UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
|
x
|
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For the
Quarterly Period Ended March 31, 2009
or
|
o
|
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For the
transition period from ___________ to ___________
|
BRITTON
& KOONTZ CAPITAL
CORPORATION
|
|
(Exact
name of Registrant as Specified in Its
Charter)
|
|
Mississippi
|
64-0665423
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer Identification
Number)
|
|
500 Main Street,
Natchez,
Mississippi 39120
|
|
(Address
of Principal Executive Offices) (Zip
Code)
|
|
(Registrant’s
Telephone Number, Including Area
Code)
|
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes
x
No
o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes
o
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
|
Large
accelerated filer
|
o
|
Accelerated
filer
|
o
|
|
Non-accelerated
filer
(Do
not check if a smaller reporting company)
|
o
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
o
No
x
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 2,126,466 Shares of Common
Stock, Par Value $2.50, were outstanding as of May 1, 2009.
BRITTO
N & KOONTZ CAPITAL CORPORATION
AND
SUBSIDIARIES
P
ART I. FINANCIAL INFORMATION
Item
1. Financial Statements
|
BRITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
AS
OF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
S S E T S
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
ASSETS:
|
|
2009
|
|
|
2008
|
|
|
Cash
and due from banks:
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
$
|
5,267,149
|
|
|
$
|
6,752,462
|
|
|
Interest
bearing
|
|
|
199,584
|
|
|
|
199,081
|
|
|
Total
cash and due from banks
|
|
|
5,466,733
|
|
|
|
6,951,543
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
funds sold
|
|
|
89,615
|
|
|
|
-
|
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
(amortized cost, in 2009 and 2008,
|
|
|
|
|
|
|
|
|
|
of
$109,543,621 and $108,548,988, respectively)
|
|
|
113,955,401
|
|
|
|
111,895,476
|
|
|
Held-to-maturity
(market value, in 2009 and 2008,
|
|
|
|
|
|
|
|
|
|
of
$53,537,898 and $54,843,091, respectively)
|
|
|
52,885,777
|
|
|
|
54,815,013
|
|
|
Equity
securities
|
|
|
4,014,700
|
|
|
|
4,009,938
|
|
|
Loans,
less allowance for loan losses of $2,965,836
|
|
|
|
|
|
|
|
|
|
in
2009 and $2,397,802 in 2008
|
|
|
218,686,793
|
|
|
|
223,113,495
|
|
|
Bank
premises and equipment, net
|
|
|
6,740,057
|
|
|
|
6,922,835
|
|
|
Other
real estate, net of reserves of $233,400 in 2009 and $198,390 in
2008
|
|
|
1,419,409
|
|
|
|
919,204
|
|
|
Accrued
interest receivable
|
|
|
1,985,581
|
|
|
|
2,080,693
|
|
|
Cash
surrender value of life insurance
|
|
|
1,069,819
|
|
|
|
1,055,627
|
|
|
Core
Deposits, net
|
|
|
531,138
|
|
|
|
558,042
|
|
|
Other
assets
|
|
|
895,708
|
|
|
|
754,959
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
407,740,731
|
|
|
$
|
413,076,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
LIABILITIES:
|
|
2009
|
|
|
2008
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
$
|
48,479,421
|
|
|
$
|
51,119,827
|
|
|
Interest
bearing
|
|
|
213,012,064
|
|
|
|
206,094,593
|
|
|
Total
deposits
|
|
|
261,491,485
|
|
|
|
257,214,420
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
Home Loan Bank advances
|
|
|
45,767,931
|
|
|
|
54,939,931
|
|
|
Securities
sold under repurchase agreements
|
|
|
51,179,061
|
|
|
|
51,633,835
|
|
|
Accrued
interest payable
|
|
|
1,073,221
|
|
|
|
1,167,525
|
|
|
Advances
from borrowers for taxes and insurance
|
|
|
166,230
|
|
|
|
313,810
|
|
|
Accrued
taxes and other liabilities
|
|
|
2,471,254
|
|
|
|
3,111,235
|
|
|
Junior
subordinated debentures
|
|
|
5,155,000
|
|
|
|
5,155,000
|
|
|
Total
liabilities
|
|
|
367,304,182
|
|
|
|
373,535,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
|
|
|
|
Common
stock - $2.50 par value per share;
|
|
|
|
|
|
|
|
|
|
12,000,000
shares authorized; 2,140,966 and 2,132,466 issued and
|
|
|
|
|
|
|
|
|
|
2,126,466
and 2,117,966 outstanding, for March 31, 2009, and
|
|
|
|
|
|
|
|
|
|
December
31, 2008, respectively
|
|
|
5,352,415
|
|
|
|
5,331,165
|
|
|
Additional
paid-in capital
|
|
|
7,386,824
|
|
|
|
7,319,282
|
|
|
Retained
earnings
|
|
|
25,188,499
|
|
|
|
25,049,749
|
|
|
Accumulated
other comprehensive income
|
|
|
2,766,186
|
|
|
|
2,098,248
|
|
|
|
|
|
40,693,924
|
|
|
|
39,798,444
|
|
|
Cost
of 14,500 shares of common stock held by the company
|
|
|
(257,375
|
)
|
|
|
(257,375
|
)
|
|
Total
stockholders' equity
|
|
|
40,436,549
|
|
|
|
39,541,069
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
407,740,731
|
|
|
$
|
413,076,825
|
|
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
|
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$
|
3,354,974
|
|
|
$
|
4,287,749
|
|
|
Interest
on investment securities:
|
|
|
|
|
|
|
|
|
|
Taxable
interest income
|
|
|
1,685,346
|
|
|
|
1,129,188
|
|
|
Exempt
from federal taxes
|
|
|
425,093
|
|
|
|
417,152
|
|
|
Interest
on federal funds sold
|
|
|
89
|
|
|
|
2,199
|
|
|
Total
interest income
|
|
|
5,465,502
|
|
|
|
5,836,288
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE:
|
|
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
1,066,179
|
|
|
|
1,642,637
|
|
|
Interest
on Federal Home Loan Bank advances
|
|
|
111,117
|
|
|
|
213,963
|
|
|
Interest
on trust preferred securities
|
|
|
57,496
|
|
|
|
96,000
|
|
|
Interest
on securities sold under repurchase agreements
|
|
|
516,213
|
|
|
|
553,155
|
|
|
Total
interest expense
|
|
|
1,751,005
|
|
|
|
2,505,755
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME
|
|
|
3,714,497
|
|
|
|
3,330,533
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for loan losses
|
|
|
700,000
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME AFTER PROVISION
|
|
|
|
|
|
|
|
|
|
FOR
LOAN LOSSES
|
|
|
3,014,497
|
|
|
|
3,210,533
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME:
|
|
|
|
|
|
|
|
|
|
Service
charges on deposit accounts
|
|
|
407,440
|
|
|
|
401,116
|
|
|
Income
from fiduciary activities
|
|
|
611
|
|
|
|
999
|
|
|
Income
from networking arrangements
|
|
|
22,210
|
|
|
|
29,016
|
|
|
Gain/(loss)
on sale of mortgage loans
|
|
|
46,099
|
|
|
|
58,514
|
|
|
Gain/(loss)
on sale of securities
|
|
|
-
|
|
|
|
148,116
|
|
|
Other
|
|
|
142,489
|
|
|
|
145,674
|
|
|
Total
other income
|
|
|
618,849
|
|
|
|
783,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
|
1,368,283
|
|
|
|
1,426,583
|
|
|
Employee
benefits
|
|
|
190,567
|
|
|
|
184,852
|
|
|
Director
fees
|
|
|
36,250
|
|
|
|
46,150
|
|
|
Net
occupancy expense
|
|
|
222,112
|
|
|
|
228,531
|
|
|
Equipment
expenses
|
|
|
296,845
|
|
|
|
301,143
|
|
|
FDIC
assessment
|
|
|
115,355
|
|
|
|
7,423
|
|
|
Advertising
|
|
|
56,559
|
|
|
|
54,151
|
|
|
Stationery
and supplies
|
|
|
38,654
|
|
|
|
44,381
|
|
|
Audit
expense
|
|
|
60,250
|
|
|
|
55,743
|
|
|
Other
real estate expense (includes losses on sale)
|
|
|
58,742
|
|
|
|
11,817
|
|
|
Amortization
of deposit premium
|
|
|
26,904
|
|
|
|
26,904
|
|
|
Other
|
|
|
479,065
|
|
|
|
473,913
|
|
|
Total
other expenses
|
|
|
2,949,586
|
|
|
|
2,861,591
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAX EXPENSE
|
|
|
683,760
|
|
|
|
1,132,377
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
83,745
|
|
|
|
286,270
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
600,015
|
|
|
$
|
846,107
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
0.28
|
|
|
$
|
0.40
|
|
|
Basic
weighted shares outstanding
|
|
|
2,122,027
|
|
|
|
2,117,966
|
|
|
Diluted
earnings per share
|
|
$
|
0.28
|
|
|
$
|
0.40
|
|
|
Diluted
weighted shares outstanding
|
|
|
2,122,199
|
|
|
|
2,118,750
|
|
|
Cash
dividends per share
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
|
|
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Paid-in
|
|
|
Retained
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Earnings
|
|
|
Income
|
|
|
Stock
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2007
|
|
|
2,117,966
|
|
|
$
|
5,331,165
|
|
|
$
|
7,305,970
|
|
|
$
|
23,071,921
|
|
|
$
|
349,184
|
|
|
$
|
(257,375
|
)
|
|
$
|
35,800,865
|
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
846,107
|
|
|
|
-
|
|
|
|
-
|
|
|
|
846,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (net of tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on securities available for sale, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of taxes of $312,699
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
525,636
|
|
|
|
-
|
|
|
|
525,636
|
|
|
Other
Comprehensive gains from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivates, net of reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment of $(69,545)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(116,903
|
)
|
|
|
-
|
|
|
|
(116,903
|
)
|
|
Total
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,254,840
|
|
|
Cash
Dividend paid $0.18 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(381,234
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(381,234
|
)
|
|
Fair
Value unexercised stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
3,328
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,328
|
|
|
Balance
at March 31, 2008
|
|
|
2,117,966
|
|
|
$
|
5,331,165
|
|
|
$
|
7,309,298
|
|
|
$
|
23,536,795
|
|
|
$
|
757,917
|
|
|
$
|
(257,375
|
)
|
|
$
|
36,677,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2008
|
|
|
2,117,966
|
|
|
$
|
5,331,165
|
|
|
$
|
7,319,282
|
|
|
$
|
25,049,749
|
|
|
$
|
2,098,248
|
|
|
$
|
(257,375
|
)
|
|
$
|
39,541,069
|
|
|
Comprehensive Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600,015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (net of tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on securities available for sale, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of taxes of $397,354
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
667,937
|
|
|
|
-
|
|
|
|
667,937
|
|
|
Total
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,267,952
|
|
|
Cash
Dividend paid $0.18 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(381,234
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(381,234
|
)
|
|
Common
stock issued
|
|
|
8,500
|
|
|
|
21,250
|
|
|
|
65,450
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
86,700
|
|
|
Unearned
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(80,030
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(80,030
|
)
|
|
Fair
Value unexercised stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
2,092
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,092
|
|
|
Balance
at March 31, 2009
|
|
|
2,126,466
|
|
|
$
|
5,352,415
|
|
|
$
|
7,386,824
|
|
|
$
|
25,188,499
|
|
|
$
|
2,766,186
|
|
|
$
|
(257,375
|
)
|
|
$
|
40,436,549
|
|
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
PERIODS
ENDED MARCH 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
600,015
|
|
|
$
|
846,107
|
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
(270,428
|
)
|
|
|
(34,608
|
)
|
|
Provision
for loan losses
|
|
|
700,000
|
|
|
|
120,000
|
|
|
Provision
for losses on foreclosed real estate
|
|
|
35,010
|
|
|
|
35,010
|
|
|
Provision
for depreciation
|
|
|
191,154
|
|
|
|
210,285
|
|
|
Stock
dividends received
|
|
|
(3,500
|
)
|
|
|
(23,000
|
)
|
|
(Gain)/loss
on sale of other real estate
|
|
|
6,411
|
|
|
|
(32,694
|
)
|
|
(Gain)/loss
on sale of mortgage loans
|
|
|
(46,099
|
)
|
|
|
(58,514
|
)
|
|
(Gain)/loss
on sale of investment securities
|
|
|
-
|
|
|
|
(148,116
|
)
|
|
(Gain)/loss
on sale of other securities
|
|
|
(1,262
|
)
|
|
|
-
|
|
|
Net
amortization (accretion) of securities
|
|
|
(16,441
|
)
|
|
|
(26,631
|
)
|
|
Amortization
of deposit premium
|
|
|
26,904
|
|
|
|
26,904
|
|
|
Writedown
of other real estate
|
|
|
15,000
|
|
|
|
-
|
|
|
Proceeds
from sales, maturities and paydowns
|
|
|
|
|
|
|
|
|
|
of
trading securities
|
|
|
-
|
|
|
|
19,349,806
|
|
|
Net
change in:
|
|
|
|
|
|
|
|
|
|
Accrued
interest receivable
|
|
|
95,112
|
|
|
|
319,301
|
|
|
Cash
surrender value
|
|
|
(14,192
|
)
|
|
|
(13,739
|
)
|
|
Other
assets
|
|
|
(389,343
|
)
|
|
|
(283,462
|
)
|
|
Unearned
compensation
|
|
|
(80,031
|
)
|
|
|
-
|
|
|
Accrued
interest payable
|
|
|
(94,304
|
)
|
|
|
(238,920
|
)
|
|
Accrued
taxes and other liabilities
|
|
|
(518,309
|
)
|
|
|
54,552
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
235,697
|
|
|
|
20,102,281
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease
in federal funds sold
|
|
|
(89,615
|
)
|
|
|
88,406
|
|
|
Proceeds
from sales, maturities and paydowns of securities:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
|
6,761,262
|
|
|
|
2,983,919
|
|
|
Held-to-maturity
|
|
|
1,922,188
|
|
|
|
584,248
|
|
|
Purchase
of securities:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
|
(7,732,408
|
)
|
|
|
-
|
|
|
Held-to-maturity
|
|
|
-
|
|
|
|
(14,811,294
|
)
|
|
(Increase)/decrease
in loans
|
|
|
3,211,274
|
|
|
|
(7,443,990
|
)
|
|
Proceeds
from sale and transfers of other real estate
|
|
|
4,900
|
|
|
|
299,808
|
|
|
Purchase
of premises and equipment
|
|
|
(8,376
|
)
|
|
|
(31,393
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) investing activities
|
|
|
4,069,225
|
|
|
|
(18,330,296
|
)
|
|
BRITTON
& KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
PERIODS
ENDED MARCH 31,
|
(continued)
|
|
|
2009
|
|
|
2008
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
Increase
/(decrease) in customer deposits
|
|
|
4,203,342
|
|
|
|
2,079,916
|
|
|
Increase
/(decrease) in brokered deposits
|
|
|
73,722
|
|
|
|
(5,844,612
|
)
|
|
Increase
/(decrease) in securities sold under
|
|
|
|
|
|
|
|
|
|
repurchase
agreements
|
|
|
(454,774
|
)
|
|
|
1,052,178
|
|
|
Increase
/(decrease) in FHLB advances
|
|
|
(9,172,000
|
)
|
|
|
(506,080
|
)
|
|
Increase
/(decrease) in advances from borrowers
|
|
|
|
|
|
|
|
|
|
for
taxes and insurance
|
|
|
(147,580
|
)
|
|
|
(154,269
|
)
|
|
Cash
dividends paid
|
|
|
(381,234
|
)
|
|
|
(381,234
|
)
|
|
Common
stock issued
|
|
|
86,700
|
|
|
|
-
|
|
|
Fair
value of unexercised stock options
|
|
|
2,092
|
|
|
|
3,328
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
(5,789,732
|
)
|
|
|
(3,750,773
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN CASH AND DUE FROM BANKS
|
|
|
(1,484,810
|
)
|
|
|
(1,978,788
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND DUE FROM BANKS AT BEGINNING OF PERIOD
|
|
|
6,951,543
|
|
|
|
8,732,307
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND DUE FROM BANKS AT END OF PERIOD
|
|
$
|
5,466,733
|
|
|
$
|
6,753,519
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW
|
|
|
|
|
|
|
|
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for interest
|
|
$
|
1,845,309
|
|
|
$
|
2,744,676
|
|
|
Cash
paid during the period for income taxes
|
|
$
|
735,773
|
|
|
$
|
193,452
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE
OF NONCASH INVESTING AND
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gains (losses)
|
|
|
|
|
|
|
|
|
|
on securities available for sale
|
|
$
|
1,065,291
|
|
|
$
|
838,335
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in the deferred tax effect in unrealized
|
|
|
|
|
|
|
|
|
|
gains (losses) on securities available for sale
|
|
$
|
397,354
|
|
|
$
|
312,699
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gains (losses) on derivative
|
|
$
|
-
|
|
|
$
|
(186,448
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Change
in the deferred tax effect in
|
|
|
|
|
|
|
|
|
|
unrealized gains (losses) on derivative
|
|
$
|
-
|
|
|
$
|
(69,545
|
)
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2009
Note
A. Basis of Presentation
The consolidated balance sheet for
Britton & Koontz Capital Corporation (the "Company") as of December 31,
2008, has been derived from the audited financial statements of the Company for
the year then ended. The accompanying interim consolidated financial
statements as of March 31, 2009, are unaudited and reflect all normal recurring
adjustments which, in the opinion of management, are necessary for the fair
presentation of the Company’s financial position and operating results as of and
for the periods presented. Certain 2008 amounts have been
reclassified to conform to the 2009 presentation.
Note
B. Interest Rate Risk Management
On August 10, 2007, the Bank entered
into a 5 year, no-call 2-year Structured Repurchase Agreement with JP Morgan
Chase Bank, N.A. (“Chase”) for $20 million. Terms of the transaction
call for the Bank to pay a fixed rate of 4.82%. In the first two
years such rate is subject to reduction if 3-Month LIBOR is greater than 5.36%
measured two business days prior to the 10
th
of each
February, May, August and November. Accordingly, during this two-year
no-call period, the Bank’s cost of funds cannot exceed the initial rate of
4.82%. On November 13, 2007, the Company entered into a 5 year,
no-call 3-year Structured Repurchase Agreement with Chase for an additional $20
million. Terms of the transaction call for the Bank to pay a fixed
rate of 4.71%. In the first three years such rate is subject to
reduction if 3-Month LIBOR is greater than 4.90% measured two business days
prior to the 13
th
of each
February, May, August and November. Accordingly, during this three
year no-call period, the Bank’s cost of funds cannot exceed the initial rate of
4.71%. Chase, in its discretion, may terminate the transactions on
August 10, 2009 and November 13, 2010, respectively, and quarterly
thereafter. The Bank is required to maintain a margin percentage of
105% on the subject securities to both transactions. These agreements
with Chase were entered into as a means of adding additional leverage and to
lock in a fixed rate for a certain period of time. Additionally, both
transactions carry a cap embedded into the interest rate that protects the
Company in the case of adverse interest rate increases.
Note
C. Loans Held-for-Sale
The Company originates loans that
will be sold in the secondary market and other loans that it plans to hold to
maturity. Loans to be held in the portfolio are classified at
origination based on the Company’s intent and ability to hold until
maturity. These loans are reported at their outstanding
balance. Loans held for sale are designated at origination and locked
in with an approved investor by obtaining a forward commitment to purchase the
loan, usually not to exceed 30 days from closing. Management has a
clear intent to sell the loan based on the commitment it has obtained from the
investor.
Loans held-for-sale are primarily
thirty year and fifteen year fixed rate, one to four family real estate loans
which are valued at the lower of cost or market, as determined by outstanding
commitments from investors or current investor yield requirements, calculated on
an individual basis. These loans are sold to protect earnings and
equity from undesirable shifts in interest rates. Unrealized losses
on loans held-for-sale, if any, are charged against income in the period of
decline. Such declines are recorded in a valuation allowance account
and deducted from the cost basis of the loans. Gains on loans
held-for-sale are recognized when realized. At March 31, 2009, the
Company did not have any loans held-for-sale.
At least annually, all loans held in
the portfolio are analyzed and compiled as to the individual characteristics of
each loan. If at any time a decision is made to sell any loan in the
portfolio, such loan is reclassified as held-for-sale and carried at the lower
of cost or market.
Note
D. Junior Subordinated Debentures
On March 26, 2003, the Company
finalized its participation in FTN Financial Capital Market’s and Keefe,
Bruyette & Woods’ pooled trust preferred offering. The Company
established Britton & Koontz Statutory Trust # 1 which issued 5,000 capital
securities and 155 common securities with an aggregate liquidation amount of $5
million and $155 thousand, respectively. The term of the capital
securities and debentures is 30 years, callable after 5 years at the option of
the Company. The initial interest rate was 4.41%, adjusting quarterly
at 3-Month LIBOR plus 3.15% and capped at 11.75%. The interest rate
at March 31, 2009, was 4.38%. The securities are currently
callable on a quarterly basis.
Note
E. Loan Commitments
In the ordinary course of business, the
Company enters into commitments to extend credit to its
customers. Letters of credit at both March 31, 2009, and December 31,
2008, were $3.6 million. As of March 31, 2009, the Company had
entered into other commercial and residential loan commitments with certain
customers that had an aggregate unused balance of $52.0 million, a slight
decrease from
$
52.1
million at December 31, 2008. This compares with loan commitments of
$59.3 million and $58.4 million at March 31, 2008, and December 31, 2007,
respectively. Because letters of credit and loan commitments often
are not used in their entirety, if at all, before they expire, the balances on
such commitments should not be used to project actual future liquidity
requirements. However, the Company does incorporate expectations
about the level of draws under all credit-related commitments into its funds
management process.
Note
F. Earnings per Share
Basic income per share amounts are
computed by dividing net income by the weighted average number of common shares
outstanding. The computation of diluted income per share assumes the
exercise of all outstanding securities potentially convertible into common
stock, including options granted, unless the effect is
anti-dilutive. The effect will be anti-dilutive when the exercise
price per share of an option exceeds the current market price for a share of
Company stock. The Company accounts for its options under the
recognition and measurement of fair value provisions of Statement of Financial
Accounting Standards No. 123R “Share-Based Payment.” The Company uses
the Black-Scholes method for valuing stock options. The following
information sets forth the computation of earnings per share for the three
months ended March 31, 2009 and 2008.
|
|
|
For
the three months ended
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
|
2,122,027
|
|
|
|
2,117,966
|
|
|
Dilutive
effect of granted options
|
|
|
172
|
|
|
|
784
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
|
2,122,199
|
|
|
|
2,118,750
|
|
|
Net
income
|
|
$
|
600,015
|
|
|
$
|
846,107
|
|
|
Net
income per share-basic
|
|
$
|
0.28
|
|
|
$
|
0.40
|
|
|
Net
income per share-diluted
|
|
$
|
0.28
|
|
|
$
|
0.40
|
|
Ite
m 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
This discussion is intended to
present a review of the major factors affecting the financial condition and
results of operations of Britton & Koontz Capital Corporation (the
“Company”) and its wholly-owned subsidiary, Britton & Koontz Bank, N.A. (the
“Bank”), as of March 31, 2009, as compared to the Company’s financial condition
as of December 31, 2008, and the results of operations of the Company for the
three-month period ended March 31, 2009, as compared to the corresponding period
in 2008.
Summary
On April 24, 2009, the Company
announced net income and earnings per share for the quarter ended March 31,
2009, of $600 thousand and $.28 per diluted share, respectively, compared to
$846 thousand and $.40 per diluted share for the quarter ended March 31,
2008. The decrease in earnings in the first quarter of 2009 as
compared to the same period in 2008 is primarily attributable to the Company’s
increase in the provision to the allowance for loan losses by $580 thousand in
the first quarter of 2009. Also, costs associated with FDIC premium
assessments in the first quarter of 2009 increased $108 thousand over the same
period in 2008. During the first quarter of 2009, the Company
experienced increases in its nonperforming assets, primarily in its Mississippi
markets, which prompted the additional provision expense.
Assets declined $5.3 million during
the first quarter of 2009 to $407.7 million as loan demand weakened and the
Company’s 1-4 family residential portfolio continued to pay down as
expected. Investment securities were $170.9 million at March 31,
2009, compared to $170.7 million at December 31, 2008. Loans declined
$3.9 million to $221.7 million at March 31, 2009, from $225.5 million at
December 31, 2008. Deposits increased $4.3 million to $261.5 million
at March 31, 2009 from $257.2 million at December 31, 2008, while borrowings
from the Federal Home Loan Bank (“FHLB”) declined $9.2 million to $45.8
million. Total stockholders’ equity increased $896 thousand to
$40.4 million at March 31, 2009, from $39.5 million at December 31,
2008.
The Bank’s provision for loan losses
for the three month period ending March 31, 2009, was increased to $700
thousand, compared to $120 thousand during the same period in
2008. As stated earlier, the increase in provision was in response to
increases in non-performing assets after December 31, 2008. Total
non-performing assets ended the first quarter of 2009 at $7.3 million compared
to $5.0 million at December 31, 2008. Approximately $4.0 million of
the nonaccrual loans are two commercial real estate loans. Both are
subject to formal forbearance agreements, which are described in more detail in
the “Asset Quality” section below.
Non-performing assets as a percent of
average assets increased to 1.78% at March 31, 2009, from 1.25% at December 31,
2008. The allowance for loan losses ended the first quarter of 2009
at $3.0 million, or 1.34% of loans, compared to $2.4 million, or 1.06% of loans,
at December 31, 2008. Other real estate at March 31, 2009 was $1.4
million compared to $919 thousand at December 31, 2008. One property
included in other real estate in the amount of $534 thousand has been contracted
for sale in the second quarter of 2009.
The Company continues to focus on
credit issues and asset quality. Management believes that it has strengthened
the Company’s underwriting and loan review process; it has also undertaken a
rigorous inspection of the Company’s portfolio management
process. Even though the Company’s asset quality ratios have
increased during the first quarter, the Company expects its portfolio
management, including improved underwriting standards and early involvement in
problem loans, to contribute to a more consistent and effective credit
culture.
The Company has executed a purchase
agreement on a second location in its Baton Rouge, Louisiana
market. Under current plans, this location will operate as a
specialty branch focusing on mortgage and commercial loan origination as well as
offering wealth management and other private banking services.
Investment Securities
The Company’s investment portfolio at
March 31, 2009, consisted of mortgage-backed and municipal
securities. Investment securities that are classified as
held-to-maturity (“HTM”) are accounted for by the amortized cost method while
securities in the available-for-sale (“AFS”) category are accounted for at fair
value. Changes in value of the AFS securities are recorded in the
equity section of the balance sheet in “accumulated other comprehensive
income.”
Management determines the
classification of its securities at acquisition. Total HTM and
AFS investment securities remained relatively stable as cash
flows of approximately $9.8 million were offset by new purchases of nearly $8.0
million and increases in fair value of $1.1 million. Total HTM and
AFS securities at March 31, 2009, were $52.9 million and $114.0 million,
respectively, compared to $54.8 million and $111.9 million, respectively, at
December 31, 2008. Equity securities ended both periods at $4.0
million At March 31, 2009, equity securities were comprised
primarily of Federal Reserve Bank stock of $522 thousand, FHLB stock of $3.2
million, ECD Investments, LLC (“ECD”) membership interests of $100 thousand and
the Company’s $155 thousand investment in B&K Statutory Trust.
The amortized cost of the Bank’s
investment securities, including HTM and AFS securities, at March 31, 2009 and
December 31, 2008, are summarized below.
COMPOSITION
OF INVESTMENT PORTFOLIO
(Amortized Cost)
|
|
|
|
|
|
|
|
|
Mortgage-Backed
Securities
|
|
$
|
123,827,837
|
|
|
$
|
123,834,755
|
|
|
Obligations
of State and
|
|
|
|
|
|
|
|
|
|
Political
Subdivisions
|
|
|
38,601,561
|
|
|
|
39,529,246
|
|
|
Total
|
|
$
|
162,429,398
|
|
|
$
|
163,364,001
|
|
Loans
Total loans decreased $3.9 million to
$221.7 million at March 31, 2009, from $225.5 million at December 31, 2008, due
to decreases in the commercial loan portfolio of $2.5 million and normal
paydowns in the residential mortgage portfolio of $1.4 million. Total
loans to deposit ratio was 84.8% at March 31, 2009, compared to 87.7% at
December 31, 2008. The following table presents the Bank’s loan portfolio
composition at March 31, 2009, and December 31, 2008.
COMPOSITION
OF LOAN PORTFOLIO
|
|
|
|
|
|
|
|
|
Commercial,
financial & agricultural
|
|
$
|
25,784,000
|
|
|
$
|
25,128,000
|
|
|
Real
estate-construction
|
|
|
27,839,000
|
|
|
|
30,910,000
|
|
|
Real
estate-1-4 family residential
|
|
|
60,645,000
|
|
|
|
65,312,000
|
|
|
Real
estate-other
|
|
|
101,456,000
|
|
|
|
97,952,000
|
|
|
Installment
|
|
|
5,826,000
|
|
|
|
6,038,000
|
|
|
Other
|
|
|
103,000
|
|
|
|
171,000
|
|
|
Total
loans
|
|
$
|
221,653,000
|
|
|
$
|
225,511,000
|
|
The Company’s loan portfolio at March
31, 2009, had no significant concentrations of loans other than in the
categories presented in the table above.
Bank Premises
There have been no material changes
in the Company’s premises since December 31, 2008. The Company has
executed a purchase agreement for a second location in its Baton Rouge,
Louisiana market. This transaction is expected to close in May
2009. The Company plans for this new location to house a specialty
branch, focusing on mortgage and commercial loan origination as well as wealth
management and other private banking activities.
Asset
Quality
Nonperforming assets, including
non-accrual loans of $5.4 million, other real estate of $1.4 million and loans
90 days or more delinquent of $516 thousand, increased $2.3 million to $7.3
million at March 31, 2009, from $5.0 million at year-end. The
increase is due primarily to one commercial credit in the amount of $2.7 million
that was classified as nonperforming in the first quarter of
2009. The new credit, together with one other existing nonperforming
loan, accounted for almost 75% of the total nonaccrual loan portfolio at March
31, 2009. Both of these credits are secured by commercial real estate
and are under formal forbearance agreements. Under each of these
agreements, the Company has agreed to refrain from foreclosing on the collateral
securing the loan provided that the relevant borrower complies with the
forbearance agreement’s terms, which include the obligation to repay principal
and interest on the loan. Each borrower is currently in compliance
with the terms of its forbearance agreement. The higher non-accruals pushed the
Bank’s ratio of nonperforming loans to total loans to 2.66% at March 31, 2009,
from 1.81% at December 31, 2008. A breakdown of nonperforming assets
at March 31, 2009, and December 31, 2008, is shown
below.
BREAKDOWN
OF NONPERFORMING ASSETS
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
|
Nonaccrual
loans by type:
|
|
|
|
|
|
|
|
Real
estate
|
|
$
|
5,179
|
|
|
$
|
3,364
|
|
|
Installment
|
|
|
79
|
|
|
|
86
|
|
|
Commercial
and all other loans
|
|
|
113
|
|
|
|
118
|
|
|
Total
nonaccrual loans
|
|
|
5,371
|
|
|
|
3,568
|
|
|
Loans
past due 90 days or more
|
|
|
516
|
|
|
|
518
|
|
|
Total
nonperforming loans
|
|
|
5,886
|
|
|
|
4,086
|
|
|
Other
real estate owned (net)
|
|
|
1,419
|
|
|
|
919
|
|
|
Total
nonperforming assets
|
|
$
|
7,306
|
|
|
$
|
5,005
|
|
|
Nonperforming
loans as a percent of loans, net of unearned
interest
and loans held for sale
|
|
|
2.66
|
%
|
|
|
1.81
|
%
|
Allowance for Loan
Losses
The allowance for loan losses is
established as losses are estimated through a provision for loan losses charged
against operations and is maintained at a level that management considers
adequate to absorb losses in the loan portfolio. The allowance is
subject to change as management re-evaluates the adequacy of the allowance on a
quarterly basis. Management’s judgment in determining the adequacy of
the allowance is inherently subjective and is based on the evaluation of
individual loans, the known and inherent risk characteristics and size of the
loan portfolios, the assessment of current economic and real estate market
conditions, estimates of the current value of underlying collateral, past loan
loss experience, review of regulatory authority examination reports, evaluations
of specific loans and other relevant factors. The Bank risk
rates each loan at the initiation of the transaction and risk ratings are
reviewed and changed, when necessary, during the life of the
loan. Loans assigned higher risk ratings are monitored more closely
by management.
The allowance consists of specific,
general and unallocated components. The specific component relates to
loans that are considered impaired. Loan loss reserve factors are
multiplied against the balances in each risk rating category to arrive at the
appropriate level of the specific component of the allowance. The
general component of the allowance for loan losses groups loans with similar
characteristics; the level of the general component is a percentage of the
balance of these loans. The percentage is based upon historical
losses and the inherent risks within each category. The unallocated
portion of the allowance reflects management’s estimate of probable but
undetected losses inherent in the portfolio; such estimates are influenced by
uncertainties in economic conditions, delays in obtaining information, including
unfavorable information about a borrower’s financial condition, difficulty in
identifying triggering events that correlate to subsequent loss rates, and risk
factors that have not yet manifested themselves in loss allocation
factors. The methodology for determining the adequacy of the
allowance for loan losses is consistently applied; however, revisions may be
made to the methodology and assumptions based on historical information related
to charge-off and recovery experience and management’s evaluation of the current
loan portfolio.
Based upon this evaluation,
management believes the allowance for loan losses of $3.0 million at March
31, 2009, which represents 1.34% of gross loans, is adequate, under
prevailing economic conditions, to absorb probable losses on existing
loans. At March 31, 2009, total reserves included specific reserves
of $1.5 million, general reserves of $1.1 million and unallocated reserves of
$401 thousand. At December 31, 2008, the allowance for loan
loss was $2.4 million, or 1.06% of gross loans.
Provision for Loan
Losses
The provision for loan losses is a
charge to earnings to maintain the allowance for loan losses at a level
consistent with management’s assessment of the loan portfolio in light of
current and expected economic conditions. The provision for the three
months ended March 31, 2009, was increased to $700 thousand from $120 thousand
in the same period in 2008. The increase in provision was added in
response to increases in nonaccrual loans since December 31, 2008, as discussed
above. Net charge-offs declined in the first quarter of 2009 to $132
thousand from $175 thousand during the same period in 2008.
The Company regularly reviews the
allowance account in an effort to maintain it at an adequate level and collects
necessary data to make a proper provision expense to earnings. Based
upon this evaluation, and considering the net charge-offs in the 1
st
quarter
of 2009 and possible charge-offs in the 2
nd
quarter, management currently believes that a provision for loan losses of
approximately $250 thousand for the second quarter of 2009 will be adequate to
provide coverage for possible loan losses that may be inherent in the loan
portfolio. The following table details the allowance activity for the
three months ended March 31, 2009 and 2008:
ACTIVITY
OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
|
Balance
at beginning of period
|
|
$
|
2,398
|
|
|
$
|
2,431
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
|
(153
|
)
|
|
|
(259
|
)
|
|
Commercial
|
|
|
-
|
|
|
|
(45
|
)
|
|
Installment
and other
|
|
|
(2
|
)
|
|
|
(14
|
)
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
|
4
|
|
|
|
4
|
|
|
Commercial
|
|
|
15
|
|
|
|
105
|
|
|
Installment
and other
|
|
|
4
|
|
|
|
34
|
|
|
Net
(charge-offs)/recoveries
|
|
|
(132
|
)
|
|
|
(175
|
)
|
|
Provision
charged to operations
|
|
|
700
|
|
|
|
120
|
|
|
Balance
at end of period
|
|
$
|
2,966
|
|
|
$
|
2,376
|
|
|
Allowance
for loan losses as a percent of loans, net of unearned interest and loans
held for sale
|
|
|
1.34
|
%
|
|
|
1.03
|
%
|
|
Net
charge-offs as a percent of average loans
|
|
|
.06
|
%
|
|
|
.08
|
%
|
Potential Problem Loans
At March 31, 2009, the Company had no
loans, other than those balances incorporated in the above tables, which
management had significant doubts as to the ability of the borrower to comply
with current repayment terms.
Deposits
Total deposits increased $4.3 million
from $257.2 million at December 31, 2008, to $261.5 million at March 31,
2009. The increase in total deposits is due primarily to additional
public deposits from the Natchez Adams County School District resulting from the
bid won in mid-2008. The composition of the Company’s deposits is
described in the following table.
COMPOSITION
OF DEPOSITS
|
|
|
|
|
|
|
|
|
Non-Interest
Bearing
|
|
$
|
48,479,421
|
|
|
$
|
51,119,827
|
|
|
NOW
Accounts
|
|
|
55,232,497
|
|
|
|
48,338,323
|
|
|
Money
Market Deposit Accounts
|
|
|
34,027,022
|
|
|
|
33,662,518
|
|
|
Savings
Accounts
|
|
|
18,942,242
|
|
|
|
17,736,516
|
|
|
Certificates
of Deposit
|
|
|
104,810,303
|
|
|
|
106,357,236
|
|
|
Total
Deposits
|
|
$
|
261,491,485
|
|
|
$
|
257,214,420
|
|
Borrowings
Total
bank borrowings, including FHLB advances, federal funds purchased and customer
and structured repurchase agreements, decreased $9.6 million to $96.9 million at
March 31, 2009, compared to $106.6 million at December 31, 2008. The
decrease in borrowed funds is due primarily to the increase in deposits as a
funding source, which allowed to the Company to decrease its reliance on
borrowings to meet its liquidity needs. The Company includes in these
borrowings balances that the Company has pursuant to agreements with local
depositors to sweep overnight funds from their commercial deposit
accounts. Because of the nature of the agreements, these sweep
accounts are included as borrowings rather than local customer deposits; these
amounts are classified as repurchase agreements and included under the
“Securities sold under repurchase agreements” line item on the Company’s balance
sheet. Management believes these accounts perform more like a core
deposit rather than a bank obligation.
Capital
Stockholders' equity totaled $40.4
million at March 31, 2009, compared to $39.5 million at December 31,
2008. Earnings of $600 thousand and a $668 thousand change in
unrealized losses in the AFS investment portfolio were offset by $381 thousand
in dividends paid.
The Company and Bank maintained a
total capital to risk weighted assets ratio of 17.79% and 16.03%, respectively,
a Tier 1 capital to risk weighted assets ratio of 16.62% and 14.86%,
respectively, and a leverage ratio of 10.31% and 9.26%, respectively, at March
31, 2009. These levels substantially exceed the minimum requirements
of bank regulatory agencies for well-capitalized institutions of 10.00%, 6.00%
and 5.00%, respectively. Components of comprehensive income are
excluded from the calculation of capital ratios. The ratio of
shareholders' equity to assets increased to 9.9% at March 31, 2009, compared to
9.6% at December 31, 2008.
Off-Balance Sheet
Arrangements
There have been no changes in the
Company’s off-balance sheet arrangements during the three months ended March 31,
2009. See Note B and Note E to the Company’s consolidated financial
statements for a description of the Company’s off-balance sheet
arrangements.
Results
of Operations
Net Interest Income and Net Interest
Margin
One of the largest components of the
Company’s earnings is net interest income, which is the difference between the
interest and fees earned on loans and investments and the interest paid for
deposits and borrowed funds. The net interest margin is net interest
income expressed as a percentage of average earning assets.
Net interest income increased $383
thousand to $3.7 million for the three months ended March 31, 2009, compared to
the same period in 2008. The increase is due to growth in net earning
assets, which added approximately $480 thousand to net interest income over the
prior period, offset by approximately $97 thousand due to changes in interest
rates. The growth in net interest income is evidenced mainly by the
increase in average assets to $409 million at March 31, 2009, primarily from
additional investment security purchases. Average investment
securities increased $51 million from $120 million at March 31, 2008, to $171
million at March 31, 2009, as the Company took advantage of a more desirable
yield curve and the lower interest rate environment. The Company’s
net interest margin remained relatively stable, decreasing only 5 basis points
to 3.77% at March 31, 2009, from 3.82% at March 31, 2008.
Non-Interest
Income/ Non-Interest Expense
Non-interest income
ended March 31, 2009, at $619 thousand compared to $783 thousand at March 31,
2008. The difference was primarily due to a gain of $148 thousand
from the sale of the Company’s trading investment security portfolio in the
first quarter of 2008. Non-interest expense increased $88 thousand as
compared to the first quarter of 2008 and ended the first quarter of 2009 at
$2.9 million. A $108 thousand increase in FDIC premiums and an
increase in other real estate expenses of $47 thousand were offset by lower
personnel, occupancy and equipment costs.
Income Taxes
The
Company recorded income tax expense of $84 thousand for the three months ended
March 31, 2009, compared to $286 thousand for the same period in
2008. The decreased tax expense was due primarily to the tax effects
resulting from the additional $500 thousand in the provision for loan losses in
the first quarter of 2009.
Liquidity and Capital
Resources
The Company utilizes a funds
management process to assist management in maintaining net interest income
during times of rising or falling interest rates and in maintaining sufficient
liquidity. Principal sources of liquidity for the Company are asset
cash flows, customer deposits and the ability to borrow against investment
securities and loans. Secondary sources of liquidity include the sale
of investment and loan assets. All components of liquidity are
reviewed and analyzed on a monthly basis.
The Company has established a
liquidity contingency plan to guide the Bank in the event of a liquidity
crisis. The plan describes the normal operating environment,
prioritizes funding options and outlines management responsibilities and board
notification procedures. As more emphasis has been directed to
liquidity needs, the Company is in the process of enhancing its contingency plan
to include stress levels, heightened reporting and monitoring along with testing
to better understand and report its liquidity position.
The Company’s cash and cash
equivalents decreased $1.5 million to $5.5 million at March 31, 2009, from $7.0
million at December 31, 2008. Cash provided by operating and
investing activities during the first quarter of 2009 was $315 thousand and $4.1
million, respectively, while financing activities used $5.9 million over the
same period.
At March 31, 2009, the Company had
unsecured federal funds lines with correspondent banks of $44 million and
maintained the ability to draw on its available line of credit with the FHLB in
the amount of approximately $35 million. In addition to these lines
of credit, the bank had approximately $66 million in liquid assets including
unencumbered investment securities available for collateralized borrowing and
approximately $50 million available from the brokered CD
market. Capital expenditures of approximately $900 thousand for the
acquisition and development of a second Baton Rouge location are expected to
primarily come from cash provided by operating activities. Management
believes it maintains adequate liquidity for the Company’s current needs and
does not expect the expenditures associated with the development of its new
Baton Rouge location to negatively affect its strong liquidity
position.
Certain restrictions exist on the
ability of the Bank to transfer funds to the Company in the form of dividends
and loans. These restrictions are described in detail in Part II,
Item 2, “Unregistered Sales of Equity Securities and Use of
Proceeds.” These restrictions have not had, and are not expected in
the future to have, a material impact on the Company’s ability to meet its
anticipated cash obligations.
DISCLOSURE REGARDING
FORWARD-LOOKING STATEMENTS
This
Report includes “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
such forward-looking statements are based on numerous assumptions (some of which
may prove to be incorrect) and are subject to risks and uncertainties, which
could cause the actual results to differ materially from the Company’s
expectations. Forward-looking statements have been and will be made
in written documents and oral presentations of the Company. Such
statements are based on management’s beliefs as well as assumptions made by and
information currently available to management. When used in the
Company’s documents (including this Report) or oral presentations, the words
“anticipate,” “estimate,” “expect,” “objective,” “projection,” “forecast,”
“goal” and similar expressions are intended to identify forward-looking
statements. In addition to any assumptions and other factors referred
to specifically in connection with such forward-looking statements, factors that
could cause the Company’s actual results to differ materially from those
contemplated in any forward-looking statements include, among others, increased
competition, regulatory factors, economic conditions, changing market
conditions, availability or cost of capital, employee workforce factors, costs
and other effects of legal and administrative proceedings, and changes in
federal, state or local legislative requirements. The Company
undertakes no obligation to update or revise any forward-looking statements,
whether as a result of changes in actual results, changes in assumptions or
other factors affecting such statements.
Item
3. Quantitative and Qualitative
Disclosures about Market Risk
No disclosure is required hereunder
as the Company is a “smaller reporting company,” as defined in Item 10(f) (1) of
Regulation S-K.
Item
4T.
Controls and
Procedures
The Company carried out an
evaluation, under the supervision and with the participation of the Chief
Executive Officer of the Company (“CEO”) and the Chief Financial Officer of the
Company (“CFO”), of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and
Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of
March 31, 2009. Based on this evaluation, the CEO and CFO concluded
that the Company’s disclosure controls and procedures are effective in timely
alerting them to material information required to be included in the Company’s
SEC reports.
There has been no change in the
Company’s internal control over financial reporting that occurred during the
Company’s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PA
RT II. OTHER INFORMATION
Ite
m 2. Unregistered Sales of Equity
Securities and Use of Proceeds
The
Company’s ability to pay dividends to its shareholders is substantially
dependent on the ability of the Bank to transfer funds to the Company in the
form of dividends, loans and advances. Federal law imposes
limitations on the payment of dividends by national banks. Under
federal law, the directors of a national bank, after making proper deduction for
all expenses and other deductions required by the Comptroller of the Currency,
may credit net profits to the bank’s undivided profits account and may declare a
dividend from that account of so much of the net profits as they judge
expedient. The Comptroller and the Federal Reserve Board have each
indicated that banking organizations should generally pay dividends only out of
current operating earnings. The Bank’s ability to pay dividends to
the Company is also limited by prudence, statutory and regulatory guidelines and
a variety of other factors.
At March 31, 2009,
retained earnings available for payment of cash dividends under applicable
dividend regulations exceeded $5.2 million.
Certain restrictions also exist on
the ability of the Bank to transfer funds to the Company in the form of
loans. Federal Reserve regulations limit the amount the Bank may loan
to the Company unless such loans are collateralized by specific
obligations. At March 31, 2009, the maximum amount available for
transfer from the Bank to the Company in the form of loans on a secured basis
was $4.2 million. There were no loans outstanding from the Bank to
the Company at March 31, 2009.
Ite
m 6. Exhibits
|
Exhibit
|
|
Description of Exhibit
|
|
|
|
|
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3.1
|
*
|
Amended
and Restated Articles of Incorporation of Britton & Koontz Capital
Corporation, incorporated by reference to Exhibit 3.01 to the Company’s
Current Report on Form 8-K filed with the Securities and Exchange
Commission (“Commission”) on February 20, 2009.
|
|
|
|
|
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3.2
|
*
|
By-Laws
of Britton & Koontz Capital Corporation, as amended, incorporated by
reference to Exhibit 3.2 to Company’s Current Report on Form 8-K filed
with the Commission on October 22, 2008.
|
|
|
|
|
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4.1
|
*
|
Shareholder
Rights Agreement dated June 1, 1996 between Britton & Koontz Capital
Corporation and Britton & Koontz First National Bank, as Rights Agent,
incorporated by reference to Exhibit 4.3 to Company’s Registration
Statement on Form S-8, Registration No. 333-20631, filed with the
Commission on January 29, 1997, as amended by Amendment No. 1 to Rights
Agreement dated as of August 15, 2006, incorporated by reference to
Exhibit 4.2 to Company’s Current Report on Form 8-K filed with the
Commission on August 17, 2006.
|
|
|
|
|
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10.1
|
*
|
Executive
Employment Agreement dated as of February 19, 2009 between the Company and
W. Page Ogden, incorporated by reference to Exhibit 10.01 to the Company’s
Current Report on Form 8-K filed with the Commission on February 20,
2009.
|
|
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31.1
|
|
Certifications
of the Chief Executive Officer, as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
31.2
|
|
Certifications
of the Chief Financial Officer, as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.1
|
|
Certifications
of the Chief Executive Officer, as required pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
32.2
|
|
Certifications
of the Chief Financial Officer, as required pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
*
|
As
indicated in the column entitled “Description of Exhibits” this exhibit is
incorporated by reference to another filing or
document.
|
SIG
NATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
BRITTON & KOONTZ CAPITAL
CORPORATION
Date: May 7,
2009
/s/ W. Page Ogden
W. Page Ogden
Chief Executive Officer
Date: May 7,
2009
/s/ William M. Salters
William M. Salters
Chief Financial Officer
|
Exhibit
|
Description of Exhibit
|
|
|
|
|
31.1
|
Certifications
of the Chief Executive Officer, as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
31.2
|
Certifications
of the Chief Financial Officer, as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
32.1
|
Certifications
of the Chief Executive Officer, as required pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
|
32.2
|
Certifications
of the Chief Financial Officer, as required pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
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