Britton & Koontz Capital Reports First Quarter 2008 Earnings

NATCHEZ, Miss., April 17 /PRNewswire-FirstCall/ -- The Board of Directors
of Britton & Koontz Capital Corporation (Nasdaq: BKBK) ("B&K Capital" or "the
Company") today reported net income and earnings per share for the quarter
ended March 31, 2008, of $846 thousand, or $.40 per diluted share, compared to
$427 thousand, or $.20 per diluted share, for the quarter ended March 31,
2007. Annualized returns on average assets and average equity for the quarter
ended March 31, 2008, were .93% and 9.31%, respectively, compared to .46% and
5.06%, for the same period in 2007.
The increase in earnings in 2008 over the prior period arose primarily
because of losses on investment securities experienced in the first quarter of
2007. As reported earlier, in connection with its adoption of Statement of
Financial Accounting Standards No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities," the Company sold approximately $55 million
of its available-for-sale investment securities and recognized a loss of $559
thousand in the first quarter of 2007. The proceeds were reinvested in
securities with a higher yield. In the first quarter of 2008 the Company sold
approximately $19 million of securities classified as trading at a gain of
$148 thousand, which also contributed to the increase in earnings. Proceeds
from this transaction were used to reduce Federal Home Loan Bank debt and to
purchase securities classified as held-to-maturity.
Net interest income increased $69 thousand to $3.3 million for the first
quarter of 2008 compared to the first quarter of 2007. The increase in net
interest income is primarily due to a more favorable interest rate yield curve
as short-term interest rates fell from 5.25% beginning in September 2007 to
2.25% as of the end of the first quarter of 2008. The Company's net interest
margin and interest rate spread increased when comparing the first quarter of
2008 to the same period in 2007. Asset yields declined 16 basis points from
6.86% to 6.70% in the first quarter comparative periods while funding costs
decreased 25 basis points from 3.87% to 3.62% during the same period. The
positive spread contributed $162 thousand toward the increase in net interest
income and was offset by $93 thousand due to lower average asset and liability
volumes. Average assets decreased $4.6 million primarily from lower loan
volumes; this decrease was partially offset by an increase in the average
investment portfolio. As a result of the improved interest rate environment
and more desirable yield curve, the Company's net interest margin increased
from 3.72% at the end of March 31, 2007, to 3.82% at the end of the first
quarter of 2008.
The increase in non-interest income to $783 thousand for the quarter ended
March 31, 2008, is related to the securities transaction described above.
Non-interest expense remained relatively unchanged at $2.9 million for the
period ended March 31, 2008, compared to the same period in 2007.
The Bank's provision for loan losses for the three month period ending
March 31, 2008, was increased to $120 thousand, compared to $80 thousand
during the same period in 2007. The increase in provision was added in
response to increases in net charge-offs from $102 thousand to $174 thousand
over the comparative periods. The allowance for loan losses ended the first
quarter of 2008 at $2.4 million, or 1.03% of total loans. Non-accrual loans
increased from $1.6 million at March 31, 2007 to $2.9 million at March 31,
2008, while loans past due 90 days or more increased from $170 thousand to
$838 thousand over the same period. Other real estate decreased from $1.0
million to $445 thousand. Non-performing assets as a percent of total assets
increased from .77% at March 31, 2007 to 1.15% at March 31, 2008. The
increase in non-performing loans was primarily due to two commercial loans
totaling approximately $2 million. Resolution of both loans is expected in
the second quarter of 2008 following the sale of the collateral securing the
loans. One credit in the amount of $1.3 million is in the Natchez market, and
the second credit in the amount of $672 thousand is in the Baton Rouge market.
The Company considers its analysis of the amount of reserves on these two
loans to be adequate as of March 31, 2008.
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 one in Baton Rouge, Louisiana. As of March 31, 2008, the Company reported
assets of $366.0 million and equity of $36.7 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 March 31, 2008,
were 2,117,966.
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
(Unaudited)
For the Three Months
Ended March 31,

2008 2007

Interest income $5,836,288 $6,007,107
Interest expense (2,505,755) (2,745,558)
Net interest income 3,330,533 3,261,549
Provision for loan losses (120,000) (80,000)
Net interest income after
provision for loan losses 3,210,533 3,181,549
Non-interest income 783,435 197,687
Non-interest expense (2,861,591) (2,918,745)
Income before income taxes 1,132,377 460,491
Income taxes (286,270) (33,366)
Net income $846,107 $427,125

Return on Average Assets 0.93% 0.46%
Return on Average Equity 9.31% 5.06%

Diluted:
Net income per share $0.40 $0.20
Weighted average shares outstanding 2,118,750 2,120,993

March 31, December 31, March 31,
2008 2007 2007
Total assets $366,030,316 $368,345,272 $367,842,729
Cash and due from banks 6,753,519 8,732,307 8,538,684
Investment securities 118,621,061 125,691,658 106,986,053
Gross loans 230,680,704 223,352,663 240,512,347
Deposits-interest bearing 193,017,904 199,088,223 214,523,798
Deposits-non interest bearing 49,611,550 47,305,927 51,679,173
Total deposits 242,629,454 246,394,150 266,202,971
Short-term borrowed funds 35,903,417 34,964,330 46,094,833
Long-term borrowed funds 42,032,711 42,425,699 13,119,348
Trust preferred securities 5,155,000 5,155,000 5,155,000
Stockholders' equity 36,677,800 35,800,865 34,025,830
Book value (per share) $17.32 $16.90 $16.07
Total shares outstanding 2,117,966 2,117,966 2,117,966

SOURCE Britton & Koontz Capital Corporation

W. Page Ogden, President & CEO, or William M. Salters, Treasurer & CFO,
+1-601-445-5576, or fax, +1-601-445-2481, corporate@bkbank.com