-----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, MteFY6hFV4O99U7lDbQqMdSJubevE1tLaBqhRTGErjpfbyCoTD/UfdZMNPEm3DUg NHbt1VDRiJiuaIU0gclYBQ== 0000832818-01-500003.txt : 20010515 0000832818-01-500003.hdr.sgml : 20010515 ACCESSION NUMBER: 0000832818-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOL BANCSHARES INC CENTRAL INDEX KEY: 0000832818 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [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: 1632647 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 p33101.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 March 31, 2001 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 30, 2001. Common Stock, $1 Par Value - 179,145. 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 None 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) March 31, Dec. 31, March 31, (Amounts in thousands) 2001 2000 2000 ASSETS Cash and Due from Banks Non-Interest Bearing Balances and Cash 6,682 4,909 7,552 Interest Bearing Balances - - - Investment Securities Securities Held to Maturity (Fair Values at 3/31/01, 12/31/00, & 3/31/00 respectively 1,495 2,982 2,933 $1,507,000, $2,984,000, and $2,930,000) Securities Available for Sale 388 388 367 Federal Funds Sold 25,555 25,905 32,240 Loans, net of Unearned Discount 60,977 57,727 55,099 Allowance for Loan Losses (1,800) (1,800) (1,800) Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization) 2,055 2,131 2,413 Other Real Estate 651 1,074 1,305 Deferred Taxes 27 211 237 Letters of Credit 64 54 104 Other Assets 1,008 1,126 1,121 TOTAL ASSETS $97,102 $94,707 $101,571 See accompanying notes to Financial Statements BANCSHARES, INC. CONSOLIDATED STATEMENT OF CONDITION (Continued) March 31, Dec. 31, March 31, (Amounts in thousands) 2001 2000 2000 LIABILITIES Deposits: Non-Interest Bearing 35,230 34,031 35,866 Interest Bearing 52,801 51,133 56,307 TOTAL DEPOSITS 88,031 85,164 92,173 Notes Payable 2,224 2,226 2,231 Letters of Credit Outstanding 64 54 104 Accrued Litigation Settlement - - - Accrued Interest 502 524 468 Other Liabilities 221 1,017 989 TOTAL LIABILITIES 91,042 88,985 95,965 STOCKHOLDERS' EQUITY Preferred Stock - Par Value $1 2,302,811 Shares Issued and Outstanding at 3/31/01, 12/31/00, and 3/31/00 2,303 2,303 2,303 Common Stock - Par Value $1 179,145 Shares Issued and Outstanding at 3/31/01, 12/31/00, and 3/31/00 179 179 179 Accumulated Other Comprehensive Income 197 197 183 Capital in Excess of Par - Retired Stock 15 15 15 Undivided Profits 3,028 2,649 2,649 Current Earnings 338 379 277 TOTAL STOCKHOLDERS' EQUITY 6,060 5,722 5,606 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $97,102 $94,707 $101,571 See accompanying notes to Financial Statements BANCSHARES, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) March 31, March 31, (Amounts in thousands) 2001 2000 INTEREST INCOME Interest and Fees on Loans 2,018 1,865 Interest on Time Deposits - - Interest on Securities Held to Maturity 34 38 Interest and Dividends on Securities Available for Sale - - Interest on Federal Funds Sold 356 403 Other Interest Income - - Total Interest Income 2,408 2,306 INTEREST EXPENSE Interest on Deposits 375 353 Interest on Federal Funds Purchased - - Other Interest Expense 10 10 Interest Expense on Notes Payable 2 2 Interest Expense on Debentures 39 39 Total Interest Expense 426 404 NET INTEREST INCOME 1,982 1,902 Provision for Loan Losses 97 (80) NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,885 1,982 NONINTEREST INCOME Service Charges on Deposit Accounts 260 265 Cardholder & Other Credit Card Income 158 152 ORE Income 687 1 Other Operating Income 113 85 Gain on Sale of Securities - - Total Noninterest Income 1,218 503 NONINTEREST EXPENSE Salaries and Employee Benefits 1,047 1,036 Occupancy Expense 392 488 Loan & Credit Card Expense 238 235 ORE Expense 435 26 Other Operating Expense 466 277 Total Noninterest Expense 2,578 2,062 Income Before Tax Provision 525 423 Provision (Benefit) For Income Taxes 187 146 NET INCOME $338 $277 Earnings Per Share of Common Stock $1.89 $1.55 See accompanying notes to Financial Statements BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) March 31, March 31, (Amounts in thousands) 2001 2000 NET INCOME (LOSS) $338 $277 OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Holding Gains (Losses) on Investment Securities Available-for-Sale, Arising During the Period - - Less: Reclassification Adjustment for Gains Included in Net Income OTHER COMPREHENSIVE INCOME COMPREHENSIVE INCOME (LOSS) $338 $277 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, 1999 2,303 179 183 15 2,649 5,329 Other Comprehensive Income, net of applicable deferred income taxes - - Net Income 277 277 Balance - March 31, 2000 2,303 179 183 15 2,926 $5,606 Balance December 31, 2000 2,303 179 197 15 3,028 5,722 Other Comprehensive "Income, net of" applicable deferred income taxes - Net Income (Loss) 338 338 Balance - March 31, 2001 2,303 179 197 15 3,366 $6,060 BOL BANCSHARES, INC. STATEMENTS OF CASH FLOWS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, (Amounts in thousands) 2001 2000 OPERATING ACTIVITIES Net Income (Loss) 338 277 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Provision for (Recovery of) Loan Losses 98 (80) Depreciation and Amortization Expense 94 135 Amortization of Investment Security Premiums (4) 4 Accretion of Investment Security Discounts (6) (15) (Increase)Decrease in Deferred Income Taxes 184 146 (Gain) Loss on Sale of Property and Equipment - - (Gain) Loss on Sale of Other Real Estate - - (Increase)Decrease in Other Assets 541 847 (Decrease)Increase in Other Liabilities, Accrued Interest and Accrued Loss Contingency (818) (431) Net Decrease(Increase) in Mortgage Loans Held for Resale - - Net Cash Provided by (Used in) Operating Activities 427 883 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 1,497 3,000 Purchases of Held-to-Maturity Investment Securities - (2,918) Proceeds from Sale of Property and Equipment - 0 Purchases of Property and Equipment (18) (8) Proceeds from Sale of Other Real Estate - - Purchases of Other Real Estate - (31) Net (Increase)Decrease in Loans (3,349) 3,761 Net Cash Provided by (Used in) Investing Activities (1,870) 3,804 FINANCING ACTIVITIES Net Increase (Decrease) in Non-Interest Bearing and Interest Bearing Deposits 2,867 1,617 Proceeds from Issuance of Long-Term Debt - - Retirement of Stock - - Principal Payments on Long Term Debt (2) (2) Net Cash Provided by (Used in) Financing Activities 2,865 1,615 Net Increase (Decrease) in Cash and Cash Equivalents 1,422 6,302 Cash and Cash Equivalents - Beginning of Year 30,814 33,489 Cash and Cash Equivalents - End of Period $32,236 $39,791 See accompanying notes to Financial Statements BOL BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 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 three-month period ended March 31, 2001, are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 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, 2000. Note 2. PER SHARE DATA Earning per common share data are computed using the weighted average number of shares outstanding which were 179,145 at March 31, 2001 and 2000. Note 3. 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, 2001, or (ii) believes the lawsuit is without sufficient merit or monetary exposure to require the posting of a reserve. The Company has not provided a judicial interest that may be awarded on a judgment pending the conclusion of the appeals procedure. Indeed, should the Company be successful in any of those lawsuits in which it has posted reserves, recoveries would be realized and the Company's consolidated net income would be positively impacted. The following actions, however, have been brought against the Company and, if the claimants were wholly successful on the merits, could result in significant exposure to the Bank: 1. The Company is a defendant in a lawsuit filed by another bank alleging the Company improperly dishonored checks totaling $979,000. The Company claims that such checks were properly returned ""nonsufficient funds"". When these checks were returned to the Plaintiff, of the $979,000, one check for $110,000 was misplaced by the FRB and therefore returned late to the Plaintiff. The Company was forced to cover the amount of the check. The Company filed a counter suit against the Plaintiffs for contribution on the $110,000 loss and for tortuous interference. The Plaintiff filed exceptions to the counter suit. These exceptions were heard in the district court and the Company's right to contribution was maintained, however the Company's suit for tortuous interference was dismissed. On appeal, the appellate court sustained the Company's right to contribution and overruled the lower court's decision on tortuous interference, finding that the Company could maintain such a cause of action. The Louisiana Supreme Court denied writs filed by the Plaintiff. The case is currently awaiting trial. The Company is vigorously defending all claims asserted in this suit. Expected Results: Outside counsel advises that the Company will not pay any damages in this matter and the likelihood is reasonably high that the Company will obtain some recovery from the Plaintiff. 2. 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 in March 2000, a decision was rendered in favor of the Bank and accordingly, the $150,000 was reversed and is reflected in operations. In February 2001 the $243,000 deposit for bond together with interest has been 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 4. 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: MARCH 31, 2001 Carrying Fair (Amounts in thousands) Amount Value Financial Assets: Cash and Short-Term Investments $32,237 $32,237 Investment Securities 1,883 1,895 Loans 60,977 60,569 Less: Allowance for Loan Losses 1,800 1,800 $93,297 $92,901 Financial Liabilities: Deposits $88,031 $88,007 Unrecognized Financial Instruments: Commitments to Extend Credit $1,168 $1,168 Commercial Lines of Credit 64 64 Credit Card Arrangements 65,823 65,823 $67,055 $67,055 QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA For Three Months Ended (Amounts in thousands, except March 31, Dec. 31, March 31, per share data) 2001 2000 2000 Interest Income $2,408 $2,363 $2,306 Interest Expense 426 423 404 Net Interest Income 1,982 1,940 1,902 Provision for Loan Losses 97 158 (80) Net Interest Income after Provision 1,885 1,782 1,982 Noninterest Income: Noninterest Income 1,218 664 503 Securities Gains - - - Noninterest Income 1,218 664 503 Noninterest Expense 2,578 2,426 2,062 Income before Taxes 525 20 423 Income Tax Expense (Benefit) 187 (30) 146 Net Income (Loss) $338 $50 $277 Income per Common Share $1.89 $0.28 $1.55 Average Common Shares Outstanding 179 179 179 Selected Quarter-End Balances Loans $60,977 $57,727 $55,099 Deposits 88,031 85,164 92,173 Long-Term Debt 2,224 2,226 2,231 Shareholders' Equity 6,060 5,722 5,606 Total Assets 97,102 94,707 101,571 Selected Average Balances Loans $57,946 $58,774 $56,933 Deposits 84,665 85,718 89,036 Long-Term Debt 2,225 2,226 2,231 Shareholders' Equity 6,138 5,748 5,647 Total Assets 94,076 95,103 98,769 Selected Ratios Return on Average Assets 0.36% 0.05% 0.28% Return on Average Equity 5.51% 0.87% 4.91% Tier 1 Risk-Based Capital 12.78% 12.27% 12.08% Risk-Based Capital 14.05% 13.54% 13.35% Tier 1 Leverage 8.55% 7.81% 7.44% BOL BANCSHARES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS March 31, 2001 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." This discussion may contain certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Readers are cautioned not to place undue reliance on these forward-looking statements. FIRST QUARTER 2001 HIGHLIGHTS BOL BANCSHARES' first quarter 2001 results showed improvement in earnings over the first quarter of 2000. Net income for the first quarter of 2001 totaled $338,000 ($1.89 per share), up 22.02% compared to a net income of $277,000 ($1.55 per common share) for the first quarter of 2000. Pre-tax, pre-provision earnings were $622,000, an increase from the first quarter of 2000 profit of $343,000. Total assets declined $4,469,000 (4.40%) to $97,102,000,000 at March 31, 2001 compared to March 31, 2000. Shareholders' equity increased $454,000 (8.10%)to $6,060,000 at March 31, 2001 compared TO March 31,2000. Total loans increased $5,878,000 (10.67%) from March 31, 2000 to $60,977,000 at March 31, 2001. Real Estate Mortgage loans grew $5,257,000 (17.82%) to $34,762,000, while credit card loans declined $1,195,000 (6.36%) to $17,603,000. Deposits declined $4,142,000 (4.49%) to $88,031,000 at March 31, 2001 compared to March 31, 2000. FINANCIAL CONDITION: EARNING ASSETS Interest earning assets averaged $86,198,000 in the first quarter of 2001, a $2,622,000 decrease from the first quarter of 2000 average of $88,820,000. Compared to the first quarter of 2000, average loans increased $1,013,000 (1.78%) while investment securities decreased $712,000 (21.32%) an federal funds sold decreased $2,923,000 (10.24%). Table 1 presents the Company's loan portfolio by major classifications. Total loans increased $5,878,000 (10.67%) over the first quarter of 2000. This increase is mainly attributable to the increase in real estate mortgage loans. TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO March 31, 2001 Dec. 31, 2000 March 31, 2000 (Amounts in thousands) Loans % Loans % Loans % Commercial, Financial, & Agricultural 3,716 6.09% 3,095 5.36% 3,921 7.12% Real Estate Mortgage 34,762 57.01% 32,264 55.89% 29,505 53.55% Mortgage Loan Held for Resale - 0.00% - 0.00% - 0.00% Personal Loans 4,655 7.63% 3,917 6.79% 2,754 5.00% Credit Cards-Visa, Mastercard 16,184 26.54% 16,547 28.66% 16,918 30.70% Credit Cards-Proprietary 1,419 2.33% 1,745 3.02% 1,880 3.41% Overdrafts 241 0.39% 159 0.28% 121 0.22% Loans $60,977 100.00% $57,727 100.00% $55,099 100.00% Securities Held to Maturity. Average securities held to maturity decreased $733,000 (24.66%) from the first quarter of 2000. 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 $21,000 (5.72%) from the first quarter of 2000. Securities available for sale are carried at fair value. Short Term Investments. Average federal funds sold decreased $2,923,000 (10.24%) down from the first quarter of 2000. 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 $700,000 at March 31, 2001 as compared to $1,306,000 at March 31, 2000. Other real estate totaled $651,000 at March 31, 2001 as compared to $1,305,000 at March 31, 2000. Table 2. NONPERFORMING ASSETS (Amounts in thousands) 03/31/01 12/31/00 09/30/00 06/30/00 03/31/00 Nonaccrual Loans 49 49 53 53 1 Restructured Loans - - - - - Other Real Estate Owned 651 1,074 1,074 1,105 1,305 Total Nonperforming Assets $700 $1,123 $1,127 $1,158 $1,306 Loans Past Due 90 days or More 439 367 393 354 434 Ratio of Past Due Loans to Loans0.72% 0.66% 0.66% 0.64% 0.79% Ratio of Nonperforming Assets to Loans and Other Real Estate Owned 1.14% 1.97% 1.87% 2.05% 2.32% IMPAIRED LOANS As of March 31, 2001, 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 decreased 9.12% to $3,169,000 at March 31, 2001 from $3,487,000 at March 31, 2000. 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 2001 and 2000. The allowance for loan losses as a percentage of loans decreased from 3.27% at March 31, 2000 to 2.95% at March 31, 2001. The net (charge-offs) recoveries as a percentage of average loans increased from -.14% at March 31, 2000 to .17% at March 31, 2001. 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 For The Three Months Ended March 31, March 31, (Amounts in thousands) 2001 2000 Balance at Beginning of Period $1,800 $1,800 Loans Charged Off (242) (290) Recoveries 145 370 Net (Charge Offs) Recoveries (97) 80 Provision for Loan Losses 97 (80) Balance at End of Period $1,800 $1,800 Allowance for Loan Losses as a Percentage of Loans 2.95% 3.27% Net (Charge Offs) Recoveries as a Percentage of Average Loans 0.17% -0.14% FUNDING SOURCES: DEPOSITS Average deposits totaled $84,665,000 in the first quarter of 2001, a decrease of $4,371,000 (4.91%) from $89,036,000 in the first quarter of 2000. Average core deposits were $83,391,000 for the first quarter of 2001 down from $87,288,000 in the first quarter of 2000. Table 4 presents the composition of average deposits for the three quarters ending March 31, 2001, December 31, 2000 and March 31, 2000. TABLE 4. DEPOSIT COMPOSITION For The Three Months Ended March 31, Dec. 31, March 31, 2001 2000 2000 Average % of Average % of Average % of (Amounts in thousands) Balances Deposits Balances Deposits Balances Deposits Demand, Noninterest-Bearing $33,358 39.40% $34,294 40.01% $34,271 8.49% NOW Accounts 12,416 14.66% 13,417 15.65% 13,479 5.14% Money Market Deposit Accounts 5,110 6.03% 4,307 5.02% 5,200 5.84% Savings Accounts 24,978 29.50% 24,725 28.84% 25,745 8.92% Other Time Deposits 7,529 8.89% 7,779 9.08% 8,593 9.65% Total Core Deposits 83,391 98.50% 84,522 98.60% 87,288 8.04% Certificates of Deposit of $100,000 or more 1,274 1.50% 1,196 1.40% 1,748 1.96% Total Deposits $84,665 100.00% $85,718 100.00% $89,036 100.00% 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 first quarter of 2001 increased $80,000 over the same period last year. The net interest income margin increased to 2.30% for the first quarter of 2001 from 2.14% for the first quarter of 2000. 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 YIELDS FIRST QUARTER 2001 FIRST QUARTER 2000 Average Average (Dollars in thousands) Balance Interest Rate Balance Interest Rate ASSETS INTEREST-EARNING ASSETS: Loans, net of unearned income(1)(2) Taxable 57,946 2,018 3.48% 56,933 1,865 3.28% Tax-exempt - - Investment securities Taxable 2,628 34 1.29% 3,340 38 1.14% Tax-exempt - - Interest-bearing deposits - - - - Federal funds sold 25,624 356 1.39% 28,547 403 1.41% Total Interest-Earning Assets 86,198 2,408 2.79% 88,820 2,306 2.60% Cash and due from banks 5,296 5,749 Allowance for loan Losses (1,805) (1,809) Premises and equipment 2,096 2,490 Other Real Estate 783 1,282 Other assets 1,508 2,237 TOTAL ASSETS $94,076 $98,769 LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST-BEARING LIABILITIES: Deposits: Demand Deposits 17,526 82 0.47% 18,679 62 0.33% Savings deposits 24,978 195 0.78% 25,745 185 0.72% Time deposits 8,803 98 1.11% 10,341 106 1.03% Total Interest-Bearing Deposits 51,307 375 0.73% 54,765 353 0.64% Federal Funds Purchased Securities sold under agreements to repurchase Other Short-Term borrowings - - Long-Term debt 2,225 51 2.27% 2,231 51 2.29% Total Int-Bearing Liabilities 53,532 426 0.80% 56,996 404 0.71% Noninterest-bearing deposits 33,358 34,271 Other liabilities 1,048 1,855 Shareholders' equity 6,138 5,647 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $94,076 $98,769 Net Interest Income 1,982 1,902 Net Interest Spread 2.00% 1.89% Net Interest Margin 2.30% 2.14% (1) Fee income relating to loans of $156,000 at March 31, 2001, and $167,000 at March 31,2000 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) March 2001 Compared to March 2000 Change in Interest Due to Total (Dollars in thousands) Volume Rate Change Net Loans: Taxable 120 33 153 Tax-Exempt(2) - - - Investment Securities - - - Taxable 4 (8) (4) Tax-Exempt(2) - - - Interest-Bearing Deposits - - - Federal Funds Sold (6) (41) (47) Total Interest Income 118 (16) 102 Deposits: Demand Deposits 24 (4) 20 Savings Deposits 15 (5) 10 Time Deposits 8 (16) (8) Total Interest-Bearing Deposits 47 (25) 22 Federal Funds Purchased - - - Securities Sold under Agreements to Repurchase - - - Other Short-Term Borrowings - - - Long-Term Debt (0) (0) (0) Total Interest Expense 47 (25) 22 (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 first quarter of 2001 increased $715,000 or 142.15% from the same period last year. This increase is attributable to a gain on the sale of ORE. This parcel was sold in 1998, however the regulators advised that the Company incorrectly applied the full accrual method of accounting. Due to this the Company restated all financials. The Company recognized this gain on the sale of ORE in 2001 as the purchaser's payments have reached certain levels outlined by the regulators. Table 5 presents noninterest income for the three months ended March 31, 2001 and 2000. TABLE 5. NONINTEREST INCOME For The Three Months Ended March 31, March 31, Increase (Amounts in thousands) 2001 2000 (Decrease) Service Charges $121 $126 ($5) NSF Charges 139 139 (0) Gain on Sale of Securities - - - Cardholder & Other Credit Card Income 132 111 21 Membership Fees 26 41 (15) Other Commission & Fees 19 23 (4) ORE Income 1 1 (0) Gain on Sale of ORE 686 - 686 Other Income 94 62 32 Total Noninterest Income $1,218 $503 $715 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 first quarter of 2001 increased $516,000 or 25.02% from the same period last year. This increase is attributable to the writedown of 4 parcels of ORE. Table 6 presents noninterest expense for the three months ended March 31, 2001 and 2000. TABLE 6. NONINTEREST EXPENSE For The Three Months Ended March 31, March 31, Increase (Amounts in thousands) 2001 2000 (Decrease) Salaries & Benefits $1,047 $1,036 11 Loss on Litigation - (150) 150 Occupancy Expense 392 488 (96) Advertising Expense 13 27 (14) Communications 41 48 (7) Postage 61 67 (6) Loan & Credit Card Expense 238 235 3 Professional Fees 33 62 (29) Legal Fees 69 32 37 Insurance & Assessments 25 25 (0) Stationery, Forms & Supply 61 57 4 ORE Expenses 435 26 409 Other Operating Expense 163 109 54 Total Noninterest Expense $2,578 $2,062 $516 INCOME TAXES The Company recorded a provision for income taxes of $187,000 for the first quarter of 2001 and $146,000 for the first quarter of 2000. 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 March 31, Dec. 31, Sept. 30, June 30, March 31, 2001 2000 2000 2000 2000 Risk-Based Capital Tier 1 Risk Based Capital Ratio 12.78% 12.27% 12.13% 12.24% 12.08% Risk Based Capital Ratio 14.05% 13.54% 13.40% 13.51% 13.35% Tier 1 Leverage Ratio 8.55% 7.81% 7.82% 7.47% 7.44% 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 37.19% at March 31, 2001, 38.91% at December 31, 2000, and 45.23% at March 31, 2000. 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. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of the Company. There have been no material changes in reported market risks faced by the Company since the end of the most recent year. 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) /s/ G. Harrison Scott ______________________ May 14, 2001 G. Harrison Scott Date Chairman (in his capacity as a duly authorized officer of the Registrant) /s/ Peggy L. Schaefer ______________________ Peggy L. Schaefer Treasurer (in her capacity as Chief Accounting Officer of the Resgistrant)
-----END PRIVACY-ENHANCED MESSAGE-----