UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997
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 April 30, 1997.
<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 5
Consolidated Statements of Changes in
Stockholder's Equity 6
Consolidated Statement of Cash Flow 7
Notes to Consolidated Financial Statements 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operation 12
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)
<CAPTION>
March 31, Dec. 31, March 31,
(Amounts in thousands) 1997 1996 1996
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash 7,001 7,903 6,994
Interest Bearing Balances - - -
Investment Securities
Securities Held to Maturity (Fair Values at
3/31/97, 12/31/96, & 3/31/96 respectively 9,464 7,977 7,989
were$9,440,000, $8,017,000, and $8,023,000)
Securities Available for Sale 1,082 1,083 1,111
Federal Funds Sold 18,450 14,400 9,700
Loans, net of unearned income 64,444 69,298 75,733
Reserve for possible loan losses (1,500) (1,500) (1,505)
Property, Equipment and Leasehold
Improvements (Net of Depreciation and
Amortization) 2,624 2,683 2,542
Other Real Estate 1,776 1,723 2,052
Deferred Taxes 327 327 375
Letters of Credit 146 146 146
Other Assets 2,037 2,051 1,236
TOTAL ASSETS $105,851 $106,091 $106,373
<FN>
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION (Continued)
<CAPTION>
March 31, Dec. 31, March 31,
(Amounts in thousands) 1997 1996 1996
<S> <C> <C> <C>
LIABILITIES
Deposits:
Non-Interest Bearing 35,840 35,768 33,537
Interest Bearing 59,689 59,373 61,508
TOTAL DEPOSITS 95,529 95,141 95,045
Deferred Taxes - - -
Notes Payable 494 495 498
Senior Secured Debentures 1,888 1,890 1,890
Letters of Credit Outstanding 146 146 146
Accrued Litigation Settlement 390 390 390
Other Liabilities 655 778 863
TOTAL LIABILITIES 99,102 98,840 98,832
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,302,811 Shares Issued and Outstanding at
3/31/97, 12/31/96, and 3/31/96 2,303 2,303 2,303
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding at
3/31/97, 12/31/96, and 3/31/96 179 179 179
Unrealized Gain on Securities Available for
Sale, net of applicable Deferred
Income Taxes (5) (4) 9
Capital in Excess of Par - Retired Stock 15 15 15
Undivided Profits 4,758 4,852 4,852
Current Earnings (501) (94) 183
TOTAL STOCKHOLDERS' EQUITY 6,749 7,251 7,541
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $105,851 $106,091 $106,373
<FN>
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<CAPTION>
March 31, March 31,
(Amounts in thousands) 1997 1996
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans 2,414 2,854
Interest on time deposits - -
Interest on securities held to maturity 115 122
Interest and dividends on securities 13 16
available for sale
Interest on federal funds sold 210 130
Other interest income - -
Total Interest Income 2,752 3,122
INTEREST EXPENSE
Interest on deposits 471 490
Interest on federal funds purchased - -
Other interest expense 10 2
Interest expense on notes payable 3 13
Interest expense on debentures 42 42
Total Interest Expense 526 547
NET INTEREST INCOME 2,226 2,575
Provision for loan losses 780 422
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,446 2,153
OTHER INCOME
Service Charges on Deposit Accounts 328 362
Cardholder & other credit card income 144 138
ORE Income 39 5
Other Operating Income 115 110
Gain on Sale of Securities - -
Total Other Income 626 615
OTHER EXPENSE
Salaries and Employee Benefits 1,035 1,009
Occupancy Expense 450 447
Loan & Credit Card Expense 309 273
ORE Expense 81 38
Other Operating Expense 698 697
Total Other Expenses 2,573 2,464
Income Before Tax Provision (501) 304
Provision (Benefit) For Income Taxes - 121
NET INCOME ($501) $183
Earnings Per Share of Common Stock ($2.80) $1.02
<FN>
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
<CAPTION>
UNREALIZED
(Amounts in thousands) GAIN(LOSS) CAPITAL IN
ON
INVESTMENT EXCESS OF
SECURITIES PAR
PREFERRED COMMON AVAILABLE RETIRED RETAINED
STOCK STOCK FOR SALE STOCK EARNINGS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 2,303 179 19 15 4,852 7,368
1995
Change in unrealized gain on
securities AFS, net of
applicable deferred income
taxes (10) (10)
Net Income 183 183
Balance - March 31, 2,303 179 9 15 5,035 $7,541
1996
Balance December 31, 2,303 179 (4) 15 4,758 7,251
1996
Change in unrealized gain on
securities AFS, net of
applicable deferred income
taxes (1) (1)
Net Income (Loss) (501) (501)
Balance - March 31, 2,303 179 (5) 15 4,257 $6,749
1997
</TABLE>
<PAGE>
<TABLE>
BOL BANCSHARES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<CAPTION>
(Amounts in thousands) 1997 1996
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) (501) 183
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (Used in) Operating Activities:
Provision for Loan Losses 780 422
Depreciation and Amortization Expense 93 77
Amortization of Investment Security Premiums - 3
Accretion of Investment Security Discounts 18 (16)
(Decrease)Increase in Deferred Income Taxes (0) 5
(Gain) Loss on Sale of Property and - -
Equipment
(Gain) Loss on Sale of Other Real Estate (35) -
Decrease(Increase) in Other Assets & Prepaid 17 (228)
Taxes
(Decrease)Increase in Other Liabilities and (125) (56)
Accrued Interest
Net Decrease(Increase) in Mortgage Loans (105) (58)
Held for Resale
Net Cash Provided by (Used in) Operating 142 332
Activities
INVESTING ACTIVITIES
Proceeds from Sale of Available-for-Sale - -
Securities
Purchases of Available-for-Sale Securities - (1,000)
Proceeds from Available-for-Sale Securities
Released at Maturity - 978
Proceeds from Held-to-Maturity Investment
Securities Released at Maturity 2,975 2,511
Purchases of Held-to-Maturity Investment (4,480) (478)
Securities
Proceeds from Sale of Property and Equipment 1 1
Purchases of Property and Equipment (34) (45)
Proceeds from Sale of Other Real Estate 105 -
Purchases of Other Real Estate (124) (3)
Net Decrease (Increase) in Loans 4,178 (726)
Net Cash Provided by (Used in) Investing 2,621 1,238
Activities
FINANCING ACTIVITIES
Net Increase (Decrease) in Demand Deposits,
Interest Bearing Deposits,
Savings Accounts, and CD's 389 (2,342)
Proceeds from Issuance of Long-Term Debt - -
Retirement of Stock - -
Principal Payments on Long Term Debt (3) (1)
Net Cash Provided by (Used in) Financing 386 (2,343)
Activities
Net Increase (Decrease) in Cash and Cash 3,149 (773)
Equivalents
Cash and Cash Equivalents at Beginning of 22,303 17,467
Year
Cash and Cash Equivalents at End of Period 25,452 $16,694
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
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 three-month period ended March 31,
1997, are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. 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, 1996.
Note 2. PER SHARE DATA
Income per common share data are based on the weighted average number
of shares outstanding of 179,145 and 179,145 at March 31, 1997 and 1996
respectively.
Note 3. SENIOR SECURED DEBENTURES
On December 27, 1996 the Company offered $1,800,000 in aggregate
principal amount of 9% Senior Secured Debentures due 2000, of BOL Bancshares,
Inc. The Debentures will bear interest at the rate of 9% per annum payable
semi-annually on each January 31 and July 31. Each $500.00 in principal
amount of a Debenture will be secured by a pledge of 39.72 shares of common
stock of the Bank. This offering closed on February 28, 1997. The offering
was fully subscribed and will satisfy the Senior Secured Debentures which
will be due July, 1997. The shortfall will be made up in cash.
Note 4. CONTINGENCIES
Because of the nature of the banking industry in general, the Company
and the Bank are each parties from time to time to litigation and other
proceedings in the ordinary course of business, none of which (other than
those described below), either individually or in the aggregate, have a
material effect on the Company's and/or the Bank's financial condition.
Other than the lawsuits described below, the Company has either (i)
posted reserves adequate to pay any judgments that may be rendered against
the Company and such posting is reflected in the Company's consolidated
financial statements for the period ending December 31, 1996, or (ii)
believes the lawsuit is without sufficient merit or monetary exposure to
require the posting of a reserve. The Company has not provided a judicial
interest that may be awarded on a judgment pending the conclusion of the
appeals procedure. Indeed, should the Company be successful in any of those
lawsuits in which it has posted reserves, recoveries would be realized and
the Company's consolidated net income would be positively impacted.
The following actions, however, have been brought against the Company
and, if the claimants were wholly successful on the merits, could result in
significant exposure to the Bank:
1. The Company is a defendant in a lawsuit filed by 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. The
trial was scheduled for March 17, 1997. The Company is awaiting the court's
decision.
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.
<PAGE>
2. 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 countersuit against the Plaintiffs for contribution on the
$110,000 loss and for tortious interference. The Plaintiff filed exceptions
to the countersuit. These exceptions were heard in the district court and
the Company's right to contribution was maintained, however the Company's
suit for tortious interference was dismissed. On appeal, the appellate court
sustained the Company's right to contribution and overruled the lower court's
decision on tortious 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.
3. On February 10, 1997 a lawsuit was filed by a proprietary merchant
alleging that the Company wrongfully debited the Plaintiff's Reserve account
which is held for losses. The Plaintiff is seeking $2,000,000 in damages. On
February 10, 1997, the same day, the Bank filed suit, based on the fact that
the proprietor was withholding payments which belonged to the Bank. The
Company intends to continue to defend vigorously the claims asserted in the
suit.
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, including attorney fees in this matter.
Note 5. 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 shortterm
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.
<PAGE>
COMMITMENTS TO EXTEND CREDIT
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the
counterparties.
The estimated fair values of the Bank's financial instruments are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1997
Carrying Fair
(Amounts in thousands) Amount Value
<S> <C> <C>
Financial Assets:
Cash and Short-Term Investments $25,451 $25,451
Investment Securities 10,554 10,523
Loans 64,444 64,406
Less: Allowance for Loan Losses 1,500 1,500
$98,949 $98,880
Financial Liabilities:
Deposits $96,025 $96,063
Unrecognized Financial Instruments:
Commitments to Extend Credit $868 $868
Commercial Lines of Credit 146 146
Credit Card Arrangements 57,954 57,954
$58,968 $58,968
</TABLE>
<PAGE>
<TABLE>
QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA
<CAPTION>
For Three Months Ended
(Amounts in thousands, except March 31, Dec. 31, March 31,
per share data) 1996 1996 1996
<S> <C> >C> <C>
Interest Income $2,752 $2,982 $3,122
Interest Expense 526 543 548
Net Interest Income 2,226 2,439 2,574
Provision for Loan Losses 780 581 421
Net Interest Income after 1,446 1,858 2,153
Provision
Noninterest income:
Noninterest income 626 637 615
Securities gains - - -
Noninterest income 626 637 615
Noninterest expense 2,573 2,695 2,464
Income before taxes (501) (200) 304
Income tax expense (benefit) - (100) 121
Net Income (Loss) ($501) ($100) $183
Income per common share ($2.80) ($0.56) $1.02
Average common shares 179 179 179
outstanding
Selected Quarter-End Balances
Loans $64,444 $69,298 $75,733
Deposits 95,529 95,141 95,045
Long-Term debt 2,382 2,384 2,388
Stockholders' equity 6,749 7,251 7,542
Total assets 105,851 106,091 106,373
Selected Average Balances
Loans $69,298 $70,319 $73,764
Deposits 95,247 94,412 93,317
Long-Term debt 1,889 2,388 2,389
Stockholders' equity 7,025 8,967 7,480
Total assets 106,100 104,702 104,562
Selected Ratios
Return on average assets -0.47% -0.10% 0.18%
Return on average equity -7.14% -1.12% 2.45%
Tier 1 risk-based capital 12.16% 12.32% 11.75%
Total risk-based capital 13.42% 13.58% 13.00%
Leverage 8.32% 8.60% 8.79%
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1997
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 $92,094,000 in the first quarter of
1997, a $1,506,000 decrease from the first quarter of 1996 average of
$93,600,000. Compared to the first quarter of 1996, average loans decreased
$7,020,000 (9.52%) and investment securities decreased $888,000 (8.78%)
while federal funds sold increased $6,403,000 (65.85%).
Table 1 presents the Company's loan portfolio by major classifications.
Total loans decreased $11,289,000 (14.91%)over the first quarter of 1996.
This decrease is mainly attributable to the decline in the credit card
portfolio. Visa / MasterCard loans decreased $3,149,000 (11.84%) and
Proprietary loans decreased $7,524,000 (48.61%) due to the loss of several
proprietary accounts.
<TABLE>
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO
<CAPTION>
March 31, 1997 Dec. 31, 1996 March 31, 1996
(Amounts in Loans % Loans % Loans %
thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, 6,391 9.92% 4,390 6.33% 4,971 6.56%
financial, & agricultural
Real estate-mortgage 22,383 34.73% 22,370 32.28% 23,612 31.18%
Mortgage Loan Held 105 0.16% - 0.00% 314 0.41%
for Resale
Personal Loans 4,037 6.26% 5,722 8.26% 4,579 6.05%
Credit cards-Visa, 23,443 36.38% 25,265 36.46% 26,592 35.11%
MasterCard
Credit cards- 7,953 12.34% 11,344 16.37% 15,477 20.44%
Proprietary
Overdrafts 132 0.20% 207 0.30% 188 0.25%
Loans 64,444 100.00% $69,298 100.00% $75,733 100.00%
</TABLE>
Securities Held to Maturity. Average securities held to maturity
decreased $850,000 (9.45%) from the first quarter of 1996. 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
decreased $39,000 (3.48%) from the first quarter of 1996. Securities
available for sale are carried at fair value.
Short Term Investments. Average federal funds sold increased $6,403,000
(65.85%) up from the first quarter of 1996. This increase is mainly due to
the decrease in the aforementioned credit card portfolio.
<PAGE>
ASSET QUALITY
Table 2 presents a summary of nonperforming assets for the past five
quarters.
Nonperforming assets consist of nonaccrual and restructured loans and
ORE. Nonaccrual loans are loans on which the interest accruals have been
discontinued when it appears that future collection of principal or interest
according to the contractual terms may be doubtful. Interest on these loans
is reported on the cash basis as received when the full recovery of principal
is anticipated or after full principal has been recovered when collection of
interest is in question. The loan process ensures that all loans which meet
the criteria for nonaccrual status are placed on nonaccrual. Restructured
loans are those loans whose terms have been modified, because of economic or
legal reasons related to the debtors' financial difficulties, to provide for
a reduction in principal, change in terms, or fixing of interest rates at
below market levels. ORE is real property acquired by foreclosure or
directly by title or deed transfer in settlement of debt.
Nonperforming assets, totaled $2,089,000 at March 31, 1997 as compared
to $2,191,000 at March 31, 1996. Other real estate totaled $1,776,000 at
March 31, 1997 as compared to $2,052,000 at March 31, 1996.
<TABLE>
Table 2. NONPERFORMING ASSETS
<CAPTION>
(Amounts in 03/31/97 12/31/96 09/31/96 06/31/96 03/31/96
thousands)
<S> <C> <C> <C> <C> <C.
Nonaccrual Loans 313 316 316 288 139
Restructured Loans - - - - -
Other Real Estate 1,776 1,723 1,699 1,699 2,052
Owned
Total Nonperforming $2,089 $2,039 $2,015 $1,987 $2,191
Assets
Loans past due 90 3,745 2,295 1,754 4,289 2,074
days or more
Ratio of past due 5.81% 3.31% 2.43% 5.66% 2.74%
loans to loans
Ratio of nonperforming
assets to loans
and other real 3.15% 2.87% 2.72% 2.57% 2.82%
estate owned
</TABLE>
Management is not aware of any potential problem loans other than those
disclosed in the table above, which includes all loans recommended for
classification by regulators, which would have a material impact on asset
quality.
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.
<PAGE>
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 March 31, 1997, the Bank did not have any impaired loans.
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 207.36% to
$4,549,000 at March 31, 1997 from $1,480,000 at March 31, 1996. During this
period there was one loan added as type 3 which is in excess of $1,550,000
and four loans added as type 4 in excess of $1,200,000.
RESERVE AND PROVISION FOR POSSIBLE LOAN LOSSES
Table 3 presents an analysis of the activity in the reserve for possible
loan losses for the first quarter of 1997 and 1996. The reserve for loan
losses as a percentage of loans increased from 1.99% at March 31, 1996 to
2.33% at March 31, 1997. The net charge-off (recoveries) as a percentage of
average loans increased from 0.56% at March 31, 1996 to 1.17% at March 31,
1997.
The allowance for loan losses is established through a provision for
loan losses charged to expenses. Management's policy is to maintain the
allowance for possible loan losses at a level sufficient to absorb losses
inherent in the loan portfolio. The allowance is increased by the provision
for loan losses and decreased by charge-offs, net of recoveries. Management's
evaluation process to determine potential losses includes consideration of
the industry, specific conditions of individual borrowers, historical loan
loss experience and the general economic environment. As these factors
change, the level of loan loss provision changes. Loans are charged against
the allowance for loan losses when management believes that the
collectibility of the principal is unlikely. Accrual of interest is
discontinued and accrued interest is charged off on a loan when management
believes, after considering economic and business conditions and collection
efforts, that the borrower's financial condition is such that collection of
interest is doubtful. Ultimate losses may vary from the current estimates.
These estimates are reviewed periodically and, as adjustments become
necessary, they are reflected in current operations.
<PAGE>
<TABLE>
TABLE 3. RESERVE FOR POSSIBLE LOAN LOSSES ACTIVITY
<CAPTION>
For The Three Months Ended
March 31, March 31,
(Amounts in thousands) 1997 1996
<S> <C> <C>
Balance at beginning of period $1,500 $1,500
Loans charged off (914) (584)
Recoveries 134 167
Net (charge-offs) recoveries (780) (417)
Provision for loan losses 780 422
Balance at end of period $1,500 $1,505
Reserve for possible loan losses
as a percentage of loans 2.33% 1.99%
Net (charge-offs) recoveries as
a percentage of average loans 1.17% 0.56%
</TABLE>
FUNDING SOURCES:
DEPOSITS
Deposits. Average deposits totaled $92,738,000 in the first quarter of
1997, a decrease of $579,000 (0.62%) from $93,317,000 in the first quarter of
1996. Average core deposits were $91,299,000 for the first quarter of 1997
down from $92,173,000 in the first quarter of 1996. Table 4 presents the
composition of average deposits for the three quarters ending March 31, 1997,
December 31, 1996 and March 31, 1996.
<TABLE>
TABLE 4. DEPOSIT COMPOSITION
<CAPTION>
For The Three Months Ended
Mar 31, 1997 Dec. 31, 1996 Mar 31, 1996
Average % of Average % of Average % of
(Amounts in Balances Deposits Balances Deposits Balances Deposits
thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand, noninterest- $33,550 36.18% $34,084 36.10% $32,578 34.91%
bearing
NOW accounts 11,466 12.36% 11,900 12.60% 11,724 12.56%
Money market deposit 6,899 7.44% 8,225 8.71% 7,576 8.12%
accounts
Savings accounts 25,963 28.00% 25,453 26.96% 25,126 26.93%
Other time deposits 13,421 14.47% 13,185 13.97% 15,169 16.26%
Total core deposits 91,299 98.45% 92,847 98.34% 92,173 98.77%
Certificates of deposit
of $100,000 or more 1,439 1.55% 1,564 1.66% 1,144 1.23%
Total deposits 92,738 100.00% $94,411 100.00% $93,317 100.00%
</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 $600,000 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.
<PAGE>
INTEREST RATE SENSITIVITY
The Bank has established, as bank policy, an asset/liability management
system that protects Bank profits from undue exposure to interest rate risks.
The major elements used to manage interest rate risk include the mix of fixed
and variable rate assets and liabilities and the maturity pattern of assets
and liabilities. It is the Company's policy not to invest in derivatives in
the ordinary course of business. The Company performs a monthly review of
assets and liabilities that reprice and the time bands within which the
repricing occurs. Balances are reported in the time band that corresponds to
the instrument's next repricing date or contractual maturity, whichever
occurs first. Through such analysis, the Company monitors and manages its
interest sensitivity gap to minimize the effects of changing interest rates.
GAP & INTEREST MARGIN SPREAD
By Bank policy we limit the Bank's earnings exposure due to interest
rate risk by setting limits on positive and negative gaps within the next 12
months. These limits are set so that this year's profits will not be unduly
impacted no matter what happens to interest rates during the year. In
addition, we extend the scenarios out five years to monitor the risks
associated on a longer term.
RESULTS OF OPERATIONS:
NET INTEREST INCOME
Net interest income, the difference between interest income and
interest expense, is a significant component of the performance of a banking
organization. Data used in the analysis of net interest income are derived
from the daily average levels of earnings assets and interest bearing
deposits as well as from the related income and expense. Net interest income
is not developed on a taxable equivalent basis because the level of tax
exempt income is not material. The primary factors that affect net interest
income are the changes in volume and mix of earning assets and interest-
bearing liabilities, along with the change in market rates.
Net interest income for the first quarter of 1997 decreased $348,000
over the same period last year, and decreased $213,000 from the fourth
quarter of 1996. The net interest income margin decreased to 4.42% for the
first quarter of 1997 from 2.74% for the first quarter of 1996.
<PAGE>
<TABLE>
CONSOLIDATED AVERAGE BALANCE SHEETS, YIELDS AND RATES
<CAPTION>
FIRST QUARTER 1997 FIRST QUARTER 1996
Average Average
(Amounts in thousands) Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
INTEREST-EARNING ASSETS:
Loans, net of unearned income(1)(2)
Taxable 66,743 2,414 3.62% 73,764 2,854 3.87%
Tax-exempt -
Investment securities
Taxable 9,224 128 1.39% 10,112 138 1.36%
Tax-exempt - - -
Interest-bearing deposits - - 0.00% - -
Federal funds sold 16,127 210 1.31% 9,724 130 1.34%
Total Interest-Earning 92,094 2,752 2.99% 93,600 3,122 3.34%
Assets
Cash and due from banks 5,632 6,052
Allowance for loan Losses (1,500) (1,226)
Premises and equipment 2,654 2,556
Other Real Estate 1,787 2,034
Other assets 2,438 1,546
TOTAL ASSETS $103,105 $104,562
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 18,364 99 0.54% 19,301 109 0.56%
Savings deposits 25,963 190 0.73% 25,126 186 0.74%
Time deposits 14,861 182 1.22% 16,312 204 1.25%
Total Interest-Bearing 59,188 471 0.80% 60,739 499 0.82%
Deposits
Federal Funds Purchased
Securities sold under
agreements to repurchase
Other Short-Term borrowings - -
Long-Term debt 2,383 55 2.31% 2,389 57 2.39%
Total Int-Bearing 61,571 526 0.85% 63,128 556 0.88%
Liabilities
Noninterest-bearing 33,550 32,578
deposits
Other liabilities 959 1,376
Shareholders' equity 7,025 7,480
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 103,105 $104,562
Net Interest income/spread 2.13% 2.45%
Net Interest Margin 2.42% 2.74%
<FN>
(1) Fee income relating to loans of $62,000 at March 31, 1997, and $73,000
at March 31, 1996 is included in interest income.
(2) Nonaccrual loans are included in average balances and income on such
loans, if recognized, is recognized on the cash basis.
(3) Interest income does not include the effects of taxable-equivalent
adjustments using a federal tax rate of 34%.
</TABLE>
<PAGE>
<TABLE>
Rate/Volume Analysis
<CAPTION>
March, 1997 Compared to March, 1996
Variance Attributed to (1)
Net
(Amounts in thousands) Volume Rate Change
<S> <C> <C> <C>
Net Loans:
Taxable (7,021) -0.25% (440)
Tax-exempt(2) - 0.00% -
Investment Securities - 0.00% -
Taxable (888) 0.03% (10)
Tax-exempt(2) - 0.00% -
Interest-bearing deposits - 0.00% -
Federal funds sold 6,403 -0.03% 80
Total Interest-Earning Assets ($1,506) -0.35% ($370)
Deposits:
Demand Deposits (937) -0.03% (10)
Savings deposits 837 -0.01% 4
Time deposits (1,451) -0.03% (22)
Total interest-bearing (1,551) -0.03% (28)
deposits
Federal Funds Purchased - 0.00% -
Securities sold under - 0.00% -
agreements to repurchase
Other Short-Term borrowings - 0.00% -
Long-Term debt (6) -0.07% (2)
Total Interest-Bearing ($1,557) -0.03% ($30)
Liabilities
>FN>
(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%.
</TABLE>
NONINTEREST INCOME AND EXPENSE
The amount of noninterest income and noninterest expenses of a banking
organization relate closely to the size of the total assets and deposits and
the number of deposit accounts. The amount of noninterest expense represents
the cost of operating the banking organization.
The major components of noninterest income are service charges related
to deposit accounts, cardholder and other credit card fees, Ore income, gain
on sale of ORE and other noninterest income.
Noninterest income for the first quarter of 1997 increased $11,000 or
1.79% from the same period last year. Table 5 presents noninterest
income for the three months ended March 31, 1997 and 1996.
<PAGE>
<TABLE>
TABLE 5. NONINTEREST INCOME
<CAPTION>
For The Three Months Ended Percentage
Mar 31, Mar 31, Increase
(Amounts in thousands) 1997 1996 (Decrease)
<S> <C> <C> <C>
Service Charges $150 $156 ($6)
NSF Charges 178 206 (28)
Gain on Sale of Securities - - -
Cardholder & Other Credit Card 89 100 (11)
Income
Membership Fees 55 56 (1)
Other Comm & Fees 25 33 (8)
ORE Income 3 5 (2)
Gain on Sale of ORE 35 0 35
Other Income 91 59 32
Total Non-Interest Income $626 $615 $11
</TABLE>
NONINTEREST EXPENSE
The major components of noninterest expense represents the cost of
operating the banking organization.
Noninterest expense for the first quarter of 1997 increased $109,000 or
4.46% from the same period last year. Table 6 presents the activity for the
three months ended March 31, 1997 and 1996. The increase from the same
period last year is mainly due to loan & credit card expenses, legal fees and
ORE expenses.
<TABLE>
TABLE 6. NONINTEREST EXPENSE
<CAPTION>
For The Three Months Ended Percentage
Mar 31, Mar 31, Increase
(Amounts in thousands) 1997 1996 (Decrease)
<S> <C> <C> <C>
Salaries & Benefits $1,035 $1,009 $26
Loss on Litigation - - -
Occupancy Expense 450 447 3
Advertising Expense 39 83 (44)
Communications 84 80 4
Postage 138 115 23
Loan & Credit Card Expense 309 273 36
Professional Fees 57 82 (25)
Legal Fees 112 77 35
Insurance & Assessments 27 26 1
Stationery, Forms & Supply 114 117 (3)
ORE Expenses 81 38 43
Other Operating Expense 127 117 10
Total Non-Interest Expense $2,573 $2,464 $109
</TABLE>
<PAGE>
INCOME TAXES
The Company did not record a provision for income taxes for the first
quarter of 1997. A provision of $121,000 was recorded for the first quarter
of 1996.
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 RATIOS
<CAPTION>
March 31, Dec. 31, Sept. 30, June 30, March 31,
1997 1996 1996 1996 1996
<S> <C> <C> <C> <C> <C>
Risk-based capital
Tier 1 risk-based 12.16% 12.32% 12.07% 11.76% 11.75%
capital ratio
Total risk-based 13.42% 13.58% 13.33% 13.02% 13.00%
capital ratio
Leverage 8.32% 8.60% 8.82% 8.76% 8.79%
</TABLE>
LIQUIDITY
The purpose of liquidity management is to ensure that there is
sufficient cash flow to satisfy demands for credit, deposit withdrawals, and
other corporate needs. Traditional sources of liquidity include asset
maturities and growth in core deposits. The Company has maintained adequate
liquidity through cash flow from operating activities and financing
activities to fund loan growth, and anticipates that this will continue even
if the Company expands.
Liquidity and capital resources are discussed weekly by the management
committee, the assets and liability committee and at the monthly executive
committee meeting. Bank of Louisiana maintains adequate capital to meet its
needs in the foreseeable future. The liquidity ratio for the Bank was 38.84%
at March 31, 1997, 33.56% at December 31, 1996, and 27.94% at March 31, 1996.
Measuring liquidity and capital on a weekly basis enables management to
constantly monitor loan growth, and shifting customer preferences. The
committee's in-depth reviews of current, projected, and worse case scenarios
through various reports ensures the availability of funds and capital
adequacy.
The Bank intends on increasing capital by implementing an extensive
marketing program and evaluating all pricing fees and investing in
proprietary accounts which will maximize the highest yield possible and
thereby improve earnings.
There are no known trends, events, regulatory authority recommendations,
or uncertainties that the Company is aware of that will have or that are
likely to have a material adverse effect on the Company's liquidity, capital
resources, or operations.
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)
/s/ Peggy L Schaefer
May 9, 1997 Peggy L. Schaefer, Treasurer
Date
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 7,001
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 18,450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,546
<INVESTMENTS-CARRYING> 10,546
<INVESTMENTS-MARKET> 10,522
<LOANS> 64,444
<ALLOWANCE> 1,500
<TOTAL-ASSETS> 105,851
<DEPOSITS> 95,529
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,191
<LONG-TERM> 2,382
0
2,303
<COMMON> 179
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 105,851
<INTEREST-LOAN> 2,414
<INTEREST-INVEST> 128
<INTEREST-OTHER> 210
<INTEREST-TOTAL> 2,752
<INTEREST-DEPOSIT> 471
<INTEREST-EXPENSE> 55
<INTEREST-INCOME-NET> 2,226
<LOAN-LOSSES> 780
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,573
<INCOME-PRETAX> (501)
<INCOME-PRE-EXTRAORDINARY> (501)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (501)
<EPS-PRIMARY> (2.80)
<EPS-DILUTED> 0
<YIELD-ACTUAL> 2.13
<LOANS-NON> 313
<LOANS-PAST> 3,745
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,549
<ALLOWANCE-OPEN> 1,500
<CHARGE-OFFS> 914
<RECOVERIES> 134
<ALLOWANCE-CLOSE> 1,500
<ALLOWANCE-DOMESTIC> 1,500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
