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, 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 April 28, 2000.
Common Stock, $1 Par Value - 179,145 shares.
<PAGE>
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 23
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)
March 31, Dec. 31, March 31,
(Amounts in thousands) 2000 1999 1999
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash 7,552 8,704 7,489
Interest Bearing Balances - - -
Investment Securities
Securities Held to Maturity (Fair Values at
3/31/00, 12/31/99, & 3/31/99 respectively 2,933 3,004 4,019
were
$2,930,000, $3,000,000, and $4,021,000)
Securities Available for Sale 367 367 291
Federal Funds Sold 32,240 24,785 32,325
Loans, net of Unearned Discount 55,099 58,781 57,019
Allowance for Loan Losses (1,800) (1,800) (1,800)
Property, Equipment and Leasehold
Improvements
(Net of Depreciation and Amortization) 2,413 2,540 2,641
Other Real Estate 1,305 1,274 1,415
Deferred Taxes 237 382 454
Letters of Credit 104 104 84
Other Assets 1,121 1,968 1,164
TOTAL ASSETS $101,571 $100,109 $105,101
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION (Continued)
<TABLE>
<CAPTION>
March 31, Dec. 31, March 31,
(Amounts in thousands) 2000 1999 1999
<S> <C> <C> <C>
LIABILITIES
Deposits:
Non-Interest Bearing 35,866 35,306 36,659
Interest Bearing 56,307 55,250 59,014
TOTAL DEPOSITS 92,173 90,556 95,673
Notes Payable 2,231 2,233 2,271
Letters of Credit Outstanding 104 104 84
Accrued Litigation Settlement - 150 200
Accrued Interest 468 486 446
Other Liabilities 989 1,251 1,342
TOTAL LIABILITIES 95,965 94,780 100,016
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $1
2,302,811 Shares Issued and Outstanding at
3/31/00, 12/31/99, and 3/31/99 2,303 2,303 2,303
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding at
3/31/00, 12/31/99, and 3/31/99 179 179 179
Accumulated Other Comprehensive Income 183 183 133
Capital in Excess of Par - Retired Stock 15 15 15
Undivided Profits 2,649 2,555 2,556
Current Earnings 277 94 (101)
TOTAL STOCKHOLDERS' EQUITY 5,606 5,329 5,085
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $101,571 $100,109 105,101
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BANCSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
March 31, March 31,
(Amounts in thousands) 2000 1999
<S> <C> <C>
INTEREST INCOME
Interest and Fees on Loans 1,865 1,938
Interest on Time Deposits - -
Interest on Securities Held to Maturity 38 60
Interest and Dividends on Securities - 2
Available for Sale
Interest on Federal Funds Sold 403 340
Other Interest Income - -
Total Interest Income 2,306 2,340
INTEREST EXPENSE
Interest on Deposits 353 418
Interest on Federal Funds Purchased - -
Other Interest Expense 10 9
Interest Expense on Notes Payable 2 3
Interest Expense on Debentures 39 40
Total Interest Expense 404 470
NET INTEREST INCOME 1,902 1,870
Provision for (Recovery of) Loan Losses (80) 98
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,982 1,772
OTHER INCOME
Service Charges on Deposit Accounts 265 283
Cardholder & other credit card income 152 155
ORE Income 1 2
Other Operating Income 85 94
Gain on Sale of Securities - -
Total Other Income 503 534
OTHER EXPENSE
Salaries and Employee Benefits 1,036 995
Occupancy Expense 488 485
Loan & Credit Card Expense 235 253
ORE Expense 26 33
Other Operating Expense 277 641
Total Other Expenses 2,062 2,407
Income Before Tax Provision 423 (101)
Provision (Benefit) For Income Taxes 146 -
NET INCOME 277 (101)
Earnings Per Share of Common Stock $1.55 ($0.56)
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
March 31, Dec. 31, March 31,
(Amounts in thousands) 2000 1999 1999
<S> <C> <C> <C>
NET INCOME (LOSS) $277 $94 ($101)
OTHER COMPREHENSIVE INCOME, NET OF TAX
Unrealized Holding Gains (Losses) on
Investment Securities Available-for-Sale,
Arising During the Period 50
Less: Reclassification Adjustment for Gains
Included in Net Income
OTHER COMPREHENSIVE INCOME 50
COMPREHENSIVE INCOME (LOSS) $277 $144 ($101)
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<PAGE>
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 -
Net Income (101) (101)
Balance - March 31, 2,303 179 133 15 2,455 5,085
1999
Balance December 31, 2,303 179 183 15 2,649 5,329
1999
Other Comprehensive
Income, net of
applicable deferred income
taxes -
Net Income (Loss) 277 277
Balance - March 31, 2,303 179 183 15 2,926 $5,606
2000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BOL BANCSHARES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
(Amounts in thousands) 2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) 277 (101)
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by (Used in) Operating Activities:
Provision for (Recovery of) Loan Losses (80) 98
Depreciation and Amortization Expense 135 120
Amortization of Investment Security Premiums 4 2
Accretion of Investment Security Discounts (15) (2)
(Increase)Decrease in Deferred Income Taxes 146 -
(Gain) Loss on Sale of Property and - -
Equipment
(Gain) Loss on Sale of Other Real Estate - -
(Increase)Decrease in Other Assets & Prepaid 847 151
Taxes
(Decrease)Increase in Other Liabilities,
Accrued Interest and Accrued Loss (431) 912
Contingency
Net Decrease(Increase) in Mortgage Loans - -
Held for Resale
Net Cash Provided by (Used in) Operating 883 1,180
Activities
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 0
Purchases of Property and Equipment (8) (255)
Proceeds from Sale of Other Real Estate - -
Purchases of Other Real Estate (31) (63)
Net (Increase)Decrease in Loans 3,762 3,742
Net Cash Provided by (Used in) Investing 3,805 3,902
Activities
FINANCING ACTIVITIES
Net Increase (Decrease) in Non-Interest Bearing
and Interest Bearing Deposits 1,617 1,090
Proceeds from Issuance of Long-Term Debt - -
Retirement of Stock - -
Principal Payments on Long Term Debt (2) (1)
Net Cash Provided by (Used in) Financing 1,615 1,089
Activities
Net Increase (Decrease) in Cash and Cash 6,302 6,169
Equivalents
Cash and Cash Equivalents - Beginning of Year 33,489 33,643
Cash and Cash Equivalents - End of Period $39,791 $39,812
See accompanying notes to Financial Statements
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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 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, 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 and Form 10-Q for March 31,
1999 was amended on April 25, 2000.
Note 3. PER SHARE DATA
Income per common share data are based on the weighted average number
of shares outstanding of 179,145 at March 31, 2000 and March 31, 1999
respectively.
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 March 31, 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
<PAGE>
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 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 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.
The estimated fair values of the Bank's financial instruments are as
follows:
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, 2000
Carrying Fair
(Amounts in thousands) Amount Value
<S> <C> <C>
Financial Assets:
Cash and Short-Term Investments $39,792 $39,792
Investment Securities 3,300 3,297
Loans 55,099 54,741
Less: Allowance for Loan Losses 1,800 1,800
$96,391 $96,030
Financial Liabilities:
Deposits $92,173 $92,222
Unrecognized Financial Instruments:
Commitments to Extend Credit $2,267 $2,267
Commercial Lines of Credit 104 104
Credit Card Arrangements 54,564 54,564
$56,935 $56,935
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY
For Three Months Ended
(Amounts in thousands, except March 31, Dec. 31, March 31,
per share data) 2000 1999 1999
<S> <C> <C> <C>
Interest Income $2,306 $2,170 $2,340
Interest Expense 404 424 470
Net Interest Income 1,902 1,746 1,870
Provision for (Recovery of) Loan (80) (815) 98
Losses
Net Interest Income after 1,982 2,561 1,772
Provision
Other Income:
Other Income 503 543 534
Securities Gains - - -
Other Income 503 543 534
Other Expense 2,062 2,348 2,407
Income before Taxes 423 756 (101)
Income Tax Expense (Benefit) 146 46 -
Net Income (Loss) $277 $710 ($101)
Income per Common Share $1.55 $3.97 ($0.56)
Average Common Shares 179 179 179
Outstanding
Selected Quarter-End Balances
Loans $55,099 $58,781 $57,019
Deposits 92,173 90,556 95,673
Long-Term Debt 2,231 2,233 2,271
Shareholders' Equity 5,606 5,329 5,085
Total Assets 101,571 100,109 105,101
Selected Average Balances
Loans $56,933 $57,951 $58,593
Deposits 89,036 90,356 92,366
Long-Term Debt 2,231 2,233 2,271
Shareholders' Equity 5,647 6,973 5,965
Total Assets 98,769 105,856 102,249
Selected Ratios
Return on Average Assets 0.28% 0.67% -0.10%
Return on Average Equity 4.91% 10.18% -1.64%
Tier 1 Risk-Based Capital 12.08% 10.50% 10.73%
Risk-Based Capital 13.35% 11.77% 12.00%
Tier 1 Leverage 7.44% 6.80% 6.70%
</TABLE>
<PAGE>
BOL BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 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). This discussion should be read in
conjunction with the accompanying consolidated financial statements, notes
and tables.
FINANCIAL CONDITION:
EARNING ASSETS
Interest earning assets averaged $88,820,000 in the first quarter of
2000, a $3,665,000 decrease from the first quarter of 1999 average of
$92,485,000. Compared to the first quarter of 1999, average loans
decreased $1,660,000 (2.83%) investment securities decreased $1,641,000
(32.95%) and federal funds sold decreased $364,000 (1.26%).
Table 1 presents the Company's loan portfolio by major
classifications. Total loans decreased $1,920,000 (3.37%)over the first
quarter of 1999. This decrease is mainly attributable to the decline in
the credit card portfolio. Visa / MasterCard loans decreased $3,360,000
(16.57%) and Proprietary loans decreased $712,000 (27.47%) due to the loss
of several proprietary accounts, offset by an increase in real estate loans
of $3,229,000 (12.29%).
<TABLE>
<CAPTION>
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO
March 31, 2000 Dec. 31, 1999 March 31, 1999
(Amounts in Loans % Loans % Loans %
Thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, 3,921 7.12% 1,831 3.11% 4,834 8.48%
Financial, &
Agricultural
Real Estate Mortgage 29,505 53.55% 30,684 52.20% 26,276 46.08%
Mortgage Loan Held - 0.00% - 0.00% - 0.00%
for Resale
Personal Loans 2,754 5.00% 5,125 8.72% 2,904 5.09%
Credit Cards-Visa, 16,918 30.70% 18,585 31.62% 20,278 35.56%
Mastercard
Credit Cards- 1,880 3.41% 2,428 4.13% 2,592 4.55%
Proprietary
Overdrafts 121 0.22% 128 0.22% 135 0.24%
Loans $55,099 100.00% $58,781 100.00% $57,019 100.00%
</TABLE>
Securities Held to Maturity. Average securities held to maturity
decreased $1,361,000 (31.40%) from the first 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 $280,000 (43.28%) from the first quarter of 1999. Securities
available for sale are carried at fair value.
<PAGE>
Short Term Investments. Average federal funds sold decreased $364,000
(1.26%) down from the first quarter of 1999.
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 $1,306,000 at March 31, 2000 as compared
to $2,217,000 at March 31, 1999. Other real estate totaled $1,305,000 at
March 31, 2000 as compared to $1,415,000 at March 31, 1999.
<TABLE>
<CAPTION>
Table 2. NONPERFORMING ASSETS
(Amounts in 03/31/00 12/31/99 09/30/99 06/30/99 03/31/99
Thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual Loans 1 40 35 835 802
Restructured Loans - - - - -
Other Real Estate Owned 1,305 1,274 1,337 1,340 1,415
Total Nonperforming Assets $1,306 $1,314 $1,372 $2,175 $2,217
Loans Past Due 90 days or More 434 528 605 539 821
Ratio of Past Due Loans to 0.79% 0.90% 1.05% 0.95% 1.44%
Loans
Ratio of Nonperforming Assets to Loans
and Other Real Estate Owned 2.32% 2.19% 2.33% 3.74% 3.79%
</TABLE>
IMPAIRED LOANS
As of March 31, 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 63.26% to $3,487,000 at March 31, 2000 from
$2,136,000 at March 31, 1999. The increase is primarily due to one loan in
the amount of $1,169,000 that has been rated as substandard by the FDIC due
to the size of the loan. This loan has been current since inception.
<PAGE>
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 LOAN LOSSES
Table 3 presents an analysis of the activity in the allowance for loan
losses for the first quarter of 2000 and 1999. The allowance for loan
losses as a percentage of loans increased from 3.16% at March 31, 1999 to
3.27% at March 31, 2000. The net charge-off (recoveries) as a percentage
of average loans decreased from .17% at March 31, 1999 to
- -.14% at March 31, 2000. The net recoveries of $80 as of March 31, 2000 is
due to the recovery of $202,000 from the settlement of a lawsuit against a
proprietor.
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.
<TABLE>
<CAPTION>
TABLE 3. ALLOWANCE FOR LOAN LOSSES
For The Three Months Ended
March 31, March 31,
(Amounts in Thousands) 2000 1999
<S> <C> <C>
Balance at Beginning of Period $1,800 $1,800
Loans Charged Off (290) (296)
Recoveries 370 198
Net (Charge Offs) Recoveries 80 (98)
Provision for (Recovery of) Loan Losses (80) 98
Balance at End of Period $1,800 $1,800
Allowance for Loan Losses as a
Percentage of Loans 3.27% 3.16%
Net (Charge Offs) Recoveries as a Percentage
of Average Loans -0.14% 0.17%
</TABLE>
FUNDING SOURCES:
DEPOSITS
Deposits. Average deposits totaled $89,036,000 in the first quarter
of 2000, a decrease of $3,330,000 (3.61%) from $92,366,000 in the first
quarter of 1999. Average core deposits were $87,288,000 for the first
quarter of 2000 down from $90,704,000 in the first quarter of 1999. Table
4 presents the composition of average deposits for the three quarters
ending March 31, 2000, December 31, 1999 and March 31, 1999.
<PAGE>
<TABLE>
<CAPTION>
TABLE 4. DEPOSIT COMPOSITION
For The Three Months Ended
March 31, Dec. 31, March 31,
2000 1999 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- $34,271 38.49% $34,040 37.67% $35,543 38.48%
Bearing
NOW Accounts 13,479 15.14% 13,837 15.31% 12,905 13.97%
Money Market Deposit 5,200 5.84% 5,340 5.91% 5,815 6.30%
Accounts
Savings Accounts 25,745 28.92% 25,955 28.73% 26,990 29.22%
Other Time Deposits 8,593 9.65% 9,404 10.41% 9,451 10.23%
Total Core Deposits 87,288 98.04% 88,576 98.03% 90,704 98.20%
Certificates of Deposit of
$100,000 or more 1,748 1.96% 1,780 1.97% 1,662 1.80%
Total Deposits $89,036 100.00% $90,356 100.00% $92,366 100.00%
</TABLE>
BORROWINGS
The Company's long-term debt is comprised primarily of debentures
which are secured by 39.72 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.
<PAGE>
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 2000 increased $32,000
over the same period last year. The net interest income margin increased
to 2.14% for the first quarter of 2000 from 2.02% for the first 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 ASSSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST, RATE AND NEW YIELDS
FIRST QUARTER 2000 FIRST QUARTER 1999
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 56,933 1,865 3.28% 58,593 1,938 3.31%
Tax-exempt - -
Investment securities
Taxable 3,340 38 1.14% 4,981 62 1.24%
Tax-exempt - -
Interest-bearing deposits - - - -
Federal funds sold 28,547 403 1.41% 28,911 340 1.18%
Total Interest-Earning 88,820 2,306 2.60% 92,485 2,340 2.53%
Assets
Cash and due from banks 5,749 6,075
Allowance for loan Losses (1,809) (1,802)
Premises and equipment 2,490 2,602
Other Real Estate 1,282 1,380
Other assets 2,237 1,509
TOTAL ASSETS $98,769 $102,249
LIABILITIES AND SHAREHOLDERS' EQUITY
INTEREST-BEARING LIABILITIES:
Deposits:
Demand Deposits 18,679 62 0.33% 18,720 91 0.49%
Savings deposits 25,745 185 0.72% 26,990 201 0.74%
Time deposits 10,341 106 1.03% 11,113 126 1.13%
Total Interest-Bearing 54,765 353 0.65% 56,823 418 0.74%
Deposits
Federal Funds Purchased
Securities sold under agreements to
repurchase
Other Short-Term borrowings - -
Long-Term debt 2,231 51 2.28% 2,271 52 2.29%
Total Int-Bearing 56,996 404 0.71% 59,094 470 0.80%
Liabilities
Noninterest-bearing 34,271 35,543
deposits
Other liabilities 1,855 1,647
Shareholders' equity 5,647 5,965
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $98,769 $102,249
Net Interest Income 1,902 1,870
Net Interest Spread 1.89% 1.73%
Net Interest Margin 2.14% 2.02%
(1) Fee income relating to loans of $167,000 at March 31, 2000, and
$139,000 at March 31, 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
March, 2000 Compared to March, 1999
Variance Attributed to (1)
Net
(Amounts in thousands) Volume Rate Change
<S> <C> <C> <C>
Net Loans:
Taxable (1,660) -0.03% (73)
Tax-exempt(2) - 0.00% -
Investment Securities - 0.00% -
Taxable (1,641) -0.11% (24)
Tax-exempt(2) - 0.00% -
Interest-bearing deposits - 0.00% -
Federal funds sold (364) 0.24% 63
Total Interest-Earning Assets (3,665) 0.07% (34)
Deposits:
Demand Deposits (41) -0.15% (29)
Savings deposits (1,245) -0.03% (16)
Time deposits (772) -0.11% (20)
Total interest-bearing (2,058) -0.09% (65)
deposits
Federal Funds Purchased - 0.00% -
Securities sold under - 0.00% -
agreements to repurchase
Other Short-Term borrowings - 0.00% -
Long-Term debt (40) -0.01% (1)
Total Interest-Bearing ($2,098) -0.09% ($66)
Liabilities
(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>
OTHER INCOME
An important source of the Company's revenue is derived from other
income.
Other income for the first quarter of 2000 decreased $31,000 or 5.81%
from the same period last year. Table 5 presents other income for the
three months ended March 31, 2000 and 1999.
<PAGE>
<TABLE>
<CAPTION>
TABLE 5. OTHER INCOME
For The Three Months Ended
March 31, March 31, Increase
(Amounts in thousands) 2000 1999 (Decrease)
<S> <C> <C> <C>
Service Charges $126 $135 (9)
NSF Charges 139 146 (7)
Gain on Sale of Securities - - -
Cardholder & Other Credit Card 111 107 4
Income
Membership Fees 41 48 (7)
Other Comm & Fees 23 23 0
ORE Income 1 2 (1)
Gain on Sale of ORE - - -
Other Income 62 73 (11)
Total Other Income $503 $534 (31)
</TABLE>
OTHER EXPENSE
The major categories of other expense include salaries and employee
benefits, occupancy and equipment expenses and other operating associated
with the day-to-day operations of the Company.
Other expense for the first quarter of 2000 decreased $345,000 or
14.33% from the same period last year. Table 6 presents the activity for
the three months ended March 31, 2000 and 1999. The decrease from the same
period last year is mainly due to the reversal of the loss on litigation in
the amount of $150,000 due to a decision rendered in favor of the Bank and
the reduction of legal fees by $147,000 due mainly to the settlement of
another suit in 1999 thereby reducing the Bank's legal fees.
<TABLE>
<CAPTION>
TABLE 6. OTHER EXPENSE
For The Three Months Ended
March 31, March 31, Increase
(Amounts in thousands) 2000 1999 (Decrease)
<S> <C> <C> <C>
Salaries & Benefits $1,036 $995 41
Loss on Litigation (150) - (150)
Occupancy Expense 488 485 3
Advertising Expense 27 35 (8)
Communications 48 46 2
Postage 67 80 (13)
Loan & Credit Card Expense 235 253 (18)
Professional Fees 62 85 (23)
Legal Fees 32 179 (147)
Insurance & Assessments 25 29 (4)
Stationery, Forms & Supply 57 82 (25)
ORE Expenses 26 33 (7)
Other Operating Expense 109 105 4
Total Other Expense $2,062 $2,407 (345)
</TABLE>
INCOME TAXES
The Company recorded a provision for income taxes of $146,000 for the
first quarter of 2000 and $0 for 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
March Dec. 31, Sept. 30, June 30, March
31, 31,
2000 1999 1999 1999 1999
<S> <C> <C> <C> <C> <C>
Risk-Based Capital
Tier 1 Risk Based Capital 12.08% 10.50% 11.42% 11.41% 10.73%
Ratio
Risk Based Capital Ratio 13.35% 11.77% 12.69% 12.68% 12.00%
Tier 1 Leverage Ratio 7.44% 6.80% 7.03% 6.96% 6.70%
</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
45.23% at March 31, 2000, 39.21% at December 31, 1999, and 44.83% at March
31, 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 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 2, 2000 Peggy L. Schaefer
Date Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-END> Mar-31-2000
<CASH> 7,552
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 32,240
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,300
<INVESTMENTS-CARRYING> 3,300
<INVESTMENTS-MARKET> 3,297
<LOANS> 55,099
<ALLOWANCE> 1,800
<TOTAL-ASSETS> 101,571
<DEPOSITS> 92,173
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,561
<LONG-TERM> 2,231
0
2,303
<COMMON> 179
<OTHER-SE> 3,124
<TOTAL-LIABILITIES-AND-EQUITY> 101,571
<INTEREST-LOAN> 1,865
<INTEREST-INVEST> 38
<INTEREST-OTHER> 403
<INTEREST-TOTAL> 2,306
<INTEREST-DEPOSIT> 353
<INTEREST-EXPENSE> 51
<INTEREST-INCOME-NET> 1,902
<LOAN-LOSSES> (80)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,062
<INCOME-PRETAX> 423
<INCOME-PRE-EXTRAORDINARY> 423
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 277
<EPS-BASIC> 1.55
<EPS-DILUTED> 0
<YIELD-ACTUAL> 1.89
<LOANS-NON> 1
<LOANS-PAST> 434
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,487
<ALLOWANCE-OPEN> 1,800
<CHARGE-OFFS> 290
<RECOVERIES> 370
<ALLOWANCE-CLOSE> 1,800
<ALLOWANCE-DOMESTIC> 1,800
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
