Britton & Koontz reports increase in earnings

By Special to The Democrat | The Natchez Democrat

Published Saturday, August 16, 2008

NATCHEZ — Britton & Koontz Capital Corp (NASDAQ: BKBK) recently announced its net income for the quarter ended June 30, increased by more than 38 percent over the same period in 2007.

B&K Capital is the parent company of Britton & Koontz Bank, headquartered in Natchez, which operates banks in Natchez, Vicksburg and Baton Rouge.

Net income for the three months ended June 30 increased to $848,000, or $.40 per diluted share, compared to $613,000, or $.29 per diluted share, for the quarter ended June 30, 2007.

For the six month period ended June 30, net income and earnings per share were $1.7 million and $0.80 per diluted share, respectively, compared to $1.0 million and $0.49 per diluted share, respectively, for the same period in 2007.

Higher net income for the quarter and six months ended June 30, reflects recovery from losses on sales of investment securities and the mark-to-market investment portfolio losses experienced in 2007, B&K reported in their earnings release.

“We’ve shown discipline in our approach to growth during the recent economic cycle,” CEO Page Ogden said. “We believe this discipline has positioned our company well, not only to weather the current economic environment, but also to consider growth opportunities that may present themselves within or in close proximity to our market footprint.”

The Company’s capital base remains strong at $35.9 million as of June 30, 2008. Intangible assets were less than $1 million dollars as of both June 30, 2007 and June 30, 2008. The low balance of such intangibles has contributed to regulatory capital being significantly above the minimum 6 percent for a “well capitalized” designation.

At June 30, 2008, regulatory Tier 1 Capital to risk-weighted assets for the Company and its primary subsidiary, Britton & Koontz Bank, N.A., were 15.53 percent and 13.85 percent, respectively, compared to regulatory requirements of 4.00 percent.

Net interest income for the quarter and six-month periods ended June 30, 2008, was relatively unchanged at $3.4 million and $6.7 million, respectively, compared to the same periods in 2007. Net interest income for both periods in 2008 improved due to increases in average earning assets. These increases in average earning assets were offset, however, by the lower interest rate environment as asset yields declined more than funding costs for the quarterly period. Net interest margin declined to 3.74 percent for three months ended June 30, compared to 3.91 percent for the three-month period ended June 30, 2007. For the six-month comparable periods of 2008 and 2007, net interest margin declined from 3.82 percent to 3.76 percent.

Non-interest income increased by $467 thousand and $1.1 million for the three and six month period ended June 30, compared to same periods in 2007. As mentioned above, the increases are the result of the recovery of losses on sales of investment securities and the mark-to-market losses experienced in 2007. Non-interest expense remained relatively constant for both periods.

Overall asset quality for the Company at June 30, remains stable compared to asset quality as December 31, 2007, although the Company experienced some declines in certain asset quality measures in 2008, reflecting the general slowing of the national economy and the local economies in which it operates.

During the six month period ended June 30, the Company’s provision for loan losses increased by $40 thousand to $240 thousand compared to the same period in 2007. This increase is a result of a $40,000 increase in the provision in the second quarter of 2008 as compared to the second quarter of 2007.

As of June 30, the Company reported assets of $391.8 million and equity of $35.9 million.