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 June 30, 2000
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 July 31, 2000.
Common Stock, $1 Par Value - 179,145 shares.
<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 Comprehensive Income (Loss) 6
Consolidated Statements of Changes in
Stockholder's Equity 7
Consolidated Statement of Cash Flow 8
Notes to Consolidated Financial Statements 9
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operation 13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule 24
B. Reports on Form 8-K
No reports have been filed on Form 8-K
during this quarter.
<PAGE>
Part I. - Financial Information
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION
(Unaudited)
June 30 Dec. 31, June 30
(Amounts in Thousands) 2000 1999 1999
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash $7,256 $8,704 $7,460
Interest Bearing Balances - -
Investment Securities
Securities Held to Maturity (Fair Values at
6/30/00, 12/31/99, & 6/30/99 respectively 2,975 3,004 4,014
were
$2,975,000, $3,000,000, and $4,008,000)
Securities Available for Sale 338 367 350
Federal Funds Sold 30,690 24,785 32,355
Loans, net of Unearned Discount 55,418 58,781 56,529
Allowance for Loan Losses (1,800) (1,800) (1,800)
Property, Equipment and Leasehold
Improvements
(Net of Depreciation and Amortization) 2,301 2,540 2,778
Other Real Estate 1,105 1,274 1,340
Deferred Taxes 296 382 434
Letters of Credit 89 104 76
Other Assets 1,128 1,968 1,168
TOTAL ASSETS $99,796 $100,109 $104,704
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION (Continued)
June 30 Dec. 31, June 30
(Amounts in Thousands) 2000 1999 1999
<S> <C> <C> <C>
LIABILITIES
Deposits:
Non-Interest Bearing $35,910 $35,306 $35,132
Interest Bearing 54,322 55,250 60,748
TOTAL DEPOSITS $90,232 90,556 95,880
Notes Payable 2,229 2,233 2,246
Letters of Credit Outstanding 89 104 76
Accrued Litigation Settlement - 150 200
Accrued Interest 497 486 483
Other Liabilities 1,086 1,251 1,137
TOTAL LIABILITIES 94,133 94,780 100,022
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,302,811 Shares Issued and Outstanding at
6/30/00, 12/31/99, and 6/30/99 2,303 2,303 2,303
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding at
6/30/00, 12/31/99, and 6/30/99 179 179 179
Accumulated Other Comprehensive Income 214 183 171
Capital in Excess of Par - Retired Stock 15 15 15
Undivided Profits 2,649 2,555 2,556
Current Earnings 303 94 (542)
TOTAL STOCKHOLDERS' EQUITY 5,663 5,329 4,682
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $99,796 $100,109 $104,704
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three months ended Six months ended
June 30 June 30
(Amounts in Thousands) 2000 1999 2000 1999
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $1,816 $1,885 $3,682 $3,823
Interest on Time Deposits - - - -
Interest on Securities Held to 42 51 80 111
Maturity
Interest & Dividends on Securities - - - 2
Available for Sale
Interest on Federal Funds Sold 491 384 894 724
Other Interest Income - - - -
Total Interest Income 2,349 2,320 $4,656 4,660
INTEREST EXPENSE
Interest on Deposits 351 431 705 848
Interest on Federal Funds Purchased - - - -
Other Interest Expense 10 10 20 20
Interest Expense on Notes Payable 2 2 5 5
Interest Expense on Debentures 39 40 78 80
Total Interest Expense 402 483 808 953
NET INTEREST INCOME 1,947 1,837 3,848 3,707
Provision for Loan Losses 108 327 28 425
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,839 1,510 3,820 3,282
NONINTEREST INCOME
Service Charges on Deposit Accounts 270 295 536 576
Cardholder & Other Credit Card Income 164 174 316 329
ORE Income 3 12 4 15
Other Operating Income 37 49 122 144
Gain on Sale of Securities - - - -
Total Noninterest Income 474 530 978 1,064
NONINTEREST EXPENSE
Salaries and Employee Benefits 1,117 998 2,154 1,993
Occupancy Expense 415 506 903 992
Loan & Credit Card Expense 223 277 459 530
ORE Expense 12 22 38 55
Other Operating Expense 507 678 782 1,318
Total Noninterest Expense 2,274 2,481 4,336 4,888
Income Before Tax Provision 39 (441) 462 (542)
Provision (Benefit) For Income Taxes 13 - 159 -
NET INCOME $26 ($441) $303 ($542)
Earnings Per Share of Common Stock $0.14 ($2.46) $1.69 ($3.03)
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
June 30 Dec. 31, June 30
(Amounts in thousands) 2000 1999 1999
<S> <C> <C> <C>
NET INCOME (LOSS) $303 $94 ($542)
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains (Losses) on
Investment Securities Available-for-Sale,
Arising During the Period 31 50 38
Less: Reclassification Adjustment for Gains
Included in Net Income
OTHER COMPREHENSIVE INCOME 31 50 38
COMPREHENSIVE INCOME (LOSS) $334 $144 ($504)
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
(Unaudited)
(Amounts in Thousands) ACCUMULATED CAPITAL IN
OTHER EXCESS OF
COMPREHEN- PAR
PREFERRED COMMON SIVE RETIRED RETAINED
STOCK STOCK INCOME STOCK EARNINGS TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 2,303 179 133 15 2,556 5,186
1998
Other Comprehensive
Income, net of
applicable deferred income
taxes 38 38
Net Income (Loss) (542) (542)
Balance - June 30, 2,303 179 171 15 2,014 $4,682
1999
Balance December 31, 2,303 179 183 15 2,649 5,329
1999
Other Comprehensive
Income, net of
applicable deferred income
taxes 31 31
Net Income (Loss) 303 303
Balance - June 30, 2,303 179 214 15 2,952 $5,663
2000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six Months Ended June 30
(Amounts in Thousands) 2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) 303 (542)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Provision for Loan Losses 28 425
Depreciation and Amortization Expense 271 254
Amortization of Investment Security Premiums 4 7
Accretion of Investment Security Discounts (57) (2)
Decrease(Increase)in Deferred Income Taxes 87 20
(Gain) Loss on Sale of Property and Equipment - -
(Gain) Loss on Sale of Other Real Estate (2) (10)
Decrease(Increase) in Other Assets & Prepaid Taxes 1,081 89
(Decrease)Increase in Other Liabilities, Accrued Interest, 98
and ccrued Loss Contingency (289) -
Net Decrease(Increase) in Mortgage Loans Held for - -
Resale
Net Cash Provided by (Used in) Operating Activities 1,426 339
INVESTING ACTIVITIES
Proceeds from Sale of Available-for-Sale - -
Securities
Purchases of Available-for-Sale Securities - -
Proceeds from Available-for-Sale Securities
Released at Maturity - -
Proceeds from Held-to-Maturity Investment Securities
Released at Maturity 3,000 3,500
Purchases of Held-to-Maturity Investment (2,918) (3,022)
Securities
Proceeds from Sale of Property and Equipment 0 -
Purchases of Property and Equipment (31) (527)
Proceeds from Sale of Other Real Estate 3 85
Purchases of Other Real Estate (31) (63)
Net Decrease (Increase) in Loans 3,335 4,571
Net Cash Provided by (Used in) Investing Activities 3,358 4,544
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing and
Interest Bearing Deposits (324) 1,296
Proceeds from Issuance of Long-Term Debt - -
Retirement of Stock - -
Principal Payments on Long Term Debt (3) (27)
Net Cash Provided by (Used in) Financing Activities (327) 1,269
Net Increase (Decrease) in Cash and Cash 4,457 6,152
Equivalents
Cash and Cash Equivalents at Beginning of Year 33,489 33,643
Cash and Cash Equivalents at End of Period $37,946 $39,795
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
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
Article 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 six-month period ended June
30, 2000, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000. 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, 1999.
Note 2. RESTATEMENT OF PRIOR PERIOD
During 1999, the Banks' regulators advised that the Company
incorrectly applied the full accrual method of accounting for the sale of
Other Real Estate in 1998. Accordingly, the accompanying consolidated
financial statements have been restated from those originally reported to
reflect the change to the cost recovery method. The Company amended Form
10-K for December 31, 1998 on February 25, 2000, Form 10-Q for March 31,
1999 was amended on April 25, 2000 and Form 10-Q for June 30, 1999 was
amended on May 3, 2000.
Note 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The regular annual meeting of shareholders of BOL BANCHARES, INC., was
held on April 11, 2000. All incumbent directors were re-elected. There
were no other matters voted upon at the meeting.
Below are the names of the nominees who were elected to continue their
term as directors and the number of shares cast. The total shares voting
were 130,140.
<TABLE>
<CAPTION>
Number of Shares
Nominee For Against Abstain
<S> <C> <C> <C>
Gordon A. Burgess 129,921 94 125
James A. Comiskey 129,921 94 125
Lionel J. Favret 129,921 94 125
Gerry E. Hinton (Deceased 129,921 94 125
7/2/00)
Leland L. Landry 129,921 94 125
Douglas A. Schonacher 129,921 94 125
G. Harrison Scott 129,921 94 125
Edward J. Soniat 129,921 94 125
</TABLE>
Note 4. PER SHARE DATA
Income per common share data are based on the weighted average number
of shares outstanding of 179,145 at June 30, 2000 and 1999 respectively.
<PAGE>
Note 5. 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 June 30, 2000, 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:
The Company is a defendant in a lawsuit filed by a proprietary
merchant alleging that the Company mishandled the Plaintiff's proprietary
credit card portfolio. The Plaintiff seeks to recover in excess of
$1,800,000. The Bankruptcy Court has established an escrow account, in
which $270,404 was on deposit as of October 31, 1996, for the protection of
the Company. This amount would significantly reduce any losses incurred by
the Company in the event the Plaintiff is wholly successful on the merits.
During 1997, a judgment was rendered against the Bank, and accordingly, a
provision for loss of $150,000 has been charged to operation. The Bank has
counter sued and is presently appealing the judgment. The appeal has been
pending since June 1998. In March 2000, a decision was rendered in favor
of the Bank and accordingly, the $150,000 was reversed and is reflected in
operations. Outside counsel has filed a motion with the Bankruptcy Court
requesting that the $243,000 deposit for bond together with interest is
ordered returned to the Bank.
Expected Results: Outside counsel advises that the Plaintiff will not
prevail at all against the Company and that the Company will be able to
fully recover all of its losses in this matter.
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
<PAGE>
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 counter
parties.
The estimated fair values of the Bank's financial instruments are as
follows:
<TABLE>
<CAPTION>
June 30, 2000
Carrying Fair
(Amounts in Thousands) Amount Value
<S> <C> <C>
Financial Assets:
Cash and Short-Term Investments $37,946 $37,946
Investment Securities 3,313 3,313
Loans 55,418 54,861
Less: Allowance for Loan Losses 1,800 1,800
$94,877 $94,320
Financial Liabilities:
Deposits $90,232 $90,272
Unrecognized Financial Instruments:
Commitments to Extend Credit $2,522 $2,522
Commercial Lines of Credit 89 89
Credit Card Arrangements 56,099 56,099
$58,710 $58,710
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA
Three Months Ended Six Months Ended
(Amounts in Thousands, June 30 March 31 June 30 June 30 June 30
Except Per Share Data) 2000 2000 1999 2000 1999
<S> <C> <C> <C> <C> <C>
Interest Income $2,349 $2,306 $2,320 $4,656 $4,660
Interest Expense 402 404 483 808 953
Net Interest Income $1,947 1,902 1,837 3,848 3,707
Provision for Loan 108 (80) 327 28 425
Losses
Net Interest Income 1,839 1,982 1,510 3,820 3,282
after Provision
Noninterest Income:
Noninterest Income 474 503 530 978 1,064
Securities Gains - - - - -
Noninterest Income 474 503 530 978 1,064
Noninterest Expense 2,274 2,062 2,481 4,336 4,888
Income before Taxes 39 423 (441) 462 (542)
Income Tax Expense 13 146 - 159 -
(Benefit)
Net Income (Loss) $26 $277 ($441) $303 ($542)
Income per Common Share $0.14 $1.55 ($2.46) $1.69 ($3.03)
Average Common Shares 179 179 179 179 179
Outstanding
Selected Quarter-End Balances
Loans $55,418 $55,099 $56,529
Deposits 90,232 92,173 95,880
Long-Term Debt 2,229 2,231 2,246
Stockholders' Equity 5,663 5,606 4,682
Total Assets 99,796 101,571 104,704
Selected Average
Balances
Loans $55,512 $56,933 $56,855 $56,223 $57,719
Deposits 89,841 89,036 94,694 89,439 93,830
Long-Term Debt 2,230 2,231 2,255 2,231 2,263
Stockholders' Equity 5,676 5,647 5,531 5,661 5,739
Total Assets 99,474 98,769 103,591 99,122 102,916
Selected Ratios
Return on Average Assets 0.03% 0.28% -0.43% 0.31% -0.53%
Return on Average Equity 0.45% 4.91% -7.97% 5.35% -9.44%
Tier 1 Risk-Based 12.24% 12.08% 10.22%
Capital
Risk-Based Capital 13.51% 13.35% 11.49%
Tier 1 Leverage 7.47% 7.44% 6.23%
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 2000
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.
SECOND QUARTER 2000 HIGHLIGHTS
BOL BANCSHARES' second quarter 2000 results showed improvement in
earnings over the second quarter of 1999 and the first six months of 1999.
Net income for the second quarter of 2000 totaled $26,000 ($0.14 per
share), up 105.90% compared to a net loss of $441,000 (-$2.46 per common
share) for the second quarter of 1999. Net income for the first six months
of 2000 totaled $303,000 ($1.69 per common share up 155.90% compared to a
net loss of $542,000 (-$3.03 per common share for the first six months of
1999).
Pre-tax, pre-provision earnings were $149,000, an increase from the
second quarter 1999 loss of $114,000. Pre-tax, pre-provision earnings were
$490,000, an increase from the first six months of 1999 loss of $117,000.
The second quarter and first six months of 2000 included provisions for
loan losses totaling $108,000 and $28,000, respectively, compared to
$327,000 and $425,000 for the same period of 1999.
Total assets declined $4,908,000 (4.69%) to $99,796,000 at June 30,
2000 compared to June 30, 1999. Shareholders' equity increased $981,000
(20.95%) to $5,663,000 at June 30, 2000 compared to June 30, 1999.
Total loans declined $1,111,000 (1.97%) from June 30, 1999 to
$55,419,000 at June 30, 2000. Real Estate Mortgage loans grew $2,561,000
(9.32%) to $30,047,000, while credit card loans declined $3,423,000
(15,78%) to $18,271,000.
Deposits declined $5,648,000 (5.89%) to %90,232,000 at June 30, 2000
compared to June 30, 1999.
FINANCIAL CONDITION:
EARNING ASSETS
Interest earning assets averaged $90,400,000 in the second quarter of
2000, a $3,460,000 decrease from the second quarter of 1999 average of
$93,860,000. Compared to the second quarter of 1999, average loans
decreased $1,343,000 (2.36%), average investment securities decreased
$1,003,000 (23.28%), and average federal funds sold decreased $1,114,000
(3.41%).
Table 1 presents the Company's loan portfolio by major classifications.
Total loans decreased $1,111,000 (1.97%)over the second quarter of 1999.
<PAGE>
<TABLE>
<CAPTION>
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO
June 30, 2000 March 31, 2000 June 30, 1999
(Amounts in Loans % Loans % Loans %
Thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, $3,722 6.72% $3,921 7.12% $4,073 7.21%
Financial, &
Agricultural
Real Estate Mortgage 30,047 54.22% 29,505 53.55% 27,486 48.62%
Mortgage Loan Held - 0.00% - 0.00% - 0.00%
for Resale
Personal Loans 3,235 5.84% 2,754 5.00% 3,179 5.62%
Credit Cards-Visa, 16,542 29.85% 16,918 30.70% 19,331 34.20%
MasterCard
Credit Cards- 1,729 3.12% 1,880 3.41% 2,363 4.18%
Proprietary
Overdrafts 143 0.26% 121 0.22% 97 0.17%
Loans $55,418 100.00% $55,099 100.00% $56,529 100.00%
</TABLE>
Securities Held to Maturity. Average securities held to maturity
decreased $1,068,000 (26.59%) from the second quarter of 1999. 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 $66,000 (22.68%) from the second quarter of 1999. Securities
available for sale are carried at fair value.
Short Term Investments. Average federal funds sold decreased
$1,114,000 (3.41%) down from the second quarter of 1999. This decrease is
mainly due to the decrease in deposits.
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 $1,158,000 at June 30, 2000 as compared
to $2,175,000 at June 30, 1999. Other real estate totaled $1,105,000 at
June 30, 2000 as compared to $1,340,000 at June 30, 1999.
<PAGE>
<TABLE>
<CAPTION>
Table 2. NONPERFORMING ASSETS
(Amounts in 06/30/00 03/31/00 12/31/99 09/30/99 06/30/99
Thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual Loans $53 $1 $40 $35 $835
Restructured Loans - - - - -
Other Real Estate Owned 1,105 1,305 1,274 1,337 1,340
Total Nonperforming Assets $1,158 $1,306 $1,314 $1,372 $2,175
Loans Past Due 90 Days or More $354 $434 $528 $605 $539
Ratio of Past Due Loans to 0.64% 0.79% 0.90% 1.05% 0.95%
Loans
Ratio of Nonperforming Assets to Loans
and Other Real Estate Owned 2.05% 2.32% 2.19% 2.33% 3.74%
</TABLE>
IMPAIRED LOANS
As of June 30, 2000, the recorded investment in loans that are
considered impaired under SFAS 114 and 118 was $0. The related allowance
for credit losses for the impaired loans is not specifically identified,
but is included in the percentages allocated to the portfolio.
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 8.57% to $3,230,000 at June 30, 2000 from
$2,975,000 at June 30, 1999.
Management is not aware of any potential problem loans other than
those disclosed above, which includes all loans recommended for
classification by regulators, which would have a material impact on asset
quality.
ALLOWANCE AND PROVISION FOR POSSIBLE LOAN LOSSES
Table 3 presents an analysis of the activity in the allowance for loan
losses for the three month and six month period ending June 30, 2000 and
1999. The allowance for loan losses as a percentage of loans increased
from 3.17% at June 30, 1999 to 3.25% at June 30, 2000. The net charge-off
(recoveries) as a percentage of average loans decreased from .74% at June
30, 1999 to .05% at June 30, 2000.
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
<PAGE>
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.
<TABLE>
<CAPTION>
TABLE 3 - RESERVE FOR LOAN LOSSES ACTIVITY
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(Amounts in Thousands) 2000 1999 2000 1999
<S> <C> <C> <C> <C>
Balance at Beginning of Period $1,800 $1,800 $1,800 $1,800
Loans Charged Off (305) (483) (595) (779)
Recoveries 197 156 567 354
Net (Charge Offs) Recoveries (108) (327) (28) (425)
Provision for Loan 108 327 28 425
Losses
Balance at End of Period $1,800 $1,800 $1,800 $1,800
Allowance for Loan Losses as a
Percentage of Loans 3.25% 3.17% 3.25% 3.17%
Net (Charge Offs) Recoveries as a Percentage
of Average Loans 0.20% 0.58% 0.05% 0.74%
</TABLE>
FUNDING SOURCES:
DEPOSITS
Deposits. Average deposits totaled $89,841,000 in the second quarter
of 2000, a decrease of $4,853,000 (5.12%) from $94,694,000 in the second
quarter of 1999. Average core deposits were $88,154,000 for the second
quarter of 2000 down from $92,781,000 in the second quarter of 1999. Table
4 presents the composition of average deposits for the three quarters
ending June 30, 2000, March 31, 2000, and June 30, 1999.
<TABLE>
<CAPTION>
TABLE 4. DEPOSIT COMPOSITION
For The Three Months Ended
June 30 Mar 31, June 30
2000 2000 1999
Average % of Average % of Average % of
(Amounts in Balances Deposits Balances Deposits Balances Deposits
Thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand, Noninterest- 35,206 39.19% $34,271 38.49% $35,477 37.46%
Bearing
NOW Accounts 13,197 14.69% 13,479 15.14% 13,508 14.26%
Money Market Deposit 5,097 5.67% 5,200 5.84% 6,539 6.91%
Accounts
Savings Accounts 26,121 29.07% 25,745 28.92% 27,224 28.75%
Other Time Deposits 8,533 9.50% 8,593 9.65% 10,033 10.60%
Total Core Deposits 88,154 98.12% 87,288 98.04% 92,781 97.98%
Certificates of Deposit of
$100,000 or more 1,687 1.88% 1,748 1.96% 1,913 2.02%
Total Deposits $89,841 100.00% $89,036 100.00% $94,694 100.00%
</TABLE>
<PAGE>
BORROWINGS
The Company's long-term debt is comprised primarily of debentures,
which are secured by 40.79 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 $1,000,000 with a correspondent bank. The Bank can
borrow the amount of unpledged securities at the discount window at the
Federal Reserve Bank by pledging those 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. 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 second quarter of 2000 increased $110,000
over the same period last year, and increased $141,000 from the first six
months of 1999. The net interest margin increased to 2.15% for the second
quarter of 2000 from 1.96% for the second quarter of 1999.
The Company's average balances, interest income and expense and rates
earned or paid for major categories are set forth in the following tables:
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST, RATE AND NEW YIELDS
SECOND QUARTER 2000 SECOND QUARTER 1999
Average Average
(Amounts in Thousands) Balance Interest Rate Balance Interest Rate
<S>
ASSETS <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans, Net of Unearned Income(1)(2)
Taxable $55,512 1,816 3.27% $56,855 1,885 3.32%
Tax-Exempt - -
Investment Securities
Taxable 3,306 42 1.28% 4,309 51 1.18%
Tax-Exempt - -
Interest-Bearing Deposits - -
Federal Funds Sold 31,582 491 1.55% 32,696 384 1.17%
Total Interest-Earning 90,400 2,349 2.60% 93,860 2,320 2.47%
Assets
Cash and Due from Banks 5,580 5,634
Allowance for Loan Losses (1,810) (1,777)
Premises and Equipment 2,367 2,751
Other Real Estate 1,224 1,408
Other Assets 1,713 1,715
TOTAL ASSETS $99,474 $103,591
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 18,294 61 0.33% 20,047 91 0.45%
Savings Deposits 26,121 187 0.71% 27,224 206 0.76%
Time Deposits 10,220 103 1.01% 11,946 134 1.12%
Total Interest-Bearing 54,635 350 0.64% 59,217 431 0.73%
Deposits
Federal Funds Purchased
Securities sold under Agreements to
Repurchase
Other Short-Term Borrowings - -
Long-Term Debt 2,230 52 2.32% 2,255 52 2.31%
Total Int-Bearing 56,865 402 0.71% 61,472 483 0.79%
Liabilities
Noninterest-Bearing 35,206 35,477
Deposits
Other Liabilities 1,727 1,111
Shareholders' Equity 5,676 5,531
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $99,474 $103,591
Net Interest Income 1,947 1,837
Net Interest Income/Spread 1.89% 1.69%
Net Interest Margin 2.15% 1.96%
(1) Fee income relating to loans of $183,000 at June 30, 2000, and $159,000 at
June 30, 1999 is included in interest income.
(2) Nonaccrual loans are included in average balances and income on such loans,
if recognized,is recognized on the cash basis.
(3) Interest income does not include the effects of taxable-equivalent
adjustments using a Federal tax rate of 34%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST, RATE AND NEW YIELDS
Six Months Ended 6/00 Six Months Ended 6/99
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 $56,223 3,681 6.55% $57,719 3,823 6.62%
Tax-Exempt - -
Investment Securities
Taxable 3,323 80 2.42% 4,466 113 2.53%
Tax-Exempt - -
Interest-Bearing Deposits - -
Federal Funds Sold 30,066 894 2.97% 30,814 724 2.35%
Total Interest-Earning 89,611 4,655 5.19% 92,999 4,660 5.01%
Assets
Cash and Due from Banks 4,063 5,853
Allowance for Loan Losses (1,809) (1,789)
Premises and Equipment 2,428 2,677
Other Real Estate 1,253 1,394
Other Assets 3,576 1,782
TOTAL ASSETS $99,122 $102,916
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 18,486 123 0.66% 19,739 181 0.92%
Savings Deposits 25,933 371 1.43% 27,108 406 1.50%
Time Deposits 10,280 209 2.03% 11,473 261 2.27%
Total Interest-Bearing 54,700 703 1.28% 58,320 848 1.45%
Deposits
Federal Funds Purchased
Securities sold under Agreements to
Repurchase
Other Short-Term Borrowings - -
Long-Term Debt 2,231 104 4.65% 2,263 105 4.64%
Total Int-Bearing 56,931 806 1.42% 60,583 953 1.57%
Liabilities
Noninterest-Bearing 34,739 35,510
Deposits
Other Liabilities 1,791 1,084
Shareholders' Equity 5,661 5,739
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 99,122 $102,916
Net Interest Income 3,849 3,707
Net Interest Income/Spread 3.78% 3.44%
Net Interest Margin 4.30% 3.99%
(1) Fee income relating to loans of $350,000 at June 30, 2000, and $298,000 at
June 30, 1999 is included in interest income.
(2) Nonaccrual loans are included in average balances and income on such
loans, if recognized, is recognized on the cash basis.
(3) Interest income does not include the effects of taxable-equivalent
adjustments using a Federal tax rate of 34%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANALYSES OF CHANGES IN INTEREST INCOME AND INTEREST EXPENSE (1)
June, 2000 Compared to June, 1999
Change in
Interest Due to Total
(Amounts in thousands) Volume Rate Change
<S> <C> <C> <C>
Net Loans:
Taxable $ (45) $ (24) $ (69)
Tax-exempt(2) - - -
Investment Securities
Taxable (12) 3 (9)
Tax-exempt(2) - - -
Interest-bearing deposits - - -
Federal funds sold (13) 120 107
Total Interest Income (70) 99 29
Deposits:
Demand Deposits (8) (22) (30)
Savings deposits (8) (11) (19)
Time deposits (19) (12) (31)
Total interest-bearing deposits (35) (45) (80)
Federal Funds Purchased - - -
Securities sold under agreements - - -
to repurchase
Other Short-Term borrowings - - -
Long-Term debt (1) 0 (1)
Total Interest Expense (36) (45) (81)
Net Interest Income ($34) $144 $110
(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
An important source of the Company's revenue is derived from
noninterest income.
Noninterest income for the second quarter of 2000 decreased $56,000 or
10.57% from the same period last year. Table 5 presents noninterest income
for the three months and six months ended June 30, 2000 and 1999.
<PAGE>
<TABLE>
<CAPTION>
TABLE 5. NONINTEREST INCOME
Three Months Ended Six Months Ended
June 30 June 30 Increase June 30 June 30 Increase
(Amounts in 2000 1999 (Decrease) 2000 1999 (Decrease)
Thousands)
<S> <C> <C> <C> <C> <C> <C>
Service Charges $127 $137 ($10) $253 $272 ($19)
NSF Charges 144 158 (14) 283 304 (21)
Gain on Sale of - - - - - -
Securities
Cardholder & Other 125 128 (3) 236 235 1
Credit Card Income
Membership Fees 39 46 (7) 79 94 (15)
Other Comm & Fees 58 24 34 82 47 35
ORE Income 1 2 (1) 2 5 (3)
Gain on Sale of ORE 2 10 (8) 2 10 (8)
Other Income (22) 25 (47) 41 97 (56)
Total Noninterest $474 $530 ($57) $978 $1,064 ($86)
Income
</TABLE>
NONINTEREST EXPENSE
The major categories of noninterest expenses include salaries and
employee benefits, occupancy and equipment expenses and other operating
costs associated with the day-to-day operations of the Company.
Noninterest expense for the second quarter of 2000 decreased $207,000
or 8.34% from the same period last year. Table 6 presents the activity for
the three months and six months ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
TABLE 6. NONINTEREST EXPENSE
Three Months Ended Six Months Ended
June 30 June 30 Increase June 30 June 30 Increase
(Amounts in 2000 1999 (Decrease) 2000 1999 (Decrease)
Thousands)
<S> <C> <C> <C> <C> <C> <C>
Salaries & Benefits $1,117 $998 $119 $2,154 $1,993 $161
Loss on Litigation - - - (150) - (150)
Occupancy Expense 415 506 (91) 903 992 (89)
Advertising Expense 20 29 (9) 47 64 (17)
Communications 47 54 (7) 95 100 (5)
Postage 66 83 (17) 133 163 (30)
Loan & Credit Card 223 277 (54) 459 530 (71)
Expense
Professional Fees 51 119 (68) 114 204 (90)
Legal Fees 40 132 (92) 72 311 (239)
Insurance & 23 25 (2) 48 54 (6)
Assessments
Stationery, Forms & 62 91 (29) 119 172 (53)
Supply
ORE Expenses 12 22 (10) 38 55 (17)
Other Operating 198 145 53 304 250 54
Expense
Total Noninterest $2,274 $2,481 ($207) $4,336 $4,888 ($552)
Expense
</TABLE>
INCOME TAXES
The Company recorded a provision for income taxes of $13,000 for the
second quarter of 2000 and $0 for the second quarter of 1999. The
provision for income taxes consists of provisions for federal taxes only.
Louisiana does not have an income tax for banks.
<PAGE>
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>
<CAPTION>
TABLE 7. QUARTERLY SELECTED CAPITAL RATIOS
June 30 March 31, Dec. 31, Sept. 30,June 30
2000 2000 1999 1999 1999
<S> <C> <C> <C> <C> <C>
Risk-Based Capital
Tier 1 Risk Based Capital 12.24% 12.08% 10.50% 11.42% 10.22%
Ratio
Risk Based Capital Ratio 13.51% 13.35% 11.77% 12.69% 11.49%
Tier 1 Leverage Ratio 7.47% 7.44% 6.80% 7.03% 6.23%
</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
44.38% at June 30, 2000, 45.23% at March 30, 2000, and 44.97% at June 30,
1999.
Measuring liquidity and capital on a weekly basis enables management
to constantly monitor loan growth, and shifting customer preferences. The
committee's in-depth reviews of current, projected, and worse case
scenarios through various reports ensure the availability of funds and
capital adequacy.
The Bank intends on increasing capital by implementing an extensive
marketing program and evaluating all pricing fees and investing in
proprietary accounts, which will maximize the highest yield possible and
thereby improve earnings.
There are no known trends, events, regulatory authority
recommendations, or uncertainties that the Company is aware of that will
have or that are likely to have a material adverse effect on the Company's
liquidity, capital resources, or operations.
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)
August 10, 2000 G. Harrison Scott
Date Chairman
(in his capacity as a duly
authorized officer of the
Registrant)
Peggy L. Schaefer
Treasurer
(in her capacity as Chief
Accounting Officer of the
Registrant)
<PAGE>
