Britton & Koontz Capital Corporation

500 Main Street
P O Box 1407
601-445-2481  Fax
Natchez, MS  39121
January 21, 2011
W. Page Ogden, President & CEO
(Nasdaq - BKBK)
William M. Salters, Treasurer & CFO


Natchez, Mississippi – The Board of Directors of Britton & Koontz Capital Corporation (Nasdaq: BKBK, "the Company") today reported net income for the year ended December 31, 2010, of $1.9 million, or $.90 per basic and diluted share, compared to $1.6 million, or $.76 per basic and diluted share, for 2009.  Net income for the quarter ended December 31, 2010, was $665 thousand, or $.31 per basic and diluted share, compared to a loss of $58 thousand, or $(.03) per basic and diluted share, for the fourth quarter of 2009.  The returns on average assets and equity for the year ended December 31, 2010, were .51% and 4.76%, respectively, compared to .40% and 4.01%, respectively, for same period in 2009.

Net interest income for the three and twelve months ended December 31, 2010, decreased $347 thousand and $1.5 million, respectively, over the same periods in 2009.  The decrease is primarily due to the decline in earning assets exceeding the decline in costing liabilities.  Average earning assets decreased during both the quarter and annual comparative periods by $26.8 million and $27.5 million, respectively, primarily from a decline in the Bank’s investment securities portfolio.  The contributing factor in the decline in investment securities was the lower interest rate environment during 2010 which made profitable reinvestment of cash flows back into the market difficult.  Instead, cash flows were primarily used to repay short-term debt.  Asset yields also declined at a faster pace than funding costs for the three and twelve months ended December 31, 2010, with yields on assets declining 20 basis points while funding costs fell by only 10 basis points.  Lower interest rates also contributed to the decline of interest rate spread and margin during the quarter and year ended December 31, 2010.  Interest rate spread declined 9 and 10 basis points to 3.31% and 3.28%, respectively, while interest rate margin declined 11 and 10 basis points to 3.67% and 3.66%, respectively, for the quarter and year ended December 31, 2010, respectively.

Non-interest income increased $271 thousand for the 4th  quarter of 2010 compared to the 4th quarter of 2009 primarily from higher mortgage related income and gains on the sale of other real estate offset by decreases in service charges on deposit accounts.  These same factors also caused non-interest income to increase by $1.5 million to $4.3 million for the year ended December 31, 2010, compared to $2.9 million during the same period in 2009.  Non-interest expense declined $87 thousand for the 4th quarter of 2010 compared to the 4th quarter of 2009.  Non-interest expense for the year ended December 31, 2010, increased $1.2 million over the comparable period in 2009.  Approximately 50% of the annual increase in non-interest expense is due to higher personnel costs associated with the new hires in the mortgage division along with write-downs of other real estate, higher occupancy and equipment costs and other charges to expense related to the provision of loan and late fees receivable.  These additional costs were offset by lower FDIC assessment charges due to a special assessment of $183 thousand made in the 1st half of 2009.
Since December 31, 2009, total assets decreased $17.7 million to $375.4 million at December 31, 2010.  The change is due to decreases in total investment securities of $7.7 million, a drop in net loans of $6.5 million, a decline in cash and due from banks of $4.5 million, a $432 thousand decline in fixed assets and an $843 thousand decrease in other assets.  Other real estate increased $2.5 million to $3.3 million.  Total deposits increased $7.6 million to $258.5 million at December 31, 2010, compared to $250.9 million as of December 31, 2009.  The increase in deposits was primarily due to increases in the Company’s rewards checking accounts.

        Non-performing assets, which includes non-accrual loans, loans delinquent 90 days or more and other real estate, increased to $11.3 million, or 3.01% of total assets, at December 31, 2010, from $10.5 million, or 2.68% of total assets at December 31, 2009.  The Company experienced higher than normal charge-offs during 2010 of $3.2 million, which included $519 thousand during the 4th quarter.  Net charge-offs as a percentage of average loans increased to 1.42% at December 31, 2010, compared to .87% at December 31, 2009.  The Company added $1.7 million to its allowance for probable loan losses in 2010 which ended the year at $2.4 million, compared to $3.4 million in 2009.  The higher amount in 2009 was primarily due to an accumulated provision of approximately $1 million relating to two credits that were charged-off during 2010.  The Company believes the allowance for loan loss account is adequate as of December 31, 2010.

        Tier 1 Capital for the Company and its wholly-owned subsidiary, Britton & Koontz Bank, N.A., was $42.7 million and $39.9 million, respectively, at December 31, 2010.  These amounts substantially exceed the approximately $15 million, or 6% of risk-weighted assets, required to be considered “Well-Capitalized.”
        Britton & Koontz Capital Corporation, headquartered in Natchez, Mississippi, is the parent company of Britton & Koontz Bank, N.A. which operates three full service offices in Natchez, Mississippi, two in Vicksburg, Mississippi, and three in Baton Rouge, Louisiana, and a loan production office in Central, Louisiana.  As of December 31, 2010, the Company reported assets of $375.4 million and stockholders’ equity of $39.9 million.  The Company’s stock is traded on NASDAQ under the symbol BKBK and the transfer agent is American Stock Transfer & Trust Company.  Total shares outstanding at December 31, 2010, were 2,135,466.

Forward Looking Statements

This news release contains statements regarding the projected performance of Britton & Koontz Capital and its subsidiaries that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements.  These statements often include the words “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects” or similar expressions.  Actual results may differ materially from the projections provided in this release since such projections involve significant known and unknown risks and uncertainties.  Factors that might cause such differences include, but are not limited to: competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; significant fluctuations in interest rates; inflation; significant underperformance in our portfolio of outstanding loans; and legislation or regulatory changes which adversely affect the ability of the Company to conduct business combinations or new operations.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments.


Britton and Koontz Capital Corporation
Financial Highlights
For the three months ended
For the twelve months ended
December 31,
December 31,
Income Statement Data
Interest income
  $ 4,526,332     $ 5,079,559     $ 18,772,120     $ 20,979,459  
Interest expense
    1,312,618       1,518,491       5,704,736       6,459,931  
Net interest income
    3,213,714       3,561,068       13,067,384       14,519,528  
Provision for loan losses
    225,004       1,550,000       1,675,000       3,420,000  
Net interest income after
 provision for loan losses
    2,988,710       2,011,068       11,392,384       11,099,528  
Non-interest income
    1,016,196       744,699       4,294,967       2,820,368  
Non-interest expense
    3,168,294       3,254,875       13,541,460       12,365,940  
Income before income taxes
    836,612       (499,108 )     2,145,891       1,553,956  
Income taxes
    171,858       (440,738 )     233,146       (69,673 )
Net income
  $ 664,754     $ (58,370 )   $ 1,912,745     $ 1,623,629  
Return on Average Assets
    0.72 %     -0.06 %     0.51 %     0.40 %
Return on Average Equity
    6.61 %     -0.57 %     4.76 %     4.01 %
Net income per share
  $ 0.31     $ (0.03 )   $ 0.90     $ 0.76  
Weighted average shares outstanding
    2,136,047       2,127,126       2,134,941       2,125,799  
December 31,
December 31,
Balance Sheet Data
    2010       2009                  
Total assets
  $ 375,419,683     $ 393,110,149                  
Cash and due from banks
    5,818,853       10,303,641                  
Federal funds sold
    112,497       58,799                  
Investment securities
    138,904,366       146,590,266                  
Loans, net of UI & loans held for sale
    210,564,816       223,817,377                  
Loans held for sale
    6,074,014       784,063                  
Allowance for loan losses
    2,420,143       3,878,738                  
Deposits-interest bearing
    212,662,464       201,094,816                  
Deposits-non interest bearing
    45,880,066       49,847,304                  
Total deposits
    258,542,530       250,942,120                  
Short-term debt
    24,977,895       50,389,079                  
Long-term debt
    49,000,000       49,000,000                  
Stockholders' equity
    39,931,973       39,840,889                  
Book value (per share)
  $ 18.70     $ 18.74                  
Total shares outstanding
    2,135,466       2,126,466                  
Asset Quality Data
Non-accrual loans
  $ 7,509,711     $ 8,709,058                  
Loans 90+ days past due
    484,154       1,003,944                  
Total non-performing loans
    7,993,865       9,713,002                  
Other real estate owned
    3,303,189       815,207                  
Total non-performing assets
  $ 11,297,054     $ 10,528,209                  
Total non-performing assets to average assets
    3.00 %     2.62 %                
Net chargeoffs - ytd
  $ 3,133,599     $ 1,939,064                  
YTD net chargeoffs as a percent of average loans
    1.42 %     0.87 %                


The following information was filed by Britton Koontz Capital Corp (BKBK) on Monday, January 24, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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