-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fb9EAcF7D64HCsT7ox2fZq5ShsEVfrdcj+bSCuUne+aHYl2K8PPHBRwXBGv6HKyr 1DT+9OALaxLLYvccuhs7aA== /in/edgar/work/20000811/0000832818-00-000015/0000832818-00-000015.txt : 20000921 0000832818-00-000015.hdr.sgml : 20000921 ACCESSION NUMBER: 0000832818-00-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOL BANCSHARES INC CENTRAL INDEX KEY: 0000832818 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 721121561 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16934 FILM NUMBER: 692715 BUSINESS ADDRESS: STREET 1: 300 ST CHARLES AVE CITY: NEW ORLEANS STATE: LA ZIP: 70130 BUSINESS PHONE: 5048899400 MAIL ADDRESS: STREET 1: 300 ST CHARLES AVENUE CITY: NEW ORLEANS STATE: LA ZIP: 70130 10-Q 1 0001.txt 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. 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. Part I. - Financial Information
BOL BANCSHARES, INC. CONSOLIDATED STATEMENT OF CONDITION (Unaudited) June 30 Dec. 31, June 30 (Amounts in Thousands) 2000 1999 1999 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
BOL BANCSHARES, INC. CONSOLIDATED STATEMENT OF CONDITION (Continued) June 30 Dec. 31, June 30 (Amounts in Thousands) 2000 1999 1999 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
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 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
BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) June 30 Dec. 31, June 30 (Amounts in thousands) 2000 1999 1999 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
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 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
BOL BANCSHARES, INC. STATEMENTS OF CASH FLOWS (Unaudited) For The Six Months Ended June 30 (Amounts in Thousands) 2000 1999 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
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.
Number of Shares Nominee For Against Abstain 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
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. 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 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:
June 30, 2000 Carrying Fair (Amounts in Thousands) Amount Value 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
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 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%
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.
TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO June 30, 2000 March 31, 2000 June 30, 1999 (Amounts in Loans % Loans % Loans % Thousands) 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%
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.
Table 2. NONPERFORMING ASSETS (Amounts in 06/30/00 03/31/00 12/31/99 09/30/99 06/30/99 Thousands) 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%
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 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 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 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%
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 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) 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%
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:
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 ASSETS 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%.
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 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%.
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 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%.
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.
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) 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
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 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) 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
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. 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 7. QUARTERLY SELECTED CAPITAL RATIOS June 30 March 31, Dec. 31, Sept. 30,June 30 2000 2000 1999 1999 1999 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%
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. 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) EX-27 2 0002.txt
9 1,000 6-MOS Dec-31-2000 Jun-30-2000 7,256 0 30,690 0 3,313 3,313 3,313 55,418 1,800 99,796 90,232 0 1,672 2,229 0 2,303 179 3,181 99,796 3,682 80 894 4,656 705 103 3,848 28 0 4,336 462 462 0 0 303 $1.69 0 3.78 53 354 0 3,230 1,800 595 567 1,800 1,800 0 0
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