10QSB 1 rsec63007.txt REPORT SEC 6-30-07 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 June 30, 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 JULY 30, 2007. Transitional Small Business Disclosure Format (Check one): Yes / / No /X/ BOL BANCSHARES, INC. & SUBSIDIARY INDEX Page No. PART I. Financial Information Item 1: Financial Statements Consolidated Statements of Condition 3 Consolidated Statements of Income 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Cash Flow 6 Item 2: Management's Discussion and Analysis 7 Item 3: Controls and Procedures 9 PART II. Other Information Item 4: Submission of Matters to a Vote of Security Holders 10 Item 6: Exhibits and Reports on Form 8-K 10 A. Exhibits 10 B. Reports on Form 8-K 10 Signatures 11 Part I. Financial Information BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CONDITION June 30 Dec. 31, (Amounts in Thousands) 2007 2006 (Unaudited) (Audited) ASSETS Cash and Due from Banks Non-Interest Bearing Balances and Cash $4,652 $4,815 Federal Funds Sold 29,910 23,750 Investment Securities Securities Held to Maturity 11,000 14,000 Securities Available for Sale 627 536 Loans-Less Allowance for Loan Losses of $1,800 in 2007 and $1,800 in 2006 56,291 57,335 Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization) 2,316 2,285 Other Real Estate 1,231 1,165 Other Assets 1,252 1,285 TOTAL ASSETS $107,279 $105,171 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Deposits: Non-Interest Bearing $47,562 47,447 NOW Accounts 12,079 12,000 Money Market Accounts 3,471 3,722 Savings Accounts 25,285 25,321 Time Deposits, $100,000 and over 812 505 Other Time Deposits 5,029 4,536 TOTAL DEPOSITS 94,238 93,531 Notes Payable 1,544 1,544 Federal Funds Purchased 0 0 Other Liabilities 1,568 973 TOTAL LIABILITIES 97,350 96,048 SHAREHOLDERS' EQUITY Preferred Stock - Par Value $1 2,084,244 Shares Issued and Outstanding in 2007 2,084 2,089 2,089,334 Shares Issued and Outstanding in 2006 Common Stock - Par Value $1 179,145 Shares Issued and Outstanding in 2007 And 2006 179 179 Accumulated Other Comprehensive Income 347 277 Capital in Excess of Par - Retired Stock 140 138 Undivided Profits 6,440 4,310 Current Earnings 739 2,130 TOTAL SHAREHOLDERS' EQUITY 9,929 9,123 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $107,279 $105,171 BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three months ended Six months ended June 30 June 30 (Amounts in Thousands) 2007 2006 2007 2006 INTEREST INCOME Interest and Fees on Loans $1,753 $1,666 $3,446 $3,361 Interest on Investment Securities 125 136 246 266 Interest on Federal Funds Sold 325 514 628 962 Total Interest Income $2,203 2,316 4,320 4,589 INTEREST EXPENSE Interest on Deposits 164 107 320 217 Other Interest Expense 4 10 7 19 Interest Expense on Notes Payable - 1 - 1 Interest Expense on Debentures 24 31 49 61 Total Interest Expense 192 149 376 298 NET INTEREST INCOME 2,011 2,167 3,944 4,291 Provision for Loan Losses 43 299 101 375 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,968 1,868 3,843 3,916 NON-INTEREST INCOME Service Charges on Deposit Accounts 153 141 323 277 Cardholder & Other Credit Card Income 139 154 273 306 ORE Income - - - - Other Operating Income 82 993 121 1,034 Total Non-interest Income 374 1,288 717 1,617 NON-INTEREST EXPENSE Salaries and Employee Benefits 702 680 1,319 1,276 Occupancy Expense 315 312 592 613 Communications 58 67 104 132 Outsourcing Fees 393 396 732 786 Loan & Credit Card Expense 39 36 75 53 Professional Fees 80 57 163 113 ORE Expense 13 22 26 26 Other Operating Expense 212 189 389 418 Total Non-interest Expense 1,812 1,759 3,400 3,417 Income Before Tax Provision 530 1,397 1,160 2,116 Provision For Income Taxes 206 475 421 720 NET INCOME 324 $922 739 $1,396 Earnings Per Share of Common Stock $1.81 $5.15 $4.13 $7.79 BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) June 30 June 30 (Amounts in thousands) 2007 2006 NET INCOME $739 $1,396 OTHER COMPREHENSIVE INCOME, NET OF TAX Unrealized Holding Gains on Investment Securities Available-for-Sale, Arising During the Period 70 - COMPREHENSIVE INCOME $809 $1,396 BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30 (Amounts in thousands) 2007 2006 OPERATING ACTIVITIES Net Income 739 1,396 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Provision for Loan Losses 101 375 Depreciation and Amortization Expense 152 144 Amortization of Investment Security Premiums - - Accretion of Investment Security Discounts - - Decrease in Deferred Income Taxes - - Loss on Property and Equipment Disposed - 53 (Gain) on Sale of Other Real Estate - - (Increase) in Other Assets (4) (120) Increase in Other Liabilities and Accrued Interest 595 660 Net Cash Provided by Operating Activities 1,583 2,508 INVESTING ACTIVITIES Proceeds from Held-to-Maturity Investment Securities Released at Maturity 3,000 - Purchases of Held-to-Maturity Investment Securities - - Proceeds from Sale of Property and Equipment - - Purchases of Property and Equipment (182) (228) Proceeds from Sale of Other Real Estate - - Proceeds from Sale of Available-for-Sale Securities 15 - Net Decrease in Loans 877 2,300 Net Cash Provided by Investing Activities 3,710 2,072 FINANCING ACTIVITIES Net Increase (Decrease) in Non-Interest Bearing and Interest Bearing Deposits 707 (5,249) Proceeds from Issuance of Long-Term Debt - - Preferred Stock Retired (3) - Principal Payments on Long Term Debt (0) (11) Net Cash Provided by (Used in) Financing Activities 704 (5,260) Net Increase (Decrease)in Cash and Cash Equivalents 5,997 (680) Cash and Cash Equivalents - Beginning of Year 28,565 45,032 Cash and Cash Equivalents - End of Period $34,562 $44,352 BOL BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) SUPPLEMENTAL DISCLOSURES: 2007 2006 Additions to Other Real Estate through Foreclosure 65 940 Cash Paid for Interest 366 280 Cash (Paid) Received for Income Taxes (416) - Market Value Adjustment for Unrealized Gain on Securities Available-for-Sale 91 - 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 The following discussion and analysis is intended to provide a better understanding of the consolidated financial condition of BOL Bancshares, Inc. and its bank subsidiary at June 30, 2007 compared to December 31, 2006 and the results of operations for the three and six months periods ended June 30, 2007 with the same periods in 2006. This discussion and analysis should be read in conjunction with the interim consolidated financial statements and footnotes included herein. 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. 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 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 3rd or 4th 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. JUNE 30, 2007 COMPARED WITH DECEMBER 31, 2006 BALANCE SHEET Total Assets at June 30, 2007 were $107,279,000 compared to $105,171,000 at December 31, 2006 for an increase of $2,108,000 or 2.00%. Federal Funds Sold increased $6,160,000 at June 30, 2007 from $23,750,000 at December 31, 2006 to $29,910,000 at June 30, 2007. Securities decreased $3,000,000 to $11,000,000 at June 30, 2007 from $14,000,000 at December 31, 2006. This was attributable to securities of $3,000,000 that were called during the second quarter. Total loans decreased $1,044,000 or 1.82% to $56,291,000 at June 30, 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 $546,000, a decrease in non-farm non-residential loans of $1,687,000, and a decrease of $779,000 in personal and business loans. This was offset by an increase of $3,503,000 in interim construction loans. The credit card portfolio decrease 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, in addition to the cyclical nature of the business. Total deposits increased $707,000 or 0.76% to $94,238,000 at June 30, 2007 from $93,531,000 at December 31, 2006. Total non-interest bearing deposits increased $115,000 and interest-bearing accounts increased $592,000, all largely attributable to deposits of Louisiana Road Home monies. Shareholder's Equity increased $806,000 due mainly to net income at June 30, 2007 of $739,000. SIX MONTHS ENDED JUNE 30, 2007 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2006 INCOME The Company's net income for the six months ended June 30, 2007 was $739,000 or $4.13 per share, a decrease of $657,000 from the Company's total net income of $1,396,000 for the same period last year. Interest income decreased $269,000 for the six months ended June 30, 2007 over the same period last year. Interest on federal funds sold decreased $334,000 due to a decrease of $17,748,000 in the average balance from $41,977,000 at June 30, 2006 to $24,229,000 at June 30, 2007. This was offset by an increase of $85,000 in interest in the loan portfolio, whereby the average balance of loans increased $1,272,000 from $57,355,000 at June 30, 2006 to $58,627,000 at June 30, 2007. Interest expense increased $78,000 for the six months ended June 30, 2007 over the same period last year. This was caused by an increase in the interest rate on interest-bearing liabilities from .99% at June 30, 2006 to 1.62% as of June 30, 2007. Net interest income decreased $347,000 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 6.76% at June 30, 2006 to 7.26% at June 30, 2007. Non-interest income decreased $900,000 for the six month period from $1,617,000 at June 30, 2006 to $717,000 at June 30, 2007. Other income decreased $913,000 for the six months ended June 30, 2007. This decrease was due mainly to $600,000 in insurance proceeds received on an OREO property in 2006 that the Bank had no plans to repair. The Bank had a purchase offer and the property was sold in July, 2006. In addition, $369,000 in insurance proceeds was received as reimbursement of expenses incurred and the excess of disposal of fixed assets due to Hurricane Katrina in 2006. Non-interest expense decreased $17,000 for the six month period as compared to the same period last year. Outsourcing fees decreased $54,000 due mainly to credit card development fees of $32,000 in 2006 compared to $0 in 2007. Occupancy expense decreased $21,000 due mainly to $32,000 of expenses for Disaster Recovery Service in 2006 compared to $0 in 2007. Salaries and employee benefits increased $43,000 due mainly to the Lapalco Branch reopening at the end of March 2007. Professional fees increased $50,000 mainly due to audit accruals and work performed by our CPA firm over the same period last year. The provision for income taxes decreased $299,000 compared to the same period last year from $720,000 at June 30, 2006 to $421,000 at June 30, 2007 due to a decrease in income before taxes. SECOND QUARTER 2007 COMPARED WITH SECOND QUARTER 2006 INCOME Net income for the second quarter of 2007 was $324,000 compared to $922,000 for the same period last year for a decrease of $598,000. Interest income decreased $113,000 over the same period last year. Interest on the loan portfolio increased $87,000 from $1,666,000 at June 30, 2006 to $1,753,000 at June 30, 2007. This was caused mainly by an increase of $1,397,000 in the average outstanding loans from $56,991,000 at June 30, 2006 to $58,388,000 at June 30, 2007 and an increase in the interest rate from 11.69% at June 30, 2006 to 12.01% at June 30, 2007. Interest on federal funds sold decreased $189,000 due mainly to an decrease of $17,436,000 in the average balance from $42,456,000 at June 30, 2006 to $25,020,000 at June 30, 2007. Interest expense increased $43,000 for the three months ended June 30, 2007 over the same period last year. This was caused by an increase in the interest rate on interest-bearing liabilities from .74% at June 30, 2006 to 1.02% as of June 30, 2007. Net interest income decreased $156,000 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 6.82% at June 30, 2006 to 7.84% at June 30, 2007. Non-interest income decreased $914,000 for the three-month period as compared to the same period last year. This increase was due mainly to $600,000 in insurance proceeds received on an OREO property and $369,000 in insurance proceeds as reimbursement of expenses incurred and the disposal of fixed assets due to Hurricane Katrina in 2006. Non-interest expense increased $53,000 for the three-month period as compared to the same period last year. Salaries and employee benefits increased $22,000 and Professional fees increased $23,000 over the same period last year. The provision for income taxes decreased $269,000 compared to the same period last year from $475,000 at June 30, 2006 to $206,000 at June 30, 2007 due to a decrease in income before taxes. Item 3 Controls and Procedures The certifying officers of the Company have evaluated the effectiveness of the Company's disclosure controls and procedures. They have concluded after evaluating the effectiveness of the Company's disclosure controls and procedures as of June 30, 2007, that as of such date, the Company's disclosure controls and procedures were effective and designed to ensure that material information relating to the Company would be made known to them by others. There were no changes in the Company's internal controls over financial reporting for the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, such controls. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. The Annual Meeting of Shareholders of BOL BANCSHARES, INC. was held on April 10, 2007. Five nominees were elected to serve one year terms as directors. Laporte, Sehrt, Romig and Hand was approved as the independent auditors. There were no other matters voted upon at the meeting. Below are the names of the nominees who were elected as directors and the number of shares cast for each. The total shares voting were 126,362. Number of Shares Nominee For Against Abstain G. Harrison Scott 126,197 130 35 Franck F. LaBiche 126,197 130 35 Henry L. Klein 126,197 130 35 Johnny C. Crow 126,197 130 35 Sharry R. Scott 126,197 130 35 Item 6 Exhibits and Reports on Form 8-K A. 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 B. Reports on Form 8-K None 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 August 14, 2007 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)