $93,942 thousand in the third quarter
of 1995. Table 4 presents the composition of average deposits for the three
quarters ending Sept 30, 1996, June 30, 1996 and Sept 30, 1995.
<PAGE>
<TABLE>
TABLE 4 - DEPOSIT COMPOSITION
(Amounts in thousands)
<CAPTION>
09/96 06/96 09/95
Average % of Average % of Average % of
Balance Dep. Balance Dep. Balance Dep.
<S> <C> <C> <C> <C> <C> <C>
Demand, noninterest-
bearing $33,106 35.45% $33,247 34.90% $31,672 33.27%
NOW accounts 12,187 13.05% 12,301 12.91% 12,863 13.51%
Money Market deposit 7,435 7.96% 8,198 8.61% 7,995 8.40%
accounts
Savings accounts 25,317 27.11% 25,933 27.22% 27,286 28.67%
Other time deposits 14,168 15.17% 14,326 15.04% 14,126 14.84%
TOTAL CORE DEPOSITS 92,213 98.74% 94,005 98.68% 93,942 98.69%
Certificates of
deposit of $100,000
or more 1,180 1.26% 1,260 1.32% 1,246 1.31%
TOTAL DEPOSITS $93,393 100.00% $95,265 100.00% $95,188 100.00%
</TABLE>
BORROWINGS
The Company's long-term debt is comprised primarily of debentures which
are secured by 23.83 shares of the Subsidiary Bank's stock. The Bank has no
long-term debt. It is the Bank's policy to manage its liquidity so that
there is no need to make unplanned sales of assets or to borrow funds under
emergency conditions. The Bank maintains a Federal Funds line of credit in
the amount of $600 thousand with a correspondent bank and also has a
commitment from an upstream correspondent which will increase our Federal
Funds line of credit over and above the normal amount by pledging unused
securities.
INTEREST RATE SENSITIVITY
The Bank has established, as bank policy, an asset/liability management
system that protects Bank profits from undue exposure to interest rate risks.
This portion of our asset/liability management system is called gap
management. We also have established policies that are designed to protect
the Bank's interest margins from erosion. This portion of the system is
called spread management.
We define gap management as those actions taken first to measure and
then to match rate-sensitive assets to rate-sensitive liabilities. We define
a rate-sensitive asset as any earning asset that can be repriced to a market
rate in a given time frame. Similarly, a rate-sensitive liability is any
interest bearing liability that will have its interest rate changed to a
market rate during a specified time period. A negative gap is created when
rate-sensitive liabilities exceed rate-sensitive assets. Conversely, a
positive gap occurs when the Bank has more rate-sensitive assets than
liabilities. Again, a gap only has relevance with respect to a specific time
period.
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. The Bank manages its interest rate sensitivity
through several techniques which include changing the maturity and
distribution of assets and liabilities, repricing of the loan portfolio and
other methods.
RESULTS OF OPERATION
NET INTEREST INCOME
Net interest income, the difference between interest income and interest
expense, is a significant component of the performance of a banking
organization. Data used in the analysis of net interest income are derived
from the daily average levels of earnings assets and interest bearing
deposits as well as from the related income and expense. Net interest income
is not developed on a taxable equivalent basis because the level of tax
exempt income is not material.
Net interest income for the first nine months of 1996 increased $1,074
thousand over the same period last year, and increased $2 thousand from the
second quarter of 1996. The net interest income margin increased to 8.22%
for the third quarter of 1996 from 7.17% for the third quarter of 1995.
<TABLE>
<PAGE>
QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA (1)
(Amounts in thousands except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
9/96 6/96 9/95 9/96 9/95
<S> <C> <C> <C> <C> <C>
Interest Income $ 3,103 $ 3,119 $ 2,915 $ 9,345 $ 8,385
Interest Expense 542 560 637 1,650 1,764
Net Interest Income 2,561 2,559 2,278 7,695 6,621
Provision for Loan Loss 627 410 288 1,459 619
Net Interest Income
after Provision 1,934 2,149 1,990 6,236 6,002
Noninterest income:
Noninterest income 577 611 627 1,803 1,945
Securities gains 0 0 0 0 0
Noninterest income 577 611 627 1,803 1,945
Noninterest expense 2,834 2,654 2,226 7,952 6,715
Income before taxes (323) 106 391 87 1,232
Income tax expense (104) 64 168 81 521
NET INCOME (LOSS) (219) 42 223 6 711
Income per common share ($1.22) $0.23 $1.25 $0.03 $3.97
Average common shares
outstanding 179 179 179 179 179
Selected Quarter-End Balances
Loans $72,280 $75,750 $73,674
Deposits 93,839 94,877 95,992
Long-term debt 2,386 2,387 2,389
Stockholders' equity 7,347 7,580 7,936
Total assets 105,033 106,442 107,916
Selected Average Balances
Loans $73,346 $75,975 $70,276 $74,358 $69,227
Deposits 92,495 94,378 95,188 93,393 92,415
Long-term debt 2,387 2,388 2,390 2,388 2,397
Stockholders' equity 7,276 7,581 7,918 7,444 7,687
Total assets 103,760 105,869 107,970 104,727 104,069
Selected Ratios
Return on average assets (0.21%) 0.04% 0.21% 0.01% 0.68%
Return on average equity (3.01%) 0.55% 2.82% 0.08% 9.25%
Tier 1 risk-based capital 12.07% 11.76% 12.19%
Total risk-based capital 13.33% 13.02% 13.42%
Leverage ratio 8.82% 8.76% 9.13%
<FN>
(1) Prior periods have been conformed to current-period presentation.
</TABLE>
<PAGE>
NONINTEREST INCOME
Noninterest income for the third quarter of 1996 decreased $51 thousand
or 8.13% from the same period last year. For the first nine months of 1996
compared to 1995 noninterest income decreased 7.30% from $1,945 thousand to
$1,803 thousand. The major categories of noninterest income for the three
months ended Sept 30, 1996 and 1995 and the nine months ended Sept 30, 1996
and 1995 are presented in Table 5.
<TABLE>
TABLE 5 - NONINTEREST INCOME (1)
(Amounts in thousands)
<CAPTION>
Three Months Ended Nine Months Ended
Percent Percent
9/96 9/95 Increase 9/96 9/95 Increase
Decrease Decrease
<S> <C> <C> <C> <C> <C> <C>
Service Charges $ 162 $ 173 (6.36%) $ 485 $ 520 (6.73%)
NSF Charges 191 195 (2.05%) 594 576 3.13%
Earnings in Equity
Subsidiary 0 0 N/M 0 (35) (100%)
Gain on Sale of
Securities 0 0 N/M 0 0 N/M
Cardholder & Other
Cr Cd Income 107 102 4.90% 327 331 (1.21%)
Membership Fees 55 56 (1.79%) 171 187 (8.56%)
Data Processing &
Items Processing 7 7 0.00% 20 22 (9.09%)
Other Comm & Fees 26 24 8.33% 76 120 (36.67%)
ORE Income 5 16 (68.75%) 17 40 (57.50%)
Gain on Sale of
ORE 0 20 (100.00%) 7 80 (91.25%)
Other Income 23 34 (32.35%) 106 104 1.92%
TOTAL NONINTEREST
INCOME $ 576 $ 627 (8.13%) $1,803 $1,945 (7.30%)
<FN>
N/M = Not meaningful
(1) Prior periods have been conformed to current-period presentation.
</TABLE>
<PAGE>
NONINTEREST EXPENSE
Noninterest expense for the third quarter of 1996 increased $1,237
thousand or 18.42% from the same period last year. The major categories of
noninterest expense for the nine months ended Sept 30, 1996 and 1995 are
presented in Table 6. The increase from the same period last year is mainly
due to communications, postage and loan & credit card expenses.
<TABLE>
TABLE 6 - NONINTEREST EXPENSE (1)
(Amounts in thousands)
<CAPTION>
Three Months Ended Nine Months Ended
Percent Percent
9/96 9/95 Increase 9/96 9/95 Increase
Decrease Decrease
<S> <C> <C> <C> <C> <C> <C>
Salaries & Benefits $1,065 $ 951 11.99% $3,131 $2,833 10.52%
Loss on Litigation 0 0 N/M 0 0 N/M
Occupancy Expense 504 437 15.33% 1,372 1,272 7.86%
Advertising Expense 70 94 (25.53%) 229 254 (9.84%)
Communications 106 66 60.61% 283 189 49.74%
Postage 172 84 104.76% 455 212 114.62%
Loan & Credit Card
Expense 298 198 50.51% 893 620 44.03%
Professional Fees 85 77 10.39% 263 188 39.89%
Legal Fees 80 57 40.35% 205 161 27.33%
Insurance & Assessments 21 16 31.25% 71 179 (60.34%)
Stationery, Forms &
Supply 119 84 41.67% 348 276 26.09%
Federal Reserve Charges 24 24 N/M 70 70 N/M
ORE Expenses 60 38 57.89% 194 145 33.79%
Other Operating Expense 224 100 124.00% 438 316 38.61%
TOTAL NONINTEREST
EXPENSE $2,828 $2,226 27.04% $7,952 $6,715 18.42%
<FN>
N/M = Not meaningful
(1) Prior periods have been conformed to current-period presentation.
</TABLE>
<PAGE>
INCOME TAXES
The Company recorded a provision for income taxes of $81 thousand for
the third quarter of 1996 and $521 thousand for the third quarter of 1995.
CAPITAL
The Bank is required to maintain minimum amounts of capital to total
"risk weighted" assets, as defined by banking regulators. Table 7 presents
these ratios for the most recent five quarters.
<TABLE>
TABLE 7 - QUARTERLY SELECTED CAPITAL ADEQUACY RATIOS
9/96 6/96 3/96 12/95 9/95
<S> <C> <C> <C> <C> <C>
Risk-based capital
Tier 1 risk-based
capital ratio 12.07% 11.76% 11.75% 11.46% 12.19%
Total risk-based
capital ratio 13.33% 13.02% 13.00% 12.72% 13.42%
Leverage ratio 8.82% 8.76% 8.79% 8.54% 9.13%
</TABLE>
LIQUIDITY
Liquidity and capital resources are discussed weekly by the management
committee, the assets and liability committee and at each executive committee
meeting of the Bank's officers. The Bank has no long term debt and maintains
adequate capital to meet its needs in the foreseeable future. The liquidity
ratio for the Bank was 30.07% at Sept 30, 1996, 27.81% at June 30, 1996, and
30.15% at Sept 30, 1995.
The Bank's policy is to manage its liquidity through normal operations,
so that there is no need to make unplanned sales of assets or to borrow funds
under adverse conditions. This policy not withstanding, the Bank has also
established other potential sources of funds. Management has no knowledge of
any trends, events or uncertainties that would have a material effect on
liquidity.
<PAGE>
PART II - OTHER INFORMATION
Item #6 Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter.
<PAGE>
BOL BANCSHARES, INC
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the registrant.
BOL BANCSHARES, INC.
(Registrant)
October 23, 1996 Peggy L. Schaefer
Date Peggy L. Schaefer
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Sep-30-1996
<CASH> 6901
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9045
<INVESTMENTS-CARRYING> 9045
<INVESTMENTS-MARKET> 9053
<LOANS> 72280
<ALLOWANCE> 1500
<TOTAL-ASSETS> 105033
<DEPOSITS> 93839
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1461
<LONG-TERM> 2386
0
2303
<COMMON> 179
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 105033
<INTEREST-LOAN> 8567
<INTEREST-INVEST> 389
<INTEREST-OTHER> 389
<INTEREST-TOTAL> 9345
<INTEREST-DEPOSIT> 1477
<INTEREST-EXPENSE> 173
<INTEREST-INCOME-NET> 7695
<LOAN-LOSSES> 1459
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7952
<INCOME-PRETAX> 87
<INCOME-PRE-EXTRAORDINARY> 87
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.35
<LOANS-NON> 2015
<LOANS-PAST> 1754
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4262
<ALLOWANCE-OPEN> 1500
<CHARGE-OFFS> 2052
<RECOVERIES> 593
<ALLOWANCE-CLOSE> 1500
<ALLOWANCE-DOMESTIC> 1500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
