UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
T
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Sep. 30, 2010
£
TRANSITION REPORT PURSUANT TO 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 registrant as specified in its charter.)
|
Louisiana
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|
72-1121561
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|
(State of incorporation)
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(I.R.S. Employer Identification No.)
|
300 St. Charles Avenue, New Orleans, La. 70130
(Address of principal executive offices)
(504) 889-9400
(Registrant’s telephone number)
Indicate by check mark whether the registrant (1) 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
T
No
£
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
|
Large accelerated filer
£
|
|
Accelerated filer
£
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|
Non-accelerated filer
£
|
|
Smaller reporting company
T
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
£
No
T
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: 179,145 shares as of October 31, 2010.
BOL
BANCSHARES, INC. & SUBSIDIARY
INDEX
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Page No.
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PART I. Financial Information
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3
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4
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5
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6
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7
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11
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14
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Item 4. Submission of Matters to a Vote of Security Holders
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15
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15
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PART II. Other Information
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15
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16
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PART I - FINANCIAL INFORMATION
Item
1. Financial Statements
CONSOLIDATED STATEMENTS OF CONDITION
|
|
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Sept 30
|
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Dec. 31,
|
|
|
(Amounts in Thousands)
|
|
2010
|
|
|
2009
|
|
|
|
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(Unaudited)
|
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(Audited)
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|
ASSETS
|
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Cash and Due from Banks
|
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|
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Non-Interest Bearing Balances and Cash
|
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$
|
3,331
|
|
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$
|
3,041
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Federal Funds Sold
|
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14,925
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14,550
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Certificates of Deposit
|
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4,450
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5,194
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Investment Securities
|
|
|
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|
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|
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Securities Held to Maturity
|
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|
0
|
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1,000
|
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|
Securities Available for Sale
|
|
|
878
|
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|
|
814
|
|
|
Loans-Less Allowance for Loan Losses of $1,800 in 2009 and in 2008
|
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59,634
|
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58,302
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Property, Equipment and Leasehold Improvements
|
|
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(Net of Depreciation and Amortization)
|
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5,940
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6,141
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Other Real Estate
|
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3,099
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2,012
|
|
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Other Assets
|
|
|
673
|
|
|
|
1,598
|
|
|
TOTAL ASSETS
|
|
$
|
92,930
|
|
|
$
|
92,652
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS' EQUITY
|
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LIABILITIES
|
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Deposits:
|
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Non-Interest Bearing
|
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|
32,568
|
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32,107
|
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NOW Accounts
|
|
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10,562
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11,816
|
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Money Market Accounts
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4,258
|
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3,772
|
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Savings Accounts
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20,791
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20,780
|
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Time Deposits, $100,000 and over
|
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2,715
|
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3,810
|
|
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Other Time Deposits
|
|
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8,551
|
|
|
|
6,802
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TOTAL DEPOSITS
|
|
|
79,445
|
|
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79,087
|
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Notes Payable
|
|
|
1,144
|
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1,144
|
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Other Liabilities
|
|
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652
|
|
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|
968
|
|
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TOTAL LIABILITIES
|
|
|
81,241
|
|
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81,199
|
|
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|
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SHAREHOLDERS' EQUITY
|
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Preferred Stock - Par Value $1
|
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1,810,296 Shares Issued and Outstanding in 2010 1,837,089 Shares Issued and Outstanding in 2009
|
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1,810
|
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1,837
|
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Common Stock - Par Value $1
|
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179,145 Shares Issued and Outstanding in 2010 and 2009
|
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|
179
|
|
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179
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Accumulated Other Comprehensive Income
|
|
|
514
|
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|
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471
|
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Capital in Excess of Par - Retired Stock
|
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195
|
|
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|
190
|
|
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Undivided Profits
|
|
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8,777
|
|
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8,641
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Current Earnings
|
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214
|
|
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|
135
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TOTAL SHAREHOLDERS' EQUITY
|
|
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11,689
|
|
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11,453
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
|
92,930
|
|
|
$
|
92,652
|
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
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|
Three months ended
|
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Nine months ended
|
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|
|
|
Sept 30
|
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Sept 30
|
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(Amounts in Thousands)
|
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2010
|
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2009
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2010
|
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2009
|
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INTEREST INCOME
|
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Interest and Fees on Loans
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$
|
1,463
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|
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$
|
1,475
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$
|
4,504
|
|
|
$
|
4,537
|
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|
Interest on Investment Securities
|
|
|
5
|
|
|
|
11
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|
|
|
14
|
|
|
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38
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Interest on Federal Funds Sold
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5
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5
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13
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21
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Interest on Certificates of Deposit
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13
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|
17
|
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44
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41
|
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Total Interest Income
|
|
|
1,486
|
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|
|
1,508
|
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4,575
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4,637
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INTEREST EXPENSE
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Interest on Deposits
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|
91
|
|
|
|
109
|
|
|
|
270
|
|
|
|
291
|
|
|
Interest Expense on Notes Payable and Debentures
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19
|
|
|
|
19
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|
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|
56
|
|
|
|
75
|
|
|
Total Interest Expense
|
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110
|
|
|
|
128
|
|
|
|
326
|
|
|
|
366
|
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NET INTEREST INCOME
|
|
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1,376
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|
1,380
|
|
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4,249
|
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4,271
|
|
|
Provision for Loan Losses
|
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|
103
|
|
|
|
114
|
|
|
|
287
|
|
|
|
454
|
|
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
|
|
|
1,273
|
|
|
|
1,266
|
|
|
|
3,962
|
|
|
|
3,817
|
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|
NON-INTEREST INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Service Charges on Deposit Accounts
|
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|
124
|
|
|
|
100
|
|
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|
350
|
|
|
|
290
|
|
|
Cardholder & Other Credit Card Income
|
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|
105
|
|
|
|
110
|
|
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|
311
|
|
|
|
320
|
|
|
Other Operating Income
|
|
|
11
|
|
|
|
371
|
|
|
|
535
|
|
|
|
926
|
|
|
Total Non-interest Income
|
|
|
240
|
|
|
|
581
|
|
|
|
1,196
|
|
|
|
1,536
|
|
|
NON-INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits
|
|
|
657
|
|
|
|
687
|
|
|
|
1,934
|
|
|
|
2,070
|
|
|
Occupancy Expense
|
|
|
264
|
|
|
|
247
|
|
|
|
799
|
|
|
|
776
|
|
|
Communications
|
|
|
56
|
|
|
|
55
|
|
|
|
162
|
|
|
|
168
|
|
|
Outsourcing Fees
|
|
|
318
|
|
|
|
315
|
|
|
|
1,027
|
|
|
|
1,045
|
|
|
Loan & Credit Card Expense
|
|
|
30
|
|
|
|
35
|
|
|
|
87
|
|
|
|
100
|
|
|
Professional Fees
|
|
|
86
|
|
|
|
55
|
|
|
|
206
|
|
|
|
166
|
|
|
ORE Expense
|
|
|
57
|
|
|
|
30
|
|
|
|
291
|
|
|
|
65
|
|
|
Other Operating Expense
|
|
|
177
|
|
|
|
236
|
|
|
|
423
|
|
|
|
623
|
|
|
Total Non-interest Expense
|
|
|
1,645
|
|
|
|
1,660
|
|
|
|
4,929
|
|
|
|
5,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(Loss) Before Tax Provision
|
|
|
(132
|
)
|
|
|
187
|
|
|
|
229
|
|
|
|
340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision For Income Taxes
|
|
|
(36
|
)
|
|
|
63
|
|
|
|
15
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME/(LOSS)
|
|
$
|
(96
|
)
|
|
$
|
124
|
|
|
$
|
214
|
|
|
$
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per Share of Common Stock
|
|
$
|
(0.53
|
)
|
|
$
|
0.69
|
|
|
$
|
1.20
|
|
|
$
|
1.57
|
|
The accompanying notes are an integral part of these financial statements.
BOL
BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
Nine Months Ended
|
|
|
|
|
Sept 30
|
|
|
Sept 30
|
|
|
(Amounts in thousands)
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
214
|
|
|
$
|
281
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME, NET OF TAX
|
|
|
|
|
|
|
|
|
|
Unrealized Holding Gains (Losses) on Investment Securities Available-for-Sale, Arising During the Period
|
|
|
22
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
|
|
$
|
236
|
|
|
$
|
275
|
|
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30
|
(Amounts in thousands)
|
|
2010
|
|
|
2009
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
214
|
|
|
$
|
281
|
|
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
|
|
|
|
|
|
|
|
|
|
Provision for Loan Losses
|
|
|
287
|
|
|
|
454
|
|
|
Depreciation and Amortization Expense
|
|
|
290
|
|
|
|
300
|
|
|
Amortization of Investment Security Premiums
|
|
|
-
|
|
|
|
(1
|
)
|
|
Decrease in Deferred Income Taxes
|
|
|
(21
|
)
|
|
|
3
|
|
|
(Gain) Loss on Sale of Other Real Estate
|
|
|
(395
|
)
|
|
|
(9
|
)
|
|
Decrease in Other Assets
|
|
|
925
|
|
|
|
143
|
|
Decrease in Other Liabilities
and Accrued Interest
|
|
|
(315
|
)
|
|
|
(579
|
)
|
|
Net Cash Provided by Operating Activities
|
|
|
985
|
|
|
|
592
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Proceeds from Held-to-Maturity Investment Securities
|
|
|
|
|
|
|
|
|
|
Released at Maturity
|
|
|
4,000
|
|
|
|
2,000
|
|
|
Purchases of Held-to-Maturity Investment Securities
|
|
|
(3,000
|
)
|
|
|
(1,000
|
)
|
|
Purchases of Property and Equipment
|
|
|
(89
|
)
|
|
|
(24
|
)
|
|
Capitalized Construction Costs for ORE
|
|
|
(486
|
)
|
|
|
-
|
|
|
Proceeds from Sale of Other Real Estate
|
|
|
395
|
|
|
|
70
|
|
|
Decrease (Increase) in Certificate of Deposit with other Banks
|
|
|
743
|
|
|
|
(5,447
|
)
|
|
Net Increase in Loans
|
|
|
(2,219
|
)
|
|
|
(3,309
|
)
|
|
Net
Cash Used in Investing Activities
|
|
|
(656
|
)
|
|
|
(7,710
|
)
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Non-Interest Bearing
and Interest Bearing Deposits
|
|
|
358
|
|
|
|
(1,792
|
)
|
|
Preferred Stock Retired
|
|
|
(22
|
)
|
|
|
(128
|
)
|
|
Proceeds from Issuance of Long-Term Debt
|
|
|
-
|
|
|
|
1,000
|
|
|
Principal Payments on Long-Term Debt
|
|
|
-
|
|
|
|
(1,399
|
)
|
|
Net Cash Provided by (Used) in Financing Activities
|
|
|
336
|
|
|
|
(2,319
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
665
|
|
|
|
(9,437
|
)
|
|
Cash and Cash Equivalents - Beginning of Year
|
|
|
17,591
|
|
|
|
28,479
|
|
|
Cash and Cash Equivalents - End of Period
|
|
$
|
18,256
|
|
|
$
|
19,042
|
|
The accompanying notes are an integral part of these financial statements.
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
|
SUPPLEMENTAL DISCLOSURES:
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Cash Paid During the Year for Interest
|
|
$
|
261
|
|
|
$
|
415
|
|
|
Cash Paid During the Year for Income Taxes
|
|
$
|
(225
|
)
|
|
$
|
0
|
|
Market Value Adjustment for Unrealized (Loss) Gain
on Securities Available-for-Sale
|
|
$
|
33
|
|
|
$
|
(9
|
)
|
|
Additions to Other Real Estate Through Foreclosure
|
|
$
|
601
|
|
|
$
|
493
|
|
The accompanying notes are an integral part of these financial statements.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note A Summary of Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Bank of Louisiana (the Bank), and the Bank’s wholly owned subsidiary, BOL Assets, LLC. These consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X, and do not include information or footnotes for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included.
Use of Estimates
In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses.
Cash and Cash Equivalents
Cash equivalents include amounts due from banks and federal funds sold. Generally, federal funds are purchased and sold for one-day periods.
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 of 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 credit-worthiness of the counterparties.
The estimated fair values of the Company’s financial instruments at September 30, 2010 and December 31, 2009, are as follows (amounts in thousands):
|
|
|
September 30, 2010
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
Value
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
Cash and Short-Term Investments
|
|
$
|
3,331
|
|
|
$
|
3,331
|
|
|
Certificates of Deposit
|
|
|
4,451
|
|
|
|
4,451
|
|
|
Investment Securities
|
|
|
878
|
|
|
|
878
|
|
|
Loans
|
|
|
61,434
|
|
|
|
61,352
|
|
|
Less: Allowance for Loan Losses
|
|
|
(1,800
|
)
|
|
|
(1,800
|
)
|
|
|
|
$
|
68,294
|
|
|
$
|
68,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
79,445
|
|
|
$
|
79,512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized Financial Instruments:
|
|
|
|
|
|
|
Commitments to Extend Credit
|
|
$
|
2,269
|
|
|
$
|
2,269
|
|
|
Credit Card Arrangements
|
|
|
15,352
|
|
|
|
15,352
|
|
|
|
|
$
|
17,621
|
|
|
$
|
17,621
|
|
|
|
|
December 31, 2009
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
Value
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
Cash and Short-Term Investments
|
|
$
|
4,040
|
|
|
$
|
4,040
|
|
|
Certificates of Deposit
|
|
|
5,194
|
|
|
|
5,194
|
|
|
Investment Securities
|
|
|
302
|
|
|
|
814
|
|
|
Loans
|
|
|
60,102
|
|
|
|
60,294
|
|
|
Less: Allowance for Loan Losses
|
|
|
(1,800
|
)
|
|
|
(1,800
|
)
|
|
|
|
$
|
67,839
|
|
|
$
|
68,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
79,087
|
|
|
$
|
79,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized Financial Instruments:
|
|
|
|
|
|
|
Commitments to Extend Credit
|
|
$
|
2,627
|
|
|
$
|
2,627
|
|
|
Credit Card Arrangements
|
|
|
16,758
|
|
|
|
16,758
|
|
|
|
|
$
|
19,385
|
|
|
$
|
19,385
|
|
Financial Instruments
On January 1, 2008, the Company adopted the FASB fair value guidance pertaining to all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
The fair value guidance defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining fair value, the fair value guidance expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
|
|
·
|
Level 1 - Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets
|
|
|
·
|
Level 2 - Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market date for substantially the full term of the assets or liabilities
|
|
|
·
|
Level 3 - Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
|
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2010 and December 31, 2009 (amounts in thousands):
|
September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Net Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
-
|
|
|
$
|
878
|
|
|
$
|
-
|
|
|
$
|
878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
878
|
|
|
$
|
-
|
|
|
$
|
878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Net Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
-
|
|
|
$
|
814
|
|
|
$
|
-
|
|
|
$
|
814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
814
|
|
|
$
|
-
|
|
|
$
|
814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsequent Events
In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of September 30, 2010. In preparing these financial statements, the Company evaluated the events and transactions that occurred from September 30, 2010 through the date these financial statements were issued.
ITEM
2 MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2010 COMPARED WITH DECEMBER 31, 2009
BALANCE SHEET
Total assets at September 30, 2010 were $92,930,000 compared to $92,652,000 at December 31, 2009, for an increase of $278,000, or 0.30%. Federal Funds Sold increased $375,000 from $14,550,000 at December 31, 2009 to $14,925,000 at September 30, 2010. Certificates of Deposit decreased $744,000 from $5,194,000 at December 31, 2009 to $4,450,000 at September 30, 2010. This decrease was due to the inability to secure a good yield. Investment securities show a decrease of $936,000 from $1,814,0000 at December 31, 2009 to $878,000 at September 30, 2010. Securities held to maturity decreased $1,000,000 due to bonds being called. Securities available for sale increased by $64,000 reflecting updated market values. Total loans increased $1,332,000, or 2.28%, to $59,634,000 at September 30, 2010 from $58,302,000 at December 31, 2009. This increase in the loan portfolio is due mainly to an increase in 1-4 residential loans of $1,915,000, an increase in construction loans of $223,000, an increase in commercial loans of $70,000, an increase in personal loans of $57,000 and an increase in customer overdrafts $92,000. These increases were offset by a decrease in commercial real estate loans of $10,000, a decrease in second mortgage loans of $79,000, a decrease in other real estate loans of $71,000 and a decrease in credit card loans of $865,000. 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 $358,000, or 0.45%, to $79,445,000 at September 30, 2010 from $79,087,000 at December 31, 2009. Total non-interest bearing deposits increased $461,000 and interest-bearing accounts decreased $103,000. The decrease of interest earning deposits was mainly attributable to a decrease in NOW accounts of $1,254,000, an increase in money market accounts of $486,000, an increase in savings accounts of $11,000 and an increase of $654,000 in time deposits.
Other liabilities decreased $316,000 from $968,000 at December 31, 2009 to $652,000 at September 30, 2010. This decrease is due mainly to a decrease in other liabilities, a decrease in deferred taxes and a decrease in accrued interest. These decreases were partially offset by an increase in deferred membership fees.
Shareholder’s Equity increased $236,000 from $11,453,000 at December 31, 2009 to $11,689,000 at September 30, 2010. This increase is due mainly to an increase in accumulated other comprehensive income of $43,000, net income for the nine months ended September 30, 2010 of $214,000 and an increase in capital in excess of par-retired Preferred Stock of $5,000. These increases were partially offset by a decrease in Preferred Stock of $27,000.
NINE MONTHS ENDED SEPTEMBER 30, 2010 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2009
INCOME
The Company’s net income for the nine months ended September 30, 2010 was $214,000, or $1.20 per share, a decrease of $67,000 from the Company’s total net income of $281,000, or $1.57 per share, for the same period last year.
Interest income decreased $62,000 for the nine months ended September 30, 2010 over the same period last year. Interest on federal funds sold decreased $8,000 primarily due to a decrease in the average interest rate paid from .16% at September 30, 2009 to .13% at September 30, 2010. The average balance of federal funds sold decreased $4,384,000 from $17,395,000 at September 30, 2009 to $13,011,000 at September 30, 2010. Interest on investment securities decreased $24,000 due mainly to a decrease in the average balance from $2,744,000 at September 30, 2009 to $2,437,000 at September 30, 2010. Interest in the loan portfolio decreased $33,000 due mainly to a decrease in the average interest rate of 10.53% at September 30, 2009 to 10.17% at September 30, 2010. The average balance of Certificates of Deposit purchased was $4,785,000 at an average interest rate of 1.23% for the nine months ended September 30, 2010 as compared to an average balance of Certificates of Deposit of $3,982,000 with an average interest rate of 1.37% for the nine months ended September 30, 2009.
Interest expense decreased $40,000 for the nine months ended September 30, 2010 over the same period last year. This was caused primarily by a decrease in the average interest rate paid on interest-bearing deposits from .87% at September 30, 2009 to .77% as of September 30, 2010. The impact of the decrease in the average interest rate paid on interest-bearing deposits was partially offset by an increase in the average balance of interest bearing deposits from $44,513,000 at September 30, 2009 to $46,475,000 at September 30, 2010. The average interest rate on interest-bearing liabilities decreased from 1.06% at September 30, 2009 to .91% at September 30, 2010.
Net interest income decreased $22,000 for the nine months ended September 30, 2010 compared to the same period last year. Our interest rate spread increased from 6.52% at September 30, 2009 to 6.78% at September 30, 2010. The increase in the rate spread was due to an increase of .11% on the yield on interest-earning assets from 7.58% for the nine months ended September 30, 2009 to 7.69% for the nine months ended September 30, 2010, and a decrease of .15% on the average rate paid out on interest bearing liabilities from 1.06% paid for the nine months ended September 30, 2009 as compared to .91% paid during the nine months ended September 30, 2010.
Non-interest income decreased $340,000 between the nine month periods from $1,536,000 at September 30, 2009 to $1,196,000 at September 30, 2010. Other income decreased $391,000 for the nine months ended September 30, 2010. This decrease is due mainly to a decrease in miscellaneous income of $814,000 pertaining to insurance proceeds relating to Hurricane Katrina that were not needed for repairs and recognized as miscellaneous income for the nine months ended September 30, 2009. This decrease was partially offset by an increase in gain on sale of ORE properties of $395,000 and increase of $38,000 in dividend income for the nine months ended September 30, 2010.
Non-interest expense decreased $84,000 for the nine month period of 2010 as compared to the same period last year. Salaries and Employee Benefits decreased $136,000 from $2,070,000 at September 30, 2009 to $1,934,000 at September 30, 2010. This decrease was due mainly to a reduction in number of employees subsequent to the first quarter of 2009. Occupancy expense increased by $23,000 and communications decreased by $6,000. Outsourcing fees decreased $18,000 and loan and credit card expense decreased $13,000 due mainly to a decrease in credit card sales. Professional fees increased $40,000 due mainly to foreclosures occurring in 2010. ORE expenses increased $226,000 for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009 due primarily to expenses associated with the repairs and remodeling of ORE properties. Other operating expenses decreased $200,000 primarily due to a decrease in bank stock taxes.
THIRD QUARTER 2010 COMPARED WITH THIRD QUARTER 2009
INCOME
Net loss for the third quarter of 2010 was $(96,000), or $(0.53) per share, compared to $124,000, or $.69 per share, for the same period last year for a decrease of $220,000.
Interest income decreased $22,000 over the same period last year. Interest on the loan portfolio decreased $12,000 from $1,475,000 at September 30, 2009 to $1,463,000 at September 30, 2010. This was caused mainly by an increase in the average balance from $58,580 at September 30, 2009 to $60,237 at September 30, 2010.
Interest on investment securities decreased $6,000 due mainly to a decrease in the yield on investment securities from 1.69% at September 30, 2009 to 0.81% at September 30, 2010. Interest on certificates of deposit decreased $4,000 due mainly to a decrease in the interest rate of 1.38% in 2009 to 1.10% in 2010 and a decrease in the average balance from $4,918,000 to $4,746,000.
Interest expense decreased $18,000 for the three months ended September 30, 2010 over the same period last year. This was caused by a decrease in the average interest rate paid on interest-bearing deposits from 0.96% at September 30, 2009 to .78% as of September 30, 2010. The impact of the decrease in the average interest rate paid on interest bearing deposits was partially offset by an increase in the average balance of interest-bearing deposits from $45,517,000 at September 30, 2009 to $46,577,000 at September 30, 2010.
Net interest income decreased $4,000 due primarily to a decrease in the interest earning assets average balances from $81,525,000 in 2009 to an average balance of $79,609,000 in 2010.
Non-interest income decreased $341,000 for the three month period ended September 30, 2010 compared to the prior year period. Cardholder and other credit card income decreased by $5,000. Other operating income decreased by $360,000 due mainly to insurance proceeds of $354,000 credited in the third quarter of 2009 to miscellaneous income for Hurricane Katrina repairs that were not needed and an ORE gain on sale of $9,000. These decreases were offset by an increase in deposit related fees of $24,000 due mainly to an increase in the fees collected on overdrawn accounts.
Non-interest expense decreased $15,000 for the three month period ended September 30, 2010 compared to the prior year period. Occupancy expense increased $17,000 primarily due to a rent adjustment of $10,000 related to Katrina expenses, a utilities expense increase of $6,000 and an increase in equipment repairs of $1,000. Communications increase of $1,000, outsourcing fees increased $3,000, professional fees increased $31,000 due to higher legal fees on foreclosures and ORE increased $27,000 due to maintenance and repairs on the additional ORE properties. These increases were offset by a decrease in salaries and employee benefits of $30,000 due mainly to a reduction in the number of employees, a decrease in loan and credit card expenses of $5,000 and a decrease of $59,000 in other operating expenses primarily due to lower FDIC assessment of $46,000 a decrease in loss on litigation of $8,000 and a decrease in stationary, forms and supplies of $5,000.
The provision for income taxes decreased $99,000 compared to the same period last year from a provision of a liability of $63,000 at September 30, 2009 to a benefit of $36,000 at September 30, 2010.
Item
3 Quantitative and Qualitative Disclosures about Market Risk, Catastrophic Events, and Future Growth
Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of the Company.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. Difficult conditions in the financial services markets may materially and adversely affect the
business and results of operations of the Bank and the Company.
Dramatic declines in the housing market during the past year, along with falling home prices and increasing foreclosures and unemployment, have resulted in significant write downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. These write-downs, initially of mortgage-backed securities by spreading to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, and, in some cases, to fail. Many lenders and institutional investors have reduced, and in some cases, ceased to provide funding to borrowers, including other financial institutions. This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility, and widespread reduction of business activity generally, which could have a material adverse effect on our business and operations. A worsening of these conditions would likely exacerbate any adverse effects of these difficult market conditions on us and others in the financial institutions industry. However, the majority of small community banks, such as Bank of Louisiana, have strong reserve positions and are well capitalized.
The occurrence of catastrophic events such as hurricanes, tropical storms, earthquakes, windstorms, floods, severe winter weather, fires and other catastrophes could adversely affect our consolidated financial condition or results of operations. Unpredictable natural and other disasters could have an adverse effect on us in that such events could materially disrupt our operations or the ability or willingness of our customers to access financial services offered by us. The incidence and severity of catastrophic events could nevertheless reduce our earnings and cause volatility in our financial results for any fiscal quarter or year and have a material adverse effect on our financial condition or results of operation.
The Company is a customer-focused organization. Future growth is expected to be driven in a large part by the relationships maintained with customers. The Company has assembled an experienced management team, and has management development plans in place.
Item
4T Controls and Procedures
Under the supervision and with the participation of our management, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the certifying officers of the Company have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act of 1934, is recorded, processed, summarized and reported within the applicable time periods specified by the Securities and Exchange Commission’s rules and forms. There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Exhibits
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
|
|
|
|
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
|
|
|
|
Certification Pursuant to 18 U.S.C. Section 1350
|
BOL BANCSHARES, INC.
Pursuant to the requirements of Section 13 or 15(d) 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.
|
|
|
BOL BANCSHARES, INC.
|
|
|
|
|
|
|
|
|
|
November 15, 2010
|
|
/s/ G. Harrison Scott
|
|
Date
|
|
G. Harrison Scott
|
|
|
|
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)
|