-----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, KjH63P/1xigFpZGjX0hQ3Y47JEjP4dTlouxE98C4XcybA8+gVXH8jJsaQoOtuSe1 kdPSRdPCDH19bmPFTuvjNw== 0000832818-01-500008.txt : 20020410 0000832818-01-500008.hdr.sgml : 20020410 ACCESSION NUMBER: 0000832818-01-500008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 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: 1934 Act SEC FILE NUMBER: 000-16934 FILM NUMBER: 1784659 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 r10q901.txt REPORT 10Q 9-2001 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 September 30, 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 October 31, 2001. 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 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) Sept 30 Dec. 31 Sept 30 (Amounts in Thousands) 2001 2000 2000 ASSETS Cash and Due from Banks Non-Interest Bearing Balances and Cash $5,093 $4,909 $6,713 Interest Bearing Balances - - - Investment Securities Securities Held to Maturity (Fair Values at 9/30/01, 12/31/00, & 9/30/00 respectively were 10,517 2,982 2,957 $10,556,000, $2,984,000, and $2,956,000) Securities Available for Sale 388 388 338 Federal Funds Sold 23,180 25,905 24,915 Loans, net of Unearned Discount 57,642 57,727 59,202 Allowance for Loan Losses (1,800) (1,800) (1,800) Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization) 1,903 2,131 2,212 Other Real Estate 0 1,074 1,074 Deferred Taxes 0 211 191 Letters of Credit 61 54 197 Other Assets 2,018 1,126 1,020 TOTAL ASSETS $99,002 $94,707 $97,019 See accompanying notes to Financial Statements
BOL BANCSHARES, INC. CONSOLIDATED STATEMENT OF CONDITION (Continued) Sept 30 Dec. 31 Sept 30 (Amounts in Thousands) 2001 2000 2000 LIABILITIES Deposits: Non-Interest Bearing $33,546 $34,031 $35,293 Interest Bearing 56,100 51,133 52,013 TOTAL DEPOSITS 89,646 85,164 87,306 Notes Payable 2,220 2,226 2,228 Letters of Credit Outstanding 61 54 197 Deferred Taxes 13 0 0 Accrued Interest 522 524 483 Other Liabilities 427 1,017 1,166 TOTAL LIABILITIES 92,889 88,985 91,380 STOCKHOLDERS' EQUITY Preferred Stock - Par Value $1 2,300,871 Shares Issued and Outstanding at 9/30/01, 2,302,811 at 12/31/00, & 9/30/00 2,301 2,303 2,303 Common Stock - Par Value $1 179,145 Shares Issued and Outstanding at 9/30/01, 12/31/00, & 9/30/00 179 179 179 Accumulated Other Comprehensive Income 197 197 164 Capital in Excess of Par - Retired Stock 17 15 15 Undivided Profits 3,028 2,649 2,649 Current Earnings 391 379 329 TOTAL STOCKHOLDERS' EQUITY 6,113 5,722 5,639 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $99,002 $94,707 $97,019 See accompanying notes to Financial Statements
BOL BANCSHARES, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) Three months ended Nine months ended Sept 30 Sept 30 (Amounts in Thousands) 2001 2000 2001 2000 INTEREST INCOME Interest and Fees on Loans $1,849 $1,818 $5,762 $5,500 Interest on Time Deposits 0 0 0 0 Interest on Securities Held to Maturity 94 44 159 124 Interest & Dividends on Securities Available for Sale 0 0 0 0 Interest on Federal Funds Sold 224 477 881 1,370 Other Interest Income 0 0 0 0 Total Interest Income 2,167 2,339 6,802 6,994 INTEREST EXPENSE Interest on Deposits 364 349 1,129 1,049 Interest on Federal Funds Purchased 0 0 0 0 Other Interest Expense 11 10 31 31 Interest Expense on Notes Payable 2 2 6 7 Interest Expense on Debentures 39 40 118 119 Total Interest Expense 416 401 1,284 1,206 NET INTEREST INCOME 1,751 1,938 5,518 5,788 Provision for Loan Losses 84 122 346 151 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,667 1,816 5,172 5,637 NONINTEREST INCOME Service Charges on Deposit Accounts 276 285 802 820 Cardholder & Other Credit Card Income 176 157 511 473 ORE Income 59 11 1,196 15 Other Operating Income 32 29 174 152 Gain on Sale of Securities 0 0 0 0 Total Noninterest Income 543 482 2,683 1,460 NONINTEREST EXPENSE Salaries and Employee Benefits 1,091 1,111 3,241 3,265 Occupancy Expense 303 447 1,185 1,351 Loan & Credit Card Expense 221 208 715 667 ORE Expense 253 10 696 48 Other Operating Expense 564 455 1,394 1,236 Total Noninterest Expense 2,432 2,231 7,231 6,567 Income Before Tax Provision (222) 67 624 530 Provision (Benefit) For Income Taxes (58) 41 233 201 NET INCOME ($164) $26 $391 $329 Earnings Per Share of Common Stock ($0.92) $0.14 $2.18 $1.84 See accompanying notes to Financial Statements
BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Sept 30 Sept 30 (Amounts in thousands) 2001 2000 NET INCOME (LOSS) $391 $329 OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Holding Gains (Losses) on Investment Securities Available-for-Sale, Arising During the Period 0 (19) Less: Reclassification Adjustment for Gains Included in Net Income OTHER COMPREHENSIVE INCOME 0 (19) COMPREHENSIVE INCOME (LOSS) $391 $310 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 (19) (19) Net Income (Loss) 329 329 Balance - Sept 30, 2000 2,303 179 164 15 2,978 $5,639 Balance December 31, 2000 2,303 179 197 15 3,028 5,722 Preferred Stock (2) (2) Capital in Excess of Par Retired Stock 2 2 Other Comprehensive Income, net of applicable deferred income taxes Net Income (Loss) 391 391 Balance - Sept 30, 2001 2,301 179 197 17 3,419 $6,113
BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For The Nine Months Ended Sept 30 (Amounts in Thousands) 2001 2000 OPERATING ACTIVITIES Net Income (Loss) $391 $329 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Provision for (Recovery of) Loan Losses 346 151 Depreciation and Amortization Expense 269 389 Amortization of Investment Security Premiums 1 3 Accretion of Investment Security Discounts 4 (1) (Increase)Decrease in Deferred Income Taxes 224 201 (Gain) Loss on Sale of Property and Equipment 0 0 (Gain) Loss on Sale of Other Real Estate (509) (13) (Increase)Decrease in Other Assets (209) 948 (Decrease)Increase in Other Liabilities, Accrued Interest and Accrued Loss Contingency (592) (238) Net Decrease(Increase) in Mortgage Loans Held for Resale 0 0 Net Cash Provided by (Used in) Operating Activities (75) 1,769 INVESTING ACTIVITIES Proceeds from Sale of Available-for-Sale Securities 0 0 Purchases of Available-for-Sale Securities 0 0 Proceeds from Available-for-Sale Securities Released at Maturity 0 0 Proceeds from Held-to-Maturity Investment Securities Released at Maturity 2,978 5,918 Purchases of Held-to-Maturity Investment Securities (10,517) (5,873) Proceeds from Sale of Property and Equipment 0 0 Purchases of Property and Equipment (41) (61) Proceeds from Sale of Other Real Estate 900 45 Purchases of Other Real Estate 0 (31) Net (Increase)Decrease in Loans (261) (373) Net Cash Provided by (Used in) Investing Activities (6,941) (375) FINANCING ACTIVITIES Net Increase (Decrease) in Non-Interest Bearing and Interest Bearing Deposits 4,482 (3,250) Proceeds from Issuance of Long-Term Debt 0 0 Retirement of Stock (1) 0 Principal Payments on Long Term Debt (6) (5) Net Cash Provided by (Used in) Financing Activities 4,475 (3,255) Net Increase (Decrease) in Cash and Cash Equivalents (2,541) (1,861) Cash and Cash Equivalents - Beginning of Year 30,814 33,489 Cash and Cash Equivalents - End of Period $28,273 $31,628 See accompanying notes to Financial Statements
BOL BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 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 nine-month period ended September 30, 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 Income per common share data are based on the weighted average number of shares outstanding of 179,145 at September 30, 2001 and 2000 respectively. 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 September 30, 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: 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. 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: Sept 30, 2001 Carrying Fair (Amounts in Thousands) Amount Value Financial Assets: Cash and Short-Term Investments $28,273 $28,273 Investment Securities 10,905 10,944 Loans 57,642 57,708 Less: Allowance for Loan Losses 1,800 1,800 95,020 95,125 Financial Liabilities: Deposits 89,646 89,770 Unrecognized Financial Instruments: Commitments to Extend Credit 2,791 2,791 Commercial Letters of Credit 61 61 Credit Card Arrangements 67,373 67,373 $70,225 $70,225
QUARTERLY CONSOLIDATED SUMMARY OF INCOME AND SELECTED FINANCIAL DATA Three Months Ended Nine Months Ended (Amounts in Thousands, Except Sept 30 June 30 Sept 30 Sept 30 Sept 30 Per Share Data) 2001 2001 2000 2001 2000 Interest Income $2,167 $2,227 $2,339 $6,802 $6,994 Interest Expense 416 442 401 1,284 1,206 Net Interest Income 1,751 1,785 1,938 5,518 5,788 Provision for Loan Losses 84 165 122 346 151 Net Interest Income after Provision 1,667 1,620 1,816 5,172 5,637 Noninterest Income: Noninterest Income 543 922 482 2,683 1,460 Securities Gains 0 0 0 0 0 Noninterest Income 543 922 482 2,683 1,460 Noninterest Expense 2,432 2,221 2,231 7,231 6,567 Income before Taxes (222) 321 67 624 530 Income Tax Expense (Benefit) (58) 104 41 233 201 Net Income (Loss) ($164) $217 $26 $391 $329 Income per Common Share ($0.92) $1.21 $0.14 $2.18 $1.84 Average Common Shares Outstanding 179 179 179 179 179 Selected Quarter-End Balances Loans $57,642 $58,745 $59,202 Deposits 89,646 89,728 87,306 Long-Term Debt 2,220 2,222 2,228 Stockholders' Equity 6,113 6,277 5,639 Total Assets 99,002 99,216 97,019 Selected Average Balances Loans $57,643 $59,098 $55,845 $58,228 $56,095 Deposits 88,875 87,749 86,982 87,112 88,614 Long-Term Debt 2,221 2,223 2,228 2,223 2,230 Stockholders' Equity 6,308 6,262 5,709 6,236 5,677 Total Assets 98,474 97,222 96,786 96,606 98,337 Selected Ratios Return on Average Assets -0.17% 0.22% 0.03% 0.40% 0.33% Return on Average Equity -2.60% 3.46% 0.45% 6.27% 5.80% Tier 1 Risk-Based Capital 13.28% 13.43% 12.13% Risk-Based Capital 14.55% 14.70% 13.40% Tier 1 Leverage 8.31% 8.54% 7.82%
BOL BANCSHARES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 30, 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. THIRD QUARTER 2001 HIGHLIGHTS BOL BANCSHARES' nine months 2001 results showed improvement in earnings over the same period of 2000. Net income for the first nine months of 2001 totaled $391,000 ($2.18 per common share) up 18.84% compared to a net profit of $329,000 ($1.84 per common share) for the first nine months of 2000. Net loss for the third quarter of 2001 totaled ($164,000)($.92 per share), down 730.77% compared to a net profit of $26,000 ($0.14 per common share) for the third quarter of 2000. Pre-tax, pre-provision losses were $138,000, a decrease from the third quarter 2000 profit of $189,000. Pre-tax, pre-provision earnings were $970,000, an increase from the first nine months of 2000 profit of $681,000. The third quarter and first nine months of 2001 included provisions for loan losses totaling $84,000 and $346,000, respectively, compared to $122,000 and $151,000 for the same period of 2000. Total assets increased $1,983,000 (2.04%) to $99,002,000 at September 30, 2001 compared to September 30, 2000. Shareholders' equity increased $474,000 (8.41%)to $6,113,000 at September 30, 2001 compared to September 30, 2000. Total loans decreased $1,560,000 (2.64%) from September 30, 2000 to $57,642,000 at September 30, 2001. Real Estate Mortgage loans declined $493,000 (1.44%) to $33,709,000, and credit card loans declined $1,139,000 (6.44%) to $16,535,000. Deposits increased $2,340,000 (2.68%) to $89,646,000 at September 30, 2001 compared to September 30, 2000. FINANCIAL CONDITION: EARNING ASSETS Interest earning assets averaged $91,134,000 in the third quarter of 2001, a $2,886,000 increase from the third quarter of 2000 average of $88,248,000. Compared to the third quarter of 2000, average loans increased $1,798,000 (3.22%), average investment securities increased $4,725,000 (142.88%), while average federal funds sold decreased $3,637,000 (12.50%). Table 1 presents the Company's loan portfolio by major classifications. Total loans decreased $1,560,000 (2.64%)over the third quarter of 2000. TABLE 1. MAJOR CLASSIFICATION OF LOAN PORTFOLIO Sept 30, 2001 June 30, 2001 Sept 30, 2000 (Amounts in Thousands) Loans % Loans % Loans % Commercial, Financial, & Agricultural $3,056 5.30% $3,619 6.16% $3,025 5.11% Real Estate Mortgage 33,709 58.48% 33,446 56.93% 34,202 57.77% Mortgage Loan Held for Resale 0 0.00% 0 0.00% 0 0.00% Personal Loans 4,204 7.29% 4,335 7.38% 4,184 7.07% Credit Cards-Visa, MasterCard 15,253 26.46% 15,781 26.86% 16,091 27.18% Credit Cards-Proprietary 1,282 2.22% 1,397 2.38% 1,583 2.67% Overdrafts 138 0.24% 167 0.28% 117 0.20% Loans $57,642 100.00% $58,745 100.00% $59,202 100.00%
Securities Held to Maturity. Average securities held to maturity Increased $4,675,000 (157.46%) from the third 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 $50,000 (14.79%) from the third quarter of 2000. Securities available for sale are carried at fair value. Short Term Investments. Average federal funds sold decreased $3,637,000 (12.50%) down from the third quarter of 2000. This decrease is mainly due to the increase in the investment securities portfolio. 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 $244,000 at September 30, 2001 as compared to $1,127,000 at September 30, 2000. Other real estate totaled $0 at September 30, 2001 as compared to $1,074,000 at September 30, 2000. The Bank was required to write down 5 properties due to the 10 years limitation that the Bank could hold properties. Of these 5 properties, the Bank sold one. The Bank also sold another parcel that was held as ORE. Total write downs were $683,000 and the gain on the two sales were $509,000. Table 2. NONPERFORMING ASSETS (Amounts in Thousands) 09/30/01 06/30/01 03/31/01 12/31/00 09/30/00 Nonaccrual Loans $244 $45 $49 $49 $53 Restructured Loans 0 0 0 0 0 Other Real Estate Owned 0 651 651 1,074 1,074 Total Nonperforming Assets $244 $696 $700 $1,123 $1,127 Loans Past Due 90 Days or More $417 $358 $439 $367 $393 Ratio of Past Due Loans to Loans 0.72% 0.61% 0.72% 0.66% 0.66% Ratio of Nonperforming Assets to Loans and Other Real Estate Owned 0.42% 1.17% 1.14% 1.97% 1.87%
IMPAIRED LOANS As of September 30, 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 increased 8.30% to $3,524,000 at September 30, 2001 from $3,254,000 at September 30, 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 POSSIBLE LOAN LOSSES Table 3 presents an analysis of the activity in the allowance for loan losses for the three month and nine month period ending September 30, 2001 and 2000. The allowance for loan losses as a percentage of loans increased from 3.04% at September 30, 2000 to 3.12% at September 30, 2001. The net charge-off (recoveries) as a percentage of average loans increased from .27% at September 30, 2000 to .59% at September 30, 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 collectability 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 Nine Months Ended Sept 30 Sept 30 Sept 30 Sept 30 (Amounts in Thousands) 2001 2000 2001 2000 Balance at Beginning of Period $1,800 $1,800 $1,800 $1,800 Loans Charged Off (225) (241) (751) (837) Recoveries 141 119 405 686 Net (Charge Offs) Recoveries (84) (122) (346) (151) Provision for Loan Losses 84 122 346 151 Balance at End of Period $1,800 $1,800 $1,800 $1,800 Allowance for Loan Losses as a Percentage of Loans 3.12% 3.04% 3.12% 3.04% Net (Charge Offs) Recoveries as a Percentage of Average Loans 0.15% 0.22% 0.59% 0.27%
FUNDING SOURCES: DEPOSITS Average deposits totaled $88,875,000 in the third quarter of 2001, an increase of $1,893,000 (2.18%) from $86,982,000 in the third quarter of 2000. Average core deposits were $87,698,000 for the third quarter of 2001 up from $85,803,000 in the third quarter of 2000. Table 4 presents the composition of average deposits for the three quarters ending September 30, 2001, June 30, 2001, and September 30, 2000. TABLE 4. DEPOSIT COMPOSITION For The Three Months Ended Sept 30 June 30 Sept 30 2001 2001 2000 Average % of Average % of Average % of (Amounts in Thousands) Balances Deposits Balances Deposits Balances Deposits Demand, Noninterest-Bearing $32,921 37.04% $33,585 38.27% $34,151 39.26% NOW Accounts 12,975 14.60% 13,487 15.37% 12,734 14.64% Money Market Deposit Accounts 4,863 5.47% 4,715 5.37% 5,490 6.31% Savings Accounts 27,470 30.91% 25,664 29.25% 25,082 28.84% Other Time Deposits 9,469 10.65% 9,074 10.34% 8,346 9.60% Total Core Deposits 87,698 98.68% 86,525 98.61% 85,803 98.64% Certificates of Deposit of $100,000 or more 1,177 1.32% 1,224 1.39% 1,179 1.36% Total Deposits $88,875 100.00% $87,749 100.00% $86,982 100.00%
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 $1,800,000 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 instruments 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 third quarter of 2001 decreased $187,000 over the same period last year, and decreased $270,000 from the first nine months of 2000. The net interest margin decreased to 1.92% for the third quarter of 2001 from 2.20% for the third 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 NEW YIELDS THIRD QUARTER 2001 THIRD QUARTER 2000 Average Average (Amounts in Thousands) Balance Interest Rate Balance Interest Rate ASSETS INTEREST-EARNING ASSETS: Loans, Net of Unearned Income(1)(2) Taxable $57,643 $1,849 3.21% $55,845 $1,818 3.26% Tax-Exempt - - Investment Securities Taxable 8,032 94 1.18% 3,307 44 1.33% Tax-Exempt 0 0 Interest-Bearing Deposits 0 0 Federal Funds Sold 25,459 224 0.88% 29,096 477 1.64% Total Interest-Earning Assets 91,134 2,167 2.38% 88,248 2,339 2.65% Cash and Due from Banks 5,324 5,298 Allowance for Loan Losses (1,804) (1,805) Premises and Equipment 1,947 2,253 Other Real Estate 487 1,082 Other Assets 1,386 1,710 TOTAL ASSETS $98,474 $96,786 LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST-BEARING LIABILITIES: Deposits: Demand Deposits 17,838 56 0.31% 18,224 72 0.40% Savings Deposits 27,470 192 0.70% 25,082 184 0.73% Time Deposits 10,646 116 1.09% 9,525 93 0.98% Total Interest-Bearing Deposits 55,954 364 0.65% 52,831 349 0.66% Federal Funds Purchased Securities sold under Agreements to Repurchase Other Short-Term Borrowings 0 0 Long-Term Debt 2,221 52 2.34% 2,228 52 2.33% Total Int-Bearing Liabilities 58,175 416 0.72% 55,059 401 0.73% Noninterest-Bearing Deposits 32,921 34,151 Other Liabilities 1,070 1,867 Shareholders' Equity 6,308 5,709 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $98,474 $96,786 Net Interest Income $1,751 $1,938 Net Interest Spread 1.66% 1.92% Net Interest Margin 1.92% 2.20% (1)Fee income relating to loans of $154,000 at Sept 30, 2001, and $190,000 at Sept 30, 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%.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST, RATE AND NEW YIELDS Nine Months Ended 9/01 Nine Months Ended 9/00 Average Average (Amounts in Thousands) Balance Interest Rate Balance Interest Rate ASSETS INTEREST-EARNING ASSETS: Loans, Net of Unearned Income(1)(2) Taxable $58,228 $5,762 9.90% $56,095 $5,500 9.80% Tax-Exempt - - Investment Securities Taxable 4,403 159 3.60% 3,317 124 3.74% Tax-Exempt 0 0 Interest-Bearing Deposits 0 0 Federal Funds Sold 26,395 881 3.34% 29,741 1,370 4.61% Total Interest-Earning Assets 89,026 6,802 7.64% 89,153 6,994 7.84% Cash and Due from Banks 5,334 5,541 Allowance for Loan Losses (1,803) (1,808) Premises and Equipment 2,020 2,369 Other Real Estate 639 1,196 Other Assets 1,390 1,886 TOTAL ASSETS $96,606 $98,337 LIABILITIES AND SHAREHOLDERS' EQUITY INTEREST-BEARING LIABILITIES: Deposits: Demand Deposits 17,856 211 1.18% 18,398 195 1.06% Savings Deposits 26,047 583 2.24% 25,647 552 2.15% Time Deposits 9,922 335 3.37% 10,027 302 3.01% Total Interest-Bearing Deposits 53,825 1,129 2.10% 54,072 1,049 1.94% Federal Funds Purchased Securities sold under Agreements to Repurchase Other Short-Term Borrowings 0 0 Long-Term Debt 2,223 155 6.98% 2,230 157 7.04% Total Int-Bearing Liabilities 56,048 1,284 2.29% 56,302 1,206 2.14% Noninterest-Bearing Deposits 33,287 34,542 Other Liabilities 1,035 1,816 Shareholders' Equity 6,236 5,677 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $96,606 $98,337 Net Interest Income $5,518 $5,788 Net Interest Spread 5.35% 5.70% Net Interest Margin 6.20% 6.49% (1) Fee income relating to loans of $464,000 at Sept 30, 2001, and $540,000 at Sept 30, 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) Sept, 2001 Compared to Sept, 2000 Change in Interest Due to Total (Amounts in Thousands) Volume Rate Change Net Loans: Taxable $53 $209 $262 Tax-Exempt(2) 0 0 0 Investment Securities 0 0 0 Taxable (6) 41 35 Tax-Exempt(2) 0 0 0 Interest-Bearing Deposits 0 0 0 Federal Funds Sold (335) (154) (489) Total Interest Income (288) 96 (192) Deposits: Demand Deposits 22 (6) 16 Savings Deposits 22 9 31 Time Deposits 36 (3) 33 Total Interest-Bearing Deposits 80 (0) 80 Federal Funds Purchased 0 0 0 Securities Sold under Agreements to Repurchase 0 0 0 Other Short-Term Borrowings 0 0 0 Long-Term Debt (1) (1) (2) Total Interest Expense $79 ($1) $78 (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 third quarter of 2001 increased $61,000 or 12.66% from the same period last year. Table 5 presents noninterest income for the three months and nine months ended September 30, 2001 and 2000. TABLE 5. NONINTEREST INCOME Three Months Ended Nine Months Ended Sept 30 Sept 30 Increase Sept 30 Sept 30 Increase (Amounts in Thousands) 2001 2000 (Decrease) 2001 2000 (Decrease) Service Charges $123 $135 ($12) $367 $387 ($20) NSF Charges 153 150 3 435 433 2 Gain on Sale of Securities 0 0 0 0 0 0 Cardholder & Other Credit Card Income 151 125 26 434 361 73 Membership Fees 25 32 (7) 78 112 (34) Other Comm & Fees 23 (6) 29 62 76 (14) ORE Income 0 1 (1) 1 2 (1) Gain on Sale of ORE 59 11 48 1,195 13 1,182 Other Income 9 34 (25) 111 76 35 Total Noninterest Income $543 $482 $61 $2,683 $1,460 $1,223
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 third quarter of 2001 increased $201,000 or 9.01% from the same period last year. Occupancy expense decreased $144,000 for the quarter and $166,000 for the nine months due to the reclassification of the stock tax to Other Operating expense. Reclass amounts were $25,000 for the quarter and $75,000 for the nine months total. The increase in Ore expense is due to Ore writedowns as discussed in Asset Quality - Nonperforming Assets. Table 6 presents the activity for the three months and nine months ended September 30, 2001 and 2000. TABLE 6. NONINTEREST EXPENSE Three Months Ended Nine Months Ended Sept 30 Sept 30 Increase Sept 30 Sept 30 Increase (Amounts in Thousands) 2001 2000 (Decrease) 2001 2000 (Decrease) Salaries & Benefits $1,091 $1,111 ($20) $3,241 $3,265 ($24) Loss on Litigation 0 0 0 0 (150) 150 Occupancy Expense 303 447 (144) 1,185 1,351 (166) Advertising Expense 15 27 (12) 36 74 (38) Communications 46 49 (3) 132 144 (12) Postage 51 57 (6) 171 190 (19) Loan & Credit Card Expense 221 208 13 715 667 48 Professional Fees 49 24 25 127 138 (11) Legal Fees 51 60 (9) 157 132 25 Insurance & Assessments 25 24 1 71 72 (1) Stationery, Forms & Supply 55 55 0 171 175 (4) ORE Expenses 253 10 243 696 48 648 Other Operating Expense 272 159 113 529 461 68 Total Noninterest Expense $2,432 $2,231 $201 $7,231 $6,567 $664
INCOME TAXES The Company recorded a benefit for income taxes of $58,000 for the third quarter of 2001 and a provision of $41,000 for the same period in 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 Sept 30 June 30 March 31 Dec. 31 Sept. 30 2001 2001 2001 2000 2000 Risk-Based Capital Tier 1 Risk Based Capital Ratio 13.28% 13.43% 12.78% 12.27% 12.13% Risk Based Capital Ratio 14.55% 14.70% 14.05% 13.54% 13.40% Tier 1 Leverage Ratio 8.31% 8.54% 8.55% 7.81% 7.82%
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 42.35% at September 30, 2001, 41.69% at June 30, 2001, and 38.76% at September 30, 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 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 that 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 None 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 November 13, 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 Registrant) -----END PRIVACY-ENHANCED MESSAGE-----