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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.  20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended               Jun. 30, 2010

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from      to

Commission file Number         00-16934

BOL BANCSHARES, INC.
(Exact name of registrant as specified in its charter.)

Louisiana
72-1121561
(State of incorporation)
(I.R.S. Employer Identification No.)

300 St. Charles Avenue, New Orleans, La.       70130
(Address of principal executive offices)

(504) 889-9400
(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer o
 
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o  No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: 179,145 SHARES AS OF July 31, 2010.
 


 
1

 

BOL BANCSHARES, INC. & SUBSIDIARY
INDEX
 
     
Page No.
       
PART I.  Financial Information
 
       
 
Item 1.
 
       
   
 3
       
   
 4
       
   
 5
       
   
 6
       
   
 7
       
 
Item 2.
11
       
 
Item 3.
14
       
 
Item 4.
15
       
 
Item 4T.
15
       
PART II.  Other Information
 
       
 
Item 6.
15
       
 
16

 
2

 
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CONDITION

   
June 30,
   
Dec. 31,
 
(Amounts in Thousands)
 
2010
   
2009
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
Cash and Due from Banks
           
Non-Interest Bearing Balances and Cash
  $ 2,865     $ 3,041  
Federal Funds Sold
    11,000       14,550  
Certificates of Deposit
    4,694       5,194  
Investment Securities
               
Securities Held to Maturity
    3,000       1,000  
Securities Available for Sale
    814       814  
Loans-Less Allowance for Loan Losses of $1,800 in 2009 and in 2008
    59,953       58,302  
Property, Equipment and Leasehold Improvements
               
(Net of Depreciation and Amortization)
    6,010       6,141  
Other Real Estate
    3,045       2,012  
Other Assets
    869       1,598  
TOTAL ASSETS
  $ 92,250     $ 92,652  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
                 
LIABILITIES
               
Deposits:
               
Non-Interest Bearing
    32,088       32,107  
NOW Accounts
    11,766       11,816  
Money Market Accounts
    3,893       3,772  
Savings Accounts
    20,354       20,780  
Time Deposits, $100,000 and over
    3,439       3,810  
Other Time Deposits
    7,153       6,802  
TOTAL DEPOSITS
    78,693       79,087  
Notes Payable
    1,144       1,144  
Other Liabilities
    671       968  
TOTAL LIABILITIES
    80,509       81,199  
                 
SHAREHOLDERS' EQUITY
               
Preferred Stock - Par Value $1
1,810,296 Shares Issued and Outstanding at June 30, 2010 1,837,089 Shares Issued and Outstanding at December 31, 2009
    1,810       1,837  
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding in 2010 and 2009
    179       179  
Accumulated Other Comprehensive Income
    471       471  
Capital in Excess of Par - Retired Stock
    195       190  
Undivided Profits
    8,777       8,640  
Current Earnings
    310       136  
TOTAL SHAREHOLDERS' EQUITY
    11,742       11,453  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 92,250     $ 92,652  

The accompanying notes are an integral part of these financial statements.

 
3


BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
(Amounts in Thousands)
 
2010
   
2009
   
2010
   
2009
 
                         
INTEREST INCOME
                       
Interest and Fees on Loans
  $ 1,554     $ 1,536     $ 3,041     $ 3,062  
Interest on Investment Securities
    6       13       9       27  
Interest on Federal Funds Sold
    5       6       8       16  
Interest on Certificates of Deposit
    14       16       31       24  
Total Interest Income
    1,579       1,571       3,089       3,129  
INTEREST EXPENSE
                               
Interest on Deposits
    88       89       179       182  
Interest Expense on Notes Payable and Debentures
    19       28       37       56  
Total Interest Expense
    107       117       216       238  
NET INTEREST INCOME
    1,472       1,454       2,873       2,891  
Provision for Loan Losses
    109       245       184       340  
NET INTEREST INCOME AFTER PROVISION
                               
FOR LOAN LOSSES
    1,363       1,209       2,689       2,551  
NON-INTEREST INCOME
                               
Service Charges on Deposit Accounts
    114       96       226       190  
Cardholder & Other Credit Card Income
    106       108       207       210  
Other Operating Income
    210       319       525       555  
Total Non-interest Income
    430       523       958       955  
NON-INTEREST EXPENSE
                               
Salaries and Employee Benefits
    653       690       1,277       1,383  
Occupancy Expense
    267       260       535       529  
Communications
    60       60       107       113  
Outsourcing Fees
    390       371       709       730  
Loan & Credit Card Expense
    31       38       57       65  
Professional Fees
    66       58       120       111  
ORE Expense
    123       22       234       35  
Other Operating Expense
    233       201       246       387  
Total Non-interest Expense
    1,823       1,700       3,285       3,353  
                                 
(Loss)Income Before Tax Provision
    (30 )     32       362       153  
                                 
(Benefit) Provision For Income Taxes
    (85 )     (6 )     51       (4 )
                                 
NET INCOME
  $ 55     $ 38     $ 310     $ 157  
                                 
Earnings Per Share of Common Stock
  $ 0.31     $ 0.21     $ 1.73     $ 0.87  

The accompanying notes are an integral part of these financial statements.

 
4


BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

   
June 30,
   
June 30,
 
(Amounts in thousands)
 
2010
   
2009
 
             
NET INCOME
  $ 310     $ 157  
                 
OTHER COMPREHENSIVE INCOME, NET OF TAX
               
Unrealized Holding Losses on Investment
               
Securities Available-for-Sale, Arising
               
During the Period
    -       (6 )
                 
                 
COMPREHENSIVE INCOME
  $ 310     $ 151  

The accompanying notes are an integral part of these financial statements.

 
5


BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Six Months Ended June 30,

(Amounts in thousands)
 
2010
   
2009
 
OPERATING ACTIVITIES
           
Net Income
  $ 310     $ 157  
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
               
Provision for Loan Losses
    184       340  
Depreciation and Amortization Expense
    194       201  
Amortization of Investment Security Premiums
    -       1  
Decrease in Deferred Income Taxes
    -       3  
Gain on Sale of Other Real Estate
    (395 )     -  
Decrease in Other Assets
    730       92  
Decrease in Other Liabilities and Accrued Interest
    (296 )     (431 )
Net Cash Provided by Operating Activities
    727       363  
                 
INVESTING ACTIVITIES
               
Proceeds from Held-to-Maturity Investment Securities
               
Released at Maturity
    1,000       -  
Purchases of Held-to-Maturity Investment Securities
    (3,000 )     -  
Purchases of Property and Equipment
    (63 )     (4 )
Capitalized Construction Costs for ORE
    (432 )     -  
Increase in Certificate of Deposit with Other Banks
    499       (4,900 )
    Proceeds From Sale of Other Real Estate     395       -  
Net (Increase) Decrease in Loans
    (2,435 )     (3,444 )
Net Cash (Used in) Provided by Investing Activities
    (4,036 )     (8,348 )
                 
FINANCING ACTIVITIES
               
Net Decrease in Non-Interest Bearing and Interest Bearing Deposits
    (395 )     (4,599 )
Preferred Stock Retired
    (22 )     (121 )
Net Cash Used in Financing Activities
    (417 )     (4,720 )
                 
Net (Decrease) in Cash and Cash Equivalents
    (3,726 )     (12,705 )
Cash and Cash Equivalents - Beginning of Year
    17,591       28,479  
Cash and Cash Equivalents - End of Period
  $ 13,865     $ 15,774  

The accompanying notes are an integral part of these financial statements.

 
6


BOL BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
             
SUPPLEMENTAL DISCLOSURES:
 
2010
   
2009
 
             
Cash Paid During the Year for Interest
  $ 257     $ 278  
Cash (Received) Paid During the Year for Income Taxes
  $ (225 )   $ 0  
Market Value Adjustment for Unrealized Loss on Securities Available-for-Sale
  $ 0     $ (9 )

The accompanying notes are an integral part of these financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A Summary of Accounting Policies

Basis of Presentation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Bank of Louisiana (the Bank), and the Bank’s wholly owned subsidiary, BOL Assets, LLC.  These consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X, and do not include information or footnotes for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America.  However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included.

Use of Estimates
In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses.

Cash and Cash Equivalents
Cash equivalents include amounts due from banks and federal funds sold.  Generally, federal funds are purchased and sold for one-day periods.

Disclosure about Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value:

Cash and Short-Term Investments
For cash, the carrying amount approximates fair value.  For short-term investments, fair values are calculated based upon general investment market interest rates for similar maturity investments.

 
7


Investment Securities
For securities and marketable equity securities held-for-investment purposes, fair values are based on quoted market prices.

Loan Receivables
For certain homogeneous categories of loans, such as residential mortgages, credit card receivables and other consumer loans, fair value is estimated using the current U.S. treasury interest rate curve, a factor for cost of processing and a factor for historical credit risk to determine the discount rate.

Deposit Liabilities
The fair value of demand deposits, savings deposits and certain money market deposits are calculated based upon general investment market interest rates for investments with similar maturities.  The value of fixed maturity certificates of deposit is estimated using the U.S. treasury interest rate curve currently offered for deposits of similar remaining maturities.

Commitments to Extend Credit
The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit-worthiness of the counterparties.

The estimated fair values of the Company’s financial instruments at June 30, 2010 and December 31, 2009, are as follows (amounts in thousands):


   
June 30, 2010
 
   
Carrying
   
Fair
 
   
Amount
   
Value
 
Financial Assets:
           
Cash and Short-Term Investments
  $ 2,865     $ 2,865  
Certificates of Deposit
    4,694       4,694  
Investment Securities
    3,814       3,814  
Loans
    61,753       61,753  
Less:  Allowance for Loan Losses
    (1,800 )     (1,800 )
    $ 71,326     $ 71,326  
                 
                 
Financial Liabilities:
               
Deposits
  $ 78,692     $ 78,744  
                 
                 
Unrecognized Financial Instruments:
         
Commitments to Extend Credit
  $ 2,746     $ 2,746  
Credit Card Arrangements
    16,097       16,097  
    $ 18,843     $ 18,843  

 
8

 
   
December 31, 2009
 
   
Carrying
   
Fair
 
   
Amount
   
Value
 
Financial Assets:
           
Cash and Short-Term Investments
  $ 3,041     $ 3,041  
Certificates of Deposit
    5,194       5,194  
Investment Securities
    1,814       1,814  
Loans
    60,102       60,297  
Less:  Allowance for Loan Losses
    (1,800 )     (1,800 )
    $ 68,351     $ 68,546  
                 
                 
Financial Liabilities:
               
Deposits
  $ 79,087     $ 79,851  
                 
                 
Unrecognized Financial Instruments:
         
Commitments to Extend Credit
  $ 2,627     $ 2,627  
Credit Card Arrangements
    16,758       16,758  
    $ 19,385     $ 19,385  

Financial Instruments
On January 1, 2008, the Company adopted the FASB fair value guidance  pertaining to all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  This guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

The fair value guidance defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.  The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.  In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 
9


In addition to defining fair value, the fair value guidance expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs.  The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.  Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

 
Level 1 - Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets

 
Level 2 - Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market date for substantially the full term of the assets or liabilities

 
Level 3 - Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.  The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2010 and December 31, 2009 (amounts in thousands):

June 30, 2010
                       
   
Level 1
   
Level 2
   
Level 3
   
Net Balance
 
                         
Assets
                       
Equity Securities
  $ -     $ 814     $ -     $ 814  
                                 
Total
  $ -     $ 814     $ -     $ 814  

December 31, 2009
                       
   
Level 1
   
Level 2
   
Level 3
   
Net Balance
 
                         
Assets
                       
Equity Securities
  $ -     $ 814     $ -     $ 814  
                                 
Total
  $ -     $ 814     $ -     $ 814  

 
10


Subsequent Events
In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements.  The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of June 30, 2010.  In preparing these financial statements, the Company evaluated the events and transactions that occurred from June 30, 2010 through the date these financial statements were issued.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS

JUNE 30, 2010 COMPARED WITH DECEMBER 31, 2009

BALANCE SHEET

Total assets at June 30, 2010 were $92,250,000 compared to $92,652,000 at December 31, 2009, for a decrease of $402,000, or 0.43%.  Federal Funds Sold decreased $3,550,000 from $14,550,000 at December 31, 2009 to $11,000,000 at June 30, 2010.  Certificates of Deposit decreased $500,000 from $5,194,000 at December 31, 2009 to $4,694,000 at June 30, 2010. Both Federal Funds Sold and Certificates of Deposit decreases were due to normal fluctuations. Investment securities show an increase of $2,000,000 to $3,814,000 at June 30, 2010 from $1,814,000 at December 31, 2009 due to moving funds into securities to a higher yield. Total loans increased $1,651,000, or 2.83%, to $59,953,000 at June 30, 2010 from $58,302,000 at December 31, 2009. This increase in the loan portfolio is due mainly to an increase in 1-4 residential loans of $1,693,000, an increase in commercial real estate loans of $578,000, an increase in personal loans of $198,000, and an increase in customer overdrafts of $101,000. These increases were offset by a decrease in construction loans of $185,000, a decrease in second mortgage loans of $56,000, a decrease in other real estate loans of $48,000, a decrease in commercial loans of $4,000, and a decrease in credit card loans of $627,000.  The credit card portfolio decrease was largely attributable to (i) competition from other banks and non-traditional credit card issuers; (ii) tightening of the Bank’s underwriting standards; and (iii) normal attrition, in addition to the cyclical nature of the business.

Total deposits decreased $394,000, or 0.50%, to $78,693,000 at June 30, 2010 from $79,087,000 at December 31, 2009.  Total non-interest bearing deposits decreased $19,000 and interest-bearing accounts decreased $375,000. The decrease of interest earning deposits was mainly attributable to a decrease in NOW accounts of $50,000, an increase in money market accounts of $121,000, a decrease in savings accounts of $426,000 and a decrease of $20,000 in time deposits.
 
Other liabilities decreased $297,000 from $968,000 at December 31, 2009 to $671,000 at June 30, 2010.  This decrease is due mainly to a decrease in accrued expenses of $53,000, a decrease of $68,000 in other liabilities, a decrease in deferred taxes of $149,000 and a decrease in accrued interest of $41,000.  These decreases were partially offset by an increase in deferred membership fees of $14,000.
 
Shareholder’s Equity increased $289,000 from $11,453,000 at December 31, 2009 to $11,742,000 at June 30, 2010. This increase is due mainly to net income for the six months ended June 30, 2010 of $310,000 and an increase in capital in excess of par-retired Preferred Stock of $5,000.  These increases were partially offset by a decrease in Preferred Stock of $27,000.

 
11


SIX MONTHS ENDED JUNE 30, 2010 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2009

INCOME

The Company’s net income for the six months ended June 30, 2010 was $310,000, or $1.73 per share, an increase of $153,000 from the Company’s total net income of $157,000, or $0.87 per share, for the same period last year.
 
Interest income decreased $40,000 for the six months ended June 30, 2010 over the same period last year. Interest on federal funds sold decreased $8,000 primarily due to a decrease in the average interest rate paid from .17% at June 30, 2009 to .12% at June 30, 2010.  The average balance of federal funds sold decreased $4,956,000 from $18,393,000 at June 30, 2009 to $13,437,000 at June 30, 2010.  Interest on investment securities decreased $18,000 due mainly to a decrease in the average balance from $2,818,000 at June 30, 2009 to $2,428,000 at June 30, 2010. Interest in the loan portfolio decreased $21,000 due mainly to a decrease in the average interest rate of 10.76% at June 30, 2009 to 10.41% at June 30, 2010.  The average balance of Certificates of Deposit purchased was $4,805,000 at an average interest rate of 1.29% for 2010 as compared to an average balance of Certificates of Deposit of $3,506,000 with an average interest rate of 1.37% for 2009.
 
Interest expense decreased $22,000 for the six months ended June 30, 2010 over the same period last year.  This was caused primarily by a decrease in the average interest rate paid on interest-bearing deposits from .83% at June 30, 2009 to .77% as of June 30, 2010. The impact of the decrease in the average interest rate paid on interest-bearing deposits was partially offset by an increase in the average balance of interest bearing deposits from $44,004,000 at June 30, 2009 to $46,424,000 at June 30, 2010.  The average interest rate on interest-bearing liabilities decreased from 1.05% at June 30, 2009 to .90% at June 30, 2010.
 
Net interest income decreased $18,000 for the six months ended June 30, 2010 compared to the same period last year.  Our interest rate spread increased from 6.62% at June 30, 2009 to 6.91% at June 30, 2010.  The increase in the rate spread was due to an increase of .14% on the yield on interest-earning assets from 7.67% for the six months ended June 30, 2009 to 7.81% for the six months ended June 30, 2010, and a decrease of .15% on the average rate paid out on interest bearing liabilities from 1.05% paid for the six months ended June 30, 2009 as compared to .90% paid during the six months ended June 30, 2010.
 
Non-interest income increased $3,000 between the six month periods from $955,000 at June 30, 2009 to $958,000 at June 30, 2010.  Other income decreased $30,000 for the six months ended June 30, 2010. This decrease is due mainly to a decrease in miscellaneous income of $459,000 pertaining to insurance proceeds relating to Hurricane Katrina that were not needed for repairs and recognized as miscellaneous income for the six months ended June 30, 2009. This decrease was partially offset by an increase on sale of ORE properties of $395,000 and increase of $38,000 in dividend income for the six months ended June 30, 2010.
 
Non-interest expense decreased $68,000 for the six month period of 2010 as compared to the same period last year.  Salaries and Employee Benefits decreased $106,000 from $1,383,000 at June 30, 2009 to $1,277,000 at June 30, 2010.  This decrease was due mainly to a reduction in the number of employees subsequent to the first quarter of 2009. Occupancy expense increased by $6,000 and communications decreased by $6,000.  Outsourcing fees decreased $21,000 and loan and credit card expense decreased $8,000 due mainly to a decrease in credit card sales.  Professional fees increased $9,000 due mainly to foreclosures occurring in 2010. ORE expenses increased $199,000 for the six months ended June 30, 2010 compared to the six months ended June 30, 2009 due primarily to expenses associated with the repairs and remodeling of properties acquired in 2010. Other operating expenses increased $141,000 primarily due to a decrease in bank stock taxes.

 
12


SECOND QUARTER 2010 COMPARED WITH SECOND QUARTER 2009

INCOME

Net income for the second quarter of 2010 was $55,000, or $.31 per share, compared to $38,000, or $.21 per share, for the same period last year for a increase of $17,000.
 
Interest income increased $8,000 over the same period last year.  Interest on the loan portfolio increased $18,000 from $1,536,000 at June 30, 2009 to $1,554,000 at June 30, 2010. This was caused mainly by a increase in the average balance from $57,619 at June 30, 2009 to $58,587 at June 30, 2010.
Interest on investment securities decreased $7,000 due mainly to a decrease in the yield on investment securities from 1.85% at June 30, 2009 to 0.80% at June 30, 2010.  Interest on certificates of deposit decreased $2,000 due mainly to a decrease in the interest rate of 1.44% in 2009 to 1.20% in 2010 and offset by an increase in the average balance from $4,454,000 to $4,683,000. Interest on federal funds sold decreased $1,000 due mainly to the decrease in the average balance of federal funds sold from $15,627,000 at June 30, 2009 to $12,902,000 at June 30, 2010.
 
Interest expense decreased $10,000 for the three months ended June 30, 2010 over the same period last year.  This was caused by a decrease in the average interest rate paid on interest-bearing deposits from 0.81% at June 30, 2009 to .76% as of June 30, 2010. The impact of the decrease in the average interest rate paid on interest bearing deposits was partially offset by an increase in the average balance of interest-bearing deposits from $43,821,000 at June 30, 2009 to $46,418,000 at June 30, 2010.
 
Net interest income increased $18,000 due primarily to an increase in interest rate on earning assets of 0.18% and a decrease in interest bearing liabilities of 0.13%.
 
Non-interest income decreased $93,000 for the three-month period ended June 30, 2010 compared to the prior year period.  Cardholder and other credit card income decreased by $2,000 due mainly to NSF charges.  Other operating income decreased by $109,000 due mainly to insurance proceeds of $300,000 credited in the first quarter of 2009 to miscellaneous income for Hurricane Katrina repairs that were not needed, offset by an increase in 2010 of an ORE gain on sale of $195,000 and a decrease in other income of $4,000.  These decreases were offset by an increase in deposit related fees of $18,000 due mainly to an increase in the fees collected on overdrawn accounts.
 
Non-interest expense increased $123,000 for the three-month period ended June 30, 2010 compared to the prior year period.  Occupancy expense increased $7,000 due primarily to repairs done to the St. Charles office.  Outsourcing fees increased $19,000 due mainly to interchange fees caused by high credit card sales. Professional fees increased $8,000 for legal fees on foreclosures which occurred during the three months ended June 30, 2010. ORE expense increased $101,000 primarily due to repairs to the Esplanade property.  Other operating expenses increased $32,000 due primarily to a loss on the sale of a repossessed motor home totaling $49,000 offset by a decrease of $15,000 for FDIC assessment. These increases were offset by decreases in salaries and employee benefits of $37,000 primarily due to a reduction in number of employees for the for three months ended June 30, 2010 compared to the number of employees at June 30, 2009, and a decrease in loan and credit card expense of $7,000 for a 2009 expense paid on a sheriffs sale of a motor home.
 
The provision for income taxes decreased $79,000 compared to the same period last year from a provision of a benefit $6,000 at June 30, 2009 to a benefit of $85,000 at June 30, 2010 due to adjustments made to the income tax payable and income tax receivable account balances.

 
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Item 3 Quantitative and Qualitative Disclosures about Market Risk, Catastrophic Events, and Future Growth

Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.  Difficult conditions in the financial services markets may materially and adversely affect the business and results of operations of the Bank and the Company.
 
Dramatic declines in the housing market during the past year, along with falling home prices and increasing foreclosures and unemployment, have resulted in significant write downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks.  These write-downs, initially of mortgage-backed securities by spreading to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, and, in some cases, to fail.  Many lenders and institutional investors have reduced, and in some cases, ceased to provide funding to borrowers, including other financial institutions.  This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility, and widespread reduction of business activity generally, which could have a material adverse effect on our business and operations.  A worsening of these conditions would likely exacerbate any adverse effects of these difficult market conditions on us and others in the financial institutions industry.  However, the majority of small community banks, such as Bank of Louisiana, have strong reserve positions and are well capitalized.
 
The occurrence of catastrophic events such as hurricanes, tropical storms, earthquakes, windstorms, floods, severe winter weather, fires and other catastrophes could adversely affect our consolidated financial condition or results of operations. Unpredictable natural and other disasters could have an adverse effect on us in that such events could materially disrupt our operations or the ability or willingness of our customers to access financial services offered by us. The incidence and severity of catastrophic events could nevertheless reduce our earnings and cause volatility in our financial results for any fiscal quarter or year and have a material adverse effect on our financial condition or results of operation.
 
The Company is a customer-focused organization.  Future growth is expected to be driven in a large part by the relationships maintained with customers.  The Company has assembled an experienced management team, and has management development plans in place.

 
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Item 4 Submission of Matters to a Vote of Security Holders

The Annual Meeting of Shareholders of BOL BANCSHARES, INC. was held on April 13, 2010.  Six nominees were elected to serve one year terms as directors. Laporte, Sehrt, Romig and Hand was approved as the independent auditors.  There were no other matters voted upon at the meeting.
Below are the names of the nominees who were elected as directors and the number of shares cast for each.  The total shares voting were 122,418.
       
 
Number of Shares
Nominee
For
Against
Abstain
G. Harrison Scott
121,656
632
130
Johnny C. Crow
121,656
632
130
Franck F. LaBiche
121,656
632
130
Henry L. Klein
121,656
632
130
Sharry R. Scott
121,656
632
130
A. Earle Cefalu, Jr.
121,656
632
130
       

Item 4T Controls and Procedures

Under the supervision and with the participation of our management, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934) as of the end of the period covered by this report.  Based upon that evaluation, the certifying officers of the Company have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act of 1934, is recorded, processed, summarized and reported within the applicable time periods specified by the Securities and Exchange Commission’s rules and forms.  There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 6  Exhibits

Exhibits
 
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
 
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
 
Certification Pursuant to 18 U.S.C. Section 1350

 
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BOL BANCSHARES, INC.

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.
   
August 16, 2010
/s/ G. Harrison Scott  
Date
G. Harrison Scott
 
Chairman
 
(in his capacity as a duly authorized officer of the Registrant)
   
  /s/ Peggy L. Schaefer  
 
Peggy L. Schaefer
 
Treasurer
 
(in her capacity as Chief Accounting Officer of the Registrant)
 
 
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