10QSB 1 rsec33107.txt REPORT 3/31/07 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-QSB /X/ QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2007 / / TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from to Commission file Number 00-16934 BOL BANCSHARES, INC. (Exact name of small business issuer as specified in its charter.) Louisiana 72-1121561 (State of incorporation) (IRS Employer Identification No.) 300 St. Charles Avenue, New Orleans, La. 70130 (Address of principal executive offices) (504) 889-9400 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 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 / / State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: 179,145 SHARES AS OF APRIL 30, 2007. Transitional Small Business Disclosure Format (Check one): Yes / / No /X/ 1 BOL BANCSHARES, INC. & SUBSIDIARY INDEX Page No. PART 1. Financial Information Item 1: Financial Statements Consolidated Statement of Condition 3 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statement of Cash Flow 6 Item 2: Management's Discussion and Analysis 7 Item 3: Controls and Procedures 8 PART II. Other Information Item 6. Exhibits 8 Signatures 9 2 Part I. - Financial Information BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CONDITION March 31, Dec. 31, (Amounts in thousands) 2007 2006 Unaudited Audited ASSETS Cash and Due from Banks Non-Interest Bearing Balances and Cash $3,484 $4,815 Federal Funds Sold 23,100 23,750 Investment Securities Securities Held to Maturity 14,000 14,000 Securities Available for Sale 540 536 Loans-Less Allowance for Loan Losses of $1,800 in 2007 and $1,800 in 2006 56,382 57,335 Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization) 2,283 2,285 Other Real Estate 1,165 1,165 Other Assets 1,381 1,285 TOTAL ASSETS $102,335 $105,171 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Deposits: Non-Interest Bearing 44,821 47,447 NOW Accounts 11,217 12,000 Money Market Accounts 4,482 3,722 Savings Accounts 23,505 25,321 Time Deposits, $100,000 and over 607 505 Other Time Deposits 5,022 4,536 TOTAL DEPOSITS 89,654 93,531 Notes Payable 1,544 1,544 Federal Funds Purchased 0 0 Other Liabilities 1,596 973 TOTAL LIABILITIES 92,794 96,048 SHAREHOLDERS' EQUITY Preferred Stock - Par Value $1 2,089,334 Shares Issued and Outstanding in 2007 2,089,334 Shares Issued and Outstanding in 2006 2,089 2,089 Common Stock - Par Value $1 179,145 Shares Issued and Outstanding in 2007 and 2006 179 179 Accumulated Other Comprehensive Income 280 277 Capital in Excess of Par - Retired Stock 138 138 Undivided Profits 6,440 4,310 Current Earnings 415 2,130 TOTAL SHAREHOLDERS' EQUITY 9,541 9,123 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $102,335 $105,171 3 BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, March 31, (Amounts in thousands) 2007 2006 INTEREST INCOME Interest and Fees on Loans 1,693 1,695 Interest on Investment Securities 121 130 Interest on Federal Funds Sold 303 448 Total Interest Income 2,117 2,273 INTEREST EXPENSE Interest on Deposits 155 110 Other Interest Expense 4 9 Interest on Notes Payable - - Interest Expense on Debentures 25 30 Total Interest Expense 184 149 NET INTEREST INCOME 1,933 2,124 Provision for Loan Losses 58 76 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,875 2,048 NON-INTEREST INCOME Service Charges on Deposit Accounts 171 136 Cardholder & Other Credit Card Income 133 152 ORE Income - - Other Operating Income 39 41 Total Non-Interest Income 343 329 NON-INTEREST EXPENSE Salaries and Employee Benefits 617 596 Occupancy Expense 277 301 Communications 46 65 Outsourcing Fees 339 390 Loan & Credit Card Expense 36 17 Professional Fees 83 56 ORE Expense 13 4 Other Operating Expense 177 229 Total Non-Interest Expense 1,588 1,658 Income Before Tax Provision 630 719 Provision For Income Taxes 215 245 NET INCOME $415 $474 Earnings Per Share of Common Stock $2.32 $2.65 4 BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, March 31, (Amounts in thousands) 2007 2006 NET INCOME $415 $474 OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Holding Gains on Investment Securities Available-for-Sale, Arising During the Period 3 - COMPREHENSIVE INCOME $418 $474 5 BOL BANCSHARES, INC. STATEMENTS OF CASH FLOWS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, (Amounts in thousands) 2007 2006 OPERATING ACTIVITIES Net Income 415 474 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Provision for Loan Losses 58 76 Depreciation and Amortization Expense 74 71 Amortization of Investment Security Premiums 0 0 Accretion of Investment Security Discounts 0 0 Decrease in Deferred Income Taxes 2 0 (Gain) Loss on Sale of Property and Equipment 0 0 (Gain) Loss on Sale of Other Real Estate 0 0 (Increase) in Other Assets (98) (202) Increase in Other Liabilities and Accrued Interest 623 192 Net Cash Provided by Operating Activities 1,074 611 INVESTING ACTIVITIES Proceeds from Held-to-Maturity Investment Securities Released at Maturity 0 0 Purchases of Held-to-Maturity Investment Securities 0 0 Proceeds from Sale of Property and Equipment 0 0 Purchases of Property and Equipment (72) (312) Proceeds from Sale of Other Real Estate 0 0 Net Decrease in Loans 895 1,616 Net Cash Provided by Investing Activities 823 1,304 FINANCING ACTIVITIES Net (Decrease) Increase in Non-Interest Bearing and Interest Bearing Deposits (3,878) 3,018 Repayment of Federal Funds Purchased 0 0 Preferred Stock Retired 0 0 Principal Payments on Long Term Debt 0 (2) Net Cash (Used in) Provided by Financing Activities (3,878) 3,016 Net (Decrease) Increase in Cash and Cash Equivalents (1,981) 4,931 Cash and Cash Equivalents - Beginning of Year 28,565 45,032 Cash and Cash Equivalents - End of Period 26,584 49,963 6 BOL BANCSHARES, INC. STATEMENTS OF CASH FLOWS (Continued) (Unaudited) SUPPLEMENTAL DISCLOSURES: 2007 2006 Additions to Other Real Estate through Foreclosure - - Cash Paid for Interest 204 169 Cash (Paid) Received for Income Taxes (196) - Market Value Adjustment for Unrealized Gain on Securities Available-for-Sale 4 - Accounting Policies Note: Cash Equivalents Include Amounts Due from Banks and Federal Funds Sold. Generally, Federal Funds are Purchased and Sold for One Day Periods. ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS Internal Control and Assessment Disclosure Hurricane Katrina Disclosure Management expects insurance proceeds for storm damages caused by Hurricane Katrina to cover the majority of damages sustained to the Bank's branches. The branch locations that the Bank owned directly or indirectly, St. Charles, Severn, Gause and Tammany, are open and operating, however, branch locations, wherein the Bank leased the premises, Carrolton and Oakwood, are still closed with the exception of the drive-thru facility at the Oakwood location. Management is reviewing new sites to purchase or lease in an effort to replace the Carrollton location. Management has renewed the Lapalco lease and the branch was reopened at the end of March 2007. The Oakwood branch will be reopening at an adjacent site within the Oakwood Shopping Center and is scheduled to reopen in the 2nd quarter of 2007. The Company's management team and employees have and are continuing to work diligently to control operating expenses and costs while restoring normal business operations. MARCH 31, 2007 COMPARED WITH DECEMBER 31, 2006 BALANCE SHEET Total Assets at March 31, 2007 were $102,335,000 compared to $105,171,000 at December 31, 2006 a decrease of $2,836,000 or 2.70%. Federal Funds Sold decreased $650,000 at March 31, 2007 from $23,750,000 at December 31, 2006 to $23,100,000, cash and due from banks decreased $1,331,000 or 27.64%. This was mainly attributable to a decrease in the Bank's Federal Reserve Bank account of $673,000 and a decrease in Cash of $680,000. Total loans decreased $953,000 or 1.66% to $56,382,000 at March 31, 2007 from $57,335,000 at December 31, 2006. This decrease in the loan portfolio is due mainly to a decrease in the credit card portfolio of $787,000 which was largely attributable to (i) competition from other banks and non-traditional credit card issuers; (ii) tightening of the Bank's underwriting standards; and (iii) normal attrition. Total deposits decreased $3,877,000 or 4.15% to $89,654,000 at March 31, 2007 from $93,531,000 at December 31, 2006. Total non-interest bearing deposits decreased $2,626,000 and interest-bearing accounts decreased $1,251,000. Shareholder's Equity increased $418,000 due mainly to net income at March 31, 2007 of $415,000. 7 THREE MONTHS ENDED MARCH 31, 2007 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2006 INCOME The Company's net income for the three months ended March 31, 2007 was $415,000 or $2.32 per share a decrease of $59,000 from the Company's net income of $474,000 for the same period last year. Interest income decreased $156,000 for the three months ended March 31, 2007 over the same period last year. This was caused by a decrease of $145,000 in interest received on Federal Funds sold. This decrease was due mainly to a decrease in the average balance of Federal Funds sold from $41,492,000 at March 31, 2006 to $23,429,000 at March 31, 2007 and an increase in the rate from 4.32% at March 31, 2006 to 5.17% at March 31, 2007. As customers repair and renovate their homes after Katrina's damages, they are withdrawing the funds in their checking and savings accounts. Interest expense increased $35,000 over the same period last year. This was due to an increase in the interest rate on interest bearing deposits from a rate of .75% at March 31, 2006 to a rate of 1.37% at March 31, 2007. Net interest income decreased $191,000 due to the decrease in the average balance of Federal Funds sold which was offset by the higher interest rates on interest bearing deposits. The interest rate spreads increased from 6.67% at March 31, 2006 to 7.33% at March 31, 2007. Non-interest income increased $14,000 for the three months period as compared to the same period last year. This increase is due mainly to an increase in deposit related fees of $35,000 collected on overdrawn accounts which was offset by a decrease of Cardholder & Other Credit Card Income of $19,000. Non-interest expense decreased $70,000 for the three months period as compared to the same period last year. Occupancy expense decreased $24,000, due mainly to $32,000 in expenses for Disaster Recovery Service in 2006 compared to $0 in 2007. Outsourcing fees decreased $51,000 due mainly to credit card development fees of $32,000 in 2006 compared to $0 in 2007. Other Operating expenses decreased $52,000 due mainly to Katrina losses of $27,000 in 2006 compared to $0 in 2007. Salaries and Employee Benefits increased $21,000, and Professional fees increased $27,000 over the same period last year. The provision for income taxes decreased $30,000 compared to the same period last year from $245,000 at March 31, 2006 to $215,000 at March 31, 2007 due to a decrease in income before taxes. Item 3 Controls and Procedures The certifying officers of the Company have evaluated the Company's disclosure controls and procedures as of a date within 90 days of the filing date of this report and have concluded that such controls and procedures are effective. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. PART II - OTHER INFORMATION Item #6 Exhibits Exhibits 31.1 Section 302 Principal Executive Officer Certification 31.2 Section 302 Principal Financial Officer Certification 32.1 Section 1350 Certification 32.2 Section 1350 Certification 8 BOL BANCSHARES, INC. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BOL BANCSHARES, INC. (Registrant) /s/ G. Harrison Scott May 10, 2007 G. Harrison Scott Date Chairman and President (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) 9