Britton & Koontz Capital Corporation

500 Main Street
P O Box 1407
601-445-2481  Fax
Natchez, MS  39121,
October 31, 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/(loss) and earnings per share for the three and nine month period ended September 30, 2011.

The Company reported a net loss for the three months ended September 30, 2011 of $721 thousand, or ($.34) per diluted share, compared to net income of $681 thousand, or $.32 per diluted share, for the quarter ended September 30, 2010.  For the nine month period ended September 30, 2011, net income and diluted earnings per share were $84 thousand and $0.04, respectively, compared to $1.2 million and $0.58, respectively, for the same period in 2010.  The loss for the three months ended September 30, 2011, is due primarily to a loan loss provision expense of approximately $3.4 million for the quarter, partially offset by a $1.3 million increase in gains on the sale of investment securities. Reduced earnings for the nine month period is due to the aforementioned $3.4 million provision expense in the 3rd quarter of 2011 and lower net interest income of $1.1 million, offset by $2.2 million in year-to-date gains on the sale of investment securities.

Net interest income for the three and nine month periods ended September 30, 2011, decreased $412 thousand and $1.1 million, respectively, over the same period in 2010.  The decline for both periods is primarily due to a shift in the mix of earning assets to lower yielding assets coupled with a loss of interest on specific non-accrual loans of approximately $225 thousand.  The continued lower interest rate environment during 2011 provided limited reinvestment opportunity of cash flows back into the investment market and contributed to the $50.3 million increase in cash reserves at the Federal Reserve Bank at September 30, 2011, as compared to the balance at September 30, 2010.   Interest rate spread and margin declined during both comparative periods as the yield on earning assets declined at a greater pace than cost of interest-bearing liabilities.  Interest rate spread declined 41 and 35 basis points to 2.81% and 2.92% for the three and nine month period ended September 30, 2011, respectively.  Interest rate margin declined 48 and 40 basis points to 3.12% and 3.25% for the three and nine months ended September 30, 2011, respectively.

Non-interest income increased $1.1 million for the 3rd quarter of 2011 compared to the 3rd quarter of 2010 primarily from the sale of investment securities.  The Company sold approximately $16 million of investment securities in the 3rd quarter of 2011, recording a gain of $1.3 million.  Additionally, the 3rd quarter of 2010 included $139 thousand on gains from the sales of other real estate compared to no gains on sales of other real estate in 2011.  Non-interest income increased to $5.0 million for the nine months ended September 30, 2011, from $3.3 million during the same period in 2010.  The increase is primarily due to a $2.2 million increase in gains on sales of investment securities in 2011 compared to the same period in 2010.  In 2010, gains on sale of other real estate were $606 thousand.  Non-interest expense decreased $426 thousand for the 3rd quarter of 2011 compared to the 3rd quarter of 2010, while the decline was $870 thousand for the nine months ended September 30, 2011, compared to the same period in 2010.  Decreases in personnel costs and FDIC assessment expense as well as lower provision expense for loan and late fees associated with the loan portfolio contributed to the decline in non-interest expense for both the three and nine month periods.


Non-performing assets, which include non-accrual loans, loans delinquent 90 days or more, troubled debt restructurings and other real estate, increased to $16.2 million, or 4.35% of total assets, at September 30, 2011, from $11.3 million, or 3.01% of total assets at December 31, 2010.  Net loan charge-offs of $1.0 million, or .50% of average loans, through the nine months ended September 30, 2011, decreased from $2.6 million, or 1.18% of average loans, during the same period in 2010.  However, in spite of the improved charge-offs, the allowance for loan losses at September 30, 2011, increased to $6.1 million, or 3.17% of total loans, from $2.4 million, or 1.15% of total loans, at December 31, 2010.  The increase in the allowance reflects an increase in the loan loss provision primarily in the 3rd quarter of 2011.

The increase in non-performing assets is chiefly the result of the transfer of one commercial real estate related loan originated in the Company’s Baton Rouge, Louisiana office to non-accrual status during the 3rd quarter of 2011.  The increased provision for loan losses is primarily attributable to estimated exposure on this credit, as well as the reassessment of a previously impaired loan and adjustments to historical loss and qualitative factors in the general reserve calculation to reflect current economic conditions in the Company’s markets.  The Company determined to transfer the above-mentioned credit to non-accrual status based on current project financial information and internal adjustments to a prior appraisal.  The Company also ordered an independent appraisal of the real estate collateral securing this credit, although the Company has not yet received the appraisal as of the date of this release.  However, experience with recent independent appraisals reflects a significant downward valuation trend in keeping with the general negative economic environment.
           The Company’s Regulatory Tier 1 Capital of $42 million, or approximately 18% of risk weighted assets, substantially exceeds the approximate $9 million, or 4%, minimum regulatory capital requirements.

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, two in Vicksburg, Mississippi, and three in Baton Rouge, Louisiana, and a loan production office in Central, Louisiana.  As of September 30, 2011, the Company reported assets of $371.3 million and equity of $38.4 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 September 30, 2011, were 2,138,466.

Forward Looking Statements

This news release contains statements regarding the projected performance of Britton & Koontz Capital Corporation and its subsidiaries.  These statements constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act.  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; and legislation or regulatory changes which adversely affect the ability of the combined Company to conduct business combinations or new operations. The Company disclaims any 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 nine months ended
September 30,
September 30,
Income Statement Data
Interest income
  $ 3,778,488     $ 4,624,042     $ 12,185,886     $ 14,245,788  
Interest expense
    1,002,218       1,435,597       3,438,800       4,392,118  
Net interest income
    2,776,270       3,188,445       8,747,086       9,853,670  
Provision for loan losses
    3,380,000       150,000       4,692,000       1,449,996  
Net interest income/(loss) after
 provision for loan losses
    (603,730 )     3,038,445       4,055,086       8,403,674  
Non-interest income
    2,076,589       985,118       5,040,923       3,278,770  
Non-interest expense
    2,745,067       3,171,196       9,502,519       10,373,166  
Income/(loss) before income taxes
    (1,272,208 )     852,367       (406,510 )     1,309,278  
Income taxes
    (551,401 )     171,520       (490,236 )     61,288  
Net income/(loss)
  $ (720,807 )   $ 680,847     $ 83,726     $ 1,247,990  
Return on Average Assets
    -0.77 %     0.73 %     0.03 %     0.44 %
Return on Average Equity
    -7.27 %     6.75 %     0.28 %     4.14 %
Net income/(loss) per share
  $ (0.34 )   $ 0.32     $ 0.04     $ 0.58  
Weighted average shares outstanding
    2,141,944       2,135,800       2,140,730       2,134,685  


Britton and Koontz Capital Corporation
Financial Highlights
September 30,
June 30,
December 31,
September 30,
Balance Sheet Data
Total assets
  $ 371,302,355     $ 382,409,875     $ 375,419,683     $ 374,615,000  
Cash and due from banks
    56,041,151       39,442,715       5,818,853       5,769,857  
Federal funds sold
    -       -       112,497       -  
Investment securities
    108,990,350       130,791,472       138,904,366       138,225,812  
Loans, net of UI & loans held for sale
    192,030,296       196,749,011       210,564,816       214,125,613  
Loans held for sale
    4,387,626       3,756,617       6,074,014       2,808,369  
Allowance for loan losses
    6,085,035       3,562,305       2,420,143       2,714,126  
Deposits-interest bearing
    212,699,605       217,118,074       212,908,407       214,296,621  
Deposits-non interest bearing
    54,499,352       58,681,484       45,634,123       42,455,103  
Total deposits
    267,198,957       275,799,558       258,542,530       256,751,724  
Short-term debt
    14,984,408       17,520,670       24,977,895       25,329,987  
Long-term debt
    47,000,000       47,000,000       49,000,000       49,000,000  
Stockholders' equity
    38,384,773       39,783,821       39,931,973       40,374,442  
Book value (per share)
  $ 17.95     $ 18.57     $ 18.70     $ 18.91  
Total shares outstanding
    2,138,466       2,142,466       2,135,466       2,135,466  
Asset Quality Data
Non-accrual loans
  $ 11,748,495     $ 8,851,825     $ 7,509,711     $ 6,701,399  
Loans 90+ days past due
    219,963       653,727       484,154       247,825  
Troubled debt restructurings, still accruing
    712,474       147,749       -       -  
Total non-performing loans
    12,680,932       9,653,301       7,993,865       6,949,224  
Other real estate owned
    3,469,542       2,975,736       3,303,189       2,895,569  
Total non-performing assets
  $ 16,150,474     $ 12,629,037     $ 11,297,054     $ 9,844,793  
Total non-performing assets to average assets
    4.26 %     3.32 %     3.00 %     2.60 %
Net chargeoffs - ytd
  $ 1,027,107     $ 169,838     $ 3,133,599     $ 2,614,611  
YTD net chargeoffs as a percent of average loans
    0.50 %     0.08 %     1.42 %     1.18 %

The following information was filed by Britton Koontz Capital Corp (BKBK) on Monday, October 31, 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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