UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
DECEMBER
31, 2011
COMMISSION FILE NUMBER
0-16934
BOL BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS
CHARTER)
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LOUISIANA
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72-1121561
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(STATE OF INCORPORATION)
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(IRS EMPLOYER IDENTIFICATION NO.)
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300 ST. CHARLES AVENUE, NEW ORLEANS, LA
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70130
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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(ZIP CODE)
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(504) 889-9400
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING
AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT: NONE
Common Stock, par value $1.00 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
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No
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Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
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No
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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 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
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No
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Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
☒
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company in Rule 12b-2 of the
Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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No
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As of March 29, 2012, the aggregate market value
of the voting common equity stock held by non-affiliates of the registrant was $1,864,752. For this purpose, certain executive
officers and directors are considered affiliates.
The number of shares of Common Stock outstanding
as of March 29, 2012 was 179,145.
Cross Reference Index
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Page
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Part I
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Item 1:
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Business
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1
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Item 2:
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Properties
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4
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Item 3:
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Legal Proceedings
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5
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Item 4:
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Submission of Matters to a Vote of Security Holders
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5
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Part II
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Item 5:
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Market for Registrant’s Common Equity and Related Stockholder Matters
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5
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Item 6:
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Management’s Discussion and Analysis
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6
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Item 7:
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Financial Statements and Supplementary Data
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28
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Item 8:
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Changes in and Disagreements with Accountants and Financial Disclosure
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76
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Item 8A(T):
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Controls and Procedures
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76
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Item 8B:
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Other Information
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76
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Part III
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Item 9:
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Directors and Executive Officers of the Registrant
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77
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Item 10:
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Executive Compensation
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77
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Item 11:
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Security Ownership of Certain Beneficial Owners and Management
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79
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Item 12:
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Certain Relationships and Related Transactions
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79
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Item 13:
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Exhibits and Reports on Form 8-K
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(a) Exhibits
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79
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(b) Reports on Form 8-K
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79
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Item 14:
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Principal Accountant Fees and Services
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80
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Signatures
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81
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Item 1 Description of Business
Here and after BOL Bancshares,
Inc. shall be referred to as the Company and subsidiary Bank of Louisiana shall be referred to as the Bank.
History and General Business
The Company was organized
as a Louisiana corporation on May 7, 1981, for the purpose of becoming a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the “BHC Act”). The Company remained inactive until April 29, 1988, when it acquired
the Bank in a three-bank merger of the Bank of Louisiana in New Orleans (the “Old Bank”), Bank of the South (“South
Bank”), and Fidelity Bank & Trust Company, all Louisiana state-chartered banks. The Old Bank was the surviving bank in
the merger and subsequently changed its name to the Bank’s current name. The merger was originally accounted for as a “purchase”,
but after discussions with the Securities and Exchange Commission, the accounting treatment of the merger was changed to a manner
similar to a “pooling of interests”. [Since the change in accounting treatment, the Company has recast its financial
statements, to reflect “pooling” accounting.] In addition, at the time of the bank’s merger, the Company merged
with BOS Bancshares, Inc., a Louisiana corporation, and the registered bank holding company for South Bank. The Company was the
surviving entity in that merger. The Company is the sole shareholder and registered bank holding company of the Bank.
Other than owning and operating
the Bank, the Company may also engage, directly or through subsidiary corporations, in those activities closely related to banking
that are specifically permitted under the BHC Act. See “Supervision and Regulation Enforcement Action”. The Company,
after acquiring the requisite approval of the Board of Governors of the Federal Reserve System (the “FRB”) and any
other appropriate regulatory agency, may seek to engage
de
novo
in such activities or to acquire companies already
engaged in such activities. The Bank has formed BOL Assets, LLC to engage in the permissible activity of holding real estate from
loans which were in default and held past the FDIC’s time limits. There can be no assurance, however, that the Company will
not form or acquire any other entity in the future.
If the Company attempts
to form or acquire other entities and engage in activities closely related to banking, the Company will be competing with other
bank holding companies and companies currently engaged in the line of business or permissible activity in which the Company might
engage, many of which have far greater assets and financial resources than the Company and a greater capacity to raise additional
debt and equity capital. See “Territory Served and Competition”.
Forward-Looking Statements are Subject to Change
We make certain statements
in this document as to what we expect may happen in the future. These statements usually contain the words “believe”,
“estimate”, “project”, “expect”, “anticipate”, “intend” or similar
expressions. Because these statements look to the future, they are based on our current expectations and beliefs. Actual results
or events may differ materially from those reflected in the forward-looking statements. You should be aware that our current expectations
and beliefs as to future events are subject to change at any time, and we can give no assurances that the future events will actually
occur.
Critical Accounting Policies
In reviewing and understanding
financial information of the Company, you are encouraged to read and understand the significant accounting policies used in preparing
our consolidated financial statements. These policies are described in Note A of the notes to our consolidated financial statements
included in this Form 10-K. Our accounting and financial reporting policies conform to accounting principles generally accepted
in the United States of America and to general practices within the banking industry. Accordingly, the consolidated financial statements
require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available.
These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the periods presented. The following policies comprise those that management
believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require
numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect
our reported results and financial condition for the period or in future periods.
Allowance for Loan Losses.
It is the Bank’s
policy to maintain a loan loss reserve that is appropriate when compared to the quality of our loan portfolio. The allowance for
loan losses is established through a provision for loan losses charged to expense. Management reviews the allowance for loan losses
on a periodic basis in order to identify those inherent losses and to assess the overall collection probability of the loan portfolio.
The evaluation process includes, among other things, an analysis of delinquency trends, non-performing loan trends, the level of
charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations, the type, size and
geographic concentration of our loans, the value of collateral securing the loan, the borrower’s ability to repay and repayment
performance, the number of loans requiring heightened management oversight, local economic conditions and industry experience.
From this analysis, a general, specific and unallocated reserve is established, which totals the allowance for loan losses at each
reporting date. Loans are charged against the allowance for loan losses when management believes the collectability of the principal
is unlikely.
Banking Industry
The Company derives its
revenues largely from dividends from the Bank when the Bank upstreams dividends. As is the case with any financial institution,
the profitability of the Bank is subject, among other things, to fluctuating availability of money, loan demand, changes in interest
rates, actions of fiscal and monetary authorities, and economic conditions in general. See “Banking Products and Services”,
“Supervision and Regulation Enforcement Action”, and “Management’s Discussion and Analysis”.
Banking Products and Services
The Bank is a full service
commercial bank that provides a wide range of banking services for its customers. Some of the major services that it offers include
checking accounts, negotiable order of withdrawal (“NOW”) accounts, individual retirement accounts (“IRAs”),
savings and other time deposits of various types, and business, real-estate, personal use, home improvement, automobile, and a
variety of other loans, as discussed more fully below. Other services include letters of credit, safe deposit boxes, credit cards,
wire transfer, e-banking, night deposit, and drive-in facilities. Prices and rates charged for services offered are competitive
with the area’s existing financial institutions in the Bank’s primary market area.
The Bank offers a wide
variety of fixed and variable rate loans to qualified borrowers. With regard to interest rates, the Bank continues to meet legal
standards while remaining competitive with the existing financial institutions in its market area. The specific types of loans
that the Bank offers include the following:
Consumer Loans
.
The Bank’s consumer loans consist of automobile, mobile home, recreational vehicle, and boat loans; home improvement and
second-mortgage loans; secured and unsecured personal expense loans; and educational loans.
Real Estate Loans
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The Bank’s real estate loans consist of residential first and second mortgage loans on one-to-four family homes; construction
and development loans; multiple dwelling unit loans; housing rehabilitation loans; loans to purchase developed real property; and
commercial real estate loans.
Commercial Loans (Secured
and Unsecured
). The Bank’s commercial loans consist of working capital loans, secured and unsecured lines of credit,
and small equipment loans.
Credit Cards
. The
Bank offers a variety of nationally recognized credit cards, in addition to its own Mr. Bol credit card, and private label credit
cards for use at retail establishments nationwide. As of December 31, 2011 the Bank held $6,039,000 in credit card debt.
The Bank has a number of
proprietary accounts it services which is included above. These accounts consist largely of small to medium sized merchants who
have issued their own private-label credit cards. The Bank acquires these credit card accounts, typically with reserves posted,
and requires the merchant to repurchase accounts 180 days or more past due.
As of December 31, 2011 the Bank held $283,000
in proprietary accounts.
Territory Served and Competition
Market Area
. The
market area for the Bank is defined in the Bank’s Community Reinvestment Act Statement as the greater New Orleans metropolitan
area. This area includes all of the City of New Orleans and surrounding Parishes. The Bank has branch offices in Orleans, Jefferson,
and St. Tammany Parishes.
Population
. The
U.S. Census Bureau’s latest count on the population of New Orleans stands at 343,829 residents. About 1.17 million residents
were counted in 2010 in the seven-parish metropolitan area.
Competition
. The
Bank competes with other commercial banks, savings and loan associations, credit unions, and other types of financial services
providers in the New Orleans metropolitan area. The Bank is one of the smallest commercial banks in New Orleans in terms of assets
and deposits.
Economy
. While there
is still a long way to go, considerable progress is being made towards New Orleans region’s gradual economic recovery in
the aftermath of Hurricane Katrina and the BP oil spill thanks to the convergence of a number of factors; education reform, an
influx of young entrepreneurial talent, a motivated labor force and a business-friendly government. Governmental agencies and coalitions
have crafted and embraced comprehensive plans for rebuilding New Orleans and its surrounding parishes for the near, medium and
long term. Our communities and citizens are working hard to make a solid come-back. Our vision is one of a more livable, sustainable
and safer future for New Orleans, which will include all the rich cultural and architectural heritage that has made the region
so beloved to natives and visitors alike.
The recession in the broader economy could
have an adverse effect on Bank of Louisiana’s financial condition. Recessionary conditions and a subsequent period of slow
recovery in the broader economy could adversely affect the financial capacity of businesses and individuals in our market area.
These conditions could, among other consequences, increase the credit risk inherent in the current loan portfolio, restrain new
loan demand from creditworthy borrowers, prompt the Bank to tighten its underwriting criteria and reduce liquidity in the Bank’s
customer base and the level of deposits that they maintain. These economic conditions could also delay the correction of the imbalance
of supply and demand in certain real estate markets. Legislative and regulatory actions taken in response to these conditions could
impose additional restrictions and requirements on the Bank. The current and further deterioration in the residential construction
and commercial real estate markets may lead to increased nonperforming assets in Bank of Louisiana’s portfolio and increased
provisions for losses on loans, which could have a material adverse effect on our capital, financial condition and results of operation.
Employees
. As of
December 31, 2011, the Bank had 59 full-time and approximately 7 part-time employees, including executive officers, loan and other
banking officers, branch personnel, operations personnel and other support personnel. The Bank considers its relationship with
its employees to be very good. The employee benefit programs provided by the Bank include group life and health insurance, paid
vacations, sick leave, and a Section 401(k) savings plan. The Company has no employees who are not employees of the Bank. See “Executive
Compensation”.
Item 2 Description of Property.
In addition to its main
office, the Bank has five branch locations and an operations center. Set forth below is a description of the offices of the Bank.
Main Office
. The
main office of the Company is located at 300 St. Charles Avenue in the central business district of New Orleans, Louisiana. The
building consists of approximately 13,100 square feet of office space, and parking is provided on the streets and commercial lots
nearby. The Bank occupies the ground floor and the fourth floor. The second and third floors are leased to a single entity. Rental
income received is $2,543 per month. The lease commenced December 15, 2003 and terminates on December 15, 2018. The Bank owns the
building.
Severn Branch
. The
Severn Branch of the Bank is located in the central business district of Metairie at 3340 Severn Avenue, Metairie, Louisiana. The
premises consist of approximately 4,600 total square feet of office space on the first floor of a four-story office building, and
parking is provided for approximately 200 cars. Rental income received during 2011 and 2010 was $282,546 and $267,386, respectively.
Oakwood Branch
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The Oakwood Branch of the Bank is located in the Oakwood Shopping Center at 197 Westbank Expressway, Gretna, Louisiana. The premise
consists of approximately 3,730 total square feet of office space, which includes 1,560 square feet designated for its drive-in
facility. The Bank leases the lobby and drive-in facility from Oakwood Shopping Center, Ltd. The lease will expire November 14,
2016 with a monthly lease amount of $13,905 per month.
Lapalco Branch
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The Lapalco Branch of the Bank is located in the Belle Meade Plaza Shopping Center at 605 Lapalco Boulevard, Gretna, Louisiana.
The premises consist of approximately 2,500 square feet of office space in a one-story building, and parking is provided by the
shopping center. The lease will expire May, 2016 with a monthly lease amount of $6,384 per month.
Gause Branch
. The
Gause Branch of the Bank is located in the central business district of Slidell at 636 Gause Boulevard, Slidell, Louisiana. The
building consists of approximately 13,800 total square feet of office space in a three-story office building, and parking is provided
for approximately 50 cars. The Bank owns the building and underlying land upon which it is situated. The Bank occupies approximately
3,300 square feet in this building and leases the remaining space to various tenants for varying rental rates and terms. Rental
income received during 2011 totaled $64,572.
Tammany Mall Branch
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The Tammany Mall Branch of the Bank is located at 3180 Pontchartrain, Slidell, Louisiana. The premises consist of approximately
4,000 total square feet of office space, and parking is provided for approximately 40 cars. The Bank owns the building.
Operations Center
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The Bank’s operations center, which houses its accounting, audit, data processing, credit card, bookkeeping, and marketing
departments, is located at 3340 Severn Avenue, Metairie, Louisiana. The building consists of approximately 44,500 total square
feet of space in a four-story office building, and parking is provided for approximately 200 cars.
Item 3 Legal Proceedings
Because of the nature of
the banking industry in general, the Company and the Bank are each party from time to time to litigation and other proceedings
in the ordinary course of business. Reserves for such litigation, if the Company deems such litigation to have sufficient merit
or which may subject the Company to significant exposure, would be recorded and reflected in the Company’s consolidated financial
statements.
There are no legal proceedings
which require accrual or disclosure within the Company’s consolidated financial statements.
Item 4 Submission of Matters to a Vote of
Security Holders
There were no matters submitted,
during the fourth quarter of fiscal year 2011 to a vote of security holders, through the solicitation of proxies.
Item 5 Market for Registrant's Common Equity
and Related Stockholder Matters
There is no established
trading market in the shares of Bank Stock, as the Company owns 100% of the issued and outstanding shares of Bank Stock. There
is no established trading market in the shares of Company Common Stock. The Company Common Stock is not listed or quoted on any
stock exchange or automated quotation system. Management is aware, however, that Dorsey & Company, New Orleans, Louisiana does
make a market in the Company Common Stock. The following table sets forth the range of high and low sales prices of Company Common
Stock for 2011 and 2010, as determined by the Company based on trading records of Dorsey & Company. The following table does
not purport to be a listing of all trades in Company Common Stock during the time periods indicated, but only those trades of which
Dorsey and Company has informed the Company. The prices indicated below do not reflect mark-ups, mark-downs, or commissions, but
do represent actual transactions. Finally, the prices listed below are not necessarily indicative of the prices at which shares
of Company Stock would trade. As of December 31, 2011, the Company had approximately 576 shareholders of record. There were no
dividends declared on the Company common stock for the years ended 2011 or 2010.
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2011
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2010
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High
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Low
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High
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Low
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First Quarter
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-
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Second Quarter
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-
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Third Quarter
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27.85
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26.05
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31.50
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27.75
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Fourth Quarter
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-
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No dividends were paid on shares of Company
Common stock in 2011 or 2010.
Annual Shareholders Meeting
The Annual Meeting of the
shareholders of Registrant will be held at 300 St. Charles Avenue, 4th Floor, New Orleans, Louisiana, the exact date of which has
not been determined.
Independent Auditors
LaPorte, CPAs and Business
Advisors, 111 Veterans Memorial Blvd., Suite 600,Metairie, LA 70005-4958.
Item 6 MANAGEMENT’S DISCUSSION AND
ANALYSIS
The following discussion
and analysis is intended to provide a better understanding of the consolidated financial condition and results of operations of
BOL Bancshares, Inc. (the “Company”) and its bank subsidiary, (the “Bank”) for the years ended December
31, 2011, 2010, and 2009. This discussion and analysis should be read in conjunction with the consolidated financial statements,
related notes, and selected financial data appearing elsewhere in this report.
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.
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 years, 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. As a rule 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. While the
Company has assembled an experienced management team, and has management development plans in place, the unexpected loss of key
employees could have a material adverse effect on the Company’s business and may result in lower revenues.
Overview
The Company provides a
full range of quality financial services in selected market areas. As of December 31, 2011, the Company’s total assets were
$91,717,000 as compared to $94,340,000 at December 31, 2010.
Loans comprise the
largest single component of the Bank’s interest-earning assets and provide a far more favorable return than other
categories of earnings assets. The Bank’s loans totaled $54,381,000, and $60,201,000 net of unearned discount, deferred
loan fees, and Allowance for Loan Losses at December 31, 2011, and 2010, respectively. The Bank’s net interest margin
was 6.64% for the year ended December 31, 2011 as compared to 6.87% for the year ended December 31, 2010.
Historically, credit card
loans have been an important part of the Bank’s total loan portfolio. However, the Bank has been diversifying its earning
assets into commercial and installment loans. At December 31, 2011, credit card loans were $6,039,000 and represented 11.10% of
the Bank’s net loan portfolio of $54,381,000. At December 31, 2010, credit card loans were $6,321,000 and represented 10.49%
of the Bank’s loan portfolio of $60,201,000.
The Bank’s current
strategy is to continue to grow its traditional banking operations primarily in the metropolitan New Orleans area and to expand
its proprietary accounts, so long as it can maintain the minimum required Tier 1 leverage ratio required. The Bank focuses on providing
its customers with the financial sophistication and breadth of products of a regional bank while successfully retaining the local
appeal and level of service of a community bank.
Results of Operations
Net Income - December 31, 2011 Compared to
December 31, 2010.
The Company’s net
income for the year 2011 was $74,000, or $0.42 per share, a decrease of $225,000, or a decrease of $1.25 per share from the Company’s
net income of $299,000 in 2010.
Net interest income which
is total interest income (including fees) less total interest expense was $5,366,000 in 2011 compared to $5,619,000 in 2010.
Interest on earning assets
decreased $275,000 from $6,067,000 in 2010 to $5,792,000 in 2011. Interest income on investment securities decreased $7,000 from
$15,000 earned in 2010 to $8,000 in 2011. This interest decrease was due to the average amount invested in securities from $2,036,000
in 2010 down to $913,000 in 2011. Interest income generated by the loan portfolio decreased a total of $244,000 from $5,976,000
in 2010 to $5,732,000 in 2011, due to a decrease in the decrease in rates charged from 9.77% in 2010 to 9.66% charged in 2011.
Federal funds interest income decreased by $3,000 and interest income earned on certificates of deposit decreased by $21,000 due
to falling average rates from 1.17% in 2010 to 0.77% in 2011.
Interest expense on deposits
decreased $21,000 from $373,000 in 2010 to $352,000 in 2011. This decrease resulted primarily from a decrease in the average rates
paid on deposits from an average rate of 0.78% in 2010 to 0.74% in 2011, even with an increase in the average balance of interest
bearing deposits from $46,936,000 in 2010 to $47,821,000 in 2011.
The provision for loan
losses decreased $225,000 from $305,000 in 2010 to $80,000 in 2011. In 2011 Personal loans ended with a net charge-off of $2,727;
Real Estate loans had a net recovery of $39,206; Commercial loans had a charge-off of $15,959; Overdrafts had a net charge-off
of $5,514, and Credit cards with a net charge-off of $94,945.
Non-interest income decreased
$471,000 from $1,486,000 in 2010 to $1,015,000 in 2011. This decrease was due to decreases in gains on sale of ORE, which amounted
to $395,000 in 2010 and $16,000 for 2011, and a decrease of $11,000 in Service Charges, Membership fees and Other commissions and
fees, a decrease in Cardholder & Other Credit Card Income of $16,000, and a decrease in other income of $73,000. These decreases
were offset by an increase in rental income from Other Real Estate of $9,000.
Non-interest expense decreased
$389,000. The major components were a decrease of $243,000 in Salaries and Employee Benefits, due primarily in the reduction of
salaries and part-time wages, a decrease in Occupancy Expense of $143,000 due primarily to lower depreciation taken on equipment,
a decrease in Outsourcing Fees of $21,000 and a decrease in ORE Expense of $78,000. The primary offset to the decreases were increases
in Communications of $11,000, Loan & Credit Card Expense of $3,000, Professional fees of $18,000 and an increase in Other Operating
Expense of $64,000.
The Company recognized
income tax expense of $38,000 for 2011, as compared to an income tax benefit of $76,000 for 2010. The income tax benefit for 2010
was a result of an increase in the Company’s dividend received deduction, as well as adjustments to the Company’s current
and deferred income tax liability accounts.
Net Income - December 31, 2010 Compared to
December 31, 2009
The Company’s net
income for the year 2010 was $299,000 or $1.67 per share, an increase of $164,000, or an increase of $0.92 per share from the Company’s
net income of $135,000 in 2009.
Net interest income which
is total interest income (including fees) less total interest expense was $5,619,000 in 2010 compared to $5,627,000 in 2009.
Interest on earning assets
decreased $44,000 from $6,111,000 in 2009 to $6,067,000 in 2010. Interest income on investment securities decreased $19,000 from
$34,000 earned in 2009 to $15,000 in 2010. This interest decrease was due to the yields derived on security investments falling
from an average of 1.35% received in 2009 to an average interest rate of 0.72% in 2010. In addition, due to the falling rates,
the Bank reduced the average amount invested in securities from $2,510,000 in 2009 down to $2,036,000 in 2010, until such time
as the market improves. Interest income generated by the loan portfolio decreased a total of $18,000 from $5,994,000 in 2009 to
$5,976,000 in 2010, due to the decrease in rates charged from 10.09% in 2009 to 9.77% charged in 2010. Federal funds interest income
decreased by $5,000 and interest income on certificates of deposit decreased by $3,000.
Interest expense on deposits
decreased $18,000 from $391,000 in 2009 to $373,000 in 2010. This decrease resulted primarily from a decrease in the average rates
paid on deposits from an average rate of 0.87% in 2009 to 0.78% in 2010, even with an increase in the average balance of interest
bearing deposits from $44,654,000 in 2009 to $44,936,000 in 2010.
The provision for loan
losses decreased $231,000 from $536,000 in 2009 to $305,000 in 2010. In 2010 Personal loans ended with a net charge-off of $7,000,
Real Estate loans had a net charge-off of $3,000, Commercial loans had a net recovery of $25,000, Overdrafts had a net charge-off
of $14,000 and Credit cards with a net charge-off of $306,000.
Non-interest income decreased
$503,000 from $1,989,000 in 2009 to $1,486,000 in 2010. This decrease was due to a mix of a decrease in Other income of $929,000
due primarily to Katrina insurance proceeds remaining and taken into income in 2009 and a decrease of $15,000 in Cardholder income,
Membership fees and Other commissions and fees. The overall decrease was offset by an increase in Service charges on deposit accounts
of $50,000 and a net increase of $385,000 on income from ORE pertaining to the sale of three lots on Morrison Road.
Non-interest expense
decreased $291,000 from 2009 to 2010. The major components were a decrease of $150,000 in Salaries and Employee Benefits, a
decrease in Insurance and Assessments of $44,000, and a decrease in Other operating expenses of $364,000. The primary offset
to the decreases were an increase in the maintenance, repairs and upkeep of ORE properties of $203,000, an increase in
Professional fees of $30,000, an increase in Outsourcing fees of $30,000, and an increase in Occupancy expense of $20,000.
The Company recognized
an income tax benefit of $76,000 for 2010, as compared to income tax expense of $77,000 for 2009. The income tax benefit for 2010
was a result of an increase in the Company’s dividend received deduction, as well as adjustments to the Company’s current
and deferred income tax liability accounts.
The following table shows
interest income on earning assets and related average yields, as well as interest expense on interest bearing liabilities and related
average rates paid for the years 2011, 2010 and 2009.
TABLE 1 Average Balances, Interests and Yields
|
Average Balances, Interests and Yields
|
|
|
|
|
|
|
|
|
|
2011
|
2010
|
2009
|
|
|
Average
|
|
Yield/
|
Average
|
|
Yield/
|
Average
|
|
Yield/
|
|
(Dollars in Thousands)
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
Balance
|
Interest
|
Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
INTEREST-EARNING ASSETS:
|
|
|
|
|
|
|
|
|
|
|
Loans, net of Unearned income (1)(2)
|
59,318
|
5,732
|
9.66%
|
61,173
|
5,976
|
9.77%
|
59,382
|
5,994
|
10.09%
|
|
Certificates of Deposits
|
4,417
|
34
|
0.77%
|
4,672
|
55
|
1.17%
|
4,294
|
58
|
1.35%
|
|
Investment securities
|
913
|
8
|
0.85%
|
2,036
|
15
|
0.72%
|
2,510
|
34
|
1.35%
|
|
Federal funds sold
|
16,170
|
17
|
0.11%
|
13,915
|
20
|
0.14%
|
16,677
|
25
|
0.15%
|
|
Total Interest-Earning Assets
|
80,817
|
5,792
|
7.17%
|
81,797
|
6,066
|
7.42%
|
82,863
|
6,111
|
7.37%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
2,915
|
|
|
2,950
|
|
|
3,021
|
|
|
|
Allowance for loan Losses
|
(1,799)
|
|
|
(1,797)
|
|
|
(1,794)
|
|
|
|
Premises and equipment
|
5,763
|
|
|
6,003
|
|
|
6,332
|
|
|
|
Other Real Estate
|
3,833
|
|
|
2,812
|
|
|
1,398
|
|
|
|
Other assets
|
1,047
|
|
|
1,280
|
|
|
1,071
|
|
|
|
TOTAL ASSETS
|
92,575
|
|
|
93,045
|
|
|
92,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
INTEREST-BEARING LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
Demand Deposits
|
14,950
|
57
|
0.38%
|
15,402
|
89
|
0.58%
|
13,649
|
75
|
0.55%
|
|
Savings deposits
|
19,954
|
70
|
0.35%
|
20,753
|
75
|
0.36%
|
21,441
|
79
|
0.37%
|
|
Time deposits
|
12,917
|
225
|
1.74%
|
10,781
|
209
|
1.94%
|
9,564
|
238
|
2.49%
|
|
Total Int-Bearing Deposits
|
47,821
|
352
|
0.74%
|
46,936
|
373
|
0.78%
|
44,654
|
391
|
0.87%
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term debt
|
1,144
|
74
|
6.50%
|
1,144
|
74
|
6.45%
|
1,410
|
94
|
6.65%
|
|
Total Interest-Bearing Liabilities
|
48,966
|
426
|
0.87%
|
48,080
|
447
|
0.93%
|
46,065
|
484
|
1.05%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing deposits
|
30,735
|
|
|
32,274
|
|
|
33,967
|
|
|
|
Other liabilities
|
953
|
|
|
911
|
|
|
1,270
|
|
|
|
Shareholders' equity
|
11,921
|
|
|
11,779
|
|
|
11,591
|
|
|
|
TOTAL LIABILITIES AND
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
92,575
|
|
|
93,045
|
|
|
92,893
|
|
|
|
Net Interest Income
|
|
5,366
|
|
|
5,619
|
|
|
5,627
|
|
|
Net Interest Spread
|
|
|
6.30%
|
|
|
6.49%
|
|
|
6.32%
|
|
Net Interest Margin
|
|
|
6.64%
|
|
|
6.87%
|
|
|
6.79%
|
|
(1) Fee income relating to loans of $347,000 in 2011, $343,000 in 2010 and $374,000 in 2009 is included in interest income.
|
|
(2) Non-accrual loans are included in average balances and income on such loans, if recognized, is recognized on the cash basis.
|
The below table presents
changes in interest income and interest expense, and distinguishes between the changes related to increases or decreases in average
outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases
or decreases in average interest rates on such assets and liabilities (rate) for the years ended December 31.
Table 2 Rate/Volume Analyses (1)
|
|
2011 vs 2010 Increase(Decrease)
|
2010 vs 2009 Increase(Decrease)
|
|
|
|
|
|
|
|
|
|
|
Due to Change in:
|
|
Due to Change in:
|
|
|
(Dollars in Thousands)
|
Rate
|
Volume
|
Total
|
Rate
|
Volume
|
Total
|
|
|
|
|
|
|
|
|
|
Net Loans
|
(62)
|
(181)
|
(244)
|
(198)
|
181
|
(18)
|
|
Cert of Deposits
|
(17)
|
(3)
|
(21)
|
(8)
|
5
|
(3)
|
|
Investment Securities
|
2
|
(9)
|
(7)
|
(15)
|
(4)
|
(19)
|
|
Federal Funds Sold
|
(6)
|
3
|
(3)
|
(1)
|
(4)
|
(5)
|
|
Total Interest Income
|
(82)
|
(185)
|
(274)
|
(226)
|
175
|
(45)
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
Demand Deposits
|
(29)
|
(3)
|
(32)
|
3
|
10
|
13
|
|
Savings Deposits
|
(2)
|
(3)
|
(5)
|
(1)
|
(3)
|
(4)
|
|
Time Deposits
|
(26)
|
41
|
16
|
(59)
|
30
|
(29)
|
|
Total Int-Bearing Dep
|
(56)
|
36
|
(21)
|
(58)
|
38
|
(20)
|
|
Long-Term Debt
|
1
|
0
|
0
|
(3)
|
(18)
|
(21)
|
|
Total Interest Expense
|
(56)
|
35
|
(21)
|
(60)
|
20
|
(41)
|
|
Change in net interest
income
|
(27)
|
(221)
|
(253)
|
(166)
|
156
|
(4)
|
Interest Sensitivity Gap Analysis
The major elements management
utilizes monthly 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 Bank’s policy not to invest in derivatives in the ordinary course of business.
The Bank performs a quarterly 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 Bank monitors and manages its interest sensitivity gap to minimize the effects
of changing interest rates.
The interest rate sensitivity
structure within the Company’s balance sheet at December 31, 2011, has a net interest sensitive asset gap of 23.37% when
projecting out one year. In the near term, defined as 90 days, the Company currently has a net interest sensitive liability gap
of -1.46%. The information represents a general indication of repricing characteristics over time; however, the sensitivity of
certain deposit products may vary during extreme swings in the interest rate cycle. Since all interest rates and yields do not
adjust at the same velocity, the interest rate sensitivity gap is only a general indicator of the potential effects of interest
rate changes on net interest income.
The following table illustrates
the Bank’s interest rate sensitivity analysis at December 31, 2011, as well as the cumulative position at December 31, 2011:
TABLE 3 Asset/Liability and Gap Analysis
Interest Rate Sensitivity Analysis
|
|
December 31, 2011
|
|
|
|
|
|
1-30
|
31-60
|
61-90
|
91-365
|
1 Year-
|
Over
|
|
|
|
Days
|
Days
|
Days
|
Days
|
5 Years
|
5 Years
|
Total
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earning Assets
|
|
|
|
|
|
|
|
|
Securities-HTM
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Securities - AFS
|
-
|
-
|
-
|
-
|
-
|
1,037
|
1,037
|
|
Loans
|
10,493
|
4,038
|
3,485
|
25,112
|
11,009
|
244
|
54,381
|
|
Cert of Deposits
|
1,240
|
248
|
-
|
2,470
|
1,500
|
-
|
5,458
|
|
Federal Funds sold
|
16,150
|
-
|
-
|
-
|
-
|
-
|
16,150
|
|
|
|
|
|
|
|
|
|
|
Total Earning Assets
|
27,883
|
4,286
|
3,485
|
27,582
|
12,509
|
1,281
|
77,026
|
|
|
|
|
|
|
|
|
|
|
Non Earning Assets
|
-
|
-
|
-
|
-
|
-
|
14,691
|
14,691
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
27,883
|
4,286
|
3,485
|
27,582
|
12,509
|
15,972
|
91,717
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings & Now accounts
|
30,948
|
-
|
-
|
-
|
-
|
-
|
30,948
|
|
Money market
|
3,509
|
-
|
-
|
-
|
-
|
-
|
3,509
|
|
CD's < $100,000
|
573
|
689
|
244
|
3,966
|
4,580
|
-
|
10,052
|
|
CD's > $100,000
|
484
|
304
|
-
|
1,064
|
593
|
-
|
2,445
|
|
|
|
|
|
|
|
|
|
|
Total Interest-
|
|
|
|
|
|
|
|
|
Bearing Liabilities
|
35,514
|
993
|
244
|
5,030
|
5,173
|
-
|
46,954
|
|
Non-Costing Liabilities & Equity
|
264
|
-
|
-
|
-
|
1,000
|
43,499
|
44,763
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY
|
35,778
|
993
|
244
|
5,030
|
6,173
|
43,499
|
91,717
|
|
|
|
|
|
|
|
|
|
|
Interest Sensitivity Gap
|
(7,631)
|
3,293
|
3,241
|
22,552
|
7,336
|
1,281
|
30,072
|
|
Cumulative Gap
|
(7,631)
|
(4,338)
|
(1,097)
|
21,455
|
28,791
|
30,072
|
|
|
Cumulative Gap/
|
|
|
|
|
|
|
|
|
Total Assets
|
-8.32%
|
-4.73%
|
-1.20%
|
23.39%
|
31.39%
|
32.79%
|
|
Provision for Loan Losses
Management’s policy
is to maintain the allowance for possible loan losses at a level sufficient to absorb estimated 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 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.
At December 31, 2011 and
December 31, 2010 the allowance for possible loan losses was $1,800,000. In 2011, the provision for loan losses was $80,000 compared
to $305,000 in 2010. Net charge-offs were $80,000 in 2011 compared to $305,000 in 2010. Based on the volume of credit card charges
and payments, the credit card portfolio turns over every eight to nine months, requiring a provision to loan loss allowance less
than annual charge-offs due to recoveries being contemporaneously made.
TABLE 4 Allowance for Loan Losses
|
|
|
2011
|
|
|
2010
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
1,800
|
|
|
$
|
1,800
|
|
|
Charge-Offs:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
16
|
|
|
|
0
|
|
|
Real estate
|
|
|
19
|
|
|
|
4
|
|
|
Personal and Overdrafts
|
|
|
13
|
|
|
|
23
|
|
|
Credit Cards
|
|
|
223
|
|
|
|
477
|
|
|
Total Charge-offs
|
|
|
271
|
|
|
|
505
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
0
|
|
|
|
25
|
|
|
Real estate
|
|
|
58
|
|
|
|
1
|
|
|
Consumer
|
|
|
5
|
|
|
|
2
|
|
|
Credit Cards
|
|
|
128
|
|
|
|
171
|
|
|
Total Recoveries
|
|
|
191
|
|
|
|
200
|
|
|
Net charge-offs
|
|
|
80
|
|
|
|
305
|
|
|
Provision for loan losses
|
|
|
80
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
1,800
|
|
|
$
|
1,800
|
|
|
Ratio of net charge-offs during period to average loans outstanding
|
|
|
0.13
|
%
|
|
|
0.50
|
%
|
|
Allowance for possible loan losses as a percentage of loans
|
|
|
3.20
|
%
|
|
|
2.90
|
%
|
Non-interest Income
An important source of
the Company’s revenue is derived from non-interest income.
For the year 2011 non-interest
income decreased $471,000. This decrease was due primarily to a decrease in gains on the sale of Other Real Estate, which amounted
to $395,000 in 2010 and $16,000 in 2011. Other decreases included an $11,000 decrease in Service Charges, Membership Fees and Other
commissions and fees, a decrease in Cardholder & Other Credit Card Income of $16,000, and a decrease in other income of $73,000.
These decreases were offset by an increase in rental income from Other Real Estate of $9,000.
Non-interest income decreased
$503,000 from $1,989,000 in 2009 to $1,486,000 in 2010. This decrease was due to a mix of a decrease in Other income of $929,000
due primarily to Katrina insurance proceeds remaining and taken into income in 2009 and a decrease of $15,000 in Cardholder income,
Membership fees and Other commissions and fees. The overall decrease was offset by an increase in Service charges on deposit accounts
of $50,000 and a net increase of $385,000 on income from ORE pertaining to the sale of three lots on Morrison Road.
The following table sets
forth the major components of non-interest income for the last two years.
TABLE 5 Non-interest Income
|
|
|
December 31,
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Charges
|
|
|
186
|
|
|
|
214
|
|
|
|
(28
|
)
|
|
NSF Charges
|
|
|
259
|
|
|
|
253
|
|
|
|
6
|
|
|
Gain on Sale of Securities
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Cardholder & Other Cr Card Inc
|
|
|
413
|
|
|
|
428
|
|
|
|
(15
|
)
|
|
Other Comm. & Fees
|
|
|
69
|
|
|
|
58
|
|
|
|
11
|
|
|
ORE Income
|
|
|
9
|
|
|
|
0
|
|
|
|
9
|
|
|
Gain on Sale of ORE
|
|
|
15
|
|
|
|
395
|
|
|
|
(380
|
)
|
|
Gain on Insurance Settlement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Other Income
|
|
|
65
|
|
|
|
138
|
|
|
|
(73
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-interest Income
|
|
$
|
1,015
|
|
|
$
|
1,486
|
|
|
($
|
471
|
)
|
Non-interest Expense
The major categories of
non-interest expense include salaries and employee benefits, occupancy and equipment expenses and other operating costs associated
with the day-to-day operations of the Company.
For the year 2011 non-interest
expense decreased $389,000. The major components were a decrease of $243,000 in Salaries and Employee Benefits due mainly to a
reduction in salaries and part-time wages, a decrease in Occupancy Expense of $143,000 due to lower depreciation expenses on equipment,
a decrease in Outsourcing Fees of $21,000, a decrease in ORE Expenses of $78,000. The primary offset to the decreases were an increase in Loan & Credit Card Expense of $3,000, Communications of $11,000,
Stationery, Forms & Supply of $5,000, Professional fees of $18,000, Insurance & Assessments of $21,000, Advertising Expense
of $1,000, Miscellaneous Losses of $3,000, Promotional Expenses of $1,000, and Other Expenses of $35,000.
For the year 2010
non-interest expense decrease $291,000. The major components were a decrease of $150,000 in Salaries and Employee Benefits, a
decrease in Insurance and Assessments of $44,000, a decrease in other operating expenses of $364,000. The primary offset to
the decreases were an increase in maintenance, repairs and upkeep of ORE properties of $203,000, an increase in Professional
fees of $30,000, an increase in Outsourcing fees of $30,000, and an increase in Occupancy expense of $20,000.
The following table sets
forth the major components of non-interest expense for the last two years:
TABLE 6 Non-interest Expenses
|
|
|
December 31,
|
|
|
|
|
|
|
|
2011
|
|
|
2010
|
|
|
$ Change
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries & Benefits
|
|
|
2,372
|
|
|
|
2,615
|
|
|
|
(243
|
)
|
|
Occupancy Expense
|
|
|
917
|
|
|
|
1,060
|
|
|
|
(143
|
)
|
|
Estimated Loss (Recovery) Contingency
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Loan & Credit Card Expense
|
|
|
119
|
|
|
|
116
|
|
|
|
3
|
|
|
Communications
|
|
|
227
|
|
|
|
216
|
|
|
|
11
|
|
|
Outsourcing Fees
|
|
|
1,331
|
|
|
|
1,352
|
|
|
|
(21
|
)
|
|
Stationery, Forms & Supply
|
|
|
89
|
|
|
|
84
|
|
|
|
5
|
|
|
Professional Fees
|
|
|
305
|
|
|
|
287
|
|
|
|
18
|
|
|
Insurance & Assessments
|
|
|
202
|
|
|
|
181
|
|
|
|
21
|
|
|
Advertising Expense
|
|
|
12
|
|
|
|
11
|
|
|
|
1
|
|
|
Misc. Losses
|
|
|
0
|
|
|
|
3
|
|
|
|
(3
|
)
|
|
Promotional Expenses
|
|
|
58
|
|
|
|
57
|
|
|
|
1
|
|
|
ORE Expenses
|
|
|
258
|
|
|
|
335
|
|
|
|
(77
|
)
|
|
Other Operating Expense
|
|
|
297
|
|
|
|
260
|
|
|
|
37
|
|
|
Total Non-interest Expense
|
|
$
|
6,188
|
|
|
$
|
6,577
|
|
|
($
|
389
|
)
|
Provision for Income Taxes
The Company recognized
an income tax liability of $ 38,000 for 2011, as compared to an income tax benefit of $76,000 for 2010.
Financial Condition
The Bank manages its assets
and liabilities to maximize long-term earnings opportunities while maintaining the integrity of its financial position and the
quality of earnings. To accomplish this objective, management strives to effect efficient management of interest rate risk and
liquidity needs. The primary objectives of interest-sensitivity management are to minimize the effect of interest rate changes
on the net interest margin and to manage the exposure to risk while maintaining net interest income at acceptable levels. Liquidity
is provided by carefully structuring the balance sheet. The Bank’s asset liability committee meets regularly to review both
the interest rate sensitivity position and liquidity.
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. These are sources of liquidity that
the Bank has not fully utilized. The Bank, nevertheless, has maintained adequate liquidity through the sale of federal funds. Traditionally,
liquidity sources for the Bank are generated from operating activities and financing activities.
Net cash from operating
activities primarily results from net income adjusted for the following non-cash items: the provision for loan losses; depreciation
and amortization; fair value adjustments on foreclosed property; and deferred income taxes or benefits.
Significant financing activities
generally include core deposits, securities sold under agreements to repurchase, and long-term debt. The Bank anticipates capital
needs will be met from the growth in retained earnings.
During 2011, deposits decreased
$2,897,000, or 3.60%, from $80,577,000 at December 31, 2010 to $77,680,000 at December 31, 2011. Short term investments and other
marketable assets increased, resulting in a slight increase in liquidity.
The Bank has unused sources
of liquidity in the form of unused federal funds lines of $4,400,000 from a correspondent bank, and borrowing availability from
the FRB discount window equal to the Bank’s principal amount of unpledged investment securities. The Bank manages asset and
liability growth through pricing strategies within regulatory capital constraints. Management believes that its core deposit strength
minimizes the risk of deposit runoff.
Loans
The loan portfolio is the
largest category of the Bank’s earning assets. The following table summarizes the composition of the loan portfolio for the
last two years:
TABLE 7 Loans Net by Category
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Real Estate Mortgages:
|
|
|
|
|
|
|
|
|
|
Residential 1-4 Family
|
|
$
|
21,157
|
|
|
$
|
19,541
|
|
|
Commercial
|
|
|
15,787
|
|
|
|
20,282
|
|
|
Construction
|
|
|
6,399
|
|
|
|
9,023
|
|
|
Second Mortgages
|
|
|
820
|
|
|
|
949
|
|
|
Other
|
|
|
1,611
|
|
|
|
1,725
|
|
|
|
|
|
45,774
|
|
|
|
51,520
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
2,702
|
|
|
|
2,726
|
|
|
Personal
|
|
|
1,496
|
|
|
|
1,191
|
|
|
Credit Cards
|
|
|
6,039
|
|
|
|
6,321
|
|
|
Overdrafts
|
|
|
210
|
|
|
|
277
|
|
|
|
|
|
56,221
|
|
|
|
62,036
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses
|
|
|
1,800
|
|
|
|
1,800
|
|
|
Deferred Loan Fees
|
|
|
40
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loans
|
|
$
|
54,381
|
|
|
$
|
60,200
|
|
At December 31, 2011 total
loans outstanding were $56,221,000 and $62,036,000 at December 31, 2010. Average total loans during 2011 decreased $1,855,000,
or 3.03%, to $59,318,000 from $61,173,000 at December 31, 2010.
The Bank experienced a
decrease of $5,746,000 in real estate loans from $51,520,000 in 2010 to $45,774,000 in 2011 along with slight decreases in all
the other categories and only consumer loans showing a slight increase.
The following table shows
the maturity distribution and interest rate sensitivity of the Bank’s loan portfolio at December 31, 2011:
TABLE 8 Loan Maturity and Interest Rate Sensitivity
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
Maturing
|
|
|
|
|
|
|
|
|
|
|
Within
|
|
|
One To
|
|
|
Over
|
|
|
|
|
|
|
|
One Year
|
|
|
5 Years
|
|
|
5 Years
|
|
|
Total
|
|
|
|
|
|
|
|
(Dollars in Thousands)
|
|
|
Loan Maturity by Type
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate construction, land & land dev.
|
|
|
36,479
|
|
|
|
8,724
|
|
|
|
571
|
|
|
|
45,775
|
|
|
Commercial, financial & agricultural
|
|
|
2,584
|
|
|
|
118
|
|
|
|
0
|
|
|
|
2,702
|
|
|
All other loans
|
|
|
1,563
|
|
|
|
6,182
|
|
|
|
0
|
|
|
|
7,744
|
|
|
Total
|
|
$
|
40,625
|
|
|
$
|
15,024
|
|
|
$
|
571
|
|
|
$
|
56,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate Sensitivity of Loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate loans
|
|
|
38,609
|
|
|
|
15,024
|
|
|
|
571
|
|
|
|
54,204
|
|
|
Variable rate loans
|
|
|
721
|
|
|
|
0
|
|
|
|
0
|
|
|
|
721
|
|
|
Non-Accrual Loans
|
|
|
1,295
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,295
|
|
|
Total
|
|
$
|
40,625
|
|
|
$
|
15,024
|
|
|
$
|
571
|
|
|
$
|
56,221
|
|
As of December 31, 2011
and 2010, the Bank’s recorded investment in loans that are considered impaired, which consists of substandard loans, non-accrual
loans and restructured loans (TDRs), totaled $4,184,000 and $5,072,000, respectively.
Non-performing Assets
Non-performing assets consist
of non-accrual and restructured loans and other real estate owned. Non-accrual 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. 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. Other real estate owned is real property acquired
by foreclosure or deed taken in lieu of foreclosure.
Non-performing assets at
December 31, 2011 were $8,581,000 and $5,413,000 at December 31, 2010. During 2011, non-accrual loans decreased by $981,000 and
other real estate owned increased $1,460,000 due to foreclosure on loans which defaulted. At December 31, 2011 restructured loans
totaled $2,688,000.
The ratio of past due loans,
exclusive of non-accrual loans, to total loans has increased from 3.05% at December 31, 2010 to 4.80% at December 31, 2011. During
that time, the Bank increased its ratio of non-performing assets to loans and other real estate owned from 8.31% at December 31,
2010, to 14.11% at December 31, 2011. The allowance for possible loan losses as a percent of net period-end loans increased to
3.31% at December 31, 2011, compared to 2.99% at December 31, 2010. Management believes the allowance for possible loan losses
is adequate to provide for losses inherent in the loan portfolio.
When a loan is classified
as non-accrual, previously accrued interest is reversed and interest income is decreased to the extent of all interest accrued
in the current year. If any portion of the accrued interest had been accrued in the previous years, accrued interest is decreased
and a charge for that amount is made to the allowance for possible loan losses. The gross amount of interest income that would
have been recorded on non-accrual loans, if all such loans had been accruing interest at the original contract rate, at December
31, 2011 was $125,000 compared to $222,000 at December 31, 2010.
TABLE 9 Non-performing Assets
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual Loans
|
|
|
1,295
|
|
|
|
2,276
|
|
|
Restructured Loans
|
|
|
2,688
|
|
|
|
0
|
|
|
Other Real Estate Owned
|
|
|
4,597
|
|
|
|
3,137
|
|
|
Total Non-performing Assets
|
|
$
|
8,581
|
|
|
$
|
5,413
|
|
|
Loans past due 90 days or more and accruing
|
|
|
2,699
|
|
|
|
1,895
|
|
|
Ratio of loans past due 90 days or more and accruing to gross loans
|
|
|
4.80%
|
|
|
|
3.05%
|
|
|
Ratio of non-performing assets to total assets
|
|
|
9.36%
|
|
|
|
5.74%
|
|
Allocation of Allowance for Possible Loan Losses
Allocation of the allowance
for loan losses is based primarily on previous credit loss experience, adjusted for changes in the risk characteristics of each
category. Additional amounts are allocated based on the evaluation of the loss potential of individual troubled loans and the anticipated
effect of economic conditions on both individual loans and loan categories. Since the allocation is based on estimates and subjective
judgment, it is not necessarily indicative of the specific amounts of loan categories in which losses may ultimately occur.
Approved credit card accounts
are reviewed on a monthly basis to assure compliance with the Bank’s credit policy. Review procedures include determination
that the appropriate verification process has been completed, recalculation of the borrower’s debt ratio, and analyses of
the borrower’s credit history to determine if it meets established Bank criteria. Policy exceptions are carefully analyzed
monthly. Delinquent accounts are monitored daily and charged off before 180 days, which is the industry standard. Prior to charge-off,
interest on credit card loans continue to accrue. A monthly provision for credit card losses is included in the Bank’s overall
provision for loan losses.
Table 10 Allocation of Allowance for Possible Loan Losses
|
|
|
|
December 31, 2011
|
|
December 31, 2010
|
|
|
|
|
Allowance
|
% *
|
|
Allowance
|
% *
|
|
|
|
|
(Dollars in Thousands)
|
|
Non-accrual loans
|
|
|
145
|
2.30%
|
|
255
|
3.67%
|
|
Substandard/Impaired/Doubtful
|
|
1,182
|
8.78%
|
|
1,042
|
4.02%
|
|
Construction loans
|
|
|
-
|
0.00%
|
|
-
|
0.00%
|
|
Commercial, financial and agricultural
|
|
|
73
|
65.25%
|
|
89
|
71.68%
|
|
Consumer loans
|
|
|
37
|
12.55%
|
|
15
|
9.99%
|
|
Credit Cards
|
|
|
352
|
10.74%
|
|
368
|
10.19%
|
|
Overdrafts
|
|
|
11
|
0.37%
|
|
31
|
0.45%
|
|
Total
|
|
|
1,800
|
|
|
1,800
|
|
* Percentage of respective loan type to total loans.
Investment Securities
The Company’s investment
portfolio policy is to maximize income consistent with liquidity, asset quality, regulatory constraints, and asset/liability objectives.
The Bank’s Board of Directors reviews such policy not less than annually. The levels of taxable and tax-exempt securities
and short-term investments reflect the Company’s strategy of maximizing portfolio yields while providing for liquidity needs.
Investment securities totaled $1,037,000 at December 31, 2011, and $878,000 at December 31, 2010. In addition, the Company had
certificates of deposit with other institutions totaling $5,458,000 and $4,203,000 at December 31, 2011 and 2010, respectively.
The average maturity of certificates of deposit held with other institutions was one year or less at December 31, 2011. At year-end
2011 and 2010, all of the Company’s investment securities were classified as available-for-sale. The gross unrealized holding
gains on these securities at December 31, 2011 were $735,000 and $576,000 at December 31, 2010.
There were no investments
and no obligations of any one state or municipality at December 31, 2011, or 2010.
At December 31, 2011, and
2010 the Bank had no U.S. Treasury securities or obligations of U. S. government corporations or federal agencies, as available
for sale.
The following table sets
forth the carrying and approximate market values of investment securities for the last two years:
TABLE 11 Investment Securities
|
|
|
December 31,
|
|
|
|
2011
|
2010
|
|
|
|
Amortized
|
Fair
|
Amortized
|
Fair
|
|
|
|
Cost
|
Value
|
Cost
|
Value
|
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
Other investments
|
|
$302
|
$1,037
|
$302
|
$878
|
|
Total
|
|
$302
|
$1,037
|
$302
|
$878
|
Below is a table of equity
securities at fair value that are included in Investment Securities at December 31, 2011 (dollars in thousands):
TABLE 12 Other Securities
|
Other Securities
|
|
Fair Value
|
|
|
|
|
|
Mississippi River Bank
|
|
893
|
|
Liberty Financial Services, Inc.
|
|
113
|
|
Business Resource Capital
|
|
20
|
|
MasterCard International
|
|
11
|
|
|
|
|
|
Total Other Securities
|
|
$1,037
|
Deposits
Total deposits at December
31, 2011 were $77,680,000 which represented a decrease of $2,897,000, or 3.60%, from $80,577,000 at December 31, 2010. During 2011,
interest bearing deposits decreased by $1,756,000. Core deposits, the Bank’s largest source of funding, consist of all interest
bearing and non-interest bearing deposits except certificates of deposits over $100,000. Core deposits are obtained from a broad
range of customers. Average core deposits decreased $329,000, or .43%, to $75,827,000 from $76,156,000 in 2010. Average market
rate core deposits, primarily CD’s of less than $100,000 and money market accounts, increased $2,379,000 from $11,630,000
in 2010 to $14,009,000 in 2011.
Non-interest bearing deposits
are comprised of business accounts, including correspondent bank accounts, escrow deposits, as well as individual accounts. Average
non-interest bearing demand deposits represented 40.53% of average core deposits in 2011 compared to 42.38% in 2010.
The average amount of,
and average rate paid on deposits by category for the period shown are presented below:
TABLE 13 Selected Statistical Information
|
|
|
|
December 31,
|
|
|
|
|
2011
|
2010
|
|
|
|
|
Average
|
|
Average
|
|
|
|
|
|
Amount
|
Rate
|
Amount
|
Rate
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing Deposits
|
|
|
$30,735
|
N/A
|
$32,274
|
N/A
|
|
Interest-bearing Demand Deposits
|
|
|
14,950
|
0.38%
|
15,402
|
0.58%
|
|
Savings Deposits
|
|
|
19,954
|
0.35%
|
20,753
|
0.36%
|
|
Time Deposits
|
|
|
12,917
|
1.74%
|
10,781
|
1.94%
|
|
Total Average Deposits
|
|
|
$78,557
|
|
$79,210
|
|
The composition of average deposits for the last two years is presented
below:
TABLE 14 Deposit Composition
|
DEPOSIT COMPOSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
2010
|
|
|
|
|
Average
|
% Of
|
Average
|
% Of
|
|
|
|
|
Balances
|
Deposits
|
Balances
|
Deposits
|
|
|
|
|
(Dollars in Thousands)
|
|
Demand, non-interest-bearing
|
|
|
30,735
|
39.12%
|
32,274
|
40.74%
|
|
NOW accounts
|
|
|
11,129
|
14.17%
|
11,499
|
14.52%
|
|
Money market deposit accounts
|
|
|
3,822
|
4.86%
|
3,903
|
4.93%
|
|
Savings accounts
|
|
|
19,954
|
25.40%
|
20,753
|
26.20%
|
|
Other time deposits
|
|
|
10,188
|
12.97%
|
7,726
|
9.75%
|
|
Total core deposits
|
|
|
75,827
|
96.53%
|
76,155
|
96.14%
|
|
Certificates of deposit of $100,000 or more
|
|
|
2,730
|
3.47%
|
3,055
|
3.86%
|
|
Total deposits
|
|
|
$78,557
|
100.00%
|
$79,210
|
100.00%
|
The following table sets
forth maturity distribution of Time Deposits of $100,000 or more for the past two years:
TABLE 15 Maturity Distribution of Time Deposits $100,000 or More
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
Three months or less
|
|
|
1,043
|
|
|
|
798
|
|
|
After three months through one year
|
|
|
2,253
|
|
|
|
1,606
|
|
|
Over one year through three years
|
|
|
1,412
|
|
|
|
2,644
|
|
|
Over three years
|
|
|
200
|
|
|
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,908
|
|
|
$
|
5,248
|
|
Other Assets and Other Liabilities
Other Assets decreased
$349,000 in 2011, due primarily to the decrease in prepaid FDIC assessments. During 2009 the FDIC required institutions to prepay
three years worth of assessments. Accounts receivable’s decrease from 2010 to 2011 is primarily due to a deposit made with
Visa and Mastercard of $150,000 in 2010 to cover the day to day credit card settlement for Friday, December 31st in lieu of New
Years Day that fell on a Saturday and the Federal Reserve Bank was open for business.
Other Liabilities had an
increased of $99,000 in 2011. This increase was due primarily to an overall increase of Accrued Expenses of $114,000 and offset
by a decrease of $10,000 in the Bank’s Blanket Bond Fund.
The following are summaries
of other assets and other liabilities for the last two years:
TABLE 16 Other Assets & Other Liabilities
|
Other Assets
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Receivable
|
|
|
267
|
|
|
|
254
|
|
|
Prepaid Expenses
|
|
|
403
|
|
|
|
602
|
|
|
Accounts Receivable
|
|
|
17
|
|
|
|
161
|
|
|
Cash Surrender Value
|
|
|
156
|
|
|
|
167
|
|
|
Other Assets
|
|
|
0
|
|
|
|
8
|
|
|
Total Other Assets
|
|
$
|
843
|
|
|
$
|
1,192
|
|
|
Other Liabilities
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
(Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Expenses Payable
|
|
|
246
|
|
|
|
132
|
|
|
Deferred Membership Fees
|
|
|
11
|
|
|
|
13
|
|
|
Blanket Bond Fund
|
|
|
40
|
|
|
|
50
|
|
|
Other Liabilities
|
|
|
73
|
|
|
|
76
|
|
|
Total Other Liabilities
|
|
|
370
|
|
|
$
|
271
|
|
Borrowings
The Company’s long-term
debt is comprised primarily of debentures which will be due July 5, 2012 totaling $1,000,000. Each $500 debenture is secured by
a pledge of 71.50 shares of the 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 $4,400,000 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.
Shareholders’ Equity
Shareholders’ equity
at December 31, 2011 was $11,941,000, an increase of $168,000, or 1.43%, from $11,773,000 at December 31, 2010, and amounted to
13.02% of total assets. Realized shareholders’ equity which includes preferred and common stock, capital in excess of par,
and retained earnings increased $64,000, or 0.57%, to $11,323,000 at December 31, 2011 from $11,259,000 at December 31, 2010.
During 2011, the increase
in shareholder’s equity was primarily attributable to net income of $74,000, partially offset by a decrease in Preferred
Stock of $13,000, and an increase in capital in excess of par-retired Preferred Stock of $3,000. In addition, there was an increase
in accumulated other comprehensive income, which is used to refer to revenues, expenses, gains, and losses that under generally
accepted accounting principles are included in comprehensive income but are excluded from net income, in the amount of $105,000.
No dividends were paid
on shares of Company Common Stock in 2011 or 2010.
The Company maintains an
adequate capital position that exceeds all minimum regulatory capital requirements. The Company’s internal capital growth
rate (net income less dividends declared as a percentage of total shareholders’ equity) for 2011 was 0.62% compared to 2.54%
in 2010. The ratio of average shareholders’ equity to average assets was 12.88% and 12.66% in 2011 and 2010, respectively.
At December 31, 2011, the
Company’s primary capital ratio as defined by the FRB was 13.32%, compared to 13.59% in 2010. The total capital ratio was
13.32% at December 31, 2011, and 13.59% in 2010, compared to the guidelines, which mandate a minimum primary capital ratio of 5.50%
and total capital ratio of 6.00% for bank holding companies and banks.
The Bank’s leverage
ratio (Tier 1 capital to total assets) at December 31, 2011, was 13.49% compared to 12.83% at December 31, 2010, which are compared
to the minimum capital requirement of 4.00% for well-managed Banking organizations.
The Bank’s ratios
are in excess of the regulatory requirements, as indicated in the Capital Adequacy schedule below:
|
|
2011
|
2010
|
|
|
Amount
|
Percent
|
Amount
|
Percent
|
|
|
(Dollars in Thousands)
|
|
Tier I capital
|
|
|
|
|
|
Actual
|
12,187
|
20.50%
|
12,096
|
18.58%
|
|
Minimum
|
2,378
|
4.00%
|
2,603
|
4.00%
|
|
Excess
|
9,809
|
16.50%
|
9,493
|
14.58%
|
|
Total risk-based capital
|
|
|
|
|
|
Actual
|
12,943
|
21.77%
|
12,922
|
19.85%
|
|
Minimum
|
4,756
|
8.00%
|
5,207
|
8.00%
|
|
Excess
|
8,187
|
13.77%
|
7,715
|
11.85%
|
|
Tier I capital leverage ratio
|
|
|
|
|
|
Actual
|
12,187
|
13.49%
|
12,096
|
12.83%
|
|
Minimum
|
3,612
|
4.00%
|
3,771
|
4.00%
|
|
Excess
|
8,575
|
9.49%
|
8,325
|
8.83%
|
Dividends that may be paid
by the Bank to the Company are subject to certain regulatory limitations. Under Louisiana banking law, the approval of the OFI
will be required if the total of all dividends declared in any calendar year by the Bank exceed the Bank’s net profits to
date and retained net profits for the year in which such dividend is declared and the immediately preceding year, subject to maintenance
of minimum required regulatory capital.
Supervision and Regulation Enforcement Action
Bank Holding Company Regulation
Federal
The Company is a bank holding
company within the meaning of the BHC Act, and is registered with the FRB. It is required to file annual reports with the FRB and
such additional information as the FRB may require pursuant to the BHC Act. The FRB may also perform periodic examinations of the
Company and its subsidiaries. The following summary of the BHC Act and of the other acts described herein is qualified in its entirety
by express reference to each of the particular acts.
The BHC Act requires every
bank holding company to obtain the prior approval of the FRB before acquiring direct or indirect ownership or control of more than
5% of the voting shares of any bank which is already not majority owned by the Company. The BHC Act prohibits a bank holding company,
with certain exceptions, from acquiring direct or indirect ownership or control of more than 5% of the outstanding voting shares
of any company which is not a bank and from engaging in any business other than banking or furnishing services to or performing
services for its subsidiaries. The 5% limitation is not applicable to ownership of shares in any company the activities of which
the FRB has determined to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.
As set forth below, however, the Gramm-Leach-Bliley Financial Modernization Act of 1999, enacted on November 12, 1999, broadens
the ability of a bank holding company to own or control companies other than banks.
Effective September 29,
1995, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Riegle-Neal Act”) allows the FRB
to approve an application of an adequately capitalized and adequately managed bank holding company to acquire control of, or acquire
all or substantially all of the assets of, a bank located in a state other than such holding company’s home state, without
regard to whether the transaction is prohibited by the laws of any state. The FRB may not approve the acquisition of a bank that
has not been in existence for the minimum time period (not exceeding five years) specified by the statutory law of the target bank’s
state. The Riegle-Neal Act also prohibits the FRB from approving an application if the applicant (and its depository institution
affiliates) controls or would control more than 10% of the insured deposits in the United States or 30% or more of the deposits
in the target bank’s home state or in any state in which the target bank maintains a branch. The Riegle-Neal Act does not
affect the authority of states to limit the percentage of total insured deposits in the state which may be held or controlled by
a bank or bank holding company to the extent such limitation does not discriminate against out-of-state banks or bank holding companies.
Individual states may also waive the 30% statewide concentration limit contained in the Riegle-Neal Act.
Additionally, the federal
banking agencies are authorized to approve interstate merger transactions without regard to whether such transaction is prohibited
by the law of any state, unless the home state of one of the banks has opted out of the Riegle-Neal Act by adopting a law after
the date of enactment of the Riegle-Neal Act and prior to June 1, 1997, which applies equally to all out-of-state banks and expressly
prohibits merger transactions involving out-of-state banks. Interstate acquisitions of branches are permitted only if the law of
the state in which the branch is located permits such acquisitions. Interstate mergers and branch acquisitions are also subject
to the nationwide and statewide insured deposit concentration amounts described above.
The Riegle-Neal Act authorizes
the FDIC to approve interstate branching de novo by national and state banks, respectively, only in states that specifically allow
for such branching. The Riegle-Neal Act also requires the appropriate federal banking agencies to prescribe regulations that prohibit
any out-of-state bank from using the interstate branching authority primarily for the purpose of deposit production.
The Bank is an “affiliate”
of the Company within the meaning of the Federal Reserve Act. This act places restrictions on a bank’s loans or extensions
of credit to purchases of or investments in the securities of, and purchases of assets from an affiliate, a bank’s loans
or extensions of credit to third parties collateralized by the securities or obligations of an affiliate, the issuance of guarantees,
acceptances, and letters of credit on behalf of an affiliate, and certain bank transactions with an affiliate, or with respect
to which an affiliate acts as agent, participates, or has a financial interest. Furthermore, a bank holding company and its subsidiaries
are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property
or furnishings of services.
Under FRB policy, the Company
is expected to act as a source of financial strength to its subsidiary bank and to commit resources to support its subsidiary.
This support may be required at times when, absent such FRB policy, the Company may not be inclined to provide it. Under the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), a depository institution insured by the FDIC
can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC after August 9, 1989 in connection
with (a) the default of a commonly controlled FDIC-insured depository institution or (b) any assistance provided by the FDIC to
any commonly controlled FDIC-insured depository institution “in danger of default.” “Default” is defined
generally as the appointment of a conservator or receiver and “in danger of default” is defined generally as the existence
of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance. Under FDICIA (see discussion
below) a bank holding company may be required to guarantee the capital plan of an undercapitalized depository institution. Any
capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain
other indebtedness of such subsidiary bank. In the event of a bank holding company’s bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
Louisiana
Under the Louisiana Bank
Holding Company Act of 1962, as amended (the “Louisiana BHC Act”), bank holding companies are authorized to operate
in Louisiana provided the activities of the non bank subsidiaries thereof are limited to the ownership of real estate and improvements,
computer services, equipment leasing, and other directly related banking activities. In addition, a bank holding company and its
subsidiaries may not engage in any insurance activity in which a bank may not engage. The Commissioner of the OFI is authorized
to administer the Louisiana BHC Act by the issuance of orders and regulations. At present, prior approval of the Commissioner would
not be required for the formation and operation of a nonblank subsidiary of the Company if its activities meet the requirements
of the Louisiana BHC Act.
Bank Regulation
The Bank is subject to
examination and regulation by the FDIC. The Bank is chartered under the banking laws of the State of Louisiana and is subject to
the supervision of, and regular examination by, the OFI. As an affiliate of the Bank, the Company is also subject to examination
by the OFI. In addition, the deposits of the Bank are insured by the Deposit Insurance Fund (“DIF”) thereby rendering
the Bank subject to the provisions of the Federal Deposit Insurance Act (“FDIA”) and, as a state nonmember bank, to
supervision and examination by the FDIC. The FDIA requires the FDIC approval of any merger and/or consolidation by or with an insured
bank, as well as the establishment or relocation of any bank or branch office. The FDIC also supervises compliance with the provisions
of federal law and regulations that place restrictions on loans by FDIC-insured banks to their directors, executive officers, and
other controlling persons.
In December 1991, a major
banking bill entitled the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) was enacted, which
substantially revises the bank regulatory and funding provisions of the FDIA and makes revisions to several other federal banking
statues. Among other things, the FDICIA requires the federal banking regulators to take “prompt corrective action”
in respect of depository institutions that do not meet minimum capital requirements. The Bank has capital levels above the minimum
requirements. In addition, an institution that is not well capitalized is generally prohibited form accepting brokered deposits
and offering interest rates on deposits higher than the prevailing rate in its market and also may not be able to “pass through”
insurance coverage for certain employee benefit accounts. The FDICIA also requires the holding company of any undercapitalized
depository institution to guarantee, in part, certain aspects of such depository institution’s capital plan for such plan
to be acceptable. The FDICIA contains numerous other provisions, including new account, audit and reporting requirements, termination
of the “too big to fail” doctrine except in special cases, limitations on the FDIC’s payment of deposits at foreign
branches, new regulatory standards in such areas as asset quality, earnings and compensation and revised regulatory standards for,
among other things, powers of state banks, real estate lending and capital adequacy. The FDICIA also requires that a depository
institution provide 90 days prior notice of the closing of any branches.
Furthermore, all banks
are affected by the credit policies of other monetary authorities, including the FRB, which regulate the national supply of bank
credit. Such regulation influences overall growth of bank loans, investments, and deposits and may also affect interest rates charged
on loans and paid on deposits. The FRB’s monetary policies have had a significant effect on the operating results of commercial
banks in the past, and the Company expects this trend to continue in the future.
Dividends
The FRB has issued a policy
statement on the payment of cash dividends by bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company experiencing earnings weaknesses should not pay cash dividends exceeding its net income or which could only
be funded in ways that weaken the bank holding company’s financial health, such as by borrowing. Additionally, the FRB possesses
enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe
or unsound practices or violations of applicable statues and regulations. Among these powers is the ability to prohibit or limit
the payment of dividends by banks and bank holding companies.
In addition to the restrictions
on dividends imposed by the FRB, Louisiana law also places limitations on the Company’s ability to pay dividends. For example,
the Company may not pay dividends to its shareholders if, after giving effect to the dividend, the Company would not be able to
pay its debts as they become due. Because a major source of the Company’s revenue is dividends that it receives and expects
to receive from the Bank, the Company’s ability to pay dividends to its shareholders will depend on the amount of dividends
paid by the Bank to the Company. The Company cannot be sure that the Bank will, in any circumstances, pay such dividends to the
Company, as Louisiana banking law provides that a Louisiana bank may not pay dividends if it does not have, or will not have after
the payment of such dividend, unimpaired surplus equal to 50% of the outstanding capital stock of the bank. In addition, OFI approval
is required to declare or pay any dividend that would bring the total of all dividends paid in any one calendar year to an amount
greater than the total of such bank’s net profits for such year combined with the net profits of the immediately preceding
year.
Effect of Governmental Policies
The Company and the Bank
are affected by the policies of regulatory authorities, including the FRB. An important function of the Federal Reserve System
is to regulate the national money supply. Among the instruments of monetary policy used by the Federal Reserve are: purchases and
sales of U.S. Government securities in the marketplace; changes in the discount rate, which is the rate any depository institution
must pay to borrow from the Federal Reserve; and changes in the reserve requirements of depository institutions. These instruments
are effective in influencing economic and monetary growth, interest rate levels, and inflation.
The monetary policies of
the Federal Reserve and other governmental policies have had a significant effect on the operating results of commercial banks
in the past and are expected to continue to do so in the future. Because of changing conditions in the national economy and in
the financial markets, as well as the result of actions by monetary and fiscal authorities, it is not possible to predict with
certainty future changes in interest rates, deposit levels, loan demand or the business and earnings of the Company or whether
the changing economic conditions will have a positive or negative effect on operations and earnings.
Code of Ethics
The Company has adopted
a code of ethics that applies to all directors, officers and employees that is designed to deter wrongdoing and promote the following:
|
|
1.)
|
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
|
|
|
2.)
|
Full, fair, accurate, timely and understandable disclosure in reports and documents;
|
|
|
3.)
|
Compliance with applicable governmental laws, rules and regulations;
|
|
|
4.)
|
The prompt internal reporting of violations of the code to an appropriate person or persons identified
in the code; and
|
|
|
5.)
|
Accountability for adherence to the code.
|
A copy of the Company’s code of ethics
may be obtained by writing to:
Bank of Louisiana
Accounting Department
300 St. Charles Avenue
New Orleans, LA 70130-3104
Community Reinvestment
Act (CRA)
In connection with its
lending activities, the Bank is subject to a variety of federal laws designed to protect borrowers and promote lending to various
sectors of the economy and populations.
The CRA requires FDIC insured
banks to define the assessment areas that they serve, identify the credit needs of those assessment areas and take actions that
respond to the credit needs of the community. The FDIC must conduct regular CRA examinations of the Bank and assign it a CRA rating
of “outstanding,” “satisfactory,” “needs improvement” or “unsatisfactory.” The
Bank has received a “satisfactory“ rating from the FDIC.
Indemnification
of Directors and Officers
The Board of Directors
of the Bank of Louisiana, on June 8, 1988, adopted a resolution to amend the Articles of Incorporation of the Bank by adding a
new Article VII as follows:
No director or officer
of the corporation shall be personally liable to the corporation or its shareholder for monetary damages for breach of fiduciary
duty as a director or officer, except for liability (i) for breach of the director’s or officer’s duty of loyalty to
the corporation or its shareholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for any unlawful dividend or any other unlawful distribution, payment or return of assets made
to shareholders, or (iv) for any transaction from which the director or officer derived an improper personal benefit.
Sarbanes-Oxley
Act of 2002
The following is a brief
summary of some of the provision of the Sarbanes-Oxley Act of 2002 (“SOX”) that affect the Company and the Bank. It
is not intended as an exhaustive description of SOX or its impact on us.
SOX instituted or increased
various requirements for corporate governance, board of director and audit committee composition and membership, board duties,
auditing standards, external audit firm standards, additional disclosure requirements, including CEO and CFO certification of financial
statements and related controls, and other new requirements.
Board of directors are
now required to have a majority of independent directors, and audit committees are required to be wholly independent, with greater
financial expertise. Such independent directors are not allowed to receive compensation from the company on whose board they serve
except for directors’ fees. Additionally, requirements for auditing standards and independence of external auditors were
increased and included independent audit partner review, audit partner rotation, and limitations over non-audit services. Penalties
for non-compliance with existing and new requirements were established or increased.
In addition, Section 404
of SOX currently requires that by the end of 2006, our management perform a detailed assessment of internal controls and report
thereon as follows:
|
|
1.
|
We must state that we accept the responsibility for maintaining an adequate internal control structure
and procedures for financial reporting
|
|
|
2.
|
We must present an assessment, as of the end of each December 31 fiscal year, of the effectiveness
of the internal control structure and procedure for our financial reporting, and
|
|
|
3.
|
We must have our auditors attest to, and report on, as of the end of each December 31 fiscal year,
the assessment made by management. The attestation must be made in accordance with standards for attestation engagements issued
or adopted by the Public Company Accounting Oversight Board.
|
We have taken steps with
respect to achieving compliance.
Financial Modernization Act
The Gramm-Leach-Bliley
Act, (“GLB”) of 1999 permits bank holding companies meeting certain management, capital, and community reinvestment
act standards to engage in a substantially broader range of non-banking activities than permitted previously, including insurance
underwriting and merchant banking activities. This act repeals the provision of the Glass Steagall Act, thus permitting affiliations
of banks with securities firms and registered investment companies. The act authorizes financial holding companies, which permits
banks to be owned by or to own securities firms, insurance companies, and merchant banking companies. The act gives the FRB authority
to regulate financial holding companies, but provides for functional regulation of subsidiary activities.
In addition, the GLB Act
also provided significant new protections for the privacy of customer information that are applicable to the Company. Accordingly,
we must (1) adopt and disclose a privacy policy; (2) give customers the right to prevent us from making disclosure of non-public
financial information, subject to specified exceptions; and (3) follow regulatory standards to protect the security and confidentiality
of customer information.
Temporary Liquidity Guarantee
Program (“TLGP”)
On October 13, 2008, the
FDIC announced the TLGP to strengthen confidence and encourage liquidity in the banking system. The TLGP consists of two components:
a temporary guarantee of newly-issued senior unsecured debt (the Debt Guarantee Program) and a temporary unlimited guarantee of
funds in non-interest-bearing transaction and regular checking accounts at FDIC-insured institutions (the Transaction Account Guarantee
Program). The Bank chose not to participate in the program.
Troubled Asset Relief Program
(“TARP”)
On October 14, 2008, the
U.S. Department of Treasury announced the TARP Capital Purchase Program. The TARP Capital Purchase Program contemplates the U.S.
Treasury purchasing senior preferred shares in qualified U.S. financial institutions. The program is intended to encourage participating
financial institutions to build capital in order to increase the flow of financing to U.S. businesses and consumers and to support
the U.S. economy. Companies participating in the program must accept standardized terms as outlined by the U.S. Treasury and must
adopt the Treasury Department’s standards for executive compensation and corporate governance. Additionally, participants
must agree to accept future program requirements as may be promulgated by the U.S. Congress and regulatory authorities. The Bank
chose not to participate in TARP.
Dodd-Frank Wall Street Reform
and Consumer Protection Act (“Dodd-Frank Act”)
On July 21, 2010, the Dodd-Frank
Act was signed into law. The Dodd-Frank Act was intended primarily to overhaul the financial regulatory framework following the
global financial crisis and has impacted, and will continue to impact, all financial institutions. The Dodd-Frank Act contains
provisions that have, among other things, established a Consumer Financial Protection Bureau, established a systemic risk regulator,
consolidated certain federal bank regulators and imposed increased corporate governance and executive compensation requirements.
The Dodd-Frank Act requires various federal agencies to adopt a broad range of new implementing rules and regulations and to prepare
numerous studies and reports for the U.S. Congress. The federal agencies are given significant discretion in drafting and implementing
regulations. Although some of these regulations have been promulgated, many additional regulations are expected to be issued in
2012 and thereafter. Consequently, many of the details and much of the impact of the Dodd-Frank Act may not be known for many months
or years.
Emergency Economic Stabilization
of 2008 (“EESA”)
On October 3, 2008, the
United States government passed the EESA, which provides the United States Department of the Treasury with broad authority to implement
certain actions intended to help restore stability and liquidity to the U.S. financial markets.
Deposit Insurance
As part of the EESA, the
basic limit on federal deposit insurance coverage was temporarily increased from $100,000 to $250,000 per depositor through December
31, 2013 by the FDIC. As part of the Dodd-Frank Act, federal deposit insurance coverage was permanently raised to $250,000.
The FDIC imposed an additional
assessment against institutions for deposit insurance. This assessment is based on the risk category of the institution and ranges
from 5 to 43 basis points of the institution’s deposits. In December, 2008, the FDIC adopted a rule that raises the current
deposit insurance assessment rates uniformly for all institutions by 7 basis points (to a range from 12 to 50 basis points) for
the first quarter of 2009. The rule also gives the FDIC the authority to alter the way it calculates federal deposit insurance
assessment rates to adjust for an institution’ risk beginning in the second quarter of 2009 and thereafter, and as necessary
to implement emergency special assessments to maintain the deposit insurance fund.
Item 7 Financial Statements
BOL BANCSHARES, INC.
& SUBSIDIARY
December 31, 2011
Audits of Consolidated Financial Statements
December 31, 2011
and
December 31, 2010
C O N T E N T S
|
Report of Independent Registered Public Accounting Firm
|
30
|
|
|
|
|
Consolidated Balance Sheets
|
31 - 32
|
|
|
|
|
Consolidated Statements of Income
|
33
|
|
|
|
|
Consolidated Statements of Comprehensive Income
|
34
|
|
|
|
|
Consolidated Statements of Changes in Stockholders' Equity
|
35
|
|
|
|
|
Consolidated Statements of Cash Flows
|
36- 37
|
|
|
|
|
Notes to Consolidated Financial Statements
|
38- 71
|
|
|
|
|
Report of Independent Registered Public Accounting Firm on Supplementary Information
|
72
|
|
|
|
|
Schedule I - Balance Sheets - Unconsolidated
|
73
|
|
|
|
|
Schedule II - Statements of Income - Unconsolidated
|
74
|
|
|
|
|
Schedule III - Statements of Changes in Stockholders' Equity - Unconsolidated
|
75
|
To the Board of Directors
BOL Bancshares, Inc. & Subsidiary
Report
of Independent Registered Public Accounting Firm
We have audited the accompanying
consolidated balance sheets of
BOL BANCSHARES, INC.
(the Company) and its wholly-owned subsidiary, Bank of Louisiana, as
of December 31, 2011 and 2010, and the related consolidated statements of income, comprehensive income, changes in stockholders'
equity, and cash flows for the years ended December 31, 2011, 2010 and 2009. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial position of
BOL BANCSHARES, INC.
and its wholly-owned
subsidiary, Bank of Louisiana, as of December 31, 2011 and 2010, and the results of their operations and their cash flows for the
years ended December 31, 2011, 2010 and 2009, in conformity with accounting principles generally accepted in the United States
of America.
We were not engaged to examine management’s
assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011, included
in the Form 10-K and, accordingly, we do not express an opinion thereon.
A Professional Accounting Corporation
Metairie, Louisiana
March 5, 2012
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
Cash and Due from Banks
|
|
$
|
3,505,465
|
|
|
$
|
3,833,920
|
|
|
Federal Funds Sold
|
|
|
16,150,000
|
|
|
|
14,950,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Cash and Cash Equivalents
|
|
|
19,655,465
|
|
|
|
18,783,920
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of Deposit with Other Institutions
|
|
|
5,458,007
|
|
|
|
4,203,007
|
|
|
Investment Securities Available-for-Sale, at Fair Value
|
|
|
1,037,475
|
|
|
|
878,100
|
|
|
Loans - Less Allowance for Loan Losses of $1,800,000 in 2011 and 2010
|
|
|
54,380,969
|
|
|
|
60,200,514
|
|
|
Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization)
|
|
|
5,654,026
|
|
|
|
5,855,711
|
|
|
Other Real Estate
|
|
|
4,597,336
|
|
|
|
3,137,074
|
|
|
Other Assets
|
|
|
843,722
|
|
|
|
1,191,997
|
|
|
Letters of Credit
|
|
|
90,120
|
|
|
|
90,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
91,717,120
|
|
|
$
|
94,340,443
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
|
|
$
|
30,726,223
|
|
|
$
|
31,866,902
|
|
|
Interest Bearing
|
|
|
46,954,019
|
|
|
|
48,709,841
|
|
|
Notes Payable
|
|
|
1,144,201
|
|
|
|
1,144,201
|
|
|
Other Liabilities
|
|
|
369,900
|
|
|
|
270,955
|
|
|
Deferred Taxes
|
|
|
382,629
|
|
|
|
380,652
|
|
|
Letters of Credit Outstanding
|
|
|
90,120
|
|
|
|
90,120
|
|
|
Accrued Interest
|
|
|
108,604
|
|
|
|
104,980
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
79,775,696
|
|
|
|
82,567,651
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Preferred Stock - Par Value $1
|
|
|
|
|
|
|
|
|
|
1,796,624 Shares Issued and Outstanding in 2011
|
|
|
|
|
|
|
|
|
|
1,810,296 Shares Issued and Outstanding in 2010
|
|
|
1,796,624
|
|
|
|
1,810,296
|
|
|
Common Stock - Par Value $1
|
|
|
|
|
|
|
|
|
|
179,145 Shares Issued and Outstanding in 2011 and 2010
|
|
|
179,145
|
|
|
|
179,145
|
|
|
Accumulated Other Comprehensive Income
|
|
|
618,489
|
|
|
|
513,305
|
|
|
Capital in Excess of Par - Retired Stock
|
|
|
197,939
|
|
|
|
195,205
|
|
|
Retained Earnings
|
|
|
9,149,227
|
|
|
|
9,074,841
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
11,941,424
|
|
|
|
11,772,792
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
91,717,120
|
|
|
$
|
94,340,443
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME
|
|
$
|
5,791,760
|
|
|
$
|
6,066,653
|
|
|
$
|
6,110,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE
|
|
|
425,988
|
|
|
|
447,238
|
|
|
|
484,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
5,365,772
|
|
|
|
5,619,415
|
|
|
|
5,626,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR LOAN LOSSES
|
|
|
79,868
|
|
|
|
304,688
|
|
|
|
535,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income After Provision for Loan Losses
|
|
|
5,285,904
|
|
|
|
5,314,727
|
|
|
|
5,091,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Charges on Deposit Accounts
|
|
|
444,348
|
|
|
|
467,201
|
|
|
|
416,897
|
|
|
Cardholder and Other Charge Card Income
|
|
|
412,565
|
|
|
|
428,254
|
|
|
|
436,458
|
|
|
Gain on Katrina Insurance Recovery
|
|
|
—
|
|
|
|
—
|
|
|
|
817,077
|
|
|
Other Non-Interest Income
|
|
|
158,080
|
|
|
|
590,251
|
|
|
|
318,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income
|
|
|
1,014,993
|
|
|
|
1,485,706
|
|
|
|
1,989,220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits
|
|
|
2,371,869
|
|
|
|
2,615,106
|
|
|
|
2,764,527
|
|
|
Occupancy Expense
|
|
|
917,419
|
|
|
|
1,059,723
|
|
|
|
1,040,332
|
|
|
Outsourcing Fees
|
|
|
1,330,991
|
|
|
|
1,352,124
|
|
|
|
1,321,717
|
|
|
Other Non-Interest Expense
|
|
|
1,568,060
|
|
|
|
1,550,373
|
|
|
|
1,741,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Expenses
|
|
|
6,188,339
|
|
|
|
6,577,326
|
|
|
|
6,867,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX EXPENSE
|
|
|
112,558
|
|
|
|
223,107
|
|
|
|
212,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE (BENEFIT)
|
|
|
38,172
|
|
|
|
(76,023
|
)
|
|
|
77,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
74,386
|
|
|
$
|
299,130
|
|
|
$
|
135,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE OF COMMON STOCK
|
|
$
|
0.42
|
|
|
$
|
1.67
|
|
|
$
|
0.75
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
74,386
|
|
|
$
|
299,130
|
|
|
$
|
135,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME,NET OF TAX:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized Holding Gains (Losses) on Investment Securities Available-for-Sale, Arising During the Period
|
|
|
105,184
|
|
|
|
42,114
|
|
|
|
(5,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
105,184
|
|
|
|
42,114
|
|
|
|
(5,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
|
|
$
|
179,570
|
|
|
$
|
341,244
|
|
|
$
|
129,450
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Capital In
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Excess of
|
|
|
|
|
|
|
|
|
|
|
Preferred
|
|
|
Common
|
|
|
Comprehensive
|
|
|
Par
|
|
|
Retained
|
|
|
|
|
|
|
|
Stock
|
|
|
Stock
|
|
|
Income
|
|
|
Retired Stock
|
|
|
Earnings
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - January 1, 2009
|
|
$
|
1,997,360
|
|
|
$
|
179,145
|
|
|
$
|
476,917
|
|
|
$
|
157,792
|
|
|
$
|
8,640,535
|
|
|
$
|
11,451,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Retired
|
|
|
(160,271
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
32,054
|
|
|
|
—
|
|
|
|
(128,217
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,726
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the Year 2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
135,176
|
|
|
|
135,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - December 31, 2009
|
|
|
1,837,089
|
|
|
|
179,145
|
|
|
|
471,191
|
|
|
|
189,846
|
|
|
|
8,775,711
|
|
|
|
11,452,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Retired
|
|
|
(26,793
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
5,359
|
|
|
|
—
|
|
|
|
(21,434
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
42,114
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the Year 2010
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
299,130
|
|
|
|
299,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - December 31, 2010
|
|
|
1,810,296
|
|
|
|
179,145
|
|
|
|
513,305
|
|
|
|
195,205
|
|
|
|
9,074,841
|
|
|
|
11,772,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Retired
|
|
|
(13,672
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,734
|
|
|
|
—
|
|
|
|
(10,938
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
105,184
|
|
|
|
—
|
|
|
|
—
|
|
|
|
105,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the Year 2011
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
74,386
|
|
|
|
74,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - December 31, 2011
|
|
$
|
1,796,624
|
|
|
$
|
179,145
|
|
|
$
|
618,489
|
|
|
$
|
197,939
|
|
|
$
|
9,149,227
|
|
|
$
|
11,941,424
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
74,386
|
|
|
$
|
299,130
|
|
|
$
|
135,176
|
|
|
Adjustments to Reconcile Net Income to Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Provided by (Used in) Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Loan Losses
|
|
|
79,868
|
|
|
|
304,688
|
|
|
|
535,543
|
|
|
Charge-downs of Other Real Estate
|
|
|
13,072
|
|
|
|
—
|
|
|
|
—
|
|
|
Depreciation and Amortization Expense
|
|
|
307,897
|
|
|
|
384,632
|
|
|
|
399,722
|
|
|
Deferred Income Taxes
|
|
|
(52,211
|
)
|
|
|
(23,222
|
)
|
|
|
257,523
|
|
|
Gain on Sale of Other Real Estate
|
|
|
(15,599
|
)
|
|
|
(394,997
|
)
|
|
|
—
|
|
|
Increase in Deferred Loan Fees
|
|
|
4,066
|
|
|
|
5,281
|
|
|
|
10,394
|
|
|
Decrease (Increase) in Other Assets
|
|
|
348,275
|
|
|
|
315,976
|
|
|
|
(630,415
|
)
|
|
Increase (Decrease) in Other Liabilities and Accrued Interest Payable
|
|
|
102,577
|
|
|
|
(89,216
|
)
|
|
|
(872,852
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities
|
|
|
862,331
|
|
|
|
802,272
|
|
|
|
(164,909
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) Decrease in Certificates of Deposit with Other Institutions
|
|
|
(1,255,000
|
)
|
|
|
990,890
|
|
|
|
(5,193,897
|
)
|
|
Proceeds from Held-to-Maturity Investment Securities Released at Maturity
|
|
|
—
|
|
|
|
—
|
|
|
|
2,001,349
|
|
|
Proceeds from Sale or Disposal of Property and Equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
592
|
|
|
Purchases of Property and Equipment
|
|
|
(106,212
|
)
|
|
|
(99,147
|
)
|
|
|
(25,148
|
)
|
|
Proceeds from Sale of Other Real Estate
|
|
|
59,004
|
|
|
|
395,000
|
|
|
|
—
|
|
|
Capitalized Costs on Other Real Estate
|
|
|
(20,608
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Net Decrease (Increase) in Loans
|
|
|
4,239,469
|
|
|
|
(3,363,486
|
)
|
|
|
(4,088,977
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
2,916,653
|
|
|
|
(2,076,743
|
)
|
|
|
(7,306,081
|
)
|
The accompanying notes are an integral part of these consolidated
financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (Decrease) Increase in Non-Interest Bearing and Interest Bearing Deposits
|
|
|
(2,896,501
|
)
|
|
|
1,489,413
|
|
|
|
(1,889,979
|
)
|
|
Preferred Stock Retired
|
|
|
(10,938
|
)
|
|
|
(21,434
|
)
|
|
|
(128,217
|
)
|
|
Proceeds from Issuance of Long-Term Debt
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
Principal Payments on Long-Term Debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,399,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used in) Provided by Financing Activities
|
|
|
(2,907,439
|
)
|
|
|
1,467,979
|
|
|
|
(2,417,196
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
871,545
|
|
|
|
193,508
|
|
|
|
(9,888,186
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
|
|
|
18,783,920
|
|
|
|
18,590,412
|
|
|
|
28,478,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF YEAR
|
|
$
|
19,655,465
|
|
|
$
|
18,783,920
|
|
|
$
|
18,590,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to Other Real Estate through Foreclosure
|
|
$
|
1,496,131
|
|
|
$
|
1,125,187
|
|
|
$
|
858,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Paid During the Year for Interest
|
|
$
|
422,364
|
|
|
$
|
482,100
|
|
|
$
|
506,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Paid During the Year for Income Taxes
|
|
$
|
22,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Value Adjustment for Unrealized Gain on Securities Available-for-Sale
|
|
$
|
159,360
|
|
|
$
|
63,800
|
|
|
$
|
(8,676
|
)
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
BUSINESS OF THE COMPANY
BOL BANCSHARES, INC.
(the Company) was
organized as a Louisiana corporation on May 7, 1981, for the purpose of becoming a registered bank holding company under the Bank
Holding Company Act. The Company was inactive until April 29, 1988, when it acquired Bank of Louisiana, BOS Bancshares, Inc. and
its wholly-owned subsidiary, Bank of the South, and Fidelity Bank and Trust Company of Slidell, Inc., and its wholly-owned subsidiary,
Fidelity Land Co. in a business reorganization of entities under common control in a manner similar to a pooling of interest. The
acquired companies are engaged in the banking industry.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiary, Bank of Louisiana (the Bank) and its wholly-owned subsidiary,
BOL Assets, LLC. In consolidation, significant inter-company accounts, transactions, and profits have been eliminated.
INVESTMENT SECURITIES
The Company classifies all investment securities
as available for sale as of December 31, 2011 and 2010. Securities classified as available for sale are recorded at fair
value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of taxes. Other-than-temporary
impairment, deemed to be credit related, is charged to earnings as realized losses. Realized gains and losses on securities are
included in net income. Cost of securities sold is recognized using the specific identification method.
Purchase premiums and discounts are recognized
in interest income using methods approximating the interest method over the term of the securities.
LOANS AND UNEARNED INCOME
Loans are stated at the amount of unpaid principal,
reduced by unearned discount and an allowance for loan losses. Unearned discounts on loans are recognized as income over the term
of the loans on the interest method. Interest on other loans is calculated and credited to operations on a simple interest basis.
Loans are charged against the allowance for loan losses when management believes that collectibility of the principal is unlikely.
Loan origination fees and certain direct origination costs, when material, are capitalized and recognized as an adjustment of the
yield on the related loan.
Interest income is not reported when full loan
repayment is in doubt, typically when payments are past due over 90 days, unless the loan is in the process of collection and the
underlying collateral fully supports the carrying value of the loan. If the decision is made to continue accruing interest on the
loan, periodic reviews are made to confirm the accruing status of the loan. All interest accrued but not collected for these loans
is reversed against income. Payments received on such loans are reported as principal reductions until qualifying for return to
accrual basis. Loans are returned to accrual status when all of the principal and interest amounts contractually due are brought
current and future payments are reasonably assured.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
LOANS AND UNEARNED INCOME (Continued)
The Company considers a loan to be impaired
when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts
due according to the contractual terms of the loan agreement. Loans are identified for impairment through, among other things,
internally generated listings such as watch lists, past due reports, and overdraft listings, historical loss experience by type
of loan, loan files lacking current financial data related to borrowers and guarantors, borrowers experiencing problems, loans
secured by collateral that is not readily marketable and loans to borrowers in industries experiencing economic instability. The
Company’s impaired loans include performing and non-performing loans in which full payment of principal or interest is not
expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows
discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its
collateral, less costs to sell.
Impaired loans, or portions thereof, are charged
off when deemed uncollectible, based on all available current and historical information, that it is probable a loss has been incurred.
The information used in determining when a loss has been incurred include watch lists, contact with the customer, and other monthly
reports provided to management.
TROUBLED DEBT RESTRUCTURINGS
Troubled Debt Restructurings (TDRs) occur when
the Company agrees to significantly modify the original terms of a loan due to the deterioration in the financial condition of
the borrower. TDRs are considered impaired loans. Upon designation as a TDR, the Company evaluates the borrower’s payment
history, past due status, and ability to make payments based on the revised terms of the loan. If a loan was accruing prior to
being modified as a TDR and if the Company concludes that the borrower is able to make such payments, and there are no other factors
or circumstances that would cause it to conclude otherwise, the loan will remain on an accruing status. If a loan was on nonaccrual
status at the time of the TDR, the loan will remain on nonaccrual status following the modification and may be returned to accrual
status based on the policy for returning loans to accrual status.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established
through a provision for loan losses charged to expenses. Management’s policy is to maintain the allowance at a level believed,
to the best of management’s knowledge, to cover all known and inherent losses in the portfolio. Management reviews the allowance
for loan losses on a periodic basis in order to identify those inherent losses and to assess the overall collection probability
of the loan portfolio. The evaluation process includes, among other things, an analysis of delinquency trends, non-performing loan
trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations,
the type, size and geographic concentration of the Company’s loans, the value of collateral securing the loan, the borrower’s
ability to repay and repayment performance, the number of loans requiring heightened management oversight, local economic conditions
and industry experience. From this analysis, a general, specific and unallocated reserve is established, which totals the allowance
for loan losses at each reporting date. Loans are charged against the allowance for loan losses when management believes that the
collectibility of the principal is unlikely.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
ALLOWANCE FOR LOAN LOSSES (Continued)
For real estate, commercial and consumer loans,
management evaluates the average historical charge-off rate for the previous five years. However, charge-off trends occurring within
the past 12 to 24 months are considered in determining an appropriate loss percentage to use in the Bank’s allowance estimate
for these types of loans. For charge card loans, management considers the past two years of historical charge-offs in order to
develop an appropriate allowance estimate.
OTHER REAL ESTATE
Real estate acquired through, or in lieu of,
foreclosure is held for sale and is initially recorded at the lower of the loan balance or net realizable value. Subsequent to
foreclosure, valuations are periodically performed by management and the assets are carried at the lower of cost or fair value
less estimated costs of disposal. Any write-down to fair value at the time of transfer to Other Real Estate is charged to the allowance
for loan losses. Adjustments to carrying value, revenue and expenses related to holding foreclosed assets are recorded in earnings
as they occur.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Buildings, office equipment and leasehold improvements
are stated at cost, less accumulated depreciation and amortization computed principally on the straight-line and modified accelerated
cost recovery methods over the estimated useful lives of the assets. Leasehold improvements are generally depreciated over the
lesser of the lease term or the estimated useful lives of the improvements. Maintenance and repairs are expensed as incurred while
major additions and improvements are capitalized. Gains and losses on dispositions are included in current operations.
INCOME TAXES
The Company and its consolidated subsidiary
file a consolidated Federal income tax return. Federal income taxes are allocated between the companies, in accordance with a written
agreement.
Deferred income tax assets and liabilities
are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined
based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities
and gives current recognition to changes in tax rates and laws. Realization of deferred tax assets is dependent upon the generation
of a sufficient level of future taxable income and recoverable taxes paid in prior years. Although realization is not assured,
management believes it is more likely than not that all of the deferred tax assets will be realized.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
INCOME TAXES (Continued)
When tax returns are filed, it is highly certain
that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty
about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position
is recognized in the financial statements in the period during which, based on all available evidence, management believes it is
more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,
if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement
with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured
as described above would be reflected as a liability for unrecognized tax benefits in the consolidated balance sheet along with
any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties
associated with unrecognized tax benefits would be classified as additional income taxes in the statement of operations.
MEMBERSHIP FEES
Membership fees are collected in the anniversary
month of the cardholder and are amortized over a twelve-month period using the straight-line method.
CASH AND DUE FROM BANKS
The Company considers all amounts due from
banks, certificates of deposit with an original maturity of 90 days or less, Treasury Bills, and Federal Funds Sold, to be cash
equivalents.
RESTRICTIONS ON CASH AND DUE FROM BANKS
The Bank is required to maintain
non-interest bearing reserve balances to fulfill its reserve requirements. The average amount of the required reserve balance was
approximately $930,000 and $955,000, for the years ended December 31, 2011 and 2010, respectively.
NON-DIRECT RESPONSE ADVERTISING
The Bank expenses advertising costs as incurred.
USE OF ESTIMATES
The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the 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 determination of the allowance for loan
losses and deferred tax assets.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
Most of the Bank’s activities are with
customers located within the New Orleans area, except for credit card lending, which is nationwide. Note B discusses the types
of lending that the Bank engages in and Note E discusses the type of securities that the Company invests in. The Bank does not
have any significant concentrations in any one industry or customer.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2010, the FASB issued authoritative
guidance that modified Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those
reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill
impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider
whether there are any adverse qualitative factors indicating that an impairment may exist such as if an event occurs or circumstances
change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This new authoritative
guidance is effective on January 1, 2012 and is not expected to have a significant impact on the Company’s financial statements.
In April 2011, the FASB updated the accounting
guidance on the evaluation of whether a restructuring constitutes a troubled debt restructuring. The guidance clarifies the creditor’s
evaluation of whether it has granted a concession as well as the evaluation of whether a debtor is experiencing financial difficulties.
The guidance also clarifies that a creditor is precluded from using the effective interest rate test in the debtor’s guidance
on restructuring of payables when evaluating whether a restructuring constitutes a troubled debt restructuring. The new guidance
will be effective for the fiscal year ending December 31, 2012.
In April 2011, the FASB amended the accounting
guidance related to repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem
financial assets before their maturity. The amendments remove from the assessment of effective internal control the criterion relating
to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event
of default by the transferee. The amendments also eliminate the requirement to demonstrate that the transferor possesses adequate
collateral to fund substantially all the cost of purchasing replacement financial assets. The guidance is effective January 1,
2012 and is not expected to have a significant impact on the Company’s financial statements.
In May 2011, the FASB amended the accounting
guidance related to fair value measurement and disclosure, the result of which being common fair value measurement and disclosure
requirements in U.S. GAAP and International Financial Reporting Standards. The FASB does not intend for the amendment to result
in a change in the application of the requirements in Topic 820. Some of the amendments clarify the FASB’s intent about the
application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for
measuring fair value or for disclosing information about fair value measurements. The amendments are effective January 1, 2012
with no significant impact expected on the Company’s financial statements.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)
RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In June 2011, the FASB amended the accounting
guidance for presentation of other comprehensive income. The new guidance requires that all nonowner changes in stockholders equity
be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The
new guidance will be effective for the fiscal year ending December 31, 2012 and is not expected to have a significant impact on
the Company’s financial statements. In addition, this guidance requires the entity to present on the face of the financial
statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s)
where the components of net income and the components of other comprehensive income are presented. In December 2011, the FASB issued
an amendment to the guidance released in June 2011 to defer the changes related to the presentation of reclassification adjustments
to give the FASB more time to reassess and evaluate alternative presentation formats. Thus, the requirements for the presentation
of reclassifications out of accumulated other comprehensive income that were in place before the issuance of the June 2011 guidance
were reinstated until their deliberation is complete.
In September 2011, the FASB amended guidance
pertaining to goodwill impairment testing. The amendments permit an entity to first assess qualitative factors to determine whether
it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining
whether it is necessary to perform the two-step goodwill impairment test. An entity is not required to calculate the fair value
of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying
amount. The guidance is effective January 1, 2012 with no significant impact expected on the Company’s financial statements.
In December 2011, the FASB issued guidance
which relates to deconsolidation events. Under this amendment, when a parent (reporting entity) ceases to have a controlling financial
interest in a subsidiary that is in substance real estate as a result of the default on the subsidiary’s nonrecourse debt,
the reporting entity should apply the guidance in Subtopic 360-20,
Property, Plant and Equipment - Real Estate Sales,
to
determine whether it should derecognize the in substance real estate. This guidance is effective for the fiscal year ending December
31, 2013 and is not expected to have a significant impact on the Company’s financial statements.
In December 2011, the FASB issued authoritative
guidance to provide enhanced disclosures in the financial statements about offsetting and netting arrangements. The new guidance
requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset
in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting agreement.
This guidance was issued to facilitate comparison between financial statements prepared on a U.S. GAAP and IFRS reporting. The
new guidance is effective January 1, 2013 and is not expected to have a significant impact on the Company’s financial statements.
RECLASSIFICATION OF PRIOR YEAR AMOUNTS
Amounts in prior years’ consolidated
financial statements are reclassified whenever necessary to conform to the current year’s presentation.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B LOANS
Major classifications of loans are as follows:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Real Estate Mortgages:
|
|
|
|
|
|
|
|
|
|
Residential 1-4 Family
|
|
$
|
21,157,199
|
|
|
$
|
19,541,387
|
|
|
Commercial
|
|
|
15,786,519
|
|
|
|
20,281,907
|
|
|
Construction
|
|
|
6,399,173
|
|
|
|
9,023,499
|
|
|
Second Mortgages
|
|
|
820,257
|
|
|
|
948,686
|
|
|
Other
|
|
|
1,610,535
|
|
|
|
1,724,934
|
|
|
|
|
|
45,773,683
|
|
|
|
51,520,413
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
2,702,432
|
|
|
|
2,726,278
|
|
|
Personal
|
|
|
1,496,019
|
|
|
|
1,191,139
|
|
|
Credit Cards
|
|
|
6,038,529
|
|
|
|
6,321,359
|
|
|
Overdrafts
|
|
|
209,979
|
|
|
|
276,932
|
|
|
Total Loans
|
|
|
56,220,642
|
|
|
|
62,036,121
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses
|
|
|
(1,800,000
|
)
|
|
|
(1,800,000
|
)
|
|
Deferred Loan Fees
|
|
|
(39,673
|
)
|
|
|
(35,607
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net
|
|
$
|
54,380,969
|
|
|
$
|
60,200,514
|
|
The following is a classification of loans
by rate and maturity: (Dollar amounts in thousands)
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Fixed Rate Loans:
|
|
|
|
|
|
|
|
|
|
Maturing in 3 Months or Less
|
|
$
|
13,495
|
|
|
$
|
13,785
|
|
|
Maturing Between 3 and 12 Months
|
|
|
25,114
|
|
|
|
29,769
|
|
|
Maturing Between 1 and 5 Years
|
|
|
15,024
|
|
|
|
14,154
|
|
|
Maturing After 5 Years
|
|
|
571
|
|
|
|
631
|
|
|
Total Fixed Rate Loans
|
|
|
54,204
|
|
|
|
58,339
|
|
|
Variable Rate Loans:
|
|
|
|
|
|
|
|
|
|
Maturing Quarterly or More Frequently
|
|
|
721
|
|
|
|
723
|
|
|
Maturing Between 3 and 12 Months
|
|
|
—
|
|
|
|
698
|
|
|
Maturing Between 3 and 12 Months
|
|
|
—
|
|
|
|
—
|
|
|
Non-Accrual Loans
|
|
|
1,295
|
|
|
|
2,276
|
|
|
Total Variable Rate Loans
|
|
|
2,016
|
|
|
|
3,697
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans
|
|
$
|
56,220
|
|
|
$
|
62,036
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B LOANS (Continued)
The Company’s loan portfolio segments
consist of the following:
Real Estate Loans
– Consists of
residential first and second mortgage loans on one-to-four family homes; construction and development loans; multiple dwelling
unit loans; housing rehabilitation loans; loans to purchase developed real property; and commercial real estate loans. Commercial
real estate, multi-family residential and construction lending generally is considered to involve a higher degree of risk than
single-family residential lending due to a variety of factors, including generally larger loan balances, the dependency on successful
completion or operation of the project for repayment, the difficulties in estimating construction costs and loan terms which often
do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity. As a
result of the larger loan balances typically involved in these loans, an adverse development with respect to one loan or one credit
relationship can expose us to greater risk of loss compared to an adverse development with respect to a one- to four-family residential
mortgage loan.
Commercial Loans (Secured and Unsecured)
– Consists of working capital loans, secured and unsecured lines of credit, and small equipment loans. Commercial lending
involves certain risk relating to changes in local and national economic conditions and the resulting effect on commercial borrowers.
Such loans are subject to greater risk of default during periods of adverse economic conditions. Because such loans may be secured
by equipment, inventory, accounts receivable and other non-real estate assets, the collateral may not be sufficient to ensure full
payment of the loan in the event of a default. To reduce such risk, we may obtain the personal guarantees of one or more of the
principals of the borrowers.
Personal/Consumer Loans
– Consists
of automobile, mobile home, recreational vehicle, and boat loans; home improvement and second-mortgage loans; secured and unsecured
personal expense loans. Significant risks associated with consumer loans consist primarily of negative changes in the financial
stability of the borrower and the lack of marketability of collateral.
Credit Cards
– The Bank offers
a variety of nationally recognized credit cards, in addition to its own Mr. Bol credit card, and private label credit cards for
use at retail establishments nationwide. Credit card lines are underwritten using conservative credit criteria, including past
credit history and debt-to-income ratios.
The Bank has a number of proprietary accounts
it services. These accounts consist largely of small to medium sized merchants who have issued their own private-label cards. The
Bank acquires these credit card accounts, typically with reserves posted, and requires the merchant to repurchase accounts 180
days or more past due.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B LOANS (Continued)
Loans are considered past due of the required
principal and interest payments have not been received as of the date of such payments were due. Loans are placed on non-accrual
status, when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well
as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are
considered past due.
Non-accrual loans, segregated by class of loans,
as of December 31, 2011 and 2010, are as follows:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Real Estate Mortgages
|
|
|
|
|
|
|
|
|
|
Residential 1 - 4 Family
|
|
$
|
619,155
|
|
|
$
|
793,001
|
|
|
Commercial
|
|
|
130,392
|
|
|
|
100,567
|
|
|
Construction
|
|
|
470,633
|
|
|
|
1,370,855
|
|
|
Second Mortgages
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
Commercial
|
|
|
63,180
|
|
|
|
—
|
|
|
Personal
|
|
|
11,793
|
|
|
|
11,793
|
|
|
Credit Cards
|
|
|
—
|
|
|
|
—
|
|
|
Overdrafts
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,295,153
|
|
|
$
|
2,276,216
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B LOANS (Continued)
An aging analysis of past due loans, segregated
by class of loans, is as follows (Dollar amounts in thousands):
|
|
|
December 31, 2011
|
|
|
|
|
Loans
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
Accruing
|
|
|
|
|
30-89
|
|
|
90 or More
|
|
|
Total
|
|
|
|
|
|
|
|
|
Loans 90 or
|
|
|
|
|
Days
|
|
|
Days
|
|
|
Past Due
|
|
|
Current
|
|
|
Total
|
|
|
More Days
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Loans
|
|
|
Loans
|
|
|
Loans
|
|
|
Past Due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Residential
|
|
$
|
2,212
|
|
|
$
|
1,635
|
|
|
$
|
3,847
|
|
|
$
|
17,310
|
|
|
$
|
21,157
|
|
|
$
|
1,015
|
|
|
Commercial
|
|
|
—
|
|
|
|
299
|
|
|
|
299
|
|
|
|
15,487
|
|
|
|
15,786
|
|
|
|
169
|
|
|
Construction
|
|
|
214
|
|
|
|
853
|
|
|
|
1,067
|
|
|
|
5,332
|
|
|
|
6,399
|
|
|
|
382
|
|
|
Second Mortgages
|
|
|
12
|
|
|
|
—
|
|
|
|
12
|
|
|
|
808
|
|
|
|
820
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,611
|
|
|
|
1,611
|
|
|
|
—
|
|
|
Commercial
|
|
|
27
|
|
|
|
1,077
|
|
|
|
1,104
|
|
|
|
1,598
|
|
|
|
2,702
|
|
|
|
1,014
|
|
|
Personal
|
|
|
70
|
|
|
|
54
|
|
|
|
124
|
|
|
|
1,372
|
|
|
|
1,496
|
|
|
|
43
|
|
|
Credit Cards
|
|
|
127
|
|
|
|
68
|
|
|
|
195
|
|
|
|
5,844
|
|
|
|
6,039
|
|
|
|
68
|
|
|
Overdrafts
|
|
|
98
|
|
|
|
8
|
|
|
|
106
|
|
|
|
104
|
|
|
|
210
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,760
|
|
|
$
|
3,994
|
|
|
$
|
6,754
|
|
|
$
|
49,466
|
|
|
$
|
56,220
|
|
|
$
|
2,699
|
|
|
|
|
December 31, 2010
|
|
|
|
|
Loans
|
|
|
Loans
|
|
|
|
|
|
|
|
|
|
|
|
Accruing
|
|
|
|
|
30-89
|
|
|
90 or More
|
|
|
Total
|
|
|
|
|
|
|
|
|
Loans 90 or
|
|
|
|
|
Days
|
|
|
Days
|
|
|
Past Due
|
|
|
Current
|
|
|
Total
|
|
|
More Days
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Loans
|
|
|
Loans
|
|
|
Loans
|
|
|
Past Due
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Residential
|
|
$
|
1,467
|
|
|
$
|
2,410
|
|
|
$
|
3,877
|
|
|
$
|
15,664
|
|
|
$
|
19,541
|
|
|
$
|
1,617
|
|
|
Commercial
|
|
|
328
|
|
|
|
101
|
|
|
|
429
|
|
|
|
19,853
|
|
|
|
20,282
|
|
|
|
—
|
|
|
Construction
|
|
|
406
|
|
|
|
1,371
|
|
|
|
1,777
|
|
|
|
7,247
|
|
|
|
9,024
|
|
|
|
—
|
|
|
Second Mortgages
|
|
|
29
|
|
|
|
—
|
|
|
|
29
|
|
|
|
920
|
|
|
|
949
|
|
|
|
—
|
|
|
Other
|
|
|
279
|
|
|
|
—
|
|
|
|
279
|
|
|
|
1,446
|
|
|
|
1,725
|
|
|
|
—
|
|
|
Commercial
|
|
|
461
|
|
|
|
1
|
|
|
|
462
|
|
|
|
2,264
|
|
|
|
2,726
|
|
|
|
1
|
|
|
Personal
|
|
|
63
|
|
|
|
22
|
|
|
|
85
|
|
|
|
1,106
|
|
|
|
1,191
|
|
|
|
11
|
|
|
Credit Cards
|
|
|
129
|
|
|
|
56
|
|
|
|
185
|
|
|
|
6,136
|
|
|
|
6,321
|
|
|
|
56
|
|
|
Overdrafts
|
|
|
4
|
|
|
|
210
|
|
|
|
214
|
|
|
|
63
|
|
|
|
277
|
|
|
|
210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,166
|
|
|
$
|
4,171
|
|
|
$
|
7,337
|
|
|
$
|
54,699
|
|
|
$
|
62,036
|
|
|
$
|
1,895
|
|
The Company’s loan portfolio also includes
certain loans that have been modified in a Troubled Debt Restructuring (TDR), where economic concessions have been granted to borrowers
who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s
loss mitigation activities and could include reductions in the interest rate, payment extensions, or other actions.
When the Company modifies a loan, management
evaluates any possible concession based on the present value of expected future cash flows, discounted at the contractual interest
rate of the original loan agreement, except when the sole source of repayment for the loan is the liquidation of the collateral.
In these cases, management uses the current fair value of the collateral, less selling costs. If management determines that the
value of the modified loan is less than the recorded investment in the loan, impairment is recognized through an allowance estimate.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B LOANS (Continued)
The TDRs shown in the following table were
modified by either an interest rate adjustment or extension of the maturity date:
|
Loan Type
|
|
Number
of Loans
|
|
|
Pre-
Modification
Recorded
Investment
|
|
|
Post-
Modification
Recorded
Investment
|
|
|
Specific
Reserves
Allocated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Residential
|
|
|
7
|
|
|
$
|
2,387,623
|
|
|
$
|
2,387,623
|
|
|
$
|
369,811
|
|
|
Commercial
|
|
|
2
|
|
|
|
300,793
|
|
|
|
300,793
|
|
|
|
68,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9
|
|
|
$
|
2,688,416
|
|
|
$
|
2,688,416
|
|
|
$
|
438,547
|
|
The following table presents TDRs modified
during the year ended December 31, 2011:
|
Loan Type
|
|
Number
of Loans
|
|
|
Pre-
Modification
Recorded
Investment
|
|
|
Post-
Modification
Recorded
Investment
|
|
|
Specific
Reserves
Allocated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Residential
|
|
|
3
|
|
|
$
|
1,094,784
|
|
|
$
|
1,084,784
|
|
|
$
|
247,835
|
|
|
Commercial
|
|
|
2
|
|
|
|
300,793
|
|
|
|
300,793
|
|
|
|
68,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5
|
|
|
$
|
1,395,577
|
|
|
$
|
1,385,577
|
|
|
$
|
316,571
|
|
At December 31, 2011, there are no commitments
to lend additional funds to any borrower whose loan terms have been modified in a troubled debt restructuring.
Loans are considered impaired when, based on
current information and events, it is probable that the Company will be unable to collect all amounts due in accordance with the
original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a
specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future
cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral.
Impaired loans, or portions thereof, are charged off when deemed uncollectible.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE B LOANS (Continued)
Impaired loans, which consists of substandard
loans, non-accrual loans and TDRs, are set forth in the following table:
|
|
|
December 31, 2011
|
|
|
|
|
Unpaid
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
|
|
|
|
|
|
|
Contractual
|
|
|
Investment
|
|
|
Investment
|
|
|
Total
|
|
|
|
|
|
|
|
Principal
|
|
|
with No
|
|
|
with
|
|
|
Recorded
|
|
|
Related
|
|
|
|
|
Balance
|
|
|
Allowance
|
|
|
Allowance
|
|
|
Investment
|
|
|
Allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Residential
|
|
$
|
3,006,778
|
|
|
$
|
524,480
|
|
|
$
|
2,482,298
|
|
|
$
|
3,006,778
|
|
|
$
|
501,655
|
|
|
Commercial
|
|
|
130,392
|
|
|
|
—
|
|
|
|
130,392
|
|
|
|
130,392
|
|
|
|
26,530
|
|
|
Construction
|
|
|
670,591
|
|
|
|
—
|
|
|
|
670,591
|
|
|
|
670,591
|
|
|
|
198,617
|
|
|
Second Mortgages
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial
|
|
|
363,973
|
|
|
|
—
|
|
|
|
363,973
|
|
|
|
363,973
|
|
|
|
81,625
|
|
|
Personal
|
|
|
11,793
|
|
|
|
—
|
|
|
|
11,793
|
|
|
|
11,793
|
|
|
|
6,323
|
|
|
Credit Cards
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Overdrafts
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,183,527
|
|
|
$
|
524,480
|
|
|
$
|
3,659,047
|
|
|
$
|
4,183,527
|
|
|
$
|
814,750
|
|
|
|
|
December 31, 2010
|
|
|
|
|
Unpaid
|
|
|
Recorded
|
|
|
Recorded
|
|
|
|
|
|
|
|
|
|
|
Contractual
|
|
|
Investment
|
|
|
Investment
|
|
|
Total
|
|
|
|
|
|
|
|
Principal
|
|
|
with No
|
|
|
with
|
|
|
Recorded
|
|
|
Related
|
|
|
|
|
Balance
|
|
|
Allowance
|
|
|
Allowance
|
|
|
Investment
|
|
|
Allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 - 4 Family Residential
|
|
$
|
3,061,009
|
|
|
$
|
—
|
|
|
$
|
3,061,009
|
|
|
$
|
3,061,009
|
|
|
$
|
532,438
|
|
|
Commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Construction
|
|
|
1,573,221
|
|
|
|
—
|
|
|
|
1,573,321
|
|
|
|
1,573,321
|
|
|
|
382,261
|
|
|
Second Mortgages
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other
|
|
|
115,856
|
|
|
|
—
|
|
|
|
115,856
|
|
|
|
115,856
|
|
|
|
11,284
|
|
|
Commercial
|
|
|
7,303
|
|
|
|
—
|
|
|
|
7,303
|
|
|
|
7,303
|
|
|
|
820
|
|
|
Personal
|
|
|
108,894
|
|
|
|
—
|
|
|
|
108,894
|
|
|
|
108,894
|
|
|
|
5,362
|
|
|
Credit Cards
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Overdrafts
|
|
|
205,751
|
|
|
|
—
|
|
|
|
205,751
|
|
|
|
205,751
|
|
|
|
30,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,072,034
|
|
|
$
|
—
|
|
|
$
|
5,072,134
|
|
|
$
|
5,072,134
|
|
|
$
|
963,028
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE C OTHER REAL ESTATE
Other Real Estate consists of real estate acquired
through foreclosure or deed taken in lieu of foreclosure. A summary of the activity of Other Real Estate follows:
|
|
|
Years Ended December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Balance, Beginning of Year
|
|
$
|
3,137,074
|
|
|
$
|
2,011,887
|
|
|
Transfers from Loans
|
|
|
1,496,131
|
|
|
|
1,125,190
|
|
|
Recognition of Impairment in Value
|
|
|
(13,072
|
)
|
|
|
—
|
|
|
Capitalized Costs
|
|
|
20,608
|
|
|
|
—
|
|
|
Proceeds from Sale
|
|
|
(59,004
|
)
|
|
|
(395,000
|
)
|
|
Gain (Loss) on Sale
|
|
|
15,599
|
|
|
|
394,997
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, End of Year
|
|
$
|
4,597,336
|
|
|
$
|
3,137,074
|
|
The net income (expense) from Other Real Estate
totaled ($233,369) in 2011, $59,392 in 2010, and ($124,855) in 2009.
NOTE D INVESTMENT SECURITIES
The amortized cost and fair value of securities
available for sale, with gross unrealized gains and losses, at December 31, 2011 and 2010 follows:
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
302,180
|
|
|
$
|
735,295
|
|
|
$
|
—
|
|
|
$
|
1,037,475
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
302,180
|
|
|
$
|
575,920
|
|
|
$
|
—
|
|
|
$
|
878,100
|
|
At December 31, 2011 and 2010, the Bank had
no securities pledged.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E INCOME TAXES
The components of the provision for income
tax expense (benefit) are:
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
Current
|
|
$
|
90,383
|
|
|
$
|
(52,797
|
)
|
|
$
|
(193,165
|
)
|
|
Deferred
|
|
|
(52,211
|
)
|
|
|
(23,226
|
)
|
|
|
270,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Provision for Income Taxes
|
|
$
|
38,172
|
|
|
$
|
(76,023
|
)
|
|
$
|
77,182
|
|
A reconciliation of income tax at the statutory
rate to income tax expense at the Company's effective rate is as follows:
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
Computed Tax Expense (Benefit) at the Expected Statutory Rate
|
|
$
|
38,270
|
|
|
$
|
75,856
|
|
|
$
|
72,202
|
|
|
Katrina Tax Credits
|
|
|
—
|
|
|
|
(2,164
|
)
|
|
|
(35,513
|
)
|
|
Other Adjustments
|
|
|
(98
|
)
|
|
|
(149,715
|
)
|
|
|
40,493
|
|
|
Income Tax Expense for Operations
|
|
$
|
38,172
|
|
|
$
|
(76,023
|
)
|
|
$
|
77,182
|
|
Certain income and expense items are accounted
for differently for financial reporting purposes than for income tax purposes. Provisions for deferred taxes are made in recognition
of these temporary differences and are measured using the income tax rates applicable to the period when the differences are expected
to be realized or settled.
The major temporary differences, which created
deferred tax assets and liabilities, are as follows:
|
|
|
2011
|
|
|
2010
|
|
|
Deferred Tax Assets:
|
|
|
|
|
|
|
|
|
|
Other Real Estate
|
|
$
|
201,713
|
|
|
$
|
199,748
|
|
|
Allowance for Loan Loss
|
|
|
212,372
|
|
|
|
195,757
|
|
|
Expenses Accrued for Books
|
|
|
10,200
|
|
|
|
—
|
|
|
Total Deferred Tax Assets
|
|
|
424,285
|
|
|
|
395,505
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities:
|
|
|
|
|
|
|
|
|
|
Section 481A Adjustment - Prepaid Expenses
|
|
|
(64,213
|
)
|
|
|
(84,563
|
)
|
|
Unrealized Gain on Securities
|
|
|
(299,697
|
)
|
|
|
(245,509
|
)
|
|
Fixed Assets
|
|
|
(443,004
|
)
|
|
|
(446,085
|
)
|
|
Total Deferred Tax Liabilities
|
|
|
(806,914
|
)
|
|
|
(776,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Deferred Tax Liability
|
|
$
|
(382,629
|
)
|
|
$
|
(380,652
|
)
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE E INCOME TAXES (Continued)
The Company had no amount of interest and penalties
recognized in the consolidated statements of operations for neither the years ended December 31, 2011 and 2010, respectively, nor
any amount of interest and penalties recognized in the consolidated balance sheets as of December 31, 2011 and 2010,
respectively.
All tax returns have been appropriately filed
by the Company. The Company’s tax filings are subject to audit by various taxing authorities. The Company’s Federal
tax returns for 2008, 2009 and 2010 are subject to examination by the IRS, generally for three years after they were filed. As
of December 31, 2011, management evaluated the Company’s tax position and concluded that the Company has taken no uncertain
tax positions that require adjustment to the consolidated financial statements.
NOTE F PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Furniture and Equipment
|
|
$
|
2,809,406
|
|
|
$
|
2,762,402
|
|
|
Bank Owned Vehicles
|
|
|
62,491
|
|
|
|
62,491
|
|
|
Leasehold Improvements
|
|
|
520,183
|
|
|
|
460,980
|
|
|
Land
|
|
|
1,092,425
|
|
|
|
1,092,425
|
|
|
Buildings
|
|
|
5,859,133
|
|
|
|
5,859,133
|
|
|
|
|
|
10,343,638
|
|
|
|
10,237,431
|
|
|
Less: Accumulated Depreciation and Amortization
|
|
|
4,689,612
|
|
|
|
4,381,720
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Property, Equipment and Leasehold Improvements, Net
|
|
$
|
5,654,026
|
|
|
$
|
5,855,711
|
|
Depreciation and amortization expense aggregated
$307,897 in 2011, $384,632 in 2010, and $399,722 in 2009.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE G ALLOWANCE FOR LOAN
LOSSES
Changes in the allowance for loan losses by
portfolio segment as of December 31, 2011 and 2010 are as follows:
|
|
|
December 31, 2011
|
|
|
|
|
Real
Estate
|
|
|
Commercial
|
|
|
Personal
|
|
|
Credit
Cards
|
|
|
Overdrafts
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
970,452
|
|
|
$
|
45,287
|
|
|
$
|
17,763
|
|
|
$
|
367,544
|
|
|
$
|
31,171
|
|
|
$
|
367,783
|
|
|
$
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Possible Loan losses
|
|
|
(64,307
|
)
|
|
|
203,169
|
|
|
|
27,180
|
|
|
|
79,683
|
|
|
|
(14,637
|
)
|
|
|
(151,220
|
)
|
|
|
79,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-Offs
|
|
|
(19,153
|
)
|
|
|
(15,959
|
)
|
|
|
(6,376
|
)
|
|
|
(222,520
|
)
|
|
|
(6,500
|
)
|
|
|
(25
|
)
|
|
|
(270,533
|
)
|
|
Recoveries
|
|
|
58,359
|
|
|
|
—
|
|
|
|
3,649
|
|
|
|
127,575
|
|
|
|
986
|
|
|
|
96
|
|
|
|
190,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Charge-Offs
|
|
|
39,206
|
|
|
|
(15,959
|
)
|
|
|
(2,727
|
)
|
|
|
(94,945
|
)
|
|
|
(5,514
|
)
|
|
|
71
|
|
|
|
(79,868
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
945,351
|
|
|
$
|
232,497
|
|
|
$
|
42,216
|
|
|
$
|
352,282
|
|
|
$
|
11,020
|
|
|
$
|
216,634
|
|
|
$
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Amount Allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Individually Evaluated for Impairment
|
|
$
|
726,802
|
|
|
$
|
81,625
|
|
|
$
|
6,323
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
814,750
|
|
|
Loans Collectively Evaluated for Impairment
|
|
|
218,549
|
|
|
|
150,872
|
|
|
|
35,893
|
|
|
|
352,282
|
|
|
|
11,020
|
|
|
|
216,634
|
|
|
|
985,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
945,351
|
|
|
$
|
232,497
|
|
|
$
|
42,216
|
|
|
$
|
352,282
|
|
|
$
|
11,020
|
|
|
$
|
216,634
|
|
|
$
|
1,800,000
|
|
|
|
|
December 31, 2010
|
|
|
|
|
Real
Estate
|
|
|
Commercial
|
|
|
Personal
|
|
|
Credit
Cards
|
|
|
Overdrafts
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
1,229,554
|
|
|
$
|
125,487
|
|
|
$
|
67,616
|
|
|
$
|
360,976
|
|
|
$
|
13,033
|
|
|
$
|
3,334
|
|
|
$
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Possible Loan losses
|
|
|
(256,220
|
)
|
|
|
(105,250
|
)
|
|
|
(43,117
|
)
|
|
|
312,444
|
|
|
|
32,382
|
|
|
|
364,449
|
|
|
|
304,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-Offs
|
|
|
(4,371
|
)
|
|
|
—
|
|
|
|
(6,736
|
)
|
|
|
(476,737
|
)
|
|
|
(16,704
|
)
|
|
|
—
|
|
|
|
(504,548
|
)
|
|
Recoveries
|
|
|
1,489
|
|
|
|
25,050
|
|
|
|
—
|
|
|
|
170,861
|
|
|
|
2,460
|
|
|
|
—
|
|
|
|
199,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Charge-Offs
|
|
|
(2,882
|
)
|
|
|
25,050
|
|
|
|
(6,736
|
)
|
|
|
(305,876
|
)
|
|
|
(14,244
|
)
|
|
|
—
|
|
|
|
(304,688
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
970,452
|
|
|
$
|
45,287
|
|
|
$
|
17,763
|
|
|
$
|
367,544
|
|
|
$
|
31,171
|
|
|
$
|
367,783
|
|
|
$
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-End Amount Allocated to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Individually Evaluated for Impairment
|
|
$
|
925,985
|
|
|
$
|
820
|
|
|
$
|
5,363
|
|
|
$
|
—
|
|
|
$
|
30,862
|
|
|
$
|
—
|
|
|
$
|
963,030
|
|
|
Loans Collectively Evaluated for Impairment
|
|
|
44,467
|
|
|
|
44,467
|
|
|
|
12,400
|
|
|
|
367,544
|
|
|
|
309
|
|
|
|
367,783
|
|
|
|
836,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
970,452
|
|
|
$
|
45,287
|
|
|
$
|
17,763
|
|
|
$
|
367,544
|
|
|
$
|
31,171
|
|
|
$
|
367,783
|
|
|
$
|
1,800,000
|
|
Despite the above allocation, the allowance
for credit losses is general in nature and is available to absorb losses from any loan type.
From a credit risk standpoint, the Company
classifies it loans in one four categories: (i) pass, (ii) watch, (iii) substandard or (iv) doubtful.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE G ALLOWANCE FOR LOAN
LOSSES (Continued)
The classification of loans reflect a judgment
about the risks of default and loss associated with the loan. The Company reviews the ratings on credits monthly. Ratings are adjusted
to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. The methodology
is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding
increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk
and loss).
Credits rated “pass” are those
which comply with all material respects with the Bank’s loan policies, that are adequately secured with conforming collateral
and that are extended to borrowers with documented cash flow and/or liquidity to safely cover their total debt service requirements.
Credits rated “watch” show clear
signs of financial weakness or deterioration in credit worthiness; however, such concerns are not so pronounced that the Company
generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform
within standard credit terms and credit exposure is not as prominent as credits rated more harshly.
Credits rated “substandard” are
those in which the normal repayment of principal and interest may be, or has been jeopardized by reason of adverse trends or developments
in financial, managerial, economic or political nature, or important weaknesses exist in collateral. Corrective action is required
to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by
the borrower. Credit exposure becomes more likely in such credits.
Credits rated “doubtful” are those
in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the
ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available
information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed
on nonaccrual.
The following table summarizes the Company’s
internal ratings of its loans:
|
|
|
December 31, 2011
|
|
|
|
|
Real
|
|
|
|
|
|
|
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
Estate
|
|
|
Commercial
|
|
|
Personal
|
|
|
Cards
|
|
|
Overdrafts
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
39,964,153
|
|
|
$
|
1,324,958
|
|
|
$
|
1,429,987
|
|
|
$
|
6,038,528
|
|
|
$
|
129,572
|
|
|
$
|
48,887,198
|
|
|
Watch
|
|
|
970,861
|
|
|
|
2,423
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
973,284
|
|
|
Substandard
|
|
|
3,627,554
|
|
|
|
1,363,746
|
|
|
|
66,032
|
|
|
|
—
|
|
|
|
80,408
|
|
|
|
5,137,740
|
|
|
Doubtful
|
|
|
1,211,115
|
|
|
|
11,305
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,222,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
45,773,683
|
|
|
$
|
2,702,432
|
|
|
$
|
1,496,019
|
|
|
$
|
6,038,528
|
|
|
$
|
209,980
|
|
|
$
|
56,220,642
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE G ALLOWANCE FOR LOAN
LOSSES (Continued)
|
|
|
December 31, 2010
|
|
|
|
|
Real
|
|
|
|
|
|
|
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
Estate
|
|
|
Commercial
|
|
|
Personal
|
|
|
Cards
|
|
|
Overdrafts
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
$
|
44,399,289
|
|
|
$
|
1,546,798
|
|
|
$
|
1,082,245
|
|
|
$
|
6,321,359
|
|
|
$
|
—
|
|
|
$
|
53,349,691
|
|
|
Watch
|
|
|
2,382,733
|
|
|
|
1,160,384
|
|
|
|
—
|
|
|
|
—
|
|
|
|
71,181
|
|
|
|
3,614,298
|
|
|
Substandard
|
|
|
2,473,968
|
|
|
|
7,303
|
|
|
|
108,894
|
|
|
|
—
|
|
|
|
205,751
|
|
|
|
2,795,916
|
|
|
Doubtful
|
|
|
2,264,423
|
|
|
|
—
|
|
|
|
11,793
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,276,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
51,520,413
|
|
|
$
|
2,714,485
|
|
|
$
|
1,202,932
|
|
|
$
|
6,321,359
|
|
|
$
|
276,932
|
|
|
$
|
62,036,121
|
|
NOTE H STOCKHOLDERS' EQUITY
PREFERRED STOCK
8%, non-cumulative, non-participating, non-convertible,
par value 3,000,000 shares authorized, 1,796,624 shares issued and outstanding in 2011, and 3,000,000 shares authorized, 1,810,296
shares issued and outstanding in 2010. Preferred stock ranks prior to common stock as to dividends and liquidation.
COMMON STOCK
Par value $1; 1,000,000 shares authorized,
179,145 shares issued and outstanding in 2011 and 2010.
NOTE I EARNINGS PER COMMON
SHARE
Earnings per share are computed using the weighted
average number of shares outstanding, which were 179,145 in 2011, 2010 and 2009. There was no provision for dividends for the years
ended December 31, 2011, 2010 or 2009.
NOTE J CONTINGENT LIABILITIES
AND COMMITMENTS
The Bank's financial statements do not reflect
various commitments and contingent liabilities which arise in the normal course of business and which involve elements of credit
risk, interest rate risk and liquidity risk. These commitments and contingent liabilities are commitments to extend credit. A summary
of the Bank's commitments and contingent liabilities are as follows:
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Credit Card Arrangements
|
|
$
|
12,373,012
|
|
|
$
|
14,625,844
|
|
|
Commitments to Extend Credit
|
|
|
2,079,480
|
|
|
|
1,762,870
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE J CONTINGENT LIABILITIES
AND COMMITMENTS (Continued)
Commitments to extend credit, credit card arrangements
and standby letters of credit all include exposure to some credit loss in the event of nonperformance of the customer. The Bank's
credit policies and procedures for credit commitments and financial guarantees are the same as those for extension of credit that
are recorded on the consolidated balance sheets. Because these instruments have fixed maturity dates, and because many of them
expire without being drawn upon, they do not generally present any significant liquidity risk to the Bank.
In August 2005, Hurricane Katrina impacted
the New Orleans area. Several of the Bank’s branches sustained significant damage as a result of the hurricane. In addition,
due to concessions made to customers to facilitate the timely processing of transactions, the Bank has estimated that it has sustained
losses. As a result of these losses, the Bank received approximately $2,090,000 of insurance proceeds. Due to the uncertainty of
the financial impact of Katrina, these proceeds were recorded as an escrow account on the balance sheet of the Bank. Impairment
losses and expenditures associated with repairs to the Bank’s facilities were applied against this account. During 2009,
the Bank recognized into income the remaining balance in the escrow account, which totaled approximately $817,000.
NOTE K RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Bank
makes loans to its directors, officers and principal holders of equity securities. These loans are made on substantially the same
terms including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons.
An analysis of loans made to directors, officers and principal holders of equity securities, including companies in which they
have a significant ownership interest, is as follows:
|
|
|
2011
|
|
|
2010
|
|
|
Balance - January 1
|
|
$
|
1,077,302
|
|
|
$
|
1,186,284
|
|
|
New Loans Made
|
|
|
137,465
|
|
|
|
508,722
|
|
|
Repayments
|
|
|
(33,087
|
)
|
|
|
(617,704
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31
|
|
$
|
1,181,680
|
|
|
$
|
1,077,302
|
|
During the years ended December 31, 2011, 2010,
and 2009, legal fees paid to a director totaled $-0-, $8,795 and $12,352, respectively.
At December 31, 2011 and 2010, amounts due
to Directors of the Company, including accrued interest, totaled $167,076 and $152,655, respectively.
These amounts, which
are included in Notes Payable and Accrued Interest Payable in the accompanying consolidated balance sheets, are payable on demand
and bear interest at 10% per annum. Of the debentures payable at December 31, 2011 and 2010, $105,000 were to Directors of
the Company (see Note R).
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE L
LEASES
The Bank leases office space under agreements
expiring in various years through November 2016. In addition, the Bank rents office space on a month-to-month basis from non-related
groups.
The total minimum rental commitment at December
31, 2011, under the leases is due as follows:
|
|
December 31,
|
|
|
|
|
|
|
|
2012
|
|
|
$
|
179,183
|
|
|
|
2013
|
|
|
|
181,048
|
|
|
|
2014
|
|
|
|
182,913
|
|
|
|
2015
|
|
|
|
184,778
|
|
|
|
2016
|
|
|
|
141,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
869,877
|
|
For the years ended December 31, 2011, 2010
and 2009, $249,036, $243,701 and $227,714 was charged to rent expense, respectively.
The Bank is the lessor of office space under
operating leases expiring in various years through December 2018. Minimum future rentals to be received on non-cancelable leases
as of December 31, 2011 follows:
|
|
December 31,
|
|
|
|
|
|
|
|
2012
|
|
|
$
|
117,541
|
|
|
|
2013
|
|
|
|
73,677
|
|
|
|
2014
|
|
|
|
33,482
|
|
|
|
2015
|
|
|
|
30,522
|
|
|
|
2016
|
|
|
|
30,522
|
|
|
|
Thereafter
|
|
|
|
61,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
346,788
|
|
NOTE M LETTERS OF CREDIT
Standby Letters of Credit obligate the Bank
to meet certain financial obligations of its clients, if, under the contractual terms of the agreement, the clients are unable
to do so. These instruments are primarily issued to support public and private financial commitments, including commercial paper,
bond financing, initial margin requirements on futures exchanges and similar transactions. Outstanding letters of credit were $90,120
as of December 31, 2011 and 2010. Of the $90,120 in letters of credit at December 31, 2011 and 2010, $57,700 was secured by real
property, $7,420 was secured by cash and $25,000 was unsecured. All of the letters of credit are scheduled to mature in 2012.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE N DEPOSITS
Major classifications of interest bearing deposits
are as follows:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
NOW Accounts
|
|
$
|
10,897,338
|
|
|
$
|
11,184,196
|
|
|
Money Market Accounts
|
|
|
3,697,477
|
|
|
|
3,948,540
|
|
|
Savings Accounts
|
|
|
19,841,509
|
|
|
|
20,156,625
|
|
|
Certificates of Deposit Greater Than $100,000
|
|
|
4,907,733
|
|
|
|
5,247,747
|
|
|
Other Certificates of Deposit
|
|
|
7,609,962
|
|
|
|
8,172,733
|
|
|
|
|
$
|
46,954,019
|
|
|
$
|
48,709,841
|
|
The maturities of Certificates of Deposit Greater
than $100,000 at December 31, 2011 are as follows:
|
Three Months or Less
|
|
$
|
1,042,506
|
|
|
After Three Months Through One Year
|
|
|
2,253,497
|
|
|
Over One Year Through Three Years
|
|
|
1,411,730
|
|
|
Over Three Years
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4,907,733
|
|
At December 31, 2011 and 2010, overdraft demand
deposits reclassified to loans totaled $209,979 and $276,932, respectively.
NOTE O FUNDS AVAILABLE
FOR DIVIDENDS
The Bank is restricted under applicable laws
and regulatory authority in the payment of cash dividends. Such laws generally restrict cash dividends to the extent of the Bank's
earnings.
No dividends were paid by the Bank to BOL Bancshares,
Inc. during the years ended December 31, 2011, 2010, and 2009.
NOTE P CONCENTRATIONS OF
CREDIT
All of the Bank's loans, commitments, and commercial
and standby letters of credit have been granted to customers in the Bank's market area. All such customers are depositors of the
Bank. The concentrations of credit by type of loan are set forth in Note B. Commercial letters of credit were granted primarily
to commercial borrowers.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Q EMPLOYEE BENEFITS
Effective January 1, 2001, the
Bank
adopted a Section 401(k) savings plan. The Plan covers substantially all employees who are at least eighteen years old and have
completed six months of continuous service. The Bank may make discretionary contributions and is not required to match employee
contributions under the plan. The Bank made no contributions to the plan during the years ended December 31, 2011, 2010 or 2009.
NOTE R NOTES PAYABLE
The following is a summary of notes payable
at December 31, 2011 and 2010:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Notes payable to a current Director of the Company, payable on demand, interest at 10%.
|
|
$
|
144,201
|
|
|
$
|
144,201
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures payable, due July 2012, interest at 6%, callable at 103%, 102% and 101% of face value during the first, second, and third years, respectively, following the closing date,interest payable semi-annually, each $500 debenture secured by 71.50 shares of the Bank’s stock.
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
|
$
|
1,144,201
|
|
|
$
|
1,144,201
|
|
Following are maturities of long-term debt:
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
$
|
1,144,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,144,201
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE S INTEREST INCOME
AND INTEREST EXPENSE
Major categories of interest income and interest
expense are as follows:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and Fees on Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Loans
|
|
$
|
3,395,911
|
|
|
$
|
3,588,326
|
|
|
$
|
3,531,844
|
|
|
Installment Loans
|
|
|
126,077
|
|
|
|
138,452
|
|
|
|
132,183
|
|
|
Credit Cards and Related Plans
|
|
|
1,883,551
|
|
|
|
1,985,136
|
|
|
|
2,092,520
|
|
|
Commercial and All Other Loans
|
|
|
326,790
|
|
|
|
264,302
|
|
|
|
237,431
|
|
|
Interest on Certificates of Deposit
|
|
|
34,195
|
|
|
|
54,790
|
|
|
|
58,028
|
|
|
Interest and Dividends on Investment Securities
|
|
|
7,788
|
|
|
|
15,496
|
|
|
|
33,933
|
|
|
Interest on Federal Funds Sold
|
|
|
17,448
|
|
|
|
20,151
|
|
|
|
24,970
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,791,760
|
|
|
$
|
6,066,653
|
|
|
$
|
6,110,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on Time Deposits of $100,000 or More
|
|
$
|
44,949
|
|
|
$
|
59,406
|
|
|
$
|
81,297
|
|
|
Interest on Other Deposits
|
|
|
306,618
|
|
|
|
313,248
|
|
|
|
309,235
|
|
|
Interest on Notes Payable
|
|
|
74,421
|
|
|
|
74,584
|
|
|
|
93,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
425,988
|
|
|
$
|
447,238
|
|
|
$
|
484,314
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE T NON-INTEREST INCOME
AND NON-INTEREST EXPENSES
Major categories of other non-interest income
and non-interest expenses are as follows:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NON-INTEREST INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Commission and Fees
|
|
$
|
69,124
|
|
|
$
|
57,749
|
|
|
$
|
64,062
|
|
|
Other Real Estate Income
|
|
|
24,600
|
|
|
|
395,022
|
|
|
|
9,271
|
|
|
Other Income
|
|
|
64,356
|
|
|
|
137,480
|
|
|
|
245,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
158,080
|
|
|
$
|
590,251
|
|
|
$
|
318,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER NON-INTEREST EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and Charge Card Expenses
|
|
$
|
118,518
|
|
|
$
|
115,551
|
|
|
$
|
125,737
|
|
|
Communications
|
|
|
227,161
|
|
|
|
215,654
|
|
|
|
218,627
|
|
|
Stationery, Forms and Supplies
|
|
|
89,390
|
|
|
|
83,737
|
|
|
|
91,985
|
|
|
Professional Fees
|
|
|
305,429
|
|
|
|
286,517
|
|
|
|
257,246
|
|
|
Insurance and Assessments
|
|
|
202,462
|
|
|
|
181,347
|
|
|
|
224,677
|
|
|
Advertising
|
|
|
12,079
|
|
|
|
10,870
|
|
|
|
1,702
|
|
|
Miscellaneous Losses
|
|
|
424
|
|
|
|
2,943
|
|
|
|
710
|
|
|
Promotional Expenses
|
|
|
58,174
|
|
|
|
57,042
|
|
|
|
61,307
|
|
|
Other Real Estate Expenses
|
|
|
257,969
|
|
|
|
335,630
|
|
|
|
134,126
|
|
|
Other Expenses
|
|
|
296,454
|
|
|
|
261,082
|
|
|
|
625,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,568,060
|
|
|
$
|
1,550,373
|
|
|
$
|
1,741,338
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U CONDENSED FINANCIAL INFORMATION - PARENT
COMPANY ONLY
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Due from Banks
|
|
$
|
232,940
|
|
|
$
|
268,465
|
|
|
Securities Available-for-Sale, at Fair Value
|
|
|
1,006,695
|
|
|
|
847,320
|
|
|
Other Assets
|
|
|
370
|
|
|
|
1,114
|
|
|
Due from Subsidiary Bank
|
|
|
26,172
|
|
|
|
2,456
|
|
|
Investment in Bank of Louisiana
|
|
|
12,186,089
|
|
|
|
12,094,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,452,266
|
|
|
$
|
13,214,269
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Notes Payable
|
|
$
|
1,144,201
|
|
|
$
|
1,144,201
|
|
|
Deferred Taxes
|
|
|
250,001
|
|
|
|
195,813
|
|
|
Accrued Interest
|
|
|
48,026
|
|
|
|
33,604
|
|
|
Shareholders' Equity
|
|
|
12,010,038
|
|
|
|
11,840,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,452,266
|
|
|
$
|
13,214,269
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U CONDENSED FINANCIAL INFORMATION - PARENT
COMPANY ONLY (Continued)
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and Dividend Income
|
|
$
|
40,296
|
|
|
$
|
118,335
|
|
|
$
|
5,412
|
|
|
Miscellaneous Income
|
|
|
—
|
|
|
|
—
|
|
|
|
78,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,296
|
|
|
|
118,335
|
|
|
|
84,047
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
74,421
|
|
|
|
74,584
|
|
|
|
93,782
|
|
|
Other Expenses
|
|
|
5,627
|
|
|
|
4,746
|
|
|
|
5,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,048
|
|
|
|
79,330
|
|
|
|
99,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARY
|
|
|
(39,752
|
)
|
|
|
39,005
|
|
|
|
(15,365
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Undistributed Earnings of Subsidiary
|
|
|
90,421
|
|
|
|
240,629
|
|
|
|
145,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX BENEFIT
|
|
|
50,669
|
|
|
|
279,634
|
|
|
|
129,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT
|
|
|
23,717
|
|
|
|
19,496
|
|
|
|
5,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
74.386
|
|
|
$
|
299,130
|
|
|
$
|
135,176
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE U CONDENSED FINANCIAL INFORMATION - PARENT
COMPANY ONLY (Continued)
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
74,386
|
|
|
$
|
299,130
|
|
|
$
|
135,176
|
|
|
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Undistributed Earnings of Subsidiary
|
|
|
(90,421
|
)
|
|
|
(240,629
|
)
|
|
|
(145,250
|
)
|
|
Net Decrease (Increase) in Other Assets
|
|
|
744
|
|
|
|
744
|
|
|
|
(1,489
|
)
|
|
Net Increase (Decrease) in Other Liabilities
|
|
|
14,420
|
|
|
|
(24,701
|
)
|
|
|
2,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used in) Provided by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
(871
|
)
|
|
|
34,544
|
|
|
|
(8,768
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock Retired
|
|
|
(10,938
|
)
|
|
|
(21,434
|
)
|
|
|
(128,217
|
)
|
|
(Increase) Decrease in Due to/from Subsidiary
|
|
|
(23,716
|
)
|
|
|
(26,151
|
)
|
|
|
51,350
|
|
|
Proceeds from Issuance of Long-Term Debt
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000,000
|
|
|
Repayment of Long-Term Debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,399,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Used in Financing Activities
|
|
|
(34,654
|
)
|
|
|
(47,585
|
)
|
|
|
(475,867
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AND CASH EQUIVALENTS
|
|
|
(35,525
|
)
|
|
|
(13,041
|
)
|
|
|
(484,635
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BEGINNING OF YEAR
|
|
|
268,465
|
|
|
|
281,506
|
|
|
|
766,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF YEAR
|
|
$
|
232,940
|
|
|
$
|
268,465
|
|
|
$
|
281,506
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE V COMPREHENSIVE
INCOME
Comprehensive income was comprised of changes
in the Company’s unrealized holding gains or losses on securities available-for-sale during 2011, 2010 and 2009. The following
represents the tax effects associated with the components of comprehensive income:
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Unrealized Holding Gains (Losses) Arising During the Period
|
|
$
|
159,360
|
|
|
$
|
63,800
|
|
|
$
|
(8,676
|
)
|
|
Tax (Expense) Benefit
|
|
|
(54,176
|
)
|
|
|
(21,686
|
)
|
|
|
2,950
|
|
|
|
|
|
105,184
|
|
|
|
42,114
|
|
|
|
(5,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification Adjustment for Gains Included in Net Income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Tax Benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Unrealized Holding Gains (Losses) Arising During the Period
|
|
$
|
105,184
|
|
|
$
|
42,114
|
|
|
$
|
(5,726
|
)
|
NOTE W REGULATORY CAPITAL
REQUIREMENTS
As of December 31, 2011, the most recent notification
from the FDIC categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action.
To be categorized “well capitalized” the Bank must maintain minimum leverage capital ratios and minimum amounts of
capital to total "risk weighted" assets, as set forth in the table. Management philosophy and plans are directed to enhancing
the financial stability of the Bank to ensure the continuity of operations.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE W REGULATORY CAPITAL
REQUIREMENTS (Continued)
The Bank's actual capital amounts and ratios
are also presented in the table. (Dollars in thousands)
|
|
December 31, 2011
|
|
|
|
|
|
|
Required
|
|
|
|
|
|
|
to be Well
|
|
|
|
|
Required
|
Capitalized Under
|
|
|
|
|
for Capital
|
Prompt Corrective
|
|
|
Actual
|
Adequacy Purposes
|
Action Provisions
|
|
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|
|
|
|
|
|
|
|
|
Tier I Capital (to Average Assets)
|
$12,187
|
13.49%
|
$3,612
|
4.00%
|
$4,516
|
5.00%
|
|
Tier I Capital (to Risk-Weighted Assets)
|
$12,187
|
20.50%
|
$2,378
|
4.00%
|
$3,567
|
6.00%
|
|
Total Capital (to Risk-Weighted Assets)
|
$12,943
|
21.77%
|
$4,756
|
8.00%
|
$5,945
|
10.00%
|
|
|
December 31, 2010
|
|
|
|
|
|
|
Required
|
|
|
|
|
|
|
to be Well
|
|
|
|
|
Required
|
Capitalized Under
|
|
|
|
|
for Capital
|
Prompt Corrective
|
|
|
Actual
|
Adequacy Purposes
|
Action Provisions
|
|
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|
|
|
|
|
|
|
|
|
Tier I Capital (to Average Assets)
|
$12,096
|
12.83%
|
$3,771
|
4.00%
|
$4,714
|
5.00%
|
|
Tier I Capital (to Risk-Weighted Assets)
|
$12,096
|
18.58%
|
$2,603
|
4.00%
|
$3,905
|
6.00%
|
|
Total Capital (to Risk-Weighted Assets)
|
$12,922
|
19.85%
|
$5,207
|
8.00%
|
$6,509
|
10.00%
|
|
|
|
|
|
|
|
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE X REGULATORY MATTERS
– MEMORANDUM OF UNDERSTANDING
On April 19, 2011, the Bank consented to a
Memorandum of Understanding (the “MOU”) issued by the Federal Deposit Insurance Corporation (“FDIC”) and
the Office of Financial Institutions (“OFI”). The MOU provides for, among other things, the following items within
specific time periods:
|
|
·
|
The Bank shall reduce its level of adversely
classified assets.
|
|
|
·
|
The Bank shall reduce its level of past
due loans.
|
|
|
·
|
The Bank shall eliminate the extension
of credit until all appropriate underwriting documentation is obtained.
|
|
|
·
|
The Bank shall eliminate the extension
of credit to borrowers for whom the Bank holds an uncollected charged-off asset or for which their credit is classified as “Substandard”.
|
|
|
·
|
The Bank shall strengthen its loan review
program.
|
|
|
·
|
The Bank shall maintain an appropriate
Allowance for Loan and Lease Losses.
|
|
|
·
|
The Bank shall maintain a Tier 1 leverage
capital ratio equal of at least 9%, a Tier 1 Risk Based Capital Ratio of 11% and a Total Risk Based Capital Ratio of 13%.
|
|
|
·
|
The Bank shall not declare or pay any
cash dividend without regulatory approval.
|
|
|
·
|
The Bank shall review and amend its interest
rate risk policy and procedures.
|
|
|
·
|
The Bank shall provide for an independent
evaluation of its management and information systems.
|
|
|
·
|
The Bank shall review and update the Bank’s
written strategic plan and profit plan.
|
While no assurance can be given, Bank management
believes it has taken action toward complying with the provisions of the MOU. It is not presently determinable what actions, if
any, bank regulators might take if requirements of the Memorandum are not complied within specified time periods.
NOTE Y 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 practiced 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.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Y DISCLOSURE ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
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 are as follows:
|
|
|
December 31, 2011
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
Value
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
Cash and Short-Term Investments
|
|
$
|
3,505,465
|
|
|
$
|
3,505,465
|
|
|
Certificates of Deposit
|
|
|
5,458,007
|
|
|
|
5,458,007
|
|
|
Investment Securities
|
|
|
1,037,475
|
|
|
|
1,037,475
|
|
|
Loans
|
|
|
56,220,645
|
|
|
|
56,071,449
|
|
|
Less: Allowance for Loan Losses
|
|
|
(1,800,000
|
)
|
|
|
N/A
|
|
|
|
|
$
|
64,421,592
|
|
|
$
|
66,072,396
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
77,680,242
|
|
|
$
|
77,726,063
|
|
|
Unrecognized Financial Instruments:
|
|
|
|
|
|
|
|
|
|
Commitments to Extend Credit
|
|
$
|
2,079,480
|
|
|
$
|
2,079,480
|
|
|
Credit Card Arrangements
|
|
|
12,373,012
|
|
|
|
12,373,012
|
|
|
|
|
$
|
14,452,492
|
|
|
$
|
14,452,492
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Y DISCLOSURE ABOUT
FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
|
|
|
December 31, 2010
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
Value
|
|
|
Financial Assets:
|
|
|
|
|
|
|
|
|
|
Cash and Short-Term Investments
|
|
$
|
3,833,920
|
|
|
$
|
3,833,920
|
|
|
Certificates of Deposit
|
|
|
4,203,006
|
|
|
|
4,203,006
|
|
|
Investment Securities
|
|
|
878,100
|
|
|
|
878,100
|
|
|
Loans
|
|
|
62,036,121
|
|
|
|
62,053,562
|
|
|
Less: Allowance for Loan Losses
|
|
|
(1,800,000
|
)
|
|
|
N/A
|
|
|
|
|
$
|
69,151,147
|
|
|
$
|
70,968,588
|
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
80,576,743
|
|
|
$
|
80,674,660
|
|
|
Unrecognized Financial Instruments:
|
|
|
|
|
|
|
|
|
|
Commitments to Extend Credit
|
|
$
|
1,762,870
|
|
|
$
|
1,762,870
|
|
|
Credit Card Arrangements
|
|
|
14,625,844
|
|
|
|
14,625,844
|
|
|
|
|
$
|
16,388,714
|
|
|
$
|
16,388,714
|
|
NOTE Z FINANCIAL INSTRUMENTS
The Company adopted ASC 820 on January 1, 2008
for 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). ASC 820 defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements.
ASC 820 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.
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Z FINANCIAL INSTRUMENTS
(Continued)
In addition to defining fair value, ASC 820
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 preceding methods described may produce
a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values. Furthermore,
although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date. There have been no changes in the methodologies used during the year ended December 31, 2011.
The following table presents the Company’s
assets and liabilities measured at fair value on a recurring basis.
|
December 31, 2011
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Net Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
—
|
|
|
$
|
1,037,475
|
|
|
$
|
—
|
|
|
$
|
1,037,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
1,037,475
|
|
|
$
|
—
|
|
|
$
|
1,037,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010
|
|
|
Level 1
|
|
|
|
Level 2
|
|
|
|
Level 3
|
|
|
|
Net Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
—
|
|
|
$
|
878,100
|
|
|
$
|
—
|
|
|
$
|
878,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
878,100
|
|
|
$
|
—
|
|
|
$
|
878,100
|
|
BOL BANCSHARES, INC. & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE Z FINANCIAL INSTRUMENTS
(Continued)
The Company did not record any liabilities
at fair market value for which measurement of the fair value was made on a recurring basis at December 31, 2011 or 2010.
The following table presents the Company’s
assets and liabilities measured at fair value on a non-recurring basis.
|
December 31, 2011
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Net Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans
|
|
$
|
—
|
|
|
$
|
4,183,527
|
|
|
$
|
—
|
|
|
$
|
4,183,527
|
|
|
Other Real Estate
|
|
|
|
|
|
|
4,597,336
|
|
|
$
|
—
|
|
|
|
4,597,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
8,780,863
|
|
|
$
|
—
|
|
|
$
|
8,780,863
|
|
|
December 31, 2010
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Net Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans
|
|
$
|
—
|
|
|
$
|
5,072,134
|
|
|
$
|
—
|
|
|
$
|
5,072,134
|
|
|
Other Real Estate
|
|
|
|
|
|
|
3,137,074
|
|
|
|
|
|
|
|
3,137,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
—
|
|
|
$
|
8,209,208
|
|
|
$
|
—
|
|
|
$
|
8,209,208
|
|
NOTE AA EVALUATION OF SUBSEQUENT
EVENTS
In
accordance with ASC
No.
855, the Company has evaluated subsequent events through March 5, 2012,
the date these financial statements were available to be issued. There were no material subsequent events that required recognition
or additional disclosure in these financial statements.
To the Board of Directors
BOL Bancshares, Inc. & Subsidiary
Report of Independent Registered Public Accounting
Firm on Supplementary Information
Our audits were conducted
for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplementary information contained
in Schedules I, II and III is presented for the purpose of additional analysis and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting
and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied
in the audits of the consolidated financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to
the consolidated financial statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation
to the consolidated financial statements taken as a whole.
A Professional Accounting Corporation
Metairie, Louisiana
March 5, 2012
BANK OF LOUISIANA
SUPPLEMENTARY INFORMATION
SCHEDULE I
BALANCE SHEETS
UNCONSOLIDATED
ASSETS
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Cash and Due from Banks
|
|
$
|
3,505,465
|
|
|
$
|
3,833,920
|
|
|
Federal Funds Sold
|
|
|
16,150,000
|
|
|
|
14,950,000
|
|
|
Certificates of Deposit
|
|
|
5,458,007
|
|
|
|
4,203,007
|
|
|
Investment Securities
|
|
|
|
|
|
|
|
|
|
Securities Available-for-Sale, at Fair Value
|
|
|
30,780
|
|
|
|
30,780
|
|
|
Loans: Less Allowance for Loan Losses of $1,800,000 in 2011and 2010
|
|
|
54,420,650
|
|
|
|
60,236,121
|
|
|
Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization)
|
|
|
5,654,026
|
|
|
|
5,855,711
|
|
|
Other Real Estate
|
|
|
4,597,336
|
|
|
|
3,137,074
|
|
|
Other Assets
|
|
|
918,352
|
|
|
|
1,235,462
|
|
|
Letters of Credit
|
|
|
90,120
|
|
|
|
90,120
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
90,824,736
|
|
|
$
|
93,572,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
Non-Interest Bearing
|
|
$
|
30,732,071
|
|
|
$
|
31,873,827
|
|
|
Interest Bearing
|
|
|
47,181,927
|
|
|
|
48,975,907
|
|
|
Other Liabilities
|
|
|
435,751
|
|
|
|
309,018
|
|
|
Deferred Taxes
|
|
|
64,016
|
|
|
|
110,805
|
|
|
Letters of Credit Outstanding
|
|
|
90,120
|
|
|
|
90,120
|
|
|
Accrued Interest
|
|
|
60,578
|
|
|
|
71,376
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
78,564,463
|
|
|
|
81,431,053
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Common Stock - 143,000 Shares Issued and Outstanding
|
|
|
1,430,000
|
|
|
|
1,430,000
|
|
|
Surplus
|
|
|
4,616,796
|
|
|
|
4,616,796
|
|
|
Retained Earnings
|
|
|
6,213,477
|
|
|
|
6,094,346
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity
|
|
|
12,260,273
|
|
|
|
12,141,142
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity
|
|
$
|
90,824,736
|
|
|
$
|
93,572,195
|
|
See independent registered public accounting firm report on supplementary
information.
BANK OF LOUISIANA
SUPPLEMENTARY INFORMATION
SCHEDULE II
STATEMENTS OF INCOME
UNCONSOLIDATED
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST INCOME
|
|
$
|
5,783,972
|
|
|
$
|
6,059,698
|
|
|
$
|
6,110,909
|
|
|
INTEREST EXPENSE
|
|
|
352,561
|
|
|
|
375,127
|
|
|
|
395,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
5,431,411
|
|
|
|
5,684,571
|
|
|
|
5,714,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR LOAN LOSSES
|
|
|
79,868
|
|
|
|
304,688
|
|
|
|
535,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income After Provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for Loan Losses
|
|
|
5,351,543
|
|
|
|
5,379,883
|
|
|
|
5,179,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Charges on Deposit Accounts
|
|
|
451,203
|
|
|
|
476,647
|
|
|
|
416,897
|
|
|
Other Non-Interest Income
|
|
|
532,276
|
|
|
|
900,152
|
|
|
|
1,493,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
983,479
|
|
|
|
1,376,799
|
|
|
|
1,910,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits
|
|
|
2,371,869
|
|
|
|
2,615,106
|
|
|
|
2,764,527
|
|
|
Occupancy Expense
|
|
|
917,419
|
|
|
|
1,059,723
|
|
|
|
1,040,332
|
|
|
Outsourcing Fees
|
|
|
1,330,991
|
|
|
|
1,352,124
|
|
|
|
1,321,717
|
|
|
Other Non-Interest Expense
|
|
|
1,533,723
|
|
|
|
1,499,405
|
|
|
|
1,734,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,154,002
|
|
|
|
6,526,358
|
|
|
|
6,861,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE PROVISION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR INCOME TAX
|
|
|
181,020
|
|
|
|
230,324
|
|
|
|
228,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE (BENEFIT)
|
|
|
61,889
|
|
|
|
(56,527
|
)
|
|
|
82,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
119,131
|
|
|
$
|
286,851
|
|
|
$
|
146,204
|
|
See independent registered public accounting firm report on supplementary
information.
SCHEDULE III
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
UNCONSOLIDATED
|
|
|
Common
|
|
|
|
|
|
Retained
|
|
|
|
|
|
|
|
Stock
|
|
|
Surplus
|
|
|
Earnings
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - January 1, 2009
|
|
$
|
1,430,000
|
|
|
$
|
4,616,796
|
|
|
$
|
5,661,291
|
|
|
$
|
11,708,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the Year 2009
|
|
|
—
|
|
|
|
—
|
|
|
|
146,204
|
|
|
|
146,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - December 31, 2009
|
|
|
1,430,000
|
|
|
|
4,616,796
|
|
|
|
5,807,495
|
|
|
|
11,854,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the Year 2010
|
|
|
—
|
|
|
|
—
|
|
|
|
286,851
|
|
|
|
286,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - December 31, 2010
|
|
|
1,430,000
|
|
|
|
4,616,796
|
|
|
|
6,094,346
|
|
|
|
12,141,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends Paid
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income for the Year 2011
|
|
|
—
|
|
|
|
—
|
|
|
|
119,131
|
|
|
|
119,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - December 31, 2011
|
|
$
|
1,430,000
|
|
|
$
|
4,616,796
|
|
|
$
|
6,213,477
|
|
|
$
|
12,260,273
|
|
See independent registered public accounting firm report on supplementary
information.
Item 8 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure - None
Item 8A(T) Controls and Procedures
Conclusion Regarding the
Effectiveness of Disclosure Controls and Procedures
We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure.
Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their
nature, can provide only reasonable assurance regarding management’s control objectives.
With the participation of management, the certifying
officers of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls
and procedures as of December 31, 2011 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.
Management’s Annual Report on Internal Control over Financial
Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial report for the Company. Internal control over financial reporting is a
process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance
with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes
maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that
transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts
and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that
unauthorized acquisition, use or disposition of Company assets that could have a material affect on our financial statements would
have been prevented or detected on a timely basis. Because of the inherent limitations of internal control over financial reporting,
misstatements may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the
internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, with the participation of the certifying
officers of the Company, assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal Control – Integrated Framework. Based on this assessment, management, with the participation of the certifying
officers of the Company, believes that, as of December 31, 2011, the Company’s internal control over financial reporting
is effective based on those criteria.
This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Item 8B Other Information
None
Item 9 Directors and Executive Officers of the Company
Directors and executive officers
of the Company each serve for a term of one year.
|
|
|
BOL BANCSHARES, INC.
|
|
|
|
|
Directors & Executive Officers
|
|
|
|
|
|
|
|
Name
|
Age
|
Position with the Company and Bank of Louisiana
(the "Bank") and Principal Occupation
|
Director Since
|
|
|
|
|
|
|
G. Harrison Scott
|
88
|
Director; Chairman of the Board of the Company and the Bank, and President of the Company and the Bank.
|
1981
|
|
|
|
|
|
|
Franck F. LaBiche
|
65
|
Director of the Company and the Bank. President, Executone Systems Co. of La. Inc.
|
2004
|
|
|
|
|
|
|
Johnny C. Crow
|
60
|
Director of the Company and the Bank. Insurance Agent, New York Life Ins. Co.
|
2005
|
|
|
|
|
|
|
Sharry R. Scott
|
41
|
Director of the Company and the Bank. Assistant Attorney General, Louisiana Department of Justice
|
2005
|
|
|
|
|
|
|
A. Earle Cefalu, Jr.
|
73
|
Director of the Company and the Bank. General Manager, Hood Automotive
|
2009
|
|
Non-Director Executive Officer
|
|
|
|
|
|
|
|
Name
|
Age
|
Position with the Company and the Bank
and Principal Occupation
|
|
|
|
|
|
|
|
Peggy L. Schaefer
|
60
|
Ms. Schaefer has served as Treasurer of the Company since 1988 and Senior Vice President and Chief Financial Officer of the Bank since 1996.
|
|
No family relationships exist among the executive
officers of the Company or the Bank. There is one family relationship that exists among the current directors, that of Mr. G. Harrison
Scott and his daughter Sharry R. Scott. Except for service as a director of the Company, no director of the Company is a director
of any other company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements
of Section 15(b) of that act or any company registered as an investment company under the Investment Company Act of 1940.
Item 10 Executive Compensation
The Company pays no salaries
or other compensation to its directors and executive officers. The Bank paid each director, other than Mr. Scott, a fee for attending
each meeting of the Board of Directors, and each meeting of the Bank's Audit and Finance Committee and Executive Committee, in
the amount of $400, $300, and $300, respectively.
From October 1, 1990, through
June 30, 1992, the director-recipients loaned these fees to the Company. During the year 2006, the Company paid off the loans to
the former directors for a total of $563,091, including principal and interest. During the year 2008, the Company paid one current
director $223,282. As of December 31, 2011, the balance due was $167,075, including accrued and unpaid interest at the rate of
10% per annum. At this time, there is no maturity date on these loans.
The following table sets forth
compensation for the Bank’s executive officer for the calendar years 2011, 2010, and 2009. No other executive officer received
total compensation in excess of $100,000 during 2011.
|
|
|
Annual Compensation
|
Long Term Compensation
|
|
|
|
|
|
|
|
|
Awards
|
|
Payouts
|
|
|
|
|
|
|
Other Annual
|
Restricted Stock
|
Options/
|
LTIP
|
All Other
|
|
Name and Principal
|
Year
|
Salary
|
Bonus
|
Compensation
|
Award(s)
|
SARs
|
Payouts
|
Compensation
|
|
Position
|
|
($)
|
($)
|
($)
|
($)
|
(#)
|
($)
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
G. Harrison Scott,
|
2011
|
89,800
|
0
|
45,577
|
0
|
0
|
0
|
0
|
|
Chairman of the Board
|
2010
|
89,800
|
0
|
82,000
|
0
|
0
|
0
|
0
|
|
& President of the Bank
|
2009
|
89,800
|
0
|
82,000
|
0
|
0
|
0
|
0
|
In addition to the cash compensation shown in
the foregoing table, the Bank provided an automobile to Mr. Scott. Annual compensation does not include amounts attributable to
miscellaneous benefits received by Mr. Scott. The cost to the Bank of providing such benefits did not exceed 10% of the total annual
salary and bonus paid to Mr. Scott.
Committees of the Board of Directors of the Company and the Bank
The Company does not have standing audit or
compensation committees of the Board of Directors, or committees performing similar functions. In lieu thereof, the Board of Directors
as a group performs the foregoing functions.
During fiscal year 2011,
the Board of Directors of the Company held a total of 4 meetings. Each director attended at least 75% of the aggregate of the meetings
of the Board of Directors.
The Bank does not have standing nominating,
or compensation committees of the Board of Directors, or committees performing similar functions. In lieu thereof, the Board of
Directors as a group performs the foregoing functions.
During fiscal year 2011, the Board of Directors
of the Bank held a total of 12 meetings. Each director attended at least 75% of the aggregate of the meetings of the Board of Directors
and of the committees on which such director served.
The Board of Directors of the Bank has an Executive
Committee consisting of five permanent members. The permanent members of the Executive Committee in 2011 were Messrs. Scott (chairman),
Crow, LaBiche, and Ms. S. Scott, and the rotating member was A. Earle Cefalu, Jr. The Executive Committee formulates policy matters
for determination by the Board of Directors and reviews financial reports, loan reports, new business, and other real estate owned
information. The Executive Committee met 28 times in 2011.
The Board of Directors of the Bank does have
an Audit and Finance Committee and does not have a charter. This committee meets monthly on the first Tuesday of the month. By
Bank policy, the Audit and Finance Committee reviews information from management; reviews financial and delinquency reports; reviews
the work performed by the Bank’s internal auditor and by the independent certified public accountant firm. In addition this
committee also reviews capital expenditures in excess of $5,000; analyzes the Loan Loss Reserve adequacy; and approves charged
off loans. The Audit and Finance Committee met 12 times in 2011.
The Audit and Finance Committee discloses the following:
|
|
1.
|
They have reviewed and discussed the audited financial statements with management, and with the independent auditors.
|
|
|
2.
|
They have received a letter and written disclosure from the independent auditors, and have discussed the independence of the
auditors.
|
|
|
3.
|
They have recommended to the Board of Directors that the financial statements as issued by the independent auditors be included
in the Annual Report.
|
The permanent members of the Audit and Finance
Committee were Messrs. LaBiche (chairman), S. Scott and Crow, and the rotating member was Cefalu.
Item 11 Security Ownership of Certain Beneficial Owners and Management
The following table sets forth
as of December 31, 2011, certain information as to the Company Stock beneficially owned by (i) each person or entity, including
any “group” as that term is used in Section 13(d) (3) of the Exchange Act, who or which was known to the Company to
be the beneficial owner of more that 5% of the issued and outstanding Stock, (ii) the directors of the Company, (iii) all directors
and executive officers of the Company and the Bank as a group.
|
|
Common
|
|
Preferred
|
|
Name of Beneficial Owner
|
Number
|
Percent
|
|
Number
|
Percent
|
|
|
|
|
|
|
|
|
|
Directors:
|
|
|
|
|
|
|
|
G. Harrison Scott (Direct)
|
911
|
0.51%
|
|
|
157,673
|
8.76%
|
|
G. Harrison Scott (Beneficial owner of Scott Family, LLP)
|
104,687
|
58.43%
|
|
|
|
-
|
|
Franck F. LaBiche
|
500
|
0.28%
|
(*)
|
|
|
-
|
|
Johnny C. Crow
|
1,899
|
1.06%
|
|
|
|
-
|
|
Sharry R. Scott
|
-
|
-
|
(2)
|
|
|
-
|
|
A. Earle Cefalu, Jr.
|
500
|
0.28%
|
(*)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
All Directors & Executive Officers of the Company and the Bank as a group (6 persons)
|
108,497
|
60.56%
|
|
|
157,673
|
8.76%
|
|
(*)
|
|
Represents less than 1% of the shares outstanding.
|
|
(1)
|
|
Based upon information furnished by the respective persons. Pursuant to rules promulgated
under the 1934 Act, a person is deemed to beneficially own shares of stock if he or she directly or indirectly has or shares (a)
voting power, which includes the power to vote or to direct the voting of the shares; or (b) investment power, which includes
the power to dispose or direct the disposition of the shares. Unless otherwise indicated, the named beneficial owner has sole
voting power and sole investment power with respect to the indicated shares.
|
|
(2)
|
|
Sharry R. Scott, through ownership of an interest in Scott Family LLP, owns 7,151
shares of common stock.
|
Item 12 Certain Relationships and
Related Transactions
The Bank makes loans in the ordinary course of
business to its directors and executive officers, on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons, and do not involve more than the normal risk of collectability
or present other unfavorable features. At December 31, 2011, one director had aggregate loan balances in excess of $60,000, which
amounted to approximately $135,035 in the aggregate.
Item 13 Exhibits and Reports on Form 8-K
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
Reports on Form 8-K
NONE
Item 14 Principal Accountant Fees and Services
AUDIT FEES
The aggregate fees billed by LaPorte, Sehrt,
Romig and Hand for its audit of the Company’s annual financial statements for 2011 and for its reviews of the Company’s
unaudited interim financial statements included in Form 10-Q filed by the Company and other related audit fees during 2011 was
$68,755. The fees billed for 2010 were $73,530.
Tax Fees
The aggregate fees billed by LaPorte, Sehrt,
Romig and Hand for tax compliance, tax preparation, and tax review for 2011 were $14,651. The fees billed for 2010 were $20,302.
All Other Fees
The aggregate fees billed by LaPorte, Sehrt,
Romig & Hand for other accounting services for 2011 were $2,500. The fees billed for 2010 were $741.
SIGNATURES
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.
|
|
|
|
|
|
/s/
G. Harrison Scott
|
|
March 30, 2012
|
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)
|
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
indicated on March 30, 2012.
|
|
|
|
|
/s/ G. Harrison Scott
|
|
/s/ Johnny C. Crow
|
|
G. Harrison Scott – Director
|
|
Johnny C. Crow – Director
|
|
|
|
|
|
|
|
|
|
/s/ Franck F. LaBiche
|
|
/s/ Sharry R. Scott
|
|
Franck F. LaBiche – Director
|
|
Sharry R. Scott - Director
|
|
|
|
|
|
|
|
|
|
/s/ A. Earle Cefalu, Jr.
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A. Earle Cefalu, Jr.
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BOL Bancshares (GM) (USOTC:BOLB)
Historical Stock Chart
From May 2024 to Jun 2024
BOL Bancshares (GM) (USOTC:BOLB)
Historical Stock Chart
From Jun 2023 to Jun 2024
