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Britton & Koontz's earnings fall

NATCHEZ — Britton & Koontz Capital Corporation reports net income for the three months ended June 30, 2009, was $758,000, or $0.36 per diluted share, compared to $848,000, or $0.40 per diluted share, for the quarter ended June 30, 2008.

For the six-month period ended June 30, 2009, net income and diluted earnings per share were $1.4 million and $0.64, respectively, compared to $1.7 million and $0.80, respectively, for the same period in 2008.

Britton & Koontz said both the three- and six-month period comparisons reflect the effects of additional Federal Deposit Insurance Corporation (FDIC) special assessments and a higher provision for loan losses in 2009. These additional expenses were partially offset by increases in net interest income. Increased FDIC assessments reduced diluted earnings per share by $0.08 and $0.11, respectively, for the three- and six-month periods. The higher provision expense in the second quarter of 2009 negatively impacted diluted earnings per share by $0.04 and $0.21, respectively, for the three- and six-month periods.

The company experienced some declines in certain asset quality measures since Dec. 31, 2008. Non-performing assets, which includes non-accrual loans, loans delinquent 90 days or more and other real estate, increased to $8.8 million, or 2.16 percent of total assets at June 30, 2009, from $5 million, or 1.21 percent to total assets at Dec. 31, 2008. Approximately $4 million of the non-performing assets are two non-accrual commercial real estate loans, both of which have been under formal forbearance agreements. The company continues to closely monitor these loans and intends to take such actions as are necessary to limit any losses.

Two additional commercial real estate relationships totaling $1.6 million were included in 90 day past due at the end of the second quarter. One of the relationships has subsequently been renewed with a payment of all past due interest. The second relationship is expected to be renewed before the end of July with interest being paid current along with some reduction of principal. Net charge-offs of $383,000 in the second quarter of 2009 resulted in net charge-offs of $515,000 at June 30, 2009, compared to $202,000 at June 30, 2008.

Britton & Koontz’s loan loss provision in the second quarter of 2009 was $250,000, as compared to $120,000 for the corresponding period in 2008. For the six months ended June 30, 2009, the company’s loan loss provision was $950,000, compared to $240,000 during the same period in 2008. The additional provision expense increased the allowance for loan losses to $2.8 million, or 1.26 percent of loans at June 30, 2009, from $2.4 million, or 1.06 percent at Dec. 31, 2008. The company said it believes its reserves with respect to the four relationships discussed above to be adequate as of June 30, 2009.

The company’s Regulatory Tier 1 Capital to risk weighted assets of 16.6 percent, or $42.5 million, substantially exceeds the $15.4 million, or 6 percent, that the regulatory authorities consider “well-capitalized.”

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