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 September 30, 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
o
(Do
not check if a smaller reporting company)
|
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 November 1, 2009.
B
RITTON & KOONTZ CAPITAL CORPORATION
AND
SUBSIDIARIES
INDEX
PART
I FINANCIAL
INFORMATION
Item
1. Financial
Statements
BRITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
|
|
|
September
30,
|
|
|
December
31,
|
|
|
ASSETS:
|
|
2009
|
|
|
2008
|
|
|
Cash
and due from banks:
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
$
|
6,533,797
|
|
|
$
|
6,752,462
|
|
|
Interest
bearing
|
|
|
1,019,095
|
|
|
|
199,081
|
|
|
Total
cash and due from banks
|
|
|
7,552,892
|
|
|
|
6,951,543
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
funds sold
|
|
|
314,942
|
|
|
|
-
|
|
|
Investment
Securities:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
(amortized cost, in 2009 and 2008,
|
|
|
|
|
|
|
|
|
|
of
$94,834,708 and $108,548,988, respectively)
|
|
|
99,555,694
|
|
|
|
111,895,476
|
|
|
Held-to-maturity
(market value, in 2009 and 2008,
|
|
|
|
|
|
|
|
|
|
of
$51,346,674 and $54,843,091, respectively)
|
|
|
49,782,534
|
|
|
|
54,815,013
|
|
|
Equity
securities
|
|
|
3,261,100
|
|
|
|
4,009,938
|
|
|
Loans,
less allowance for loan losses of $2,444,714
|
|
|
|
|
|
|
|
|
|
in
2009 and $2,397,802 in 2008
|
|
|
221,066,179
|
|
|
|
223,113,495
|
|
|
Loans
held for sale
|
|
|
764,500
|
|
|
|
-
|
|
|
Bank
premises and equipment, net
|
|
|
7,686,544
|
|
|
|
6,922,835
|
|
|
Other
real estate, net of reserves of $403,420 in 2009
|
|
|
|
|
|
|
|
|
|
and
$198,390 in 2008
|
|
|
1,177,100
|
|
|
|
919,204
|
|
|
Accrued
interest receivable
|
|
|
1,979,271
|
|
|
|
2,080,693
|
|
|
Cash
surrender value of life insurance
|
|
|
1,089,667
|
|
|
|
1,055,627
|
|
|
Core
Deposits, net
|
|
|
477,330
|
|
|
|
558,042
|
|
|
Other
assets
|
|
|
1,122,512
|
|
|
|
754,959
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
395,830,265
|
|
|
$
|
413,076,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
LIABILITIES:
|
|
|
2009
|
|
|
|
2008
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
Non-interest
bearing
|
|
$
|
43,381,549
|
|
|
$
|
51,119,827
|
|
|
Interest
bearing
|
|
|
208,819,093
|
|
|
|
206,094,593
|
|
|
Total
deposits
|
|
|
252,200,642
|
|
|
|
257,214,420
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
Home Loan Bank advances
|
|
|
42,676,300
|
|
|
|
54,939,931
|
|
|
Securities
sold under repurchase agreements
|
|
|
51,256,132
|
|
|
|
51,633,835
|
|
|
Accrued
interest payable
|
|
|
917,510
|
|
|
|
1,167,525
|
|
|
Advances
from borrowers for taxes and insurance
|
|
|
232,386
|
|
|
|
313,810
|
|
|
Accrued
taxes and other liabilities
|
|
|
2,427,351
|
|
|
|
3,111,235
|
|
|
Junior
subordinated debentures
|
|
|
5,155,000
|
|
|
|
5,155,000
|
|
|
Total
liabilities
|
|
|
354,865,321
|
|
|
|
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, as of September 30,
2009,
|
|
|
|
|
|
|
|
|
|
and
December 31, 2008, respectively
|
|
|
5,352,415
|
|
|
|
5,331,165
|
|
|
Additional
paid-in capital
|
|
|
7,393,082
|
|
|
|
7,319,282
|
|
|
Retained
earnings
|
|
|
25,516,763
|
|
|
|
25,049,749
|
|
|
Accumulated
other comprehensive income
|
|
|
2,960,059
|
|
|
|
2,098,248
|
|
|
|
|
|
41,222,319
|
|
|
|
39,798,444
|
|
|
Cost
of 14,500 shares of common stock held by the company
|
|
|
(257,375
|
)
|
|
|
(257,375
|
)
|
|
Total
stockholders' equity
|
|
|
40,964,944
|
|
|
|
39,541,069
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
395,830,265
|
|
|
$
|
413,076,825
|
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$
|
3,458,116
|
|
|
$
|
3,811,902
|
|
|
$
|
10,165,096
|
|
|
$
|
12,077,937
|
|
|
Interest
on investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
interest income
|
|
|
1,398,981
|
|
|
|
1,428,241
|
|
|
|
4,623,134
|
|
|
|
3,822,149
|
|
|
Exempt
from federal taxes
|
|
|
432,203
|
|
|
|
416,120
|
|
|
|
1,300,253
|
|
|
|
1,245,032
|
|
|
Interest
on federal funds sold
|
|
|
47
|
|
|
|
1,474
|
|
|
|
167
|
|
|
|
4,569
|
|
|
Total
interest income
|
|
|
5,289,347
|
|
|
|
5,657,737
|
|
|
|
16,088,650
|
|
|
|
17,149,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
941,865
|
|
|
|
1,212,286
|
|
|
|
3,009,474
|
|
|
|
4,214,165
|
|
|
Interest
on Federal Home Loan Bank advances
|
|
|
50,649
|
|
|
|
286,571
|
|
|
|
196,963
|
|
|
|
782,271
|
|
|
Interest
on trust preferred securities
|
|
|
47,743
|
|
|
|
76,625
|
|
|
|
160,085
|
|
|
|
245,498
|
|
|
Interest
on securities sold under repurchase agreements
|
|
|
533,588
|
|
|
|
542,806
|
|
|
|
1,574,918
|
|
|
|
1,626,631
|
|
|
Total
interest expense
|
|
|
1,573,845
|
|
|
|
2,118,288
|
|
|
|
4,941,440
|
|
|
|
6,868,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME
|
|
|
3,715,502
|
|
|
|
3,539,449
|
|
|
|
11,147,210
|
|
|
|
10,281,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for loan losses
|
|
|
920,000
|
|
|
|
120,000
|
|
|
|
1,870,000
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME AFTER PROVISION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
LOAN LOSSES
|
|
|
2,795,502
|
|
|
|
3,419,449
|
|
|
|
9,277,210
|
|
|
|
9,921,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges on deposit accounts
|
|
|
432,229
|
|
|
|
489,450
|
|
|
|
1,258,638
|
|
|
|
1,326,362
|
|
|
Income
from fiduciary activities
|
|
|
300
|
|
|
|
999
|
|
|
|
1,211
|
|
|
|
2,997
|
|
|
Income
from networking arrangements
|
|
|
17,813
|
|
|
|
59,351
|
|
|
|
62,766
|
|
|
|
126,558
|
|
|
Gain/(loss)
on sale of mortgage loans
|
|
|
45,973
|
|
|
|
55,037
|
|
|
|
156,169
|
|
|
|
176,114
|
|
|
Gain/(loss)
on sale/matured securities
|
|
|
19,280
|
|
|
|
-
|
|
|
|
37,065
|
|
|
|
148,116
|
|
|
Other
|
|
|
116,529
|
|
|
|
114,094
|
|
|
|
371,044
|
|
|
|
375,954
|
|
|
Total
other income
|
|
|
632,124
|
|
|
|
718,931
|
|
|
|
1,886,893
|
|
|
|
2,156,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
|
1,336,294
|
|
|
|
1,347,170
|
|
|
|
4,024,732
|
|
|
|
4,137,534
|
|
|
Employee
benefits
|
|
|
189,497
|
|
|
|
177,865
|
|
|
|
572,025
|
|
|
|
547,327
|
|
|
Director
fees
|
|
|
35,400
|
|
|
|
41,400
|
|
|
|
108,945
|
|
|
|
125,000
|
|
|
Net
occupancy expense
|
|
|
249,651
|
|
|
|
251,436
|
|
|
|
709,422
|
|
|
|
718,499
|
|
|
Equipment
expenses
|
|
|
315,494
|
|
|
|
269,932
|
|
|
|
897,035
|
|
|
|
835,170
|
|
|
FDIC
assessment
|
|
|
95,669
|
|
|
|
10,602
|
|
|
|
491,759
|
|
|
|
25,093
|
|
|
Advertising
|
|
|
51,617
|
|
|
|
54,178
|
|
|
|
182,432
|
|
|
|
154,494
|
|
|
Stationery
and supplies
|
|
|
33,701
|
|
|
|
39,764
|
|
|
|
118,485
|
|
|
|
127,487
|
|
|
Audit
expense
|
|
|
62,425
|
|
|
|
58,102
|
|
|
|
182,980
|
|
|
|
172,025
|
|
|
Other
real estate expense (includes gains on sale)
|
|
|
134,157
|
|
|
|
53,669
|
|
|
|
331,550
|
|
|
|
113,154
|
|
|
Amortization
of deposit premium
|
|
|
26,904
|
|
|
|
26,904
|
|
|
|
80,712
|
|
|
|
80,712
|
|
|
Other
|
|
|
469,565
|
|
|
|
460,763
|
|
|
|
1,410,963
|
|
|
|
1,423,447
|
|
|
Total
other expenses
|
|
|
3,000,374
|
|
|
|
2,791,785
|
|
|
|
9,111,040
|
|
|
|
8,459,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAX EXPENSE
|
|
|
427,252
|
|
|
|
1,346,595
|
|
|
|
2,053,063
|
|
|
|
3,617,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
|
103,059
|
|
|
|
403,515
|
|
|
|
371,065
|
|
|
|
979,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
324,193
|
|
|
$
|
943,080
|
|
|
$
|
1,681,998
|
|
|
$
|
2,637,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
0.15
|
|
|
$
|
0.45
|
|
|
$
|
0.79
|
|
|
$
|
1.25
|
|
|
Basic
weighted shares outstanding
|
|
|
2,126,466
|
|
|
|
2,117,966
|
|
|
|
2,125,003
|
|
|
|
2,117,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
0.15
|
|
|
$
|
0.45
|
|
|
$
|
0.79
|
|
|
$
|
1.25
|
|
|
Diluted
weighted shares outstanding
|
|
|
2,127,070
|
|
|
|
2,117,966
|
|
|
|
2,125,282
|
|
|
|
2,117,966
|
|
|
Cash
dividends per share
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.54
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,637,412
|
|
|
|
|
|
|
|
|
|
|
|
2,637,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income (net of tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on securities available for sale, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of taxes of $(168,695)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(283,571
|
)
|
|
|
|
|
|
|
(283,571
|
)
|
|
Other Comprehensive gains from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
derivatives, net of
reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment of
$(69,545)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(116,903
|
)
|
|
|
|
|
|
|
(116,903
|
)
|
|
Total
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,236,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Dividend paid $0.54 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,143,702
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,143,702
|
)
|
|
Fair
Value unexercised stock options
|
|
|
|
|
|
|
|
|
|
|
9,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2008
|
|
|
2,117,966
|
|
|
$
|
5,331,165
|
|
|
$
|
7,315,954
|
|
|
$
|
24,565,631
|
|
|
$
|
(51,290
|
)
|
|
$
|
(257,375
|
)
|
|
$
|
36,904,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,681,998
|
|
|
|
|
|
|
|
|
|
|
|
1,681,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income (net of tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
on securities available for sale, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of taxes of $512,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
861,811
|
|
|
|
|
|
|
|
861,811
|
|
|
Total
Comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,543,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Dividend paid $0.54 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,148,292
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,148,292
|
)
|
|
Common
stock issued
|
|
|
8,500
|
|
|
|
21,250
|
|
|
|
65,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,700
|
|
|
Unearned
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(66,692
|
)
|
|
|
|
|
|
|
|
|
|
|
(66,692
|
)
|
|
Fair
Value unexercised stock options
|
|
|
|
|
|
|
|
|
|
|
8,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2009
|
|
|
2,126,466
|
|
|
$
|
5,352,415
|
|
|
$
|
7,393,082
|
|
|
$
|
25,516,763
|
|
|
$
|
2,960,059
|
|
|
$
|
(257,375
|
)
|
|
$
|
40,964,944
|
|
B
RITTON & KOONTZ CAPITAL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30,
|
|
|
2009
|
|
|
2008
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,681,998
|
|
|
$
|
2,637,412
|
|
|
Adjustments
to reconcile net income to net cash
|
|
|
|
|
|
|
|
|
|
provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
(213,763
|
)
|
|
|
(151,264
|
)
|
|
Provision
for loan losses
|
|
|
1,870,000
|
|
|
|
360,000
|
|
|
Provision
for losses on foreclosed real estate
|
|
|
205,030
|
|
|
|
105,030
|
|
|
Provision
for depreciation
|
|
|
571,746
|
|
|
|
560,085
|
|
|
Stock
dividends received
|
|
|
(6,200
|
)
|
|
|
(49,200
|
)
|
|
(Gain)/loss
on sale of other real estate
|
|
|
80,639
|
|
|
|
(32,694
|
)
|
|
(Gain)/loss
on sale of mortgage loans
|
|
|
(156,169
|
)
|
|
|
(176,114
|
)
|
|
(Gain)/loss
on sale of investment securities
|
|
|
(37,065
|
)
|
|
|
(148,116
|
)
|
|
(Gain)/loss
on sale of other securities
|
|
|
(1,262
|
)
|
|
|
1,262
|
|
|
Net
amortization (accretion) of securities
|
|
|
8,223
|
|
|
|
(66,552
|
)
|
|
Amortization
of deposit premium
|
|
|
80,712
|
|
|
|
80,712
|
|
|
Writedown
of other real estate
|
|
|
83,435
|
|
|
|
-
|
|
|
Unearned
compensation
|
|
|
(66,692
|
)
|
|
|
-
|
|
|
Proceeds
from sales, maturities and paydowns
|
|
|
|
|
|
|
|
|
|
of
trading securities
|
|
|
-
|
|
|
|
19,349,806
|
|
|
Net
change in:
|
|
|
|
|
|
|
|
|
|
Loans
held for sale
|
|
|
764,500
|
|
|
|
-
|
|
|
Accrued
interest receivable
|
|
|
101,422
|
|
|
|
86,551
|
|
|
Cash
surrender value
|
|
|
(34,040
|
)
|
|
|
(32,546
|
)
|
|
Other
assets
|
|
|
(367,552
|
)
|
|
|
251,645
|
|
|
Accrued
interest payable
|
|
|
(250,015
|
)
|
|
|
(799,428
|
)
|
|
Accrued
taxes and other liabilities
|
|
|
(982,809
|
)
|
|
|
112,103
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
|
|
3,332,138
|
|
|
|
22,088,692
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease
in federal funds sold
|
|
|
(314,942
|
)
|
|
|
207,478
|
|
|
Proceeds
from sales, maturities and paydowns of securities:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
|
25,678,860
|
|
|
|
8,148,272
|
|
|
Held-to-maturity
|
|
|
9,195,867
|
|
|
|
3,074,478
|
|
|
Redemption
of FHLB stock
|
|
|
756,300
|
|
|
|
945,400
|
|
|
Purchase
of FHLB stock
|
|
|
-
|
|
|
|
(1,736,200
|
)
|
|
Purchase
of securities:
|
|
|
|
|
|
|
|
|
|
Available-for-sale
|
|
|
(11,967,395
|
)
|
|
|
(35,168,412
|
)
|
|
Held-to-maturity
|
|
|
(4,131,731
|
)
|
|
|
(17,217,207
|
)
|
|
(Increase)/decrease
in loans
|
|
|
(2,323,967
|
)
|
|
|
278,949
|
|
|
Proceeds
from sale of loans
|
|
|
-
|
|
|
|
511,808
|
|
|
Proceeds
from sale and transfers of other real estate
|
|
|
501,452
|
|
|
|
-
|
|
|
Purchase
of premises and equipment
|
|
|
(1,335,455
|
)
|
|
|
(177,401
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) investing activities
|
|
|
16,058,989
|
|
|
|
(41,132,835
|
)
|
BRITTON
& KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE NINE MONTHS ENDED SEPTEMBER 30,
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
Increase
/(decrease) in customer deposits
|
|
|
(5,100,683
|
)
|
|
|
(4,563,107
|
)
|
|
Increase
/(decrease) in brokered deposits
|
|
|
86,905
|
|
|
|
(4,782,751
|
)
|
|
Increase
/(decrease) in securities sold under
|
|
|
|
|
|
|
|
|
|
repurchase
agreements
|
|
|
(377,703
|
)
|
|
|
2,164,570
|
|
|
Increase
/(decrease) in FHLB advances
|
|
|
(12,263,631
|
)
|
|
|
25,867,137
|
|
|
Increase
/(decrease) in advances from borrowers
|
|
|
|
|
|
|
|
|
|
for
taxes and insurance
|
|
|
(81,424
|
)
|
|
|
(88,242
|
)
|
|
Cash
dividends paid
|
|
|
(1,148,292
|
)
|
|
|
(1,143,701
|
)
|
|
Common
stock issued
|
|
|
86,700
|
|
|
|
-
|
|
|
Fair
value of unexercised stock options
|
|
|
8,350
|
|
|
|
9,984
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by (used in) financing activities
|
|
|
(18,789,778
|
)
|
|
|
17,463,890
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE/(DECREASE) IN CASH AND DUE FROM BANKS
|
|
|
601,349
|
|
|
|
(1,580,253
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND DUE FROM BANKS AT BEGINNING OF PERIOD
|
|
|
6,951,543
|
|
|
|
8,732,307
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND DUE FROM BANKS AT END OF PERIOD
|
|
$
|
7,552,892
|
|
|
$
|
7,152,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW
|
|
|
|
|
|
|
|
|
|
INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for interest
|
|
$
|
5,191,455
|
|
|
$
|
7,667,994
|
|
|
Cash
paid during the period for income taxes
|
|
$
|
1,463,199
|
|
|
$
|
698,186
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE
OF NONCASH INVESTING AND
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers
from loans foreclosed to other real estate
|
|
$
|
1,128,452
|
|
|
$
|
1,227,160
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gains (losses)
|
|
|
|
|
|
|
|
|
|
on
securities available for sale
|
|
$
|
1,374,499
|
|
|
$
|
(452,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Change
in the deferred tax effect in unrealized
|
|
|
|
|
|
|
|
|
|
gains
(losses) on securities available for sale
|
|
$
|
512,688
|
|
|
$
|
(168,695
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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
SEPTEMBER
30, 2009 AND DECEMBER 31, 2008
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 September 30, 2009, and for the three and nine months then
ended, 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 Company’s
wholly-owned subsidiary, Britton & Koontz Bank, N.A. (the “Bank”), entered
into a 5 year, no-call 2-year Structured Repurchase Agreement with JPMorgan
Chase Bank, N.A. (“Chase”) for $20 million. The Bank will pay a fixed
interest rate of 4.82% over the term of the agreement. 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. The
Bank will pay a fixed interest rate of 4.71%; however, in the first three years
of the agreement, this 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 the term
of this agreement, the Bank’s cost of funds cannot exceed the initial interest
rate of 4.71%. As to the first repurchase agreement, Chase, in its
discretion, may terminate the agreement quarterly; as to the second repurchase
agreement, Chase, in its discretion, may terminate the agreement on November 13,
2010 and quarterly thereafter. Under each repurchase agreement, the
Bank is required to maintain a margin percentage of 105% on the subject
securities. These agreements with Chase were entered into as a means
of adding additional leverage and to lock in a fixed rate of interest 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 as held to
maturity 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 as such 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 September 30, 2009,
the Company had $765 thousand in loans held-for-sale. There were no
losses for the period ended September 30, 2009.
Loans held in the portfolio are
periodically 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. 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 September 30, 2009, was
3.43%. The securities are currently callable on a quarterly
basis at the option of the Company.
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 September 30, 2009, and December 31,
2008, were $3.6 million. As of September 30, 2009, the Company had
entered into other commercial and residential loan commitments with customers
that had an aggregate unused balance of $41.8 million, down from $52.1 million
at December 31, 2008. 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. The Company
uses the Black-Scholes method for valuing stock options. On February
17, 2009, the Company awarded 8,500 shares of restricted common stock pursuant
to its 2007 Long-Term Incentive Compensation Plan. The shares are
subject to a three-year holding period, commencing on the date of the award,
during which the shares may not be sold, assigned, pledged or otherwise
transferred.
The following information sets forth
the computation of earnings per share for the three and nine months ended
September 30, 2009 and 2008.
|
|
|
For
the three months ended
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
|
2,126,466
|
|
|
|
2,117,966
|
|
|
Dilutive
effect of granted options
|
|
|
604
|
|
|
|
0
|
|
|
Diluted
weighted average shares outstanding
|
|
|
2,127,070
|
|
|
|
2,117,966
|
|
|
Net
income
|
|
$
|
324,193
|
|
|
$
|
943,080
|
|
|
Net
income per share-basic
|
|
$
|
0.15
|
|
|
$
|
0.45
|
|
|
Net
income per share-diluted
|
|
$
|
0.15
|
|
|
$
|
0.45
|
|
|
|
|
For
the nine months ended
|
|
|
|
|
|
|
|
|
|
|
Basic
weighted average shares outstanding
|
|
|
2,125,003
|
|
|
|
2,117,966
|
|
|
Dilutive
effect of granted options
|
|
|
279
|
|
|
|
0
|
|
|
Diluted
weighted average shares outstanding
|
|
|
2,125,282
|
|
|
|
2,117,966
|
|
|
Net
income
|
|
$
|
1,681,998
|
|
|
$
|
2,637,412
|
|
|
Net
income per share-basic
|
|
$
|
0.79
|
|
|
$
|
1.25
|
|
|
Net
income per share-diluted
|
|
$
|
0.79
|
|
|
$
|
1.25
|
|
Note
G. Fair Value
The fair
value of a financial instrument is the current amount that would be exchanged
between willing parties, other than in a forced liquidation. Fair value is best
determined based upon quoted market prices. However, in many
instances, there are no quoted market prices for the Company's various financial
instruments. In cases where quoted market prices are not available, fair values
are based on estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. Accordingly, the
fair value estimates may not be realized in an immediate settlement of the
instrument. Certain financial instruments and all non-financial instruments
are excluded from disclosure requirements under applicable accounting
standards. Accordingly, the aggregate fair value amounts presented may not
necessarily represent the underlying fair value of the Company.
The
following methods and assumptions were used by the Company in estimating fair
value disclosures for financial instruments:
Cash and
Due From Banks - Fair value equals the carrying value of such
assets.
Federal
Funds Sold - Due to the short-term nature of this asset, the carrying value of
this item approximates its fair value.
Investment
Securities - Fair values for investment securities are based on quoted market
prices, where available. If quoted market prices are not available,
fair values are based on quoted market prices of comparable instruments.
Investment securities also include equity securities that are not traded in an
active market. The fair value of these securities equals the carrying
value of such assets.
Cash
Surrender Value of Life Insurance - The fair value of this item approximates its
carrying value.
Loans,
Net - For variable-rate loans which reprice frequently, fair values are based on
carrying values. Other variable-rate loans, fixed-rate commercial loans,
installment loans, and mortgage loans are valued using discounted cash
flows. The discount rates used to determine the present value of
these loans are based on interest rates currently being charged by the Bank on
loans with comparable credit risk and terms.
Deposits
- The fair values of demand deposits are equal to the carrying value of such
deposits. Demand deposits include non-interest bearing demand
deposits, savings accounts, NOW accounts, and money market demand
accounts. Discounted cash flows have been used to value fixed rate
term deposits. The discount rate used is based on interest rates
currently being offered by the Bank on deposits with comparable amounts and
terms.
Long-Term
Borrowings - The fair values of the Company’s long-term borrowings are estimated
using discounted cash flow analysis based on the Company’s current incremental
borrowing ratio for similar types of borrowing arrangements.
Federal
Funds Purchased and Securities Sold Under Repurchase Agreements - The fair value
of these items approximates their carrying values.
Off-Balance
Sheet Instruments - Loan commitments are negotiated at current market rates and
are relatively short-term in nature. Therefore, the estimated value
of loan commitments approximates the face amount. Fair values for interest rate
swaps and caps are based on quoted market prices where available. If
quoted market prices are not available, fair values are based on quoted market
prices of comparable instruments.
The
estimated fair values of the Company's financial instruments, rounded to the
nearest thousand, are as follows:
|
|
|
September
30, 2009
|
|
|
December
31, 2008
|
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
|
|
|
|
|
|
(dollars
in Thousands)
|
|
|
|
|
|
Financial
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$
|
7,553
|
|
|
$
|
7,553
|
|
|
$
|
6,951
|
|
|
$
|
6,951
|
|
|
Investment
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity
|
|
|
49,783
|
|
|
|
51,347
|
|
|
|
54,815
|
|
|
|
54,843
|
|
|
Available-for-sale
|
|
|
99,556
|
|
|
|
99,556
|
|
|
|
111,895
|
|
|
|
111,895
|
|
|
Equity
securities
|
|
|
3,261
|
|
|
|
3,261
|
|
|
|
4,010
|
|
|
|
4,010
|
|
|
Cash
surrender value of life insurance
|
|
|
1,090
|
|
|
|
1,090
|
|
|
|
1,056
|
|
|
|
1,056
|
|
|
Loans,
net
|
|
|
221,831
|
|
|
|
224,708
|
|
|
|
223,114
|
|
|
|
224,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
252,201
|
|
|
|
253,058
|
|
|
|
257,214
|
|
|
|
258,320
|
|
|
Short-term
borrowings
|
|
|
35,676
|
|
|
|
35,671
|
|
|
|
54,121
|
|
|
|
54,107
|
|
|
Long-term
borrowings
|
|
|
7,000
|
|
|
|
7,144
|
|
|
|
819
|
|
|
|
825
|
|
|
Securities
sold under
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
repurchase
agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
|
|
|
11,256
|
|
|
|
11,254
|
|
|
|
11,634
|
|
|
|
11,638
|
|
|
Structured
|
|
|
40,000
|
|
|
|
43,578
|
|
|
|
40,000
|
|
|
|
44,185
|
|
|
Junior
subordinated debentures
|
|
|
5,155
|
|
|
|
5,155
|
|
|
|
5,155
|
|
|
|
5,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Face
Amount
|
|
|
Fair
Value
|
|
|
Face
Amount
|
|
|
Fair
Value
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
to extend credit
|
|
$
|
41,793
|
|
|
$
|
41,793
|
|
|
$
|
52,133
|
|
|
$
|
52,133
|
|
|
Standby
letters of credit
|
|
|
3,637
|
|
|
|
3,637
|
|
|
|
3,575
|
|
|
|
3,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
following provides the fair value hierarchy table required for fair value
measurements:
|
Description
|
Fair
Value Measurements at September 30, 2009
|
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
|
Significant
Other Observable Inputs
(Level
2)
|
|
Significant
Unobservable Inputs
(Level
3)
|
|
Securities
available-for-sale
|
$
|
99,555,694
|
|
|
|
$
|
99,555,694
|
|
|
|
Level
1
includes
the most reliable sources, and includes quoted prices for identical
instruments in active markets. Level 2
includes
observable inputs. Observable inputs are defined to include
“inputs other than quoted prices that are observable for the asset or
liability (for example, interest rates and yield curves at commonly quoted
intervals, volatilities, prepayment speeds, loss severities, credit risks,
and default rates)” as well as “inputs that are derived principally from
or corroborated by observable market data by correlation or other means
(market-corroborated inputs).” Level 3
includes
unobservable inputs and should be used only when observable inputs are
unavailable.
|
It
em 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 of
Britton & Koontz Capital Corporation (the “Company”) and its wholly-owned
subsidiary, Britton & Koontz Bank, N.A. (the “Bank”), as of September 30,
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 and nine month
periods ended September 30, 2009, as compared to the corresponding periods of
2008.
SUMMARY
The Company’s net income for the
three months ended September 30, 2009, was $324 thousand, or $0.15 per diluted
share, compared to $943 thousand, or $0.45 per diluted share, for the quarter
ended September 30, 2008. For the nine month period ended September
30, 2009, net income was $1.7 million, or $0.79 per diluted share, compared to
$2.6 million, or $1.25 per diluted share, for the same period in
2008.
Earnings for the three and nine
months ended September 30, 2009, decreased as compared to the corresponding
periods in 2008. Although net interest income increased for these
periods, these increases were offset by higher loan loss provision expense in
both periods in 2009 and increased Federal Deposit Insurance Corporation
(“FDIC”) assessment rates in 2009, as well as the separate FDIC special
assessment of $180 thousand expensed in the second quarter of 2009, which was
payable on September 30, 2009. The higher provision expense in 2009
negatively impacted diluted earnings per share by $0.24 and $0.45, respectively,
for the three and nine month periods ended September 30, 2009. The
higher FDIC assessment and special assessment reduced diluted earnings per share
for the three and nine months ended September 30, 2009, by $0.03 and $0.14,
respectively.
Total assets decreased $17.2 million
from $413.1 million at December 31, 2008, to $395.8 million at September
30, 2009. Cash and due from banks increased $601 thousand to
$7.6 million at September 30, 2009, from $7.0 million at December 31,
2008. The available-for-sale and held-to-maturity investment
securities portfolio decreased from December 31, 2008, by $17.4 million to
$149.3 million at September 30, 2009, primarily from monthly cash flows
exceeding additional purchases. Total loans at September 30, 2009,
decreased $1.2 million to $224.3 million from $225.5 million at December 31,
2008. Included in total loans were loans held-for-sale (“LHFS”) of
$765 thousand and $0 at September 30, 2009, and December 31, 2008,
respectively. Other real estate owned, net of reserve, increased $258
thousand over the same period to $1.2 million. Since December 31,
2008, total deposits have decreased $5.0 million to $252.2 million at
September 30, 2009. Total borrowings decreased $12.6 million over the
same period as investment cash flows were used to pay down
debt. Total stockholders’ equity increased $1.4 million to
$41.0 million at September 30, 2009, from $39.5 million at December 31,
2008.
Overall asset quality improved
slightly since June 30, 2009, but has deteriorated since December 31,
2008. The Company’s nonperforming assets were $8.3 million at
September 30, 2009 compared to $8.8 million at June 30, 2009, and $5.0 million
at December 31, 2008. Management believes the increase in
nonperforming assets as compared to December 31, 2008, reflects the effects of
the economic recession currently affecting the United States generally and the
Company’s markets in particular. Management intends to continue its
disciplined credit administration and loan underwriting processes and to remain
focused on the creditworthiness of new loan originations. Despite the
increases in problem assets, the Company expects its portfolio management
process, including its underwriting standards and early involvement in problem
loans, to allow it to mitigate further weakening of asset
quality. Management believes that it has identified the most
significant troubled assets in its loan portfolio and is working to resolve the
credit issues related to these assets as beneficially to the Company as
possible. Finally, management also believes that the Company’s asset
quality measures remain in line with, if not better than, peer
averages. Further detail on the Company’s nonperforming assets may be
found below under the heading “Asset Quality.”
In the third quarter of 2009, the Company opened a second location in Baton
Rouge, Louisiana. In connection with this new location, the number of
Company employees in the Baton Rouge area has increased from 15 to
20. Located in The Oaks at Bluebonnet Parc, the second office,
occupying approximately 4,400 square feet, offers convenient depository services
and includes a conference layout to accommodate select meetings of professional
and commercial customers. The new facility also houses the
Company’s mortgage center, a professional client services department and key
company-wide credit administration personnel. The Company also has
filed an application with the Office of the Comptroller of the Currency to open
a third full-service branch in Baton Rouge. The Company expects this
location to open in mid-November, in the Towne Center area of Baton
Rouge.
Financial
Condition
Assets
Investment Securities
The Company’s investment securities
portfolio at September 30, 2009, was $152.6 million, a decrease of $18.1 million
from December 31, 2008. Investment securities consist of US
government sponsored enterprise mortgage-backed securities and obligations of
states and political subdivisions along with certain equity
securities. Investment securities that are deemed to be
held-to-maturity are accounted for by the amortized cost method while securities
in the available-for-sale category are accounted for at fair value with
valuation adjustments recorded in the equity section of the balance sheet
through other comprehensive income/ (loss).
Management determines the
classification of its securities at acquisition. Total
held-to-maturity and available-for-sale securities decreased $17.4 million to
$149.3 million at September 30, 2009. The decrease in securities was
due to normal pay-downs of mortgage-backed securities and reinvestment calls of
municipal securities offset primarily by additional municipal security
purchases. The Company also used cash flows from the investment
securities portfolio to pay down debt. Equity securities, comprised
primarily of Federal Reserve Bank stock of $522 thousand, Federal Home Loan Bank
(“FHLB”) stock of $2.4 million, the Company’s investment in its statutory trust
of $155 thousand and ECD Investments, LLC membership interests of $100 thousand,
decreased $749 thousand due to the mandatory redemption of FHLB
stock.
From time to time, the Company will
prefund future cash flows that are expected from the current portfolio to take
advantage of favorable interest rate spreads between the short-term funding and
the investment securities purchased with such funding. Under this
prefunding strategy, the Company obtains short-term funding, typically from the
FHLB, to acquire investment securities and then uses the cash flows generated by
such securities in the subsequent two to three quarters to repay the short-term
funding. Due to the low interest rate environment during most of
2009, the Company has not been able to utilize its
prefunding strategy. However, the Company has had limited
success in pre-funding municipal securities that have been called.
The amortized cost of the Bank’s
held-to-maturity and available-for-sale investment securities at September 30,
2009, and December 31, 2008, are summarized below.
COMPOSITION OF INVESTMENT PORTFOLIO
(
Amortized
Cost
)
|
|
|
|
|
|
|
|
|
Mortgage-Backed
Securities
|
|
$
|
103,708,536
|
|
|
$
|
123,834,755
|
|
|
Obligations
of State and
|
|
|
|
|
|
|
|
|
|
Political
Subdivisions
|
|
|
40,908,706
|
|
|
|
39,529,246
|
|
|
Total
|
|
$
|
144,617,242
|
|
|
$
|
163,364,001
|
|
Loans
Total loans decreased $1.2 million
during the first nine months of 2009. Increases in loans of
approximately $12.5 million in the Company’s Baton Rouge, Louisiana market
partially offset approximately $13.7 million in decreases in the Company’s
Mississippi markets. The decreases were mainly in the Company’s real
estate-construction and real estate-1-4 family residential loans. The
Company originates 1-4 family residential loans to sell in the secondary
market. Loans sold during the third quarter of 2009 remained
relatively stable at $5.0 million compared to the third quarter of 2008 but
declined compared to the first and second quarters of 2009. In an
effort to reverse this trend and increase volumes sold in the secondary market,
the Company has hired additional loan origination staff and Company-wide
management located in its new Bluebonnet Parc Office in Baton Rouge,
Louisiana. The decision to expand its mortgage operations in Baton
Rouge is aimed at addressing anticipated elevated refinancing demand for
mortgages, which is expected to result in increases in non-interest income on
account of the higher volumes of mortgages in the secondary market.
The ratio of total loans to total
assets increased to 56.7% at September 30, 2009, compared to 54.6% at December
31, 2008. At September 30, 2009, the loan to deposit ratio was 88.9%
compared to 87.7% at December 31, 2008. The following table presents
the Bank’s loan portfolio composition at September 30, 2009, and December 31,
2008.
COMPOSITION
OF LOAN PORTFOLIO
|
|
|
|
|
|
|
|
|
Commercial,
financial & agricultural
|
|
$
|
26,810,000
|
|
|
$
|
25,128,000
|
|
|
Real
estate-construction
|
|
|
27,513,000
|
|
|
|
30,910,000
|
|
|
Real
estate-1-4 family residential
|
|
|
55,502,000
|
|
|
|
65,312,000
|
|
|
Real
estate-other
|
|
|
109,080,000
|
|
|
|
97,952,000
|
|
|
Installment
|
|
|
5,210,000
|
|
|
|
6,038,000
|
|
|
Other
|
|
|
160,000
|
|
|
|
171,000
|
|
|
Total
loans
|
|
$
|
224,275,000
|
|
|
$
|
225,511,000
|
|
The Company’s loan portfolio at
September 30, 2009, had no significant concentrations of loans other than in the
categories presented in the table above.
Bank Premises
In
the third quarter of 2009, the Company opened its second location in Baton
Rouge, Louisiana. The new facility houses the Company’s mortgage
center, a professional client services department and key company-wide credit
administration personnel. In addition to this location, the Company
also has filed an application with the Office of the Comptroller of the Currency
to open a third full-service branch in Baton Rouge. The Company
expects this location to open in mid-November, in the Towne Center area of Baton
Rouge.
Asset
Quality
The Company has experienced some
declines in certain asset quality measures since December 31,
2008. Non-performing assets, which includes non-accrual loans, loans
delinquent 90 days or more and other real estate, increased to $8.3 million, or
2.11% of total assets, at September 30, 2009, from $5.0 million, or 1.21% to
total assets, at December 31, 2008. The following table presents the
amount of our non-performing assets as of the dates indicated.
BREAKDOWN
OF NONPERFORMING ASSETS
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
|
Non-accrual
loans by type:
|
|
|
|
|
|
|
|
Real
estate
|
|
$
|
6,010
|
|
|
$
|
3,364
|
|
|
Installment
|
|
|
71
|
|
|
|
86
|
|
|
Commercial
and all other loans
|
|
|
68
|
|
|
|
118
|
|
|
Total
non-accrual loans
|
|
|
6,148
|
|
|
|
3,568
|
|
|
Loans
past due 90 days or more
|
|
|
1,010
|
|
|
|
518
|
|
|
Total
nonperforming loans
|
|
|
7,158
|
|
|
|
4,086
|
|
|
Other
real estate owned (net)
|
|
|
1,177
|
|
|
|
919
|
|
|
Total
nonperforming assets
|
|
$
|
8,335
|
|
|
$
|
5,005
|
|
|
Nonperforming
loans to total loans, net of LHFS
|
|
|
3.20
|
%
|
|
|
1.81
|
%
|
|
Nonperforming
loans to total assets
|
|
|
1.81
|
%
|
|
|
.99
|
%
|
|
Nonperforming
assets to total loans, net of LHFS
|
|
|
3.73
|
%
|
|
|
2.22
|
%
|
|
Nonperforming
assets to total assets
|
|
|
2.11
|
%
|
|
|
1.21
|
%
|
Approximately $2.7 million of the nonperforming 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 to the
Company. As discussed below, the Company charged off a portion of one
of these loans in the third quarter of 2009. In addition to these two
commercial loans, in the third quarter of 2009, four credits in the amount of
$2.0 million relating to one customer relationship moved to non-performing
status. These credits are secured by real estate mortgages, and the
Bank is pursuing its remedies with respect to these credits. Current
litigation between this customer and the title insurance company that issued the
Bank title insurance policies on the properties covered by the Bank’s mortgages,
however, could potentially delay the Bank’s ability to exercise its remedies,
including foreclosure, with respect to these credits. As this
litigation progresses and more information is obtained, the Bank will take
appropriate action to reserve against losses, if any, that may result from these
credits.
Allowance for Possible Loan
Losses
The allowance for loan losses is
established as losses are estimated through a provision for loan loss 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 from time to time as management reevaluates its
adequacy. 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. Each loan is
assigned a risk rating between one and nine with a rating of “one” being the
least risk and a rating of “nine” reflecting the most risk or a complete loss.
Risk ratings are assigned by the originating loan officer or loan committee at
the initiation of the transactions and are reviewed and changed, when necessary,
during the life of the loan.
Loans assigned a risk rating of
“five” or above are monitored more closely by management. To arrive
at the appropriate level for the allowance for loan losses, loan loss reserve
factors are multiplied against the balances in each risk rating
category.
The allowance consists of specific,
general and unallocated components. The specific component relates to
loans that are considered impaired. The general component of the
allowance for loan loss groups loans with similar characteristics and allocates
a percentage 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 perfectly 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 $2.4 million at
September 30, 2009, which represents 1.09% of gross loans held to maturity, is
adequate, under prevailing economic conditions, to absorb probable losses on
existing loans. At September 30, 2009, total reserves included
specific reserves of $1.2 million, general reserves of $869 thousand and
unallocated reserves of $342 thousand. At
December 31, 2008, the allowance for loan loss was $2.4 million,
or 1.06% of gross loans held to maturity.
Provision
for Possible Loan Losses
The provision for possible loan
losses is a charge to earnings to maintain the allowance for possible loan
losses at a level consistent with management’s assessment of the loan portfolio
in light of current and expected economic conditions. The Company’s
loan loss provision for the third quarter of 2009 was $920 thousand, as compared
to $120 thousand for the third quarter of 2008. For the nine month
period ended September 30, 2009, the Company’s provision for loan losses was
$1.9 million as compared to $360 thousand for the same period in
2008. The additional provision in 2009 was added primarily to address
increased net charge-offs experienced during the year. Additional net
charge-offs of $1.3 million in the 3rd quarter of 2009 were primarily due to a
$1.3 million charge-off related to anticipated losses on one of the commercial
real estate loans mentioned above that is subject to a forbearance
agreement. Net charge-offs through September 30, 2009, were $1.8
million compared to $499 thousand during the first nine months of
2008.
The loan loss provision is adjusted
when specific items reflect a need for such an adjustment. Management believes
that there were no material loan losses during the first nine months of 2009
that have not been charged off. Management also believes that the Corporation’s
allowance will be adequate to absorb probable losses inherent in the
Corporation’s loan portfolio. However, in light of overall economic conditions
in the Corporation’s geographic area and the nation as a whole, it is possible
that additional increases in the provision for loan loss may be
required. The following table details allowance activity for the nine
months ended September 30, 2009, and September 30, 2008:
ACTIVITY
OF ALLOWANCE FOR POSSIBLE LOAN LOSSES
|
|
|
|
|
|
|
|
|
|
|
(dollars
in thousands)
|
|
|
Balance
at beginning of period
|
|
$
|
2,398
|
|
|
$
|
2,431
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
|
(1,759
|
)
|
|
|
(474
|
)
|
|
Commercial
|
|
|
(98
|
)
|
|
|
(303
|
)
|
|
Installment
and other
|
|
|
(19
|
)
|
|
|
(34
|
)
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
Real
Estate
|
|
|
25
|
|
|
|
19
|
|
|
Commercial
|
|
|
23
|
|
|
|
221
|
|
|
Installment
and other
|
|
|
5
|
|
|
|
72
|
|
|
Net
(charge-offs)/recoveries
|
|
|
(1,823
|
)
|
|
|
(499
|
)
|
|
Provision
charged to operations
|
|
|
1,870
|
|
|
|
360
|
|
|
Balance
at end of period
|
|
$
|
2,445
|
|
|
$
|
2,292
|
|
|
Allowance
for loan losses to total loans, net of loans held-for-sale
|
|
|
1.09
|
%
|
|
|
1.03
|
%
|
|
Net
charge-offs
(year-to-date)
to average loans
|
|
|
.82
|
%
|
|
|
.22
|
%
|
Potential Problem Loans
At September 30, 2009, the Company
had no loans, other than those identified with reserves set aside and 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 decreased $5.0 million from $257.2 million at December 31, 2008, to
$252.2 million at September 30, 2009. The decrease in deposits is due
primarily to demand deposit accounts, and non-jumbo certificates of
deposit. Some of the balances in these account types transferred to
the Company’s new rewards checking developed and offered in the second quarter
of 2009. The low interest rate environment and reduced loan demand
also contributed to the lower deposit balances. As interest rates on
alternative funding sources such as FHLB borrowings remained lower than deposit
rates (which to some extent are driven by deposit pricing within the Company’s
markets), the Company took advantage of these lower-cost funding avenues to meet
its funding needs. The Company from time to time uses brokered
certificates of deposit as an asset liability management tool; such certificates
of deposit currently consist of only 4% of the Company’s total
deposits.
COMPOSITION
OF DEPOSITS
|
|
|
|
|
|
|
|
|
Non-Interest
Bearing
|
|
$
|
43,381,549
|
|
|
$
|
51,119,827
|
|
|
NOW
Accounts
|
|
|
58,349,122
|
|
|
|
48,338,323
|
|
|
Money
Market Deposit Accounts
|
|
|
33,323,192
|
|
|
|
33,662,518
|
|
|
Savings
Accounts
|
|
|
17,913,395
|
|
|
|
17,736,516
|
|
|
Certificates
of Deposit
|
|
|
99,233,384
|
|
|
|
106,357,236
|
|
|
Total
Deposits
|
|
$
|
252,200,642
|
|
|
$
|
257,214,420
|
|
Borrowings
Total bank borrowings, including FHLB
advances, federal funds purchased and customer repurchase agreements, decreased
$12.6 million from $106.6 million at December 31, 2008, to $93.9 million at
September 30, 2009. The decrease resulted from the use of cash flows
from the investment securities portfolio to pay down short-term debt at the
FHLB. Customer repurchase agreements of $11.3 million are included as
borrowings rather than local customer deposits. These contracts are
primarily made with local customers for short-term agreements and to sweep
overnight funds from their deposit accounts. Management believes
these accounts perform more like core deposits rather than wholesale
borrowings.
Capital
Stockholders' equity totaled $41.0
million at September 30, 2009, compared to $39.5 million at December 31,
2008. Earnings of $1.7 million and an $861 thousand change in
unrealized gains in the available-for-sale investment portfolio were offset by
$1.1 million in dividends paid.
Losses in individual securities in
the available-for-sale investment portfolio included in comprehensive income are
considered declines due to interest rates and are therefore only a temporary
impairment of the security.
Components of comprehensive income
and deposit premium are excluded from the calculation of capital
ratios. The Company maintained a total capital to risk weighted
assets ratio of 17.44%, a Tier 1 capital to risk weighted assets ratio of 16.50%
and a leverage ratio of 10.76% at September 30, 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. The ratio of shareholders' equity to assets increased
to 10.3% at September 30, 2009, compared to 9.6% at December 31, 2008, primarily
from the decrease in total assets and the change in net unrealized gain on
securities available-for-sale.
Off-Balance Sheet
Arrangements
There have been no significant
changes in the Company’s off-balance sheet arrangements during the three months
ended September 30, 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 Income
Net income for the three months ended
September 30, 2009, decreased to $324 thousand, or $0.15 per diluted share,
compared to $943 thousand, or $0.45 per diluted share, for the same period in
2008. Returns on average assets and average equity were .33% and
3.18%, respectively, for the three months ended September 30, 2009, compared to
.99% and 10.40%, respectively, for the same period in 2008. The
decrease is primarily due to an $800 thousand increase in the loan loss
provision in the third quarter of 2009 as compared to the same period in 2008 to
cover unexpected losses in the Bank’s commercial real estate
portfolio. Additionally, higher FDIC assessment charges, other real
estate expenses and equipment costs in 2009 contributed to lower
earnings. Increases in net interest income of $176 thousand helped
offset some of these higher expenses.
For the nine months ended September
30, 2009, net income was $1.7 million, or $0.79 per diluted share, compared to
$2.6 million, or $1.25 per diluted share, for the same period in
2008. This change, similar to the decrease for the three months ended
September 30, 2009, was due to an increase in the loan loss provision in the
amount of $1.5 million and additional FDIC assessments of $467
thousand. These higher costs were offset partially by increased net
interest income of $866 thousand.
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 $176
thousand to $3.7 million for the three months ended September 30, 2009, as
compared to the same period in 2008. Net interest income improved as
average earning assets increased by $12.0 million to $378.6 million,
contributing $147 thousand toward the increase. In addition to the
increase due to volumes, interest rate spread increased 23 basis points, adding
approximately $28 thousand to net interest income. The Company’s interest rate
spread, which is the difference in the weighted average interest rate on earning
assets and the weighted average interest rate on interest bearing liabilities,
increased as a result of funding costs declining to a greater degree than yields
on earnings assets. Net interest margin increased from 3.86% to 3.93%
for the same comparable periods.
For
the nine months ended September 30, 2009, net interest income increased $866
thousand to $11.1 million compared to the same period in
2008. Average earning assets increased $24.9 million to $386.7
million which contributed $802 thousand toward the increase in net interest
income. The lower interest rate environment also provided a positive
impact in the first nine months of 2009, as the interest rate spread increased
27 basis points, adding approximately $64 thousand to net interest
income. Net interest margin increased from 3.79% to 3.84% for
the same comparable periods.
Non-Interest Income
Non-interest income decreased $87
thousand for the third quarter of 2009 as compared to the third quarter of 2008,
while decreasing $269 thousand for the first nine months of 2009 as compared to
the corresponding period in 2008. Contributing to the decline in
non-interest income for both periods were lower service charges on deposit
accounts, lower gains on securities sales in 2009 and lower revenues from the
Bank’s networking arrangements during the first three quarters of 2009 as
compared to the same period in 2008. During the third quarter, the
Company completed a networking arrangement with Argent Financial Group
(“Argent”) of Ruston, Louisiana, to move the Company’s brokerage business and
related networking arrangements from its prior provider. Under the
new networking arrangement, Argent leases space from the Company in its Baton
Rouge and Natchez offices. The Company and Argent may refer business
to their respective financial specialists; however, unlike the terms of the
prior arrangement, financial consultant personnel are not employees of the
Company, which no longer bears the office expenses and other related selling
expenses associated with networking activities.
Non-Interest Expense
Non-interest expense includes
salaries and benefits, occupancy, equipment and other operating
expenses. Non-interest expense for the three months ended September
30, 2009, increased $209 thousand to $3.0 million compared to the same period in
2008. The primary reasons for the increase is $85 thousand additional
FDIC assessment charges and higher other real estate and equipment costs of $125
thousand in the third quarter of 2009 compared to the same period in
2008.
Non-interest expense increased $651
thousand to $9.1 million for the nine months ended September 30, 2009, compared
to the same period in 2008. Over 70% of the increase is attributable
to increased FDIC quarterly assessments and a special FDIC assessment accrued in
the second quarter of 2009 but paid in the third quarter of 2009. The
remainder of the increase is primarily due to increase in other real estate
costs.
Income Taxes
The Company recorded income tax
expense of $103 thousand for the three months ended September 30, 2009, compared
to $403 thousand for the same period in 2008.
Income tax expense for the nine months ended
September 30, 2009, was $371 thousand compared to $980 thousand during the same
period in 2008.
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 has enhanced 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 increased $601 thousand to $7.6 million at September 30, 2009, from
$7.0 million at December 31, 2008. For the nine months ended
September 30, 2009, cash provided by operating and investing activities was $3.3
million and $16.1 million, respectively, while financing activities used $18.8
million.
At September 30, 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 $40 million. In addition to these lines
of credit, the Bank had approximately $44 million in liquid assets including
unencumbered investment securities available for collateralized
borrowing. Management believes it maintains adequate liquidity for
the Company’s current needs.
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.
The Company’s recent purchase of a
second branch and the expected opening of a third branch office in Baton Rouge
is expected to enhance its existing retail services within the Baton Rouge
market and expand its presence in major business areas of the
city. The Company believes it has adequate resources to execute this
growth plan through its traditional funding sources and without materially
affecting the Company’s liquidity position
.
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. 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
.
It
em 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.
It
em 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
September 30, 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
It
em
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 September 30, 2009,
retained earnings available for payment of cash dividends under applicable
dividend regulations exceeded $4.5 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 September 30, 2009, the maximum amount available for
transfer from the Bank to the Company in the form of loans on a secured basis
was $3.4 million. There were no loans outstanding from the Bank to
the Company at September 30, 2009.
|
Exhibit
|
|
Description of Exhibit
|
|
|
|
|
|
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.
|
|
|
|
|
|
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.
|
|
|
|
|
|
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 Registrant’s Registration
Statement on Form S-8, Registration No. 333-20631, filed with the
Securities and Exchange 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 Registrant’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on August 17,
2006.
|
|
|
|
|
|
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 “Exhibits” this exhibit is incorporated by
reference to another filing or document
S
IGNATURES
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 AND KOONTZ CAPITAL
CORPORATION
|
Date:
|
November
13, 2009
|
/s/ W. Page Ogden
|
|
|
|
W.
Page Ogden
|
|
|
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
Date:
|
November
13, 2009
|
/s/ William M.
Salters
|
|
|
|
William
M. Salters
|
|
|
|
Chief
Financial Officer
(Principal
Financial Officer)
|
EX
HIBIT INDEX
|
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
|
Britton & Koontz Capital Corp. (MM) (NASDAQ:BKBK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Britton & Koontz Capital Corp. (MM) (NASDAQ:BKBK)
Historical Stock Chart
From Jul 2023 to Jul 2024
