UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012

☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☐	Smaller reporting company ☒

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

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 April 15, 2012.

BOL BANCSHARES, INC. & SUBSIDIARY

INDEX

			Page No.


PART I.	Financial Information

	Item 1.	Financial Statements

		Consolidated Statements of Condition	3

		Consolidated Statements of Income	4

		Consolidated Statements of Comprehensive Income	5

		Consolidated Statements of Cash Flow	6

		Notes to Consolidated Financial Statements	7

	Item 2.	Management's Discussion and Analysis	19

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk, Catastrophic Events and Future Growth	21


	Item 4T.	Controls and Procedures	22


PART II.	Other Information

	Item 6.	Exhibits	23

Signatures			24

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BOL BANCSHARES, INC. & SUBSIDIARY

CONSOLIDATED STATEMENTS OF CONDITION

	March 31,		December 31,
(Amounts in Thousands)	2012		2011
	(Unaudited)		(Audited)
ASSETS
Cash and Due from Banks
Non-Interest Bearing Balances and Cash	$	2,928	$	3,506
Federal Funds Sold		17,450		16,150
Certificates of Deposit		5,710		5,458
Investment Securities
Securities Held to Maturity		-		-
Securities Available for Sale		144		1,037
Loans-Less Allowance for Loan Losses of $1,800 in 2012 and in 2011		53,876		54,381
Property, Equipment and Leasehold Improvements (Net of Depreciation and Amortization)		5,585		5,654
Other Real Estate		4,604		4,597
Other Assets		883		934
TOTAL ASSETS	$	91,180	$	91,717

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Deposits:
Non-Interest Bearing		30,697		30,726
NOW Accounts		10,978		10,897
Money Market Accounts		3,468		3,697
Savings Accounts		20,090		19,842
Time Deposits, $100,000 and over		2,147		4,908
Other Time Deposits		9,618		7,610
TOTAL DEPOSITS		76,998		77,680
Notes Payable		1,144		1,144
Other Liabilities		864		952
TOTAL LIABILITIES		79,006		79,776

SHAREHOLDERS' EQUITY
Preferred Stock - Par Value $1
1,796,624 Shares Issued and Outstanding at March 31, 2012
1,796,624 Shares Issued and Outstanding at December 31, 2011		1,797		1,797
Common Stock - Par Value $1
179,145 Shares Issued and Outstanding in 2012 and 2011		179		179
Accumulated Other Comprehensive Income		75		618
Capital in Excess of Par - Retired Stock		198		198
Undivided Profits		9,149		9,075
Current Earnings		776		74
TOTAL SHAREHOLDERS' EQUITY		12,174		11,941
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	91,180	$	91,717

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

BOL BANCSHARES, INC. & SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three months ended
	March 31,		March 31,
(Amounts in Thousands)	2012		2011

INTEREST INCOME
Interest and Fees on Loans	$	1,289	$	1,478
Interest on Investment Securities		2		2
Interest on Federal Funds Sold		5		6
Interest on Certificates of Deposit		9		9
Total Interest Income		1,305		1,495
INTEREST EXPENSE
Interest on Deposits		80		88
Interest Expense on Notes Payable and Debentures		19		18
Total Interest Expense		99		106
NET INTEREST INCOME		1,206		1,389
Provision for Loan Losses		52		20
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		1,154		1,369
NON-INTEREST INCOME
Service Charges on Deposit Accounts		115		109
Gain on Sale of Securities		1,079		-
Cardholder & Other Credit Card Income		95		101
Other Operating Income		43		39
Total Non-interest Income		1,332		249
NON-INTEREST EXPENSE
Salaries and Employee Benefits		545		600
Occupancy Expense		218		224
Communications		58		57
Outsourcing Fees		263		346
Loan & Credit Card Expense		27		28
Professional Fees		61		82
ORE Expense		53		43
Other Operating Expense		155		156
Total Non-interest Expense		1,380		1,536

Income Before Tax Provision		1,106		82

Provision for Income Taxes		330		32

NET INCOME	$	776	$	50

Earnings Per Share of Common Stock	$	4.34	$	0.28

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

BOL BANCSHARES, INC. & SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended
	March 31,			March 31,
(Amounts in thousands)	2012			2011

NET INCOME	$	776		$	50

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Unrealized Holding Gains (Losses) on
Investment Securities Available-for-Sale,
Arising During the Period		(543	)		-

TOTAL OTHER COMPREHENSIVE LOSS		(543	)		-

COMPREHENSIVE INCOME	$	233		$	50

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

BOL BANCSHARES, INC. & SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 31,			March 31,
(Amounts in thousands)	2012			2011
OPERATING ACTIVITIES
Net Income	$	776		$	50
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Provision for Loan Losses		52			20
Depreciation and Amortization Expense		69			79
Decrease in Deferred Income Taxes		(64	)		(122	)
Gain on Sale of Available for Sale Investments		(1,079	)		-
Decrease in Deferred Loan Fees		(15	)		-
Decrease in Other Assets		32			268
Increase in Other Liabilities and Accrued Interest		275			175
Net Cash Provided by Operating Activities		46			470

INVESTING ACTIVITIES
Proceeds from Sale of AFS Securities		1,148			-
Purchases of Property and Equipment		-			(5	)
Capitalized Construction Costs for ORE		(7	)		(258	)
(Increase) Decrease in Certificate of Deposit with other Banks		(252	)		250
Net Decrease in Loans		469			1,946
Net Cash Provided by Investing Activities		1,358			1,933

FINANCING ACTIVITIES
Net Decrease in Non-Interest Bearing and Interest Bearing Deposits		(682	)		(1,648	)
Preferred Stock Retired		-			(1	)
Net Cash Used in Financing Activities		(682	)		(1,649	)

Net Increase in Cash and Cash Equivalents		722			754
Cash and Cash Equivalents - Beginning of Year		19,656			18,784
Cash and Cash Equivalents - End of Period	$	20,378		$	19,538

SUPPLEMENTAL DISCLOSURES:
Cash Paid During the Year for Interest	$	92		$	80
Cash Paid (Received) During the Year for Income Taxes	$	67		$	-
Market Value Adjustment for Unrealized Gain on Securities Available-for-Sale	$	-		$	-
Additions to Other Real Estate Thru Foreclosure	$	-		$	-

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

BOL BANCSHARES, INC.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note A Summary of Accounting Policies

Principles of Consolidation and 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.

Loans

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 collectability 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.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expenses. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb known and inherent losses on existing loans that may become uncollectible, based on evaluation of the collectability of loans and prior loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrowers’ ability to pay. The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired.

For loans individually evaluated for impairment, the estimated amount of loss is based on several factors, which include fair value of collateral and expected cash flows from the loan.

Note B Disclosure about Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value:

Cash and Short-Term Investments

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

Investment Securities

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

Loan Receivables

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

Deposit Liabilities

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

Commitments to Extend Credit

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

The estimated fair values of the Company’s financial instruments at March 31, 2012 and December 31, 2011, are as follows (amounts in thousands):

	March 31, 2012
`	Carrying			Fair
	Amount			Value
	(In Thousands)
Financial Assets:
Cash and Short-Term Investments	$	2,928		$	2,928
Certificates of Deposit		5,710			5,710
Investment Securities		144			144
Loans		55,701			55,641
Less: Allowance for Loan Losses		(1,800	)		NA
Less: Deferred Loan Fees		(25	)		NA
	$	62,658		$	64,423

Financial Liabilities:
Deposits	$	76,998		$	77,052

Unrecognized Financial Instruments:
Commitments to Extend Credit	$	1,149		$	1,149
Credit Card Arrangements		12,348			12,348
	$	13,497		$	13,497

	December 31, 2011
	Carrying			Fair
	Amount			Value
	(In Thousands)
Financial Assets:
Cash and Short-Term Investments	$	3,506		$	3,506
Certificates of Deposit		5,458			5,458
Investment Securities		1,037			1,037
Loans		56,221			56,071
Less: Allowance for Loan Losses		(1,800	)		NA
	$	64,422		$	66,072


Financial Liabilities:
Deposits	$	77,680		$	77,726

Unrecognized Financial Instruments:
Commitments to Extend Credit	$	2,079		$	2,079
Credit Card Arrangements		12,373			12,373
	$	14,452		$	14,452

Note C Loans and Allowance for Loans Losses

Major classifications of loans as of March 31, 2012 and December 31, 2011 are as follows:

	March 31,			December 31,
	2012			2011
		(In Thousands)
Real Estate Mortgages:
Residential 1-4 Family	$	21,316		$	21,157
Commercial		15,467			15,787
Construction		6,260			6,399
Second Mortgages		806			820
Other		1,579			1,611
		45,428			45,774

Commercial		3,127			2,702
Personal		1,407			1,496
Credit Cards		5,634			6,039
Overdrafts		105			210
		55,701			56,221

Allowance for Loan Losses		(1,800	)		(1,800	)
Deferred Loan Fees		(25	)		(40	)

Net Loans	$	53,876		$	54,381

The following is a classification of loans by rate and maturity:

	March 31,		December 31,
	2012		2011
	(In Thousands)
Fixed Rate Loans:
Maturing in 3 Months or Less	$	16,200	$	13,495
Maturing Between 3 and 12 Months		23,284		25,114
Maturing Between 1 and 5 Years		12,308		15,024
Maturing After 5 Years		556		572
Total Fixed Rate		52,348		54,205
Variable Rate Loans:
Maturing Quarterly or More Frequently		674		721
Maturing Between 3 and 12 Months		-		-
Maturing Between 1 and 5 Years		-		-
Non accrual Loans		2,679		1,295
Total Variable Rate		3,353		2,016

Total Loans	$	55,701	$	56,221

Loans are considered past due if the required principal and interest payments have not been received as of the date when such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet the 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-accruals loans, segregated by class of loan, are as follows:

	March 31,		December 31,
	2012		2011
	(in thousands)
Real Estate Mortgages
Residential 1-4 Family	$	1,064	$	619
Commercial		130		130
Construction		486		471
Second Mortgages		-		-
Other		-		-

Commercial		987		63
Personal		12		12
Credit Cards		-		-
Overdrafts		-		-

Total	$	2,679	$	1,295

An aging analysis of past due loans, segregated by class of loans, as of March 31, 2012 and December 31, 2011, is as follows:

An aging analysis of past due loans, segregated by class of loans, as of March 31, 2012.

											ACCRUING
(Amounts in Thousands)	30-89		90-MORE		TOTAL		CURRENT		TOTAL		90-MORE
March 31, 2012	DAYS		DAYS		PAST DUE		LOANS		LOANS		PAST DUE

Real Estate
1-4 Family Res.	$	2,718	$	2,672	$	5,390	$	15,926	$	21,316	$	1,608
Commercial		733		299		1,032		14,434		15,466		169
Construction		676		732		1,408		4,852		6,260		245
Second Mortgages		1		-		1		805		806		-
Other		-		-		-		1,579		1,579		-

Commercial		112		1,002		1,114		2,012		3,127		15
Personal		85		60		145		1,263		1,407		48
Credit Cards		113		41		154		5,480		5,634		41
Overdrafts		30		8		38		67		105		8

Total	$	4,468	$	4,814	$	9,282	$	46,418	$	55,701	$	2,134

An aging analysis of past due loans, segregated by class of loans, as of December 31, 2011.

											ACCRUING
(Amounts in Thousands)	30-89		90-MORE		TOTAL		CURRENT		TOTAL		90-MORE
December 31, 2011	DAYS		DAYS		PAST DUE		LOANS		LOANS		PAST DUE

Real Estate
1-4 Family Res.	$	2,212	$	1,635	$	3,847	$	17,310	$	21,157	$	1,015
Commercial		-		299		299		15,488		15,787		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	$	49,467	$	56,221	$	2,699

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.

Impaired loans as of March 31, 2012 are set forth in the following table:

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total
	Principal		with No		with		Recorded		Related
	Balance		Allowance		Allowance		Investment		Allowance

Real Estate
Residential 1-4 Family	$	5,328,677	$	844,219	$	4,484,458	$	5,328,677	$	668,012
Commercial		1,643,203		419,990		1,223,213		1,643,203		252,839
Construction		931,588		240,871		690,717		931,588		126,510
Second Mortgages		-		-		-		-		-
Other		272,710		-		272,710		272,710		30,598
Commercial		448,309		2,371		445,938		448,309		91,957
Personal		69,996		11,442		58,554		69,996		29,070
Credit Cards		-		-		-		-		-
Overdrafts		-		-		-		-		-

Total	$	8,694,483	$	1,518,893	$	7,175,590	$	8,694,483	$	1,198,986

Impaired loans as of December 31, 2011 are set forth in the following table:

	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total
	Principal		with No		with		Recorded		Related
	Balance		Allowance		Allowance		Investment		Allowance

Real Estate
Residential 1-4 Family	$	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

Changes in the allowance for loan losses by portfolio segment for the three months ended March 31, 2012 are as follows:

	Real Estate			Commercial			Personal		Credit Cards			Overdrafts			Unallocated			Total

Balance at January 1, 2012	$	945,351		$	232,497		$	42,216	$	352,282		$	11,020		$	216,634		$	1,800,000

Provision for Possible
Loan Losses		135,922			(32,050	)		1,523		(12,551	)		(9,044	)		(32,170	)		51,630

Charge-Offs		(9,331	)		(38,195	)		-		(48,968	)		-			-			(96,494	)
Recoveries		6,017			-			680		37,778			389			-			44,864

Net Charge-Offs		(3,314	)		(38,195	)		680		(11,190	)		389			-			(51,630	)

Balance March 31, 2012	$	1,077,959		$	162,252		$	44,419	$	328,541		$	2,365		$	184,464		$	1,800,000

Period-End Amount Allocated To:
Loans Individually Evaluated
for Impairment	$	998,597		$	158,739		$	41,650	$	-		$	-		$	-		$	1,198,986
Loans Collectively Evaluated
for Impairment		79,362			3,513			2,769		328,541			2,365			184,464			601,014

Balance March 31, 2012	$	1,077,959		$	162,252		$	44,419	$	328,541		$	2,365		$	184,464		$	1,800,000

Changes in the allowance for loan losses by portfolio segment for the year ended December 31, 2011 are as follows:

	Real Estate			Commercial			Personal			Credit Cards			Overdrafts			Unallocated			Total

Balance at January 1, 2011	$	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	)

Balance December 31, 2011	$	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

Balance December 31, 2011	$	945,351		$	232,497		$	42,216		$	352,282		$	11,020		$	216,634		$	1,800,000

From a credit risk standpoint, the Company classifies it loans in one of four categories: (i) pass, (ii) watch, (iii) substandard or (iv) doubtful.

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 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.

At March 31, 2012, the following table summarizes the Company’s internal ratings of its loans:

		Real						Credit
		Estate		Commercial		Personal		Cards		Overdrafts		Total

Pass		$	38,175,870	$	1,754,402	$	1,337,482	$	5,634,158	$	102,536	$	47,004,448
Watch			1,505,080		2,371				-				1,507,451
Substandard			4,807,504		434,633		69,996		-				5,312,133
Doubtful			1,863,594		11,305				-		2,361		1,877,260

	Totals	$	46,352,048	$	2,202,711	$	1,407,478	$	5,634,158	$	104,897	$	55,701,292

At December 31, 2011, the following table summarizes the Company’s internal ratings of its loans:

		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

Note D Financial Instruments

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

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

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

•

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

•

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

•

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

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2012 and December 31, 2011.

(Amounts in Thousands)
	Fair Value Measurements
						Net
March 31, 2012		Level 1		Level 2	Level 3		Balance

Assets:

Equity Securities		-	$	144	-	$	144

Total		-	$	144	-	$	144

(Amounts in Thousands)
	Fair Value Measurements
						Net
December 31, 2011		Level 1		Level 2	Level 3		Balance

Assets:

Equity Securities		-	$	1,037	-	$	1,037

Total		-	$	1,037	-	$	1,037

The following table presents the Company’s assets and liabilities measured at fair value on a non-recurring basis at March 31, 2012 and December 31, 2011.

(Amounts in Thousands)
	Fair Value Measurements
							Net
March 31, 2012		Level 1		Level 2		Level 3		Balance

Assets:

Impaired Loans		-		-	$	8,694	$	8,694
Other Real Estate Owned		-		4,604		-		4,604

Total		-	$	4,604	$	8,694	$	13,298

(Amounts in Thousands)
	Fair Value Measurements
							Net
December 31, 2011		Level 1		Level 2		Level 3		Balance

Assets:

Impaired Loans		-		-	$	4,184	$	4,184
Other Real Estate Owned		-		4,597		-		4,597

Total		-	$	4,597	$	4,184	$	8,781

Note E 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 March 31, 2012. In preparing these financial statements, the Company evaluated the events and transactions that occurred from March 31, 2012 through the date these financial statements were issued.

Note F Regulatory Matters

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.

Action taken: In the Report of Examination, 26 loans are classified adversely. Of these, nine had balances aggregating $250,000 or more, for a total of $3,702,000. Of the $3,702,000 in loans, $2,662,000 have been restructured and the remaining $1,040,000 either have or are going through the foreclosure process.

•

The Bank shall reduce its level of past due loans.

Action taken: The areas of responsibility for implementing and monitoring the Bank’s collection policy as well as specific collection procedures have been addressed. The Loan Committee will review all past due loans weekly and the Executive Committee will review them monthly. It is anticipated that a substantial improvement will begin to show starting in the fourth quarter.

•

The Bank shall eliminate the extension of credit until all appropriate underwriting documentation is obtained.

Action taken: The Loan policy procedure has been addressed as follows: Installment loans are to be reviewed for complete documentation on all loans made the previous week and presented to the Management Committee monthly with summarizing reviews and actions. Commercial Loans will be reviewed for complete documentation on all loans with maturity dates for the upcoming week. Monthly reports will be made to the Audit and Finance Committee summarizing reviews and actions.

•

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”.

Action taken: The Bank will not extend credit to charge-off borrowers, the Bank will not extend credit to a “substandard” borrower unless adequately documented and the Bank acknowledges.

•

The Bank shall maintain an appropriate Allowance for Loan and Lease Losses.

Action taken: It is Bank policy to maintain a loan loss reserve that is appropriate when compared to the quality of our loan portfolio and sufficient to meet the losses inherent in the portfolio. The adequacy of the loan loss reserve is determined on a quarterly basis by the Audit and Finance Committee. Any deficit is replenished from current earnings monthly.

•

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%.

Action taken: The Bank maintains these goals. At March 31, 2012 our Tier 1 leverage capital ratio is 13.77%, Tier 1 Risk Based Capital ratio is 20.62% and Total Risk Based Capital Ration is 21.89%.

•

The Bank shall not declare or pay any cash dividend without regulatory approval.

Action taken: Dividends have not been declared, and will not be declared or approved for payment without prior consent of the Regional Director and the Commissioner.

•

The Bank shall review and amend its interest rate risk policy and procedures.

Action taken: The Bank’s portfolio has always been shocked downwards by one & two percent. In addition our policy now includes 3 & 4 percent downward. This was implemented as of December 31, 2010. Policy and procedures were already in place to monitor risk, the downward shock of 3% and 4% was included. Reports are presented quarterly at the Audit and Finance Directors’ meeting. A program was purchased to facilitate generating the economic value of equity. Risk is monitored monthly by the ALCO committee which meets monthly in conjunction with the Management Committee.

Bank shall provide for an independent evaluation of its management and information systems.

Action taken: The Board approved Chaffe & Associates on June 6, 2011. The results of the study were presented to the Board members on 8-23-11 and forwarded to the FDIC & OFI on September 26, 2011. The results were accompanied by G. Harrison Scott’s 9-23-11 memorandum to the Board of Directors addressing the Chaffe Report.

•

The Bank shall review and update the Bank’s written strategic plan and profit plan.

Action taken: The Bank’s strategic Plan was revised on 1-21-11, to include the services of BankSmart, an outside consulting firm, contracted to review the Bank’s contracts and earnings. The Strategic Plan was presented to the Management Committee on 6-30-11 and the Audit & Finance Committee on 7-5-11.

In addition, the Company entered into an agreement on August 9, 2011, with the Federal Reserve Bank (FRB) whereby the Company will not incur additional debt, declare or pay dividends without approval of the FRB, reduce its capital position by purchasing or redeeming treasury stock, make any distributions of interest or principal on subordinated debentures or trust preferred securities without prior written approval of the FRB and the Louisiana Office of Financial Institutions (OFI), provide the FRB and OFI with quarterly financial updates and provide written confirmation that the Company has complied will all resolutions on a quarterly basis.

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 with in specified time periods.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS

MARCH 31, 2012 COMPARED WITH DECEMBER 31, 2011

BALANCE SHEET

Total assets at March 31, 2012 were $91,180,000 compared to $91,717,000 at December 31, 2011, for a decrease of $537,000, or 0.59%. Federal Funds Sold increased $1,300,000 from $16,150,000 at December 31, 2011 to $17,450,000 at March 31, 2012. Certificates of Deposit increased $252,000 from $5,458,000 at December 31, 2011 to $5,710,000 at March 31, 2012. Both the increase in Federal Funds Sold and the increase in Certificates of Deposit are due to normal fluctuations. Investment securities decreased $893,000 due to the sale of the Mississippi River Bank Stock. Total loans decreased $505,000, or 0.93%, to $53,876,000 at March 31, 2012 from $54,381,000 at December 31, 2011. The decrease in the loan portfolio is due primarily to a decrease in commercial real estate loans of $321,000, a decrease in construction loans of $139,000, a decrease in second mortgages loans of $14,000, a decrease in other real estate loans of $32,000, a decrease in personal loans of $89,000, a decrease in credit card loans of $405,000 and a decrease in overdrafts of $105,000. These decreases were offset by an increase in 1-4 residential loans of $159,000, an increase in commercial loans of $425,000 plus a decrease in deferred loan fees of $15,000. The credit card portfolio decrease was largely attributable to tightening of the Bank’s underwriting standards, normal attrition, and the cyclical nature of the business.

Total deposits decreased $682,000, or 0.88%, to $76,998,000 at March 31, 2012 from $77,680,000 at December 31, 2011. Total non-interest bearing deposits decreased $28,000 and interest-bearing accounts decreased $654,000. The decrease of interest earning deposits was mainly attributable to a decrease in money market accounts of $229,000 and a decrease of $754,000 in time deposits, offset by increases in NOW accounts of $81,000 and savings accounts of $248,000.

Other liabilities decreased $88,000 from $952,000 at December 31, 2011 to $864,000 at March 31, 2012. This decrease is due mainly to a decrease of $9,000 in accrued interest and a decrease in other liabilities of $79,000.

Shareholder’s Equity increased $233,000 from $11,941,000 at December 31, 2011 to $12,174,000 at March 31, 2012. This increase is due mainly to net income for the three months ended March 31, 2012 of $850,000, offset by a decrease in accumulated other comprehensive income of $543,000.

THREE MONTHS ENDED MARCH 31, 2012 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2011

The Company’s net income for the three months ended March 31, 2012 was $776,000, or $4.34 per share, an increase of $726,000 from the Company’s total net income of $50,000, or $0.28 per share, for the same period last year.

Total interest income decreased $190,000 for the three months ended March 31, 2012 over the same period last year. Interest on federal funds sold decreased $1,000 primarily due to a decrease in the average balance of $384,000 and a decrease in the average interest rate of 0.02%. Interest in the loan portfolio decreased $189,000 due mainly to a decrease in the average interest rate of 10.03% at March 31, 2011 to 9.53% at March 31, 2012 and a decrease of $4,784,000 in the average balance. Interest on Investment Securities and Certificates of Deposit purchased remained the same.

Total interest expense decreased $7,000 for the three months ended March 31, 2012 over the same period last year. This was caused primarily by a decrease in the average interest rate paid on interest-bearing deposits from .73% at March 31, 2011 to .70% as of March 31, 2012 along with a decrease in the average balance of interest bearing deposits from $48,252,000 at March 31, 2011 to $45,612,000 at March 31, 2012. The average interest rate on interest-bearing liabilities decreased from .86% at March 31, 2011 to .84% at March 31, 2012.

Net interest income decreased $183,000 for the three months ended March 31, 2012 compared to the same period last year. Our interest rate spread decreased from 6.65% at March 31, 2011 to 6.06% at March 31, 2012. The decrease in the rate spread was due to a decrease of .60% on the yield on interest-earning assets from 7.51% for the three months ended March 31, 2011 to 6.91% for the three months ended March 31, 2012, and a decrease of .02% on the average rate paid out on interest bearing liabilities from .86% paid for the three months ended March 31, 2011 as compared to .84% paid during the three months ended March 31, 2012.

Non-interest income increased $1,083,000 between the three month periods from $249,000 at March 31, 2011 to $1,332,000 at March 31, 2012. This increase is due primarily to the Gain on Sale of Securities derived from the sale of the Mississippi River Bank Stock totaling $1,079,000. The other increases on non-interest income were in Service Charges on deposit accounts with an increase of $6,000 and Other Operating Income with an increase of $4,000. These increases were partially offset by a decrease in Cardholder Other Credit Card income of $6,000.

Non-interest expense decreased $156,000 for the three month period of 2012 as compared to the same period last year. Salaries and Employee Benefits decreased $55,000 from $600,000 at March 31, 2011 to $545,000 at March 31, 2012. This decrease was due mainly to a reduction in the number of employees and benefits. Total Occupancy Expense decreased by $6,000 due to a decrease in occupancy rentals, and a decrease in depreciation expense. Communications increased by $1,000, Outsourcing fees decreased by $83,000 due mainly to a decrease in Credit Card transactions, Loan and Credit Card expense decreased by $1,000, Professional fees decreased $21,000 primarily due to a decrease in Consulting Fees, ORE expenses increased $10,000 due to an increase in Other Real Estate Owned, and Other Operating expenses decreased $2,000.

The provision for income taxes increased $330,000 compared to the same period last year. This increase in income taxes is primarily due to the sale of Investment Securities.

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

Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. Difficult conditions in the financial services markets may materially and adversely affect the business and results of operations of the Bank and the Company.

Dramatic declines in the housing market during the past year, along with falling home prices and increasing foreclosures and unemployment, have resulted in significant write downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. These write-downs, initially of mortgage-backed securities by spreading to credit default swaps and other derivative securities, have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions, and, in some cases, to fail. Many lenders and institutional investors have reduced, and in some cases, ceased to provide funding to borrowers, including other financial institutions. This market turmoil and tightening of credit have led to an increased level of commercial and consumer delinquencies, lack of consumer confidence, increased market volatility, and widespread reduction of business activity generally, which could have a material adverse effect on our business and operations. A worsening of these conditions would likely exacerbate any adverse effects of these difficult market conditions on us and others in the financial institutions industry.

However, the majority of small community banks, such as Bank of Louisiana, have strong reserve positions and are well capitalized.

The occurrence of catastrophic events such as hurricanes, tropical storms, earthquakes, windstorms, floods, severe winter weather, fires and other catastrophes could adversely affect our consolidated financial condition or results of operations. Unpredictable natural and other disasters could have an adverse effect on us in that such events could materially disrupt our operations or the ability or willingness of our customers to access financial services offered by us. The incidence and severity of catastrophic events could nevertheless reduce our earnings and cause volatility in our financial results for any fiscal quarter or year and have a material adverse effect on our financial condition or results of operation.

The Company is a customer-focused organization. Future growth is expected to be driven in a large part by the relationships maintained with customers. The Company has assembled an experienced management team, and has management development plans in place.

Item 4T Controls and Procedures

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

PART II - OTHER INFORMATION

Item 6 Exhibits

Exhibits

31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32 Certification Pursuant to 18 U.S.C. Section 1350

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.

May 15, 2012	/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)

BOL BANCSHARES INC 10-Q