SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

 Annual Report UNDER Section 13 or 15(d) of the Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 2002

                         Commission File Number: 0-22606

                      Britton & Koontz Capital Corporation
                 (Name of Small Business Issuer in Its Charter)

             Mississippi                                       64-0665423
   (State or Other Jurisdiction of                          (I.R.S. Employer
   Incorporation or Organization)                          Identification No.)

         500 Main Street
        Natchez, Mississippi                                     39120
(Address of Principal Executive Offices)                       (Zip Code)

                                 (601) 445-5576
                (Issuer's Telephone Number, Including Area Code)

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      None

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                          Common Stock, $2.50 Par Value
                                (Title of Class)

     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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
                                                                      ---   ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. X
                                     ---

     The issuer's revenues for the 2002 fiscal year were $20,724,232.

     The  aggregate   market  value  of  the  issuer's   voting  stock  held  by
non-affiliates computed by reference to the price of $14.60 per share, the price
at  which  the  issuer's  voting  stock  was  sold  on  December  31,  2002,  is
$23,654,935.

     The issuer had 2,113,087 shares of common stock  outstanding as of March 1,
2003.

     Transitional Small Business Disclosure Format (check one): Yes    No  X
                                                                   ---    ---

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Definitive Proxy Statement with respect to
its 2003 Annual Meeting of Shareholders,  filed with the Securities and Exchange
Commission on or about March 24, 2003, and the Annual Report to Shareholders for
fiscal year ended December 31, 2002 are  incorporated by reference into Parts II
and III of this Annual Report on Form 10-KSB.



<PAGE>



                              CROSS REFERENCE INDEX
                                       TO
                                   FORM 10-KSB


                                     PART I


ITEM  1.          DESCRIPTION OF BUSINESS......................................*
ITEM  2.          DESCRIPTION OF PROPERTY......................................*
ITEM  3.          LEGAL PROCEEDINGS............................................*
ITEM  4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........*

                                     PART II


ITEM  5.          MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS.....................................................**
ITEM  6.          MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION...................................................**
ITEM  7.          FINANCIAL STATEMENTS........................................**
ITEM  8.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE ........................**

                                    PART III

ITEM  9.          DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                  ACT........................................................***
ITEM 10.          EXECUTIVE COMPENSATION.....................................***
ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AND RELATED STOCKHOLDER MATTERS.................***
ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............***
ITEM 13.          EXHIBITS, LIST AND REPORTS ON FORM 8-K.......................*
ITEM 14.          CONTROLS AND PROCEDURES......................................*
---------

*        Included herein.

**       The material required by Items 5 through 7 is incorporated by reference
         from the  Company's  2002  Annual  Report to  Shareholders  pursuant to
         Instruction E(2) of Form 10-KSB.

***      The  material  required  by  Items  9  through  12 is  incorporated  by
         reference  from the  Company's  Proxy  Statement  for its  2003  Annual
         Meeting of Shareholders pursuant to Instruction E(3) of Form 10-KSB.


<PAGE>



                                     PART I

         This Annual Report on Form 10-KSB 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 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 1.  Description of Business.

General

         The Company

         Britton & Koontz Capital Corporation (the "Company") was organized as a
Mississippi  business  corporation  in July 1982.  Later that year,  the Company
became a one-bank holding company  registered under the Bank Holding Company Act
of 1956,  as  amended  (the  "BHCA"),  when it  acquired  all of the  issued and
outstanding  shares of Britton & Koontz First National Bank, a national  banking
association  headquartered in Natchez,  Mississippi (the "Bank").  The Bank is a
wholly-owned  subsidiary of the Company,  and stock of the Bank is the Company's
most significant asset. In July 1993, the Company acquired Natchez First Federal
Savings Bank and merged it into the Bank. In December 1998, the Company invested
$1.0  million for a 35%  interest  in Sumx Inc.  ("Sumx"),  a company  formed to
develop and market internet-based  electronic banking to financial institutions.
See "Sumx Inc." In January 1999, the Company purchased from Union Planters Bank,
N.A.  two branch  offices in  Natchez,  Mississippi  with total  deposits of $12
million  and $1.8  million in loans.  In July 1999,  the Company  completed  the
acquisition  of  another  branch  office in  Vicksburg,  Mississippi  from Union
Planters  Bank,  N.A. with deposits of $6 million and $1.4 million in loans.  In
January  2000,  the  Company  opened a loan  production  office in Baton  Rouge,
Louisiana.  On September 15, 2000, the Company acquired 250,000 shares of Series
B Preferred Stock in Sumx for $250,000,  bringing the Company's total percentage
ownership in Sumx up to  approximately  38.25%.  On December 1, 2000,  Louisiana
Bank and Trust Company merged into the Bank, adding approximately $42 million in


<PAGE>

assets and two branches in Baton Rouge,  Louisiana. On April 17, 2001, B&K Title
Insurance Agency, Inc. was organized under the laws of the State of Mississippi.
In May 2001,  the  Company  acquired  1000  shares of common  stock of B&K Title
Insurance  Agency,  Inc.,  and B&K  Title  Insurance  Agency,  Inc.  became  the
Company's second wholly-owned subsidiary.  On June 1, 2001, the Company received
approval to convert the loan  production  office in Baton Rouge,  Louisiana to a
full service  branch.  The Company opened a loan  production  office in Madison,
Mississippi on February 1, 2003.

         The  Company's  major source of income in 2002 was  dividends  from the
Bank in the amount of  $1,500,000.  The Company  expects that dividends from the
Bank will  continue to be the  Company's  major source of income in 2003.  As of
December 31, 2002, the Company had total assets of  approximately  $308 million,
and total consolidated shareholders' equity of approximately $29 million.

         The Bank

         The Bank conducts a full service banking  business from its main office
and three  branch  offices in  Natchez,  Mississippi,  one branch in  Vicksburg,
Mississippi  and  three  branch  offices  in Baton  Rouge,  Louisiana.  The Bank
provides  commercial  and  consumer  banking and trust  services to customers in
Adams and Warren Counties,  Mississippi and East Baton Rouge Parish,  Louisiana,
and the  adjoining  counties  and parishes in  Mississippi  and  Louisiana.  The
geographical  area  serviced by the Bank is  economically  diverse and  includes
public  and   private   sector   industries,   including   government   service,
manufacturing,  tourism, agriculture and oil and gas exploration. As of December
31,  2002,  the Bank had total  assets of  approximately  $308 million and total
deposits of approximately $233 million.

         The  products and  services  offered by the Bank  include  personal and
commercial  checking accounts,  money market deposit accounts,  savings accounts
and  automated  clearinghouse  services.  The Bank also  offers  money  transfer
services,  safe  deposit  box  facilities  and access to a network of  automated
teller machines. The Bank is a full-service  residential and commercial mortgage
lender.  The  Bank  also  engages  in  other  commercial  and  consumer  lending
activities,  including,  among other things,  the issuance of VISA credit cards.
The Bank's trust department offers a range of trust services, acting as trustee,
executor,  administrator,  custodian,  guardian and agent with approximately $13
million in assets under management as of December 31, 2002.

         In 1995,  the Bank  became an  Internet  service  provider  of  banking
services  for the Natchez  area.  The Bank has  extended  its  Internet  dial up
service to the Vicksburg,  Mississippi  market. In 1996, the Bank began offering
Internet-based  online banking using SumxNet,  a software  product  developed by
Sumx.

         The Insurance Agency

         B&K Title  Insurance  Agency,  Inc. has entered into an  agreement,  as
agent,  to issue policies of title  insurance upon properties in all counties of
the State of  Mississippi,  in the name of Mississippi  Guaranty Title Insurance
Company, a Mississippi corporation.

<PAGE>


         Sumx Inc.

         On December 3, 1998, the Company acquired  1,000,000 shares of Series A
Preferred  Stock in Sumx for  $1,000,000.  On September  15,  2000,  the Company
acquired  250,000 shares of Series B Preferred Stock in Sumx for $250,000.  Sumx
is owned 36.6% by the Company,  19.0% by Mr. Bazile R. Lanneau,  Jr.,  President
and Chief  Executive  Officer of Sumx,  Executive Vice President of the Bank and
Vice  President  of the  Company,  and 44.4% by Summit  Research,  Inc., a Texas
corporation.  The  funds  provided  to Sumx have  been  used for  marketing  and
continued development of the SumxNet Internet banking system ("SumxNet") and for
data center  operations.  Sumx  maintains  offices in Natchez,  Mississippi  and
Highland Village, Texas.

         Prior  to  August, 2002, Mr. Lanneau, Jr. devoted a substantial portion
of his time to the business of  Sumx. It is now  anticipated  that Mr.  Lanneau,
Jr. will devote the majority of his time to traditional banking activities  with
a small portion devoted to the  activities of Sumx.  Until  August,  2002,  Sumx
paid the company $90,000  per year for the services of Mr. Lanneau,  Jr. under a
management   services   agreement.  Mr.  Lanneau,  Jr.  currently   receives  no
compensation from  Sumx and is compensated  by the  company  and the  bank.  Mr.
Ogden, President & CEO of the company and  the bank, serves without compensation
as a director and  Secretary/Treasurer of Sumx.

         SumxNet is an  independent  Web-based  banking  solution  that  enables
financial  institutions to incorporate their customer  information directly into
their Internet banking systems  in-house,  thereby allowing banks to package and
price their Internet banking  offerings as they choose.  SumxNet also features a
transaction tracking and billing system, check categorization system,  unlimited
customer  history depth,  check image access,  bill payment and cash  management
features.

         In May of 2001, Sumx entered into an exclusive  agreement with Diebold,
Incorporated  ("Diebold"),  a global leader in providing integrated self-service
delivery  systems  and  services,  for  Diebold to market,  install  and support
Diebold Internet  Banking,  powered by Sumx, for its customer base. As of March,
2003  Diebold's  marketing  efforts  have  generated  approximately  $110,000 in
revenue.

         Due to  restrictions  related to the  exclusivity  agreement  and Sumx'
dependence  on cash  flow from the  Diebold  relationship,  Sumx gave  notice to
Diebold on May 21,  2002 of its intent to  terminate  the  agreement  due to the
failure of Diebold to use reasonable commercial efforts to market, advertise and
sublicense SumxNet. On July 31, 2002, Sumx filed suit for a declaratory judgment
confirming  termination of the agreement.  Diebold  answered,  denying breach of
contract and counterclaimed for patent infringement. Sumx believes this claim of
patent infringement to be wholly without merit; however, Sumx has refrained from
amending its pleadings, pending the outcome of active negotiations.

         Because of the  exclusivity  granted to Diebold,  and  pending  earlier
judicial determination of final termination of the agreement,  Sumx is unable to
market SumxNet  through other  qualified  vendors until May 7, 2003 when some of
the  exclusivity   restrictions  lapse;  however,   Diebold's  claim  of  patent
infringement effectively constrains Sumx' ability to market SumxNet.

<PAGE>

         As of June 30, 2002 the Company  charged-off  $549 thousand in debt and
receivables  from Sumx. In the fourth quarter 2002 the Company  charged-off  its
remaining  investment  in Sumx of $701  thousand,  consisting of a book value of
$374 thousand and related  deferred tax asset of $327 thousand from  accumulated
equity losses. The Company's  decision to write off its remaining  investment in
Sumx is driven by the  uncertainty  regarding  the  timing  and  outcome  of the
litigation with Diebold and its impact on future business prospects for Sumx.

         As of March 24, 2003,  eight financial  institutions use Sumx' Internet
banking  technology to provide Internet banking services to their customers (six
banks through Sumx, and one bank and credit union through Diebold).

Supervision and Regulation

         The banking  industry is extensively  regulated under federal and state
law. As a bank holding  company,  the Company is subject to regulation under the
BHCA and to supervision by the Board of Governors of the Federal  Reserve System
(the "Federal  Reserve").  Pursuant to the BHCA, the Company may not directly or
indirectly  acquire  the  ownership  or  control of more than 5% of any class of
voting shares or substantially all of the assets of any other company, including
a bank,  without the prior  approval of the Federal  Reserve.  The BHCA  further
limits  the  activities  of both the  Company  and the Bank to the  business  of
banking and activities closely related or incidental to banking.

         As a national  bank,  the Bank is subject to  supervision  and  regular
examination   by  the  Office  of  the   Comptroller   of  the   Currency   (the
"Comptroller").  Such examinations,  however, are for the protection of the Bank
Insurance Fund ("BIF") and, indirectly to a degree, for depositors,  and not for
the  protection  of  investors  and  shareholders.  Pursuant to the terms of the
Federal Deposit Insurance Act (the "FDIA"), the deposits of the Bank are insured
through  the BIF and the  Savings  Association  Insurance  Fund  ("SAIF") of the
Federal Deposit  Insurance  Corporation (the "FDIC").  Accordingly,  the Bank is
subject to regulation  by the FDIC and is also subject to the Federal  Reserve's
requirements to maintain  reserves against  deposits,  restrictions on the types
and  amounts of loans that may be granted and the  interest  that may be charged
thereon,  and  limitations on the types of investments  that may be made and the
types of services that may be offered.

         In 1991,  Congress  enacted the Federal Deposit  Insurance  Corporation
Improvement Act ("FDICIA"), which, among other things, substantially revised the
depository  institution  regulatory and funding  provisions of the FDIA.  FDICIA
also expanded the regulatory and enforcement powers of bank regulatory agencies.
Most  significantly,  FDICIA  mandates  annual  examinations  of  banks by their
primary  regulators  and  requires the federal  banking  agencies to take prompt
"corrective action" whenever financial  institutions do not meet minimum capital
requirements.   FDICIA  establishes  five  capital  tiers:  "well  capitalized,"
"adequately capitalized,"  "undercapitalized,"  "significantly undercapitalized"
and "critically  undercapitalized."  A depository  institution's  capitalization
status will depend on how well its capital  levels  compare to various  relevant
capital measures and certain other factors, as established by regulation.  As of
December 31, 2002,  the Bank  maintained a capital  level which  qualified it as
being "well capitalized" under such regulations.

<PAGE>

         FDICIA also prohibits a depository  institution from making any capital
distribution  (including  payment of a dividend) or paying any management fee to
its  holding  company  if  the  depository   institution   would  thereafter  be
"undercapitalized."  For additional  information  regarding  restrictions on the
Bank's payment of dividends,  see Item 5 - "Market for Common Equity and Related
Stockholder Matters."

         The  banking  industry  is  affected  by the  policies  of the  Federal
Reserve.  An  important  function  of the  Federal  Reserve is to  regulate  the
national  supply of bank credit to moderate  recessions  and to curb  inflation.
Among  the  instruments  of  monetary  policy  used by the  Federal  Reserve  to
implement  its  objectives  are:  open-market   operations  in  U.S.  Government
securities,  changes in the  discount  rate on bank  borrowings  and  changes in
reserve requirements on bank deposits.

Interstate Banking and Branching Legislation

         Federal Law

         In  1994,  Congress  passed  the  Riegle-Neal  Interstate  Banking  and
Branching Efficiency Act ("Riegle-Neal"),  which affected the interstate banking
and  branching  abilities  of bank  holding  companies  and  banks.  Riegle-Neal
authorizes a national bank  domiciled in one state to establish  branches in any
other  state as long as  neither  state has opted  out of  interstate  branching
between the date of enactment  of  Riegle-Neal  and May 31,  1997.  Riegle-Neal,
however,  does allow  states to preserve  certain  restrictions  on the entry of
out-of-state  banks,  such as the  fashion  in which  entry can be made,  an age
requirement  for a bank  being  merged or  acquired,  and a deposit  cap.  Under
Riegle-Neal,  once a bank has  established  a branch in  another  state,  it may
exercise the same rights in that state as national and state banks enjoy in that
state, including the ability to branch intra-state.

         Riegle-Neal  also  permits  states to allow banks to enter the state by
establishing  a de novo  branch in that  state.  In order to allow de novo entry
into a  particular  state,  that  state  must  expressly  provide  for  de  novo
branching.  Once a bank has established a branch in a host state through de novo
branching,  it may  exercise the same rights in that state as national and state
banks enjoy, including the ability to branch intra-state. If a state opts out of
interstate branching,  no bank domiciled in that state may establish branches in
other states,  and no bank domiciled in another state may establish  branches in
that state.
         Mississippi Law

         On March 29, 1996, the Governor of  Mississippi  signed into law a bill
in which Mississippi elected to opt in to interstate branching, effective May 1,
1997.  As  enacted,  the bill (1)  allows  all  Mississippi  banks to  establish
branches in any other state  pursuant to the entry rules in the  potential  host
state, and (2) allows  out-of-state  banks to establish  branches in Mississippi
pursuant to  Mississippi's  entry  rules.  The bill does not  authorize  de novo
branching  into  Mississippi.  An  out-of-state  bank can establish  branches in
Mississippi  only by (1) merging with a Mississippi  domiciled  bank, (2) buying
all of the  assets of a  Mississippi  domiciled  bank,  or (3) buying all of the
assets in Mississippi of an out-of-state bank which has branches in Mississippi.
All interstate branching transactions require appropriate regulatory approval.

<PAGE>

         On December 1, 2000,  the Bank  acquired  its first  interstate  branch
offices in Baton Rouge,  Louisiana.  Under  applicable  law, the Bank,  with the
approval of the  Comptroller of the Currency,  can establish  additional de novo
branch  offices  within the states of  Mississippi  and  Louisiana.  The Company
regularly   evaluates   merger  and  acquisition   opportunities,   as  well  as
opportunities to establish additional branch offices, and it anticipates that it
will continue to evaluate such opportunities.

         Financial Modernization

         The  Gramm-Leach-Bliley  Financial Services Moderation Act of 1999 (the
"GLB Act") was signed by the  President  and enacted  into law on  November  12,
1999. The GLB Act potentially affects every facet of a depository  institution's
operations.  The GLB Act does three  fundamental  things that affect the banking
industry:  (a)  repeals  key  provisions  of the  Glass  Steagall  Act to permit
commercial  banks to affiliate with securities  firms,  insurance  companies and
other  financial  service  providers;  (b)  establishes  a  statutory  framework
pursuant to which full  affiliations  can occur between these entities;  and (c)
provides financial services  organizations with flexibility in structuring these
new financial  affiliations  through a financial  holding company structure or a
financial subsidiary.

         As a result of the GLB Act,  banks  will be able to offer  customers  a
wide range of financial products and services without the restraints of previous
legislation.  In addition,  bank holding companies and other financial  services
providers will be able to commence new activities or new affiliations  much more
readily.

         Consequence of Increased Interstate Activity and Increased Bank Powers

         Because of the increasing  liberalization  of the laws and  regulations
affecting  the  conduct  of  interstate  banking  activities  and the  powers of
financial  institutions  generally,  it is anticipated  that  competition in the
Bank's geographical market area will increase.  If large,  regional bank holding
companies  acquire  branches in the Bank's  market area,  they may offer a wider
range of services than are currently offered by the Bank. Some of these regional
competitors  may  take  full  advantage  of  the  powers  of  financial  holding
companies.  In addition,  these competitors are likely to be better  capitalized
than the Bank and the Company.

         Further Changes in Regulatory Requirements

         The  United  States  Congress  and  the  Mississippi  legislature  have
periodically  considered and adopted legislation that has adversely affected the
profitability of the banking industry.  See  "Competition."  Future  legislation
could further modify or eliminate geographic and other business  restrictions on
banks and bank  holding  companies  and  current  prohibitions  affecting  other
financial  institutions,  including  mutual funds,  securities  brokerage firms,
insurance  companies,  banks from other states and investment banking firms. The
effect of any such legislation on the business of the Company or the Bank cannot
be accurately predicted.  The Company also cannot predict what legislation might
be enacted or what  other  implementing  regulations  might be  adopted,  and if
enacted or adopted, the effect thereof.

<PAGE>

         Restriction on Dividends

         The Company is a legal entity  separate and distinct from the Bank, and
substantially  all of the  Company's  revenues  result from  amounts paid by the
Bank, as dividends,  to the Company. The payment of dividends by the Bank is, of
course,  dependent upon its earnings and financial condition. The Bank, however,
as a national  bank, is also subject to legal  limitations  on the amount of its
earnings that it may pay as dividends.  For additional information regarding the
restrictions on the Bank's payment of dividends, see Item 5 - "Market for Common
Equity and Related Stockholder Matters--Dividends," below.

Employees

         As of December 31, 2002, the Company and the Bank had approximately 128
full-time and 11 part-time  employees.  The employees are not  represented  by a
collective  bargaining unit. The Company believes that its relationship with its
employees is good.

Competition

         There is significant competition among banks and bank holding companies
in  Mississippi.  The Bank  competes  with both  national  and  state  banks for
deposits,  loans and trust accounts and with savings and loan  associations  and
credit unions for loans and deposits. The Bank also competes with large national
banks  from the  principal  cities in  Louisiana  and  Mississippi  for  certain
commercial loans.

         The  deregulation  of depository  institutions as well as the increased
ability  of  non-banking  financial  institutions,  such as  finance  companies,
investment  companies,  insurance  companies,  brokerage  companies  and several
governmental  agencies,  to provide services  previously  reserved to commercial
banks has further intensified  competition.  Accordingly,  the Bank now competes
with  these  non-banking  financial  institutions,  all of which are  engaged in
marketing  various types of loans,  commercial  paper,  short-term  obligations,
investments and other services.  Because non-banking financial  institutions are
not  subject  to the same  regulatory  restrictions  as banks  and bank  holding
companies,  in many  instances  they may operate with greater  flexibility.  The
continued deregulation of the financial services industry may have a detrimental
effect on the Bank's long-term growth and profitability.

         Intensity of competition  among  financial  institutions is expected to
increase substantially as a result of the GLB Act and as a result of the ability
of financial institutions to deliver services over the Internet.

Environmental

         The Company is subject to various federal, state and local statutes and
ordinances  regulating  the  discharge of materials  into the  environment.  The
Company does not believe that it will be required to expend any material amounts
to comply with these laws and regulations.

Item 2.  Description of Property.

         The Company has its principal  offices in its headquarters  building at
500 Main Street, Natchez, Adams County, Mississippi 39120, which is owned and

<PAGE>

occupied by the Bank.  The Bank owns the  property on which five of its branches
are located and leases the property for two of its branches.  In the judgment of
management,  the  facilities of the Company and the Bank are generally  suitable
and  adequate  for the needs of the Company  and the Bank.  The  following  list
describes the locations and general character of the properties owned and leased
by the Company and the Bank:

                                                              Approximate Office
     Location                 Own/Lease          Use         Space (square feet)
     -------------            ----------     -------------   -------------------
    Natchez
     500 Main Street
     Natchez, MS.               Owned        Main Office              33,723

     411 Highway 61 N.
     Natchez, MS.               Owned        Branch Office             1,922

     148 N. Shields Lane
     Natchez, MS.               Owned        Branch Office             6,000

     55 A Sgt. Prentiss Dr.
     Natchez, MS.               Owned        Branch Office             9,900

    Vicksburg
     2150 S. Frontage Road
     Vicksburg, MS.             Owned        Branch Office             6,000

    Baton Rouge
     7142 Florida Boulevard
     Baton Rouge, La.           Owned        Branch Office             6,000

     12716 Perkins Road
     Baton Rouge, La.           Leased       Branch Office             2,000

     10626 Linkwood Ct.
     Suite A
     Baton Rouge, LA            Leased       Branch Office             2,500

    Madison
     141 Executive Drive
     Suite 5                                 Loan Production
     Madison, MS                Leased        Office                   2,200


Item 3.  Legal Proceedings.

         The Company and the Bank are  involved  in  litigation  incurred in the
normal  course of  business.  In the opinion of  management  and legal  counsel,
liabilities  arising from such claims, if any, would not have a material adverse
effect upon the Company's consolidated financial condition.

Item 4.  Submission of Matters to a Vote of Security Holders.

         There were no matters  submitted to the Company's  shareholders  during
the fourth quarter of 2002.


<PAGE>

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

         The  information  required in response to this item is  incorporated by
reference to the material  under the heading  "Information  Regarding our Common
Stock" in the  Company's  2002 Annual  Report to its  Shareholders  (the "Annual
Report").

Item 6.  Management's Discussion and Analysis or Plan of Operation.

         The  information  required in response to this item is  incorporated by
reference to the material under the heading "Management  Discussion and Analysis
of Financial Condition and Results of Operations" in the Annual Report.

Item 7.  Financial Statements.

         The  information  required in response to this item is  incorporated by
reference to the material under the heading "Consolidated  Financial Statements"
in the Annual Report.

Item 8.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

         None.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters &  Control Persons; Compliance
with Section  16(a) of the Exchange Act.

         The  information  required  in  response  to this item is  incorporated
herein by  reference  to the  material  under the  headings  "Nominees  (Class I
Directors),"  "Continuing  Directors (Class II and III  Directors),"  "Executive
Officers" and "Section 16(a) Beneficial  Ownership Reporting  Compliance" in the
Company's  Proxy  Statement  for its 2003 Annual  Meeting of  Shareholders  (the
"Proxy Statement").

Item 10.  Executive Compensation.

         The  information  required  in  response  to this item is  incorporated
herein by reference to the material under the headings "Executive Compensation",
"Stock  Options",  "Aggregate  Option  Exercises and Year-End Option Values" and
"Employment Agreements" in the Proxy Statement.


<PAGE>

Item 11.  Security  Ownership  of  Certain  Beneficial Owners and Management and
Related Stockholder Matters.

         In partial  response to this item, the Company  incorporates  herein by
reference the material under the headings "Security Ownership of Management" and
"Security Ownership of Certain Beneficial Owners" in the Proxy Statement.

         The following table summarizes the company's equity  compensation  plan
information as of December 31, 2002. The  underlying  plan,  which is more fully
described in Note J to the consolidated financial statements included in Item 8,
has been previously approved by a vote of the shareholders.

<TABLE>
<CAPTION>


                      Equity Compensation Plan Information

                                                                                                    (c)
                                                                                             Number of securities
                                                (a)                                        remaining available for
                                        Number of securities              (b)               future issuance under
                                          to be issued upon        Weighted-average          equity compensation
                                             exercise of           exercise price of          plans (excluding
                                        outstanding options,     outstanding options,            securities
         Plan Caregory                   warrants and rights      warrants and rights          in column (a))
        -----------------               --------------------     --------------------      ----------------------


<S>                                     <C>                      <C>                      <C>
Equity compensation plans
  approved by  security holders                53,677                    17.33                  110,000 (1)
Equity compensation plans not
  approved by security holders                     -                        -                         -

     Total                                     53.677                    17.33                  110,000



</TABLE>

(1)      Includes 110,000 shares that remain available for future issuance under
         the Company's Long Term Incentive Plan.

Item 12.  Certain Relationships and Related Transactions.

         The  information  required  in  response  to this item is  incorporated
herein by reference to the material under the heading "Certain Relationships and
Related Transactions" in the Proxy Statement.

Item 13.  Exhibits, List and Reports on Form 8-K.

(a)      Exhibits

         The  response to this  portion of Item 13 is  submitted  as the Exhibit
Index attached hereto and incorporated herein by this reference.

(b)      Reports on Form 8-K

         On November 5, 2002,  the  Company  filed a Current  Report on Form 8-K
reporting 2002 third quarter earnings.


<PAGE>

         On November 21, 2002,  the Company  filed a Current  Report on Form 8-K
announcing the declaration of a semi-annual dividend.

Item 14.   Controls and Procedures

         Within  the 90 days  prior to the date of this  Annual  Report  on Form
10-KSB,  the Company  carried out an evaluation,  under the supervision and with
the  participation of the Company's  principal  executive  officer and principal
financial  officer,  of the  effectiveness  of the design and  operation  of the
Company's  disclosure  controls and  procedures as defined in Rule 13a-14(c) and
Rule 15d-14(c) under the Securities  Exchange Act of 1934, as amended.  Based on
this  evaluation,  the  Company's  principal  executive  officer  and  principal
financial  officer  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  have been no
significant  changes in the Company's internal controls or in other factors that
could significantly  affect internal controls subsequent to the date the Company
carried out its evaluation.



<PAGE>



                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


                                        BRITTON & KOONTZ CAPITAL CORPORATION
                                        (Registrant)


                                        By:/s/ W. Page Ogden
                                           ------------------------------------

                                            W. Page Ogden
                                            Chairman and Chief Executive Officer
                                            Date:  March 26, 2003

         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.


Signature                          Title                          Date
------------------                 --------------                 --------------

/s/ W. Page Ogden                  Chairman,                      March 26, 2003
--------------------------------   Chief Executive
W. Page Ogden                      Officer and Director
                                   (Principal Executive Officer)

/s/ W. W. Allen, Jr.               Director                       March 26, 2003
--------------------------------
W. W. Allen, Jr.


/s/ Craig A. Bradford              Director                       March 26, 2003
--------------------------------
Craig A. Bradford, DMD


/s/ A. J. Ferguson                 Director                       March 26, 2003
--------------------------------
A. J. Ferguson


/s/ Bazile R. Lanneau, Jr.         Vice President, Chief          March 26, 2003
--------------------------------   Financial Officer, Treasurer,
Bazile R. Lanneau, Jr.             Asst. Secretary and Director
                                   (Principal Financial Officer)
                                   (Principal Accounting Officer)


/s/ Albert W. Metcalfe             Secretary                      March 26, 2003
--------------------------------   and Director
Albert W. Metcalfe


<PAGE>


Signature                          Title                          Date
------------------                 --------------                 --------------

/s/ Bethany L. Overton             Director                       March 26, 2003
--------------------------------
Bethany L. Overton


/s/ R. Andrew Patty II             Director                       March 26, 2003
--------------------------------
R. Andrew Patty II


/s/ Robert R. Punches              Vice-Chairman and              March 26, 2003
--------------------------------   Director
Robert R. Punches


/s/ Vinod K. Thukral, Ph.D.        Director                       March 26, 2003
---------------------------
Vinod K. Thukral, Ph.D.



<PAGE>


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, W. Page Ogden, certify that:

1.       I have reviewed this  annual report on Form 10-KSB of  Britton & Koontz
         Capital Corporation;

2.       Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

4.       The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

                  (a) designed such disclosure controls and procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

                  (b) evaluated the effectiveness of the registrant's disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

                  (c) presented in this annual report our conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent functions):

                  (a) all significant deficiencies in the design or operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

                  (b)  any  fraud,  whether  or  not  material,   that  involves
                  management or other  employees who have a significant  role in
                  the registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual  report  whether  there were  significant  changes  in  internal

<PAGE>

         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.



Date: March 26, 2003                                 By: /s/ W. Page Ogden
                                                         -----------------------
                                                         W. Page Ogden
                                                         Chief Executive Officer


<PAGE>


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Bazile R. Lanneau, Jr., certify that:

1.       I have reviewed this  annual report on Form 10-KSB of  Britton & Koontz
         Capital Corporation;

2.       Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

4.       The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

                  (a) designed such disclosure controls and procedures to ensure
                  that  material   information   relating  to  the   registrant,
                  including its consolidated  subsidiaries,  is made known to us
                  by others  within  those  entities,  particularly  during  the
                  period in which this annual report is being prepared;

                  (b) evaluated the effectiveness of the registrant's disclosure
                  controls and  procedures  as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

                  (c) presented in this annual report our conclusions  about the
                  effectiveness of the disclosure  controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent functions):

                  (a) all significant deficiencies in the design or operation of
                  internal   controls   which   could   adversely   affect   the
                  registrant's ability to record, process,  summarize and report
                  financial  data  and  have  identified  for  the  registrant's
                  auditors any material weaknesses in internal controls; and

                  (b)  any  fraud,  whether  or  not  material,   that  involves
                  management or other  employees who have a significant  role in
                  the registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual  report  whether  there were  significant  changes  in  internal

<PAGE>

         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.



Date: March 26, 2003                              By: /s/ Bazile R. Lanneau, Jr.
                                                      --------------------------
                                                      Bazile R. Lanneau, Jr.
                                                      Chief Financial Officer





<PAGE>


                    EXHIBITS TO ANNUAL REPORT ON FORM 10-KSB

                     OF BRITTON & KOONTZ CAPITAL CORPORATION


                               FOR THE FISCAL YEAR

                             ENDED DECEMBER 31, 2002





<PAGE>


                                  EXHIBIT INDEX

Exhibit                             Description of Exhibit

3.1               Restated Articles of Incorporation of Britton & Koontz Capital
                  Corporation,  incorporated   by  reference  to  Exhibit 4.1 to
                  Registrant's Registration Statement on Form S-8,  Registration
                  No. 333-20631, filed with the Commission on January 29, 1997 *

3.2               By-Laws of Britton & Koontz  Capital  Corporation,  as amended
                  and  restated,  incorporated  by  reference  to Exhibit 3.2 to
                  Registrant's  Annual  Report  on Form  10-KSB  filed  with the
                  Commission on March 30, 1998 *

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 Commission on January 29, 1997 *

10.01             Employment  Agreement dated December 31, 2002, between Britton
                  & Koontz Capital Corporation and W. Page Ogden.

10.02             Employment  Agreement dated December 31, 2002, between Britton
                  & Koontz Capital Corporation and Bazile R. Lanneau, Jr.

10.03             Salary  Continuation Plan Agreements dated September 26, 1994,
                  between Britton & Koontz  Capital  Corporation, W. Page Ogden,
                  &  Bazile R. Lanneau, Jr. incorporated by reference to Exhibit
                  10  to  Registrant's  Report  on  Form  10-QSB  filed with the
                  Commission on November 14, 1994 *

10.04             System  Purchase  Agreement dated January 22, 1996 between the
                  Britton & Koontz First  National Bank and  InterBank  Systems,
                  Inc.,   incorporated   by   reference   to  Exhibit   10.5  to
                  Registrant's  Annual  Report  on Form  10-KSB  filed  with the
                  Commission  on March  29,  1996 and Form  10-KSB/A,  Amendment
                  Number 1, filed with the Commission on June 14, 1996 *


<PAGE>



10.05             Britton  &  Koontz  Capital  Corporation  Long-Term  Incentive
                  Compensation Plan and  Amendment, incorporated by reference to
                  Exhibit 4.4 to Registrant's Registration Statement on Form S-8
                  , Registration  No. 333-20631, filed  with  the  Commission on
                  January 29, 1997 *

10.06             Stock  Purchase  Agreement  dated  December  3, 1998,  between
                  Britton & Koontz Capital Corporation &  Sumx Inc. incorporated
                  by reference to  Exhibit 10.09 to  Registrant's  Annual Report
                  on Form 10-KSB filed with the Commission on March 30, 1999 *

10.10             Investor Rights Agreement dated December 3, 1998 among Britton
                  & Koontz Capital  Corporation,  Summit Research,  Inc., Bazile
                  R. Lanneau, Jr. and  Sumx Inc.  incorporated  by  reference to
                  Exhibit 10.10  to  Registrant's  Annual  Report on Form 10-KSB
                  filed with the Commission on March 30, 1999 *

10.11             Voting Agreement dated December 3, 1998 among Britton & Koontz
                  Capital Corporation, Summit Research, Inc. & Bazile R. Lanneau
                  ,  Jr.  incorporated   by  reference   to  Exhibit   10.11  to
                  Registrant's  Annual  Report  on  Form  10-KSB  filed with the
                  Commission on March 30, 1999 *

10.12             Management  Service  Agreement dated  December 3, 1998,  among
                  Britton & Koontz Capital  Corporation, Sumx Inc. and Bazile R.
                  Lanneau,  Jr. incorporated  by reference  to Exhibit  10.12 to
                  Registrant's  Annual  Report  on  Form  10-KSB  filed with the
                  Commission on March 30, 1999 *

11                Computation of Per Share Earnings

13                Annual Report to Shareholders

21                Subsidiaries of the Registrant

23                Consent of Independent Auditors

99.1              Section 906 - Certification of Chief Executive Officer

99.2              Section 906 - Certification of Chief Financial Officer


* As indicated in the column entitled  "Description of Exhibit," this exhibit is
incorporated by reference to another filing or document.


<PAGE>




                                  EXHIBIT 10.01

                     EMPLOYMENT AGREEMENT FOR W. PAGE OGDEN




<PAGE>


                              EMPLOYMENT AGREEMENT



         AGREEMENT dated effective as this 31st day of December,  2002,  between
BRITTON & KOONTZ FIRST NATIONAL BANK (hereinafter  referred to as "B&K", BRITTON
& KOONTZ CAPITAL CORPORATION  (hereinafter  referred to as "B&K Capital Corp."),
and W. PAGE OGDEN (hereinafter referred to as "Employee").

         I.  EMPLOYMENT

         B&K agrees to employ the Employee and the Employee  agrees to work as a
full-time employee of B&K, upon the terms and conditions of this agreement.

         II.  TERM

         This agreement shall terminate on December 31, 2005.  However, it shall
automatically  renew for three successive  one-year terms,  unless 90 days prior
notice is given by the respective parties.

         III.  COMPENSATION

         For all services rendered by the Employee, as outlined hereinafter, the
Employee shall be paid an annual salary of One Hundred Sixty Thousand ($160,000)
Dollars,  which  shall be payable in  accordance  with  B&K's  ordinary  payroll
procedures.

         IV.  ADDITIONAL EMPLOYEE BENEFITS

         A) In addition to the compensation recited hereinabove,  Employee shall
be entitled to  participate  to the fullest  extent  allowable in all additional
benefits normally made available to employee.

         B) B&K agrees to provide  Employee with an automobile  and to reimburse
Employee for all  maintenance,  repairs,  insurance,  gasoline,  and other costs
incidental  to the  automobile.  Employee  agrees  to  reimburse  B&K  for  such
automobile costs or expenses  necessary to comply with the current or future tax
laws and regulations promulgated thereunder.

         C)  B&K  agrees  to  pay  the  country  club,  professional  and  civic
organization dues for Employee and his wife.

         V.  DUTIES

         Employee  is hired by B&K as  Chairman  and CEO of B&K and B&K  Capital
Corp. and will report  directly to the Board of Directors of B&K and B&K Capital
Corp. Employee will be responsible for the supervision and administration of B&K
Capital Corp. and all of its  subsidiaries  in accordance  with the policies and
strategic  plans  of  the  bank  and  applicable  state  and  federal  laws  and
regulations.

         Employee  will be a member  of the  Board of  Directors  of B&K and B&K
Capital Corp.  Employee is expected to spend a reasonable  amount of his time in
civic  and  professional  activities,  and it is agreed  that the time  spent by
Employee in these  activities,  along with other reasonable  amounts of time for
personal or outside business, shall not constitute a breach of this agreement by
Employee,  provided that such  activities do not  materially  interfere with the
services required to be rendered by Employee to B&K.


<PAGE>

         VI.  TERMINATION OF EMPLOYMENT

         It is agreed that B&K may terminate Employee's  employment at any time,
with or without cause, but any termination other than for cause shall not affect
Employee's right to compensation or other benefits.  Termination for cause shall
include termination because of personal dishonesty,  willful misconduct,  breach
of fiduciary  duty involving  personal  profit,  intentional  failure to perform
stated  duties,  willful  violation of any law, rule or  regulation  (other than
traffic violations or similar offenses),  and/or flagrant abuse and violation of
the  bank  policies  adopted  by the B&K  Board of  Directors.  If  employee  is
terminated  without cause B&K shall pay Employee a lump sum termination  payment
equal to the greater of Eighty  Thousand  ($80,000.00)  Dollars or six months of
Employee's  then current  annual  salary.  As a condition  precedent to employee
receiving this lump sum termination payment, employee must sign an agreement not
to sue B&K or B&K Capital  based on any  violation of labor laws,  including age
discrimination.

         VII. ASSIGNMENT

         Employee  acknowledges  that the  services  to be  rendered  by him are
unique and personal.  Accordingly, the Employee may not assign any of his rights
or delegate any of his authorities or obligations under this agreement.

         VIII.  ENTIRE AGREEMENT

This  agreement  contains the entire  understanding  of the parties,  may not be
changed orally,  but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification,  extension or discharge is
sought.

         IX.  GOVERNING LAW

         This agreement  shall be construed and enforced in accordance  with the
laws of the State of Mississippi.

         X.  SEVERABILITY AND MODIFICATION

         The invalidity of  unenforceability of any provision hereof shall in no
way affect the validity or enforceability of other provisions.

         XI.  COUNTERPARTS

         This  instrument is executed in duplicate  counterparts,  each of which
shall be deemed an original, but both of which shall constitute one and the same
instrument.  Employee  shall have one fully executed copy and B&K shall have one
fully executed copy.


<PAGE>

         XII.  BINDING EFFECTS OF THIS AGREEMENT

         This agreement shall be binding upon the heirs,  legal  representative,
successors and assigns of the parties hereto.

         IN WITNESS  WHEREOF  this  agreement  is  executed as of the date first
hereinabove recited.


                      BRITTON & KOONTZ FIRST NATIONAL BANK



                   By: /s/ Robert R. Punches
                       -------------------------------
                        Robert R. Punches, Vice-Chairman

                      BRITTON & KOONTZ CAPITAL CORPORATION



                   By: /s/ Robert R. Punches
                       -------------------------------
                        Robert R. Punches, Vice-chairman



                      /s/ W. Page Ogden
                      ---------------------------------
                      W. PAGE OGDEN



<PAGE>




                                 EXHIBIT 10.02

                EMPLOYMENT AGREEMENT FOR BAZILE R. LANNEAU, JR.





<PAGE>

                              EMPLOYMENT AGREEMENT


         AGREEMENT  dated  effective as this 31st day of December, 2002, between
BRITTON & KOONTZ FIRST NATIONAL BANK (hereinafter referred to as "B&K",  BRITTON
& KOONTZ CAPITAL  CORPORATION  (hereinafter referred to as "B&K Capital Corp."),
and BAZILE R. LANNEAU, JR. (hereinafter referred to as "Employee").

         I.  EMPLOYMENT

         B&K agrees to employ the Employee and the Employee  agrees to work as a
full-time employee of B&K, upon the terms and conditions of this agreement.

         II.  TERM

         This agreement shall terminate on December 31, 2005.  However, it shall
automatically  renew for three successive  one-year terms,  unless 90 days prior
notice is given by the respective parties.

         III.  COMPENSATION

         For all services rendered by the Employee, as outlined hereinafter, the
Employee  shall be paid an  annual  salary  of One  Hundred  Seventeen  Thousand
($117,000)  Dollars,  which shall be payable in accordance  with B&K's  ordinary
payroll procedures.

         IV.  ADDITIONAL EMPLOYEE BENEFITS

         A) In addition to the compensation recited hereinabove,  Employee shall
be entitled to  participate  to the fullest  extent  allowable in all additional
benefits normally made available to employee.

         B) B&K agrees to provide  Employee with an automobile  and to reimburse
Employee for all  maintenance,  repairs,  insurance,  gasoline,  and other costs
incidental  to the  automobile.  Employee  agrees  to  reimburse  B&K  for  such
automobile costs or expenses  necessary to comply with the current or future tax
laws and regulations promulgated thereunder.

         C)  B&K  agrees  to  pay  the  country  club,  professional  and  civic
organization dues for Employee and his wife.

         V.  DUTIES

         Employee is hired by B&K as Executive Vice President and by B&K Capital
Corp.  as Vice  President  and will report  directly to the  President  and CEO.
Employee will be the second ranking employee in the bank and will be responsible
for the supervision and  administration of areas listed below in accordance with
the policies and strategic  plans of the bank and  applicable  state and federal
laws and regulations.  Employee will be responsible for the ongoing  development
of policy and procedures in and oversight of investments  and funds  management,
operations, accounting, personnel and trust.

         Employee  will be a member  of the  Board of  Directors  of B&K and B&K
Capital Corp. and will serve as Chairman of the Investment and Trust  Committees
of the Board of B&K and B&K Capital  Corp.  Employee  will be a voting member of
both the Directors'  and Officers' Loan  Committees and will service a portfolio
of loan  accounts  selected  by the  president.  Employee is expected to spend a
reasonable  amount of his time in civic and professional  activities,  and it is
agreed  that the time spent by Employee  in these  activities,  along with other
reasonable  amounts  of  time  for  personal  or  outside  business,  shall  not
constitute a breach of this agreement by Employee, provided that such activities
do not  materially  interfere  with the  services  required  to be  rendered  by
Employee to B&K.

<PAGE>


         VI.  TERMINATION OF EMPLOYMENT

         It is agreed that B&K may terminate Employee's  employment at any time,
with or without cause, but any termination other than for cause shall not affect
Employee's right to compensation or other benefits.  Termination for cause shall
include termination because of personal dishonesty,  willful misconduct,  breach
of fiduciary  duty involving  personal  profit,  intentional  failure to perform
stated  duties,  willful  violation of any law, rule or  regulation  (other than
traffic violations or similar offenses),  and/or flagrant abuse and violation of
the  bank  policies  adopted  by the B&K  Board of  Directors.  If  employee  is
terminated  without cause B&K shall pay Employee a lump sum termination  payment
equal to the greater of Fifty Eight Thousand Five Hundred  ($58,500.00)  Dollars
or six months of Employee's then current annual salary. As a condition precedent
to employee receiving this lump sum termination  payment,  employee must sign an
agreement  not to sue B&K or B&K Capital  based on any  violation of labor laws,
including age discrimination.

         VII. ASSIGNMENT

         Employee  acknowledges  that the  services  to be  rendered  by him are
unique and personal.  Accordingly, the Employee may not assign any of his rights
or delegate any of his authorities or obligations under this agreement.

         VIII.  ENTIRE AGREEMENT

This  agreement  contains the entire  understanding  of the parties,  may not be
changed orally,  but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification,  extension or discharge is
sought.

         IX.  GOVERNING LAW

         This agreement  shall be construed and enforced in accordance  with the
laws of the State of Mississippi.

         X.  SEVERABILITY AND MODIFICATION

         The invalidity of  unenforceability of any provision hereof shall in no
way affect the validity or enforceability of other provisions.

<PAGE>

         XI.  COUNTERPARTS

         This  instrument is executed in duplicate  counterparts,  each of which
shall be deemed an original, but both of which shall constitute one and the same
instrument.  Employee  shall have one fully executed copy and B&K shall have one
fully executed copy.

         XII.  BINDING EFFECTS OF THIS AGREEMENT

         This agreement shall be binding upon the heirs,  legal  representative,
successors and assigns of the parties hereto.

         IN WITNESS  WHEREOF  this  agreement  is  executed as of the date first
hereinabove recited.


                             BRITTON & KOONTZ FIRST NATIONAL BANK

                         By: /s/ W. Page Ogden
                             -------------------------------
                             W. Page Ogden, Chairman & CEO


                             BRITTON & KOONTZ CAPITAL CORPORATION


                         By: /s/ W. Page Ogden
                             -------------------------------
                             W. Page Ogden, Chairman & CEO



                             /s/ Bazile R. Lanneau, Jr.
                             -------------------------------
                             BAZILE R. LANNEAU, JR.



<PAGE>



                                   EXHIBIT 11

                        COMPUTATION OF EARNINGS PER SHARE





<PAGE>

<TABLE>
<CAPTION>


                                   Exhibit 11

                 Statement Re: Computation of Earnings Per Share

                                                         Three Months Ended                Twelve Months Ended
                                                             December                           December
                                                 -----------------------------        ---------------------------------
                                                      2002             2001                2002               2001
                                                 -------------  --------------        -------------        ------------
<S>                                              <C>            <C>                   <C>                  <C>
Basic:
       Average shares outstanding:                  2,112,048        2,109,055           2,109,809           2,108,973
                                                  ------------   -------------         ------------        -----------

                           Total                    2,112,048        2,109,055           2,109,809           2,108,973
                                                  ============   =============         ============        ===========

       Net income                                 $  (305,794)   $     810,798         $ 1,239,914         $ 3,247,783
                                                  ============   =============         ============        ===========

       Net income per share                       $     (0.14)   $        0.38         $      0.59         $      1.54
                                                  ============   =============         ============        ===========

Diluted:
       Average shares outstanding:                  2,112,048        2,109,055           2,109,809           2,108,973

         Net  effect  of the  assumed
         exercise  of stock  options  based
         on the treasury stock method using
         average market prices                            863            2,368               2,596                 851
                                                  ------------   -------------        -------------        -----------

                           Total                    2,112,911        2,111,383           2,112,405           2,109,824
                                                  ============   =============        =============        ===========

       Net income                                 $  (305,794)   $     810,798         $ 1,239,914         $ 3,247,783
                                                  ============   =============         ============        ===========

       Net income per share                       $     (0.14)   $         .38         $      0.59         $      1.54
                                                  ============   =============         ============        ===========

</TABLE>



<PAGE>




                                   EXHIBIT 13


                          ANNUAL REPORT TO SHAREHOLDERS



<PAGE>

Britton & Koontz Capital Corporation and Subsidiaries
Message to Shareholders


In the midst of sharply  declining market indices in 2002, your stock price held
steady.  In 2001,  the closing price was $15 and at the close of 2002, the price
was  $14.60.  Most  importantly,  the  dividend,  at $.62 per share  produced an
outstanding yield exceeding 4%.

Although  the  results  of  operations  were  disappointing  for 2002,  analysis
suggests that the lower level of earnings  will not be  long-lived  and that the
fundamentals  of the Company remain  strong.  Earnings per share of $.59 in 2002
versus $1.54 the previous year reflected  several factors.  The most significant
one was the write-off of the investment in Sumx, a technology  company formed to
develop electronic banking software. The write-off,  which equated to a $.56 per
share reduction,  was dictated by the fact that the earlier  promising  alliance
with a major marketing  partner failed to result in a significant  number of new
sales.  The  Sumxnet  software  continues  to perform  exceedingly  well for the
Company and other  installed  locations.  While there remains the possibility of
recovery of investment from the sale or further  licensing of the software,  the
doubt  surrounding the future of Sumx  necessitated its removal from the balance
sheet.

The Company's earnings picture also reflected the resolution of certain weakened
commercial  and real estate loans.  The provision for loan losses,  charge-offs,
and sales of foreclosed  collateral were higher than past averages.  However, by
the end of the year, the migration  through and out of the portfolio of the bulk
of the problem loans had become apparent. As a result of the vigilant management
of the portfolio,  nonperforming  loans as a per cent of the total loans dropped
from 1.56% to 1.29%.  Several factors,  namely a weakened economy in the Natchez
area, final resolution of loan issues in the Baton Rouge acquired portfolio, and
underwriting  errors in the entry into the Vicksburg market,  all coalesced into
the loan issues of 2002. The  encouraging  aspect of the picture is the evidence
that these problems have largely been removed from the portfolio.

A third  important  factor in the earnings  picture for 2002 was higher expense,
particularly in the personnel area, associated with the expansion of the bank in
new markets in Baton Rouge, LA, Vicksburg,  MS and Madison,  MS (in early 2003).
The Board has adopted a strategic  plan to grow and diversify in larger  markets
geographically related to the traditional home market of Natchez. Such expansion
cannot occur  without some  dampening of earnings in the  short-run.  Your Board
firmly  believes  in managing  the  Company in the context of a strategic  plan,
which often means  short-term  sacrifices for longer term gains.  Assembling the
right staff and  locations  in the markets of the Company will provide the basic
structure for the Company to grow and prosper in the years ahead.

Perhaps,  the  brightest  spot in the 2002  activities  for the  Company was the
mortgage underwriting. With the unprecedented lower interest rates, refinancings
reached  new  levels,  and the  Company  participated  energetically  in all our
markets in this phenomenon.  The B&K Title Company also experienced one complete
year of operation  with  approximately  $100,000 in revenue.  Increased  sale of
title insurance affords the Company a promising opportunity to enhance income in
the mortgage  line of business and also to augment fee income in the  commercial
loan area.

The  increased  liquidity in our stock from  greater  trading  volume,  the very
attractive  dividend  yield and price  stability  in 2002,  and the  prospect of
higher earnings all support the promise of your investment in BKBK. As always, I
appreciate  your confidence and continued  support of the Company.  Whenever you
have questions, I encourage you to call. Serving you is indeed a privilege.




Sincerely,



/s/ W. Page Ogden
-------------------------
W. Page Ogden
Chairman and CEO


<PAGE>





<TABLE>
<CAPTION>


Financial Highlights
($ IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR END BALANCE                                          2002                 2001                 2000
-----------------------------------------------------------------------------------------------------------
<S>                                                     <C>                  <C>                 <C>
Total Assets                                            $ 308,879            $ 298,856           $ 270,119
Loans (net of unearned income)                            184,792              185,127             186,861
Allowance for Loan Losses                                   2,129                2,108               1,884
Total Deposits                                            233,012              217,680             211,323
Stockholders' Equity                                       29,329               28,291              25,524
FOR THE YEAR
-----------------------------------------------------------------------------------------------------------
Net Interest Income                                      $ 12,649             $ 12,080            $ 11,086
Net Income                                                  1,240                3,248               2,691
PER SHARE
-----------------------------------------------------------------------------------------------------------
Earnings per share-Basic                                   $ 0.59               $ 1.54              $ 1.29
Earnings per share-Diluted                                   0.59                 1.54                1.28
Cash dividends                                               0.62                 0.61                0.60
Year End Stock Price                                        14.60                15.00               12.00
OTHER KEY INFORMATION
-----------------------------------------------------------------------------------------------------------
Return on Average Assets (%)                                 0.41                 1.19                0.98
Return on Average Equity (%)                                 4.23                12.76               10.70
Dividend Payout (%)                                        105.67                39.61               43.00
Net Interest Income/Average Earning Assets (%)               4.51                 4.73                4.32
Allowance for Loan Losses/Loans (%)                          1.15                 1.14                1.01
Non Performing Loans/Loans (%)                               1.28                 1.53                0.74
Loans/Deposits (%)                                           0.79                 0.85                0.88
Total Stockholders' Equity/Assets (%)                        9.50                 9.47                9.45
Tier 1 Leverage Ratio (%)                                    8.71                 9.52                8.76
Tier 1 Risk-Based Ratio (%)                                 13.64                13.71               13.74
Total  Risk-Based Ratio (%)                                 14.74                14.81               14.81
Weighted Average Shares Outstanding:
Basic                                                   2,109,809            2,108,973           2,080,046
Diluted                                                 2,112,405            2,111,383           2,101,714



Note: Loans are less unearned income and include loans held for sale

</TABLE>

<PAGE>



                      BRITTON & KOONTZ CAPITAL CORPORATION
                                AND SUBSIDIARIES

                        Consolidated Financial Statements

                     Years Ended December 31, 2002 and 2001

                                      with

                          Independent Auditor's Report



<PAGE>



                          INDEPENDENT AUDITOR'S REPORT



To the Board of Directors and Stockholders
Britton & Koontz Capital Corporation and Subsidiaries


We have audited the accompanying  consolidated statements of financial condition
of Britton & Koontz Capital Corporation and Subsidiaries as of December 31, 2002
and  2001,  and the  related  consolidated  statements  of  income,  changes  in
stockholders'   equity,   and  cash  flows  for  the  years  then  ended.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial  statements  are free of  material  misstatements.  An audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Britton & Koontz
Capital  Corporation and  Subsidiaries as of December 31, 2002 and 2001, and the
results  of their  operations  and their  cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.




/s/ May and Company

Vicksburg, Mississippi
January 16, 2003



<PAGE>


<TABLE>
<CAPTION>




              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 2002 AND 2001



                                     ASSETS

                                                                                       2002                 2001
                                                                                 ----------------    -----------------

<S>                                                                             <C>                  <C>
ASSETS:
    Cash and due from banks:
       Non-interest bearing                                                      $      8,914,638    $       7,160,387
       Interest bearing                                                                 2,562,236            7,398,849
                                                                                 ----------------    -----------------

              Total cash and due from banks                                            11,476,874           14,559,236

    Federal funds sold                                                                  3,560,000            1,050,000
    Investment securities:
       Held-to-maturity (market value of $34,305,172 and
          $27,867,675, respectively)                                                   33,147,883           27,967,610
       Available-for-sale (amortized cost of $58,343,140 and
          $53,590,873, respectively)                                                   60,565,938           54,665,875
       Equity securities, at cost less equity in unallocated losses                             -              558,826
       Other equity securities                                                          3,345,200            3,163,900
    Loans, less unearned income of $14,782 in 2002 and
       $24,594 in 2001, and allowance for loan losses of
       $2,129,328 in 2002 and $2,108,247 in 2001                                      178,268,969          177,603,099
    Loans held-for-sale                                                                 4,393,397            5,415,543
    Bank premises and equipment, net                                                    7,022,975            7,170,954
    Other real estate, net                                                              1,554,323            1,526,213
    Accrued interest receivable                                                         2,123,114            2,325,525
    Cash surrender value of life insurance                                                900,550              856,390
    Core deposits, net of accumulated amortization
       of $410,472 in 2002 and $302,856 in 2001                                         1,203,738            1,311,354
    Other assets                                                                        1,316,327              681,940
                                                                                 ----------------    -----------------

TOTAL ASSETS                                                                     $    308,879,288    $     298,856,465
                                                                                 ================    =================
</TABLE>






See accompanying notes to the consolidated financial statements.


<PAGE>


<TABLE>
<CAPTION>










                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                       2002                 2001
                                                                                 ----------------    -----------------

LIABILITIES:
    Deposits:
<S>                                                                             <C>                  <C>
       Non-interest bearing                                                     $      33,843,654    $      33,165,781
       Interest bearing                                                               199,168,384          184,514,075
                                                                                -----------------    -----------------

              Total deposits                                                          233,012,038          217,679,856

    Federal Home Loan Bank advances                                                    41,315,484           47,000,000
    Securities sold under repurchase agreements                                         2,141,790            3,098,017
    Accrued interest payable                                                              956,437            1,319,813
    Advances from borrowers for taxes and insurance                                       326,242              314,566
    Accrued taxes and other liabilities                                                 1,797,823            1,153,073
                                                                                -----------------    -----------------

              Total liabilities                                                       279,549,814          270,565,325
                                                                                -----------------    -----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
    Common stock, $2.50 par value per share;
       12,000,000 shares authorized;
       2,127,587 and 2,123,555 shares issued and 2,113,087
       and 2,109,055 shares outstanding at December 31,
       2002 and 2001, respectively                                                      5,318,968            5,308,888
    Additional paid-in capital                                                          7,225,408            7,189,563
    Retained earnings                                                                  15,304,539           15,373,489
    Accumulated other comprehensive income                                              1,737,934              676,575
                                                                                -----------------    -----------------
                                                                                       29,586,849           28,548,515
    Less:  Treasury stock 14,500 shares, at cost                                         (257,375)            (257,375)
                                                                                ------------------   ------------------

              Total stockholders' equity                                               29,329,474           28,291,140
                                                                                -----------------    -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $     308,879,288    $     298,856,465
                                                                                =================    =================

</TABLE>


<PAGE>



<TABLE>
<CAPTION>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                                                       2002                 2001
                                                                                 ----------------    -----------------

INTEREST INCOME:
<S>                                                                              <C>                 <C>
    Interest and fees on loans                                                   $     14,734,982    $      16,897,617
    Interest on investment securities:
       Taxable interest income                                                          3,477,193            3,668,297
       Exempt from federal income taxes                                                 1,608,837              728,721
    Interest on federal funds sold                                                         33,329               18,267
                                                                                 ----------------    -----------------

          Total interest income                                                        19,854,341           21,312,902
                                                                                 ----------------    -----------------

INTEREST EXPENSE:
    Interest on deposits                                                                5,057,718            7,613,718
    Interest on Federal Home Loan Bank advances                                         2,082,094            1,461,116
    Interest on federal funds purchased                                                     8,079               23,577
    Interest on securities sold under repurchase agreements                                57,245              134,106
                                                                                 ----------------    -----------------

          Total interest expense                                                        7,205,136            9,232,517
                                                                                 ----------------    -----------------

NET INTEREST INCOME                                                                    12,649,205           12,080,385

PROVISION FOR LOAN LOSSES                                                               1,025,000              525,000
                                                                                 ----------------    -----------------

NET INTEREST INCOME AFTER PROVISION
    FOR LOAN LOSSES                                                                    11,624,205           11,555,385
                                                                                 ----------------    -----------------

OTHER INCOME:
    Service charges on deposit accounts                                                 1,273,892            1,249,103
    Income from fiduciary activities                                                       40,667               71,832
    Insurance premiums and commissions                                                      1,809               18,975
    Other real estate income (expense)                                                   (379,723)             (22,090)
    Other investee losses                                                              (1,145,607)            (235,964)
    Other                                                                               1,078,853              986,766
                                                                                 ----------------    -----------------

          Total other income                                                              869,891            2,068,622
                                                                                 ----------------    -----------------

Continued
</TABLE>


<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                                                       2002                 2001
                                                                                 ----------------    -----------------

OTHER EXPENSES:
<S>                                                                             <C>                  <C>
    Salaries                                                                            4,886,180            4,130,509
    Director fees                                                                         173,980              160,410
    Employee benefits                                                                     839,758              669,575
    Net occupancy expense                                                                 754,100              731,539
    Equipment expense                                                                     953,669              889,527
    FDIC assessment                                                                        37,099               39,204
    Stationery and supplies                                                               275,268              219,628
    Amortization                                                                          107,616              107,616
    Other                                                                               2,238,064            1,975,261
                                                                                 ----------------    -----------------

          Total other expenses                                                         10,265,734            8,923,269
                                                                                 ----------------    -----------------

INCOME BEFORE INCOME TAX EXPENSE                                                        2,228,362            4,700,738

INCOME TAX EXPENSE                                                                        988,450            1,452,956
                                                                                 ----------------    -----------------

NET INCOME                                                                       $      1,239,912    $       3,247,782
                                                                                 ================    =================

EARNINGS PER SHARE DATA:
    Basic earnings per share                                                     $           0.59    $           1.54
                                                                                 ================    ================

    Diluted earnings per share                                                   $           0.59    $           1.54
                                                                                 ================    ================


See accompanying notes to the consolidated financial statements.

</TABLE>


<PAGE>


<TABLE>
<CAPTION>




              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2002 AND 2001



                                                       Common Stock                     Additional
                                            ------------------------------------         Paid-In           Retained
                                                  Shares             Amount              Capital           Earnings
                                            ----------------    ----------------    ---------------     --------------

<S>                                         <C>                 <C>                 <C>                 <C>
BALANCE, December 31, 2000                         2,101,534    $      5,290,085    $     7,156,245     $  13,412,231
   Comprehensive income:
     Net income                                            -                   -                  -         3,247,782
     Other comprehensive income
       (net of tax):
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment and taxes of
           $442,054                                        -                   -                  -                 -
                                            ----------------    ----------------    ---------------     -------------

         Total comprehensive income                        -                   -                  -         3,247,782
                                            ----------------    ----------------    ---------------     -------------

Stock options exercised                                7,521              18,803             33,318                 -

Cash dividends declared
   ($0.61 per share)                                       -                   -                  -        (1,286,524)
                                            ----------------    ----------------    ---------------     -------------

BALANCE, December 31, 2001                         2,109,055           5,308,888          7,189,563        15,373,489
   Comprehensive income:
     Net income                                            -                   -                  -         1,239,912
     Other comprehensive income
       (net of tax):
         Net change in unrealized gain
           on derivative, net of taxes
           of $148,421                                     -                   -                  -                 -
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment and taxes of
           $335,927                                        -                   -                  -                 -
                                            ----------------    ----------------    ---------------     -------------

         Total comprehensive income                        -                   -                  -         1,239,912
                                            ----------------    ----------------    ---------------     -------------

Stock options exercised                                4,032              10,080             35,845                 -

Cash dividends declared
   ($0.62 per share)                                       -                   -                  -        (1,308,862)
                                            ----------------    ----------------    ---------------     --------------

BALANCE, December 31, 2002                         2,113,087    $      5,318,968    $     7,225,408     $  15,304,539
                                            ================    ================    ===============     =============



See accompanying notes to the consolidated financial statements.


<PAGE>

</TABLE>

<TABLE>
<CAPTION>








                                                           Accumulated
                                                                           Other
                                                          Comprehensive          Treasury
                                                             Income                Stock                 Total
                                                       ----------------      ----------------      ----------------

<S>                                                    <C>                   <C>                   <C>
BALANCE, December 31, 2000                             $        (77,565)     $       (257,375)     $     25,523,621
   Comprehensive income:
     Net income                                                       -                     -             3,247,782
     Other comprehensive income
       (net of tax):
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment and taxes of
           $442,054                                             754,140                     -               754,140
                                                       ----------------      ----------------      ----------------

         Total comprehensive income                             754,140                     -             4,001,922
                                                       ----------------      ----------------      ----------------

Stock options exercised                                               -                     -                52,121

Cash dividends declared
   ($0.61 per share)                                                  -                     -            (1,286,524)
                                                       ----------------      ----------------      ----------------

BALANCE, December 31, 2001                                      676,575              (257,375)           28,291,140
   Comprehensive income:
     Net income                                                       -                     -             1,239,912
     Other comprehensive income
       (net of tax):
         Net change in unrealized gain
           on derivative, net of taxes
           of $148,421                                          249,490                     -               249,490
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment and taxes of
           $335,927                                             811,869                     -               811,869
                                                       ----------------      ----------------      ----------------

         Total comprehensive income                           1,061,359                     -             2,301,271
                                                       ----------------      ----------------      ----------------

Stock options exercised                                               -                     -                45,925

Cash dividends declared
   ($0.62 per share)                                                  -                     -            (1,308,862)
                                                       ----------------      ----------------      -----------------

BALANCE, December 31, 2002                             $      1,737,934      $       (257,375)     $     29,329,474
                                                       ================      =================     ================



</TABLE>



<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                                                        2002                2001
                                                                                   ---------------     ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>                 <C>
    Net income                                                                     $     1,239,912     $     3,247,782
    Adjustments to reconcile net income to
       net cash provided by operating activities:
          Deferred taxes                                                                   165,025            (148,331)
          Provision for loan losses                                                      1,025,000             525,000
          Write off of advances to affiliate                                               586,781                   -
          Provision for depreciation                                                       785,747             760,717
          Provision for other real estate                                                  150,000                   -
          Gain on sale of investments available-for-sale                                  (154,175)           (129,287)
          Gain on sale of mortgage loans                                                  (311,283)           (308,010)
          Loss on sale of premises and equipment                                                 -               9,808
          Gain on sale of other real estate                                                 (8,400)             (4,105)
          Stock dividends received                                                         (81,300)            (82,100)
          Amortization (accretion) of investment security
              premiums (discounts), net                                                    (79,656)             71,448
          Amortization of valuation adjustment on acquired loans                            10,305              10,305
          Amortization of acquisition premium                                              107,616             107,616
          Equity in investee losses                                                        558,826             235,964
          Write-down of other real estate                                                  146,120              14,856
    Decrease in accrued interest receivable                                                202,158             204,572
    Increase in cash surrender value of life insurance                                     (44,160)            (48,061)
    (Increase) decrease in other assets                                                   (372,294)            180,035
    Decrease in accrued interest payable                                                  (363,376)           (567,430)
    Decrease in accrued taxes and other liabilities                                         (4,623)            (70,787)
                                                                                   ----------------    ----------------

              Net cash provided by operating activities                                  3,558,223           4,009,992
                                                                                   ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Increase in federal funds sold                                                      (2,510,000)         (1,050,000)
    Proceeds from maturities of investment
       securities held-to-maturity                                                               -           2,175,000
    Proceeds from sales and maturities of investment
       securities available-for-sale                                                     8,249,296           6,497,432
    Proceeds from principal paydowns of investment
       securities available-for-sale                                                    14,123,566          11,423,926
    Advances to affiliate                                                                 (410,151)                  -
    Repayment of advances by affiliate                                                      19,087                   -



Continued
</TABLE>

<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                                                           2002              2001
                                                                                   ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES-continued:
<S>                                                                                <C>                 <C>
    Purchases of investment securities held-to-maturity                                 (5,170,133)        (25,905,655)
    Purchases of investment securities available-for-sale                              (26,901,438)        (11,072,943)
    Purchase of other equity securities                                                   (100,000)           (859,450)
    Increase in loans                                                                   (1,846,069)        (12,786,044)
    Proceeds from loans held for sale                                                            -           9,783,213
    Proceeds from sale of other real estate                                              1,102,847             175,028
    Proceeds from sale of premises and equipment                                                 -              22,395
    Purchases of premises and equipment                                                   (637,768)           (892,206)
                                                                                   ----------------    ---------------

              Net cash used in investing activities                                    (14,080,763)        (22,489,304)
                                                                                   ----------------    ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand deposits                                                      9,737,956           9,414,584
    Net increase (decrease) in time deposits                                             5,594,226          (3,057,260)
    Net increase (decrease) in Federal Home Loan Bank advances                          (5,684,516)         19,825,000
    Net increase (decrease) in securities sold under
       repurchase agreements                                                              (956,227)            258,017
    Increase (decrease) in advances from borrowers
       for taxes and insurance                                                              11,676            (126,268)
    Cash dividends paid                                                                 (1,308,862)         (1,286,524)
    Cash received from stock options exercised                                              45,925              52,121
                                                                                   ---------------     ---------------

              Net cash provided by financing activities                                  7,440,178          25,079,670
                                                                                   ---------------     ---------------

NET INCREASE (DECREASE) IN CASH AND
    DUE FROM BANKS                                                                      (3,082,362)          6,600,358

CASH AND DUE FROM BANKS AT
    BEGINNING OF YEAR                                                                   14,559,236           7,958,878
                                                                                   ---------------     ---------------

CASH AND DUE FROM BANKS AT
    END OF YEAR                                                                    $    11,476,874     $    14,559,236
                                                                                   ===============     ===============



</TABLE>




Continued


<PAGE>



<TABLE>
<CAPTION>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                                                           2002              2001
                                                                                   ---------------     ---------------

SCHEDULE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES:
<S>                                                                                <C>                 <C>
       Transfer of loans foreclosed to other real estate                           $     1,418,677     $       938,987
                                                                                   ===============     ===============

       Total change in unrealized (gains) losses
          on securities available-for-sale                                         $    (1,147,796)    $     1,196,194
                                                                                   ================    ===============

       Total increase in deferred income taxes
          on the change in unrealized gains (losses) on
          securities available-for-sale                                            $       335,927     $      (442,054)
                                                                                   ===============     ================

       Securitized loans transferred to investments                                $             -     $     3,795,070
                                                                                   ===============     ===============

       Reclassification of held-to-maturity
          securities to available-for-sale securities                              $             -     $    50,648,250
                                                                                   ===============     ===============

       Total change in unrealized gains
          on derivative                                                            $      (397,911)    $             -
                                                                                   ================    ===============

       Total increase in deferred income taxes
          on the change in unrealized gains on
          derivative                                                               $       148,421     $             -
                                                                                   ===============     ===============



See accompanying notes to the consolidated financial statements.
</TABLE>

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               Principles of Consolidation

               The  consolidated  financial  statements  include the accounts of
               Britton & Koontz Capital  Corporation  ("Company") and its wholly
               owned subsidiaries, Britton & Koontz First National Bank ("Bank")
               and B & K Title Insurance Agency, Inc.  ("Agency").  All material
               intercompany   profits,   balances  and  transactions  have  been
               eliminated.

               Nature of Operations

               The Bank operates under a national bank charter and provides full
               banking  services,  including  trust  services.  The primary area
               served by the Bank is the  southwest  region of  Mississippi  and
               East Baton Rouge  Parish in  Louisiana.  Services are provided at
               four   locations  in  Natchez,   Mississippi,   one  location  in
               Vicksburg,  Mississippi,  and  three  locations  in Baton  Rouge,
               Louisiana.

               During  2001,  the  Company   formed  and  began   operating  the
               wholly-owned subsidiary, B & K Title Insurance Agency, Inc.

               Use of Estimates

               The   preparation  of   consolidated   financial   statements  in
               conformity with generally accepted accounting principles requires
               management  to make  estimates  and  assumptions  that affect the
               reported  amounts of assets and  liabilities  and  disclosure  of
               contingent  assets and  liabilities  at the date of the financial
               statements  and the  reported  amounts of revenues  and  expenses
               during the  reporting  period.  Actual  results could differ from
               those estimates.

               Material   estimates   that  are   particularly   susceptible  to
               significant  change relate to the  determination of the allowance
               for loan losses.  In  connection  with the  determination  of the
               allowance  for  loan  losses,   management  obtains   independent
               appraisals for significant properties.

               While  management uses available  information to recognize losses
               on loans,  future  additions  to the  allowance  may be necessary
               based on  changes  in local  economic  conditions.  In  addition,
               regulatory  agencies,  as an integral  part of their  examination
               process,  periodically  review  the  Bank's  allowance  for  loan
               losses. Such agencies may require the Bank to recognize additions
               to the  allowance  based on  their  judgments  about  information
               available  to them at the time of their  examination.  Because of
               these factors,  it is reasonably  possible that the allowance for
               loan losses may change  materially in the near term.  However the
               amount  of the  change  that is  reasonably  possible  cannot  be
               estimated.
Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

               Investment Securities
               Management   determines   the   appropriate   classification   of
               securities  at the  time  of  purchase.  If  management  has  the
               positive  intent  and the  Bank  has the  ability  at the time of
               purchase  to  hold  debt  securities  until  maturity,  they  are
               classified as held-to-maturity  and carried at cost, adjusted for
               amortization of premiums and accretion of discounts using methods
               approximating the interest method.  Available-for-sale securities
               include  securities that management intends to use as part of its
               asset and liability  management  strategy and that may be sold in
               response to changes in interest rates,  resultant prepayment risk
               and  other  factors  related  to  interest  rates  and  resultant
               prepayment  risk changes.  These  securities  are carried at fair
               value.  Equity  securities  include stock in the Federal  Reserve
               Bank and the Federal Home Loan Bank, which are restricted and are
               carried at cost. Equity securities also included an investment in
               the voting stock of Sumx Inc. This investment was carried at cost
               adjusted for the Company's  share of the  investee's  earnings or
               losses. There is no readily available market for the voting stock
               of  Sumx  Inc.  and,  accordingly,  no  quoted  market  price  is
               available. The investment was deemed worthless in 2002.

               Realized  gains and losses on  dispositions  are based on the net
               proceeds  and the  adjusted  book value of the  securities  sold,
               using the specific  identification  method.  Unrealized gains and
               losses on investment securities  available-for-sale  are based on
               the  difference  between  book  value  and  fair  value  of  each
               security.  These  gains and  losses  are  credited  or charged to
               stockholders' equity, net of applicable taxes. Realized gains and
               losses flow through the Bank's yearly  operations.  The Bank does
               not engage in trading account activities.

               Loans
               Loans are stated at the amount of principal outstanding,  reduced
               by unearned  income and an allowance  for loan  losses.  Unearned
               income on certain  installment loans is recognized as income over
               the  terms  of the  loans  by a  method  which  approximates  the
               interest  method.  Interest on other loans is calculated by using
               the simple  interest  method on daily  balances of the  principal
               amount  outstanding.  Loans are  ordinarily  placed on nonaccrual
               when a loan is  specifically  determined  to be  impaired or when
               principal or interest is delinquent for 90 days or more; however,
               management  may elect to continue the accrual when the  estimated
               net  realizable  value of  collateral  is sufficient to cover the
               principal balance and the accrued  interest.  Any unpaid interest
               previously  accrued on nonaccrual  loans is reversed from income.
               Interest  income,   generally,  is  not  recognized  on  specific
               impaired  loans unless the  likelihood of further loss is remote.
               Interest  payments  received  on  such  loans  are  applied  as a
               reduction of the loan principal balance. Interest income on other
               nonaccrual  loans is  recognized  only to the extent of  interest
               payments received.
Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

               Loans-continued

               Securitized  loans  are  transferred  to a  long-term  investment
               category  at the  lower of cost or market  value on the  transfer
               date. Any material  difference between the carrying amount of the
               loans and their outstanding principal balance is recognized as an
               adjustment to the yield by the interest method.

               Loans Held-for-Sale

               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
               originated  with the  intent  of  selling  them on the  secondary
               market.

               Unrealized  losses on loans  held-for-sale  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.

               Allowance for Loan Losses

               The  allowance  is an amount  that  management  believes  will be
               adequate to absorb probable losses inherent in the loan portfolio
               as of  the  balance  sheet  date  based  on  evaluations  of  the
               collectibility  of loans and  prior  loan  loss  experience.  The
               evaluations  take into  consideration  such factors as changes in
               the nature and volume of the loan  portfolio,  overall  portfolio
               quality,  review of specific  problem loans, and current economic
               conditions  that  may  affect  the  borrower's  ability  to  pay.
               Allowances for impaired loans are generally  determined  based on
               collateral  values or the present value of estimated  cash flows.
               Credits  deemed  uncollectible  are  charged  to  the  allowance.
               Provisions  for loan losses and  recoveries  on loans  previously
               charged  off are  added  to the  allowance.  Past due  status  is
               determined based on contractual terms.

               Bank Premises and Equipment

               Bank premises and equipment are stated at cost, less  accumulated
               depreciation.   Depreciation   expense   is   computed   by   the
               straight-line method and is charged to expense over the estimated
               useful lives of the assets, which range from 3 to 30 years




Continued


<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

               Other Real Estate

               Other real estate  consists  primarily  of  foreclosed  property.
               Properties acquired through foreclosure or in settlement of loans
               and in lieu of loan  foreclosures  are  classified  as foreclosed
               properties  and are  valued  at the  lower of the  loan  value or
               estimated  fair value of the  property  acquired  less  estimated
               selling costs. At the time of foreclosure, the excess, if any, of
               the loan value,  over the  estimated  fair value of the  property
               acquired  less  estimated   selling  costs,  is  charged  to  the
               allowance for loan losses.  Additional  decreases in the carrying
               values of foreclosed  properties or changes in estimated  selling
               costs,  subsequent  to the time of  foreclosure,  are  recognized
               through provisions  charged to operations.  Revenues and expenses
               associated  with owning and operating other real estate and gains
               and  losses  on  dispositions  of such  assets  are  recorded  in
               earnings in the period incurred.

               The fair value of foreclosed  properties is determined based upon
               appraised value, utilizing either the estimated replacement cost,
               the selling price of properties utilized for similar purposes, or
               discounted cash flow analyses of the properties' operations.

               Compensated Absences
               Employees  of the Bank are entitled to paid  vacation,  emergency
               and sick days off,  depending on length of service in the banking
               industry.  Vacation,  emergency  and sick days are  granted on an
               annual basis to eligible employees. Unused vacation and emergency
               days expire on December 31 of each year.  Unused sick days expire
               on each related employee's employment anniversary date each year.

               The  estimated  amount of  compensation  for future  absences  is
               deemed  immaterial to the consolidated  financial  statements and
               accordingly,  no liability has been recorded in the  accompanying
               financial statements.  The Bank's policy is to recognize the cost
               of compensated absences when actually paid to employees.

               Income Taxes
               The  provision  for income taxes is based on amounts  reported in
               the  statements of income after  exclusion of  nontaxable  income
               such as interest on state and municipal securities. Also, certain
               items of income and expenses  are  recognized  in different  time
               periods  for  financial  statement  purposes  than for income tax
               purposes.  Thus,  provisions  for deferred  taxes are recorded in
               recognition of such temporary differences.




Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

               Income Taxes-Continued

               Deferred  taxes  are  provided  on  a  liability  method  whereby
               deferred  tax  assets are  recognized  for  deductible  temporary
               differences  and  deferred tax  liabilities  are  recognized  for
               taxable  temporary  differences.  Temporary  differences  are the
               differences   between   the   reported   amounts  of  assets  and
               liabilities and their tax bases.  Deferred tax assets are reduced
               by a valuation  allowance when, in the opinion of management,  it
               is more likely than not that some  portion or all of the deferred
               tax assets will not be realized.

               Deferred tax assets and  liabilities are adjusted for the effects
               of changes in tax laws and rates on the date of enactment.

               The Company and its wholly owned  subsidiary  file a consolidated
               federal  income tax  return.  Consolidated  income tax expense is
               allocated  on the basis of each  Company's  income  adjusted  for
               permanent differences.

               Earnings Per Share
               Basic earnings per share is the income  available to the weighted
               average  number of shares of common  stock  outstanding  for each
               period presented. All shares held by the Employee Stock Ownership
               Plan (ESOP) are treated as  outstanding in computing the earnings
               per share.  Stock options are used in the  calculation of diluted
               earnings per share if they are dilutive (i.e., the average market
               price exceeds the exercise price). The following table reconciles
               the basic and diluted earnings per share amounts:
<TABLE>
<CAPTION>


                                                                             Income             Shares        Per Share
                                                                           (Numerator)     (Denominator)        Amount
                                                                           -----------     -------------     ------------
<S>                                                                       <C>              <C>              <C>
               Year ended December 31, 2002: Basic earnings per share:
                     Income available to common
                         shareholders                                      $ 1,239,912       2,109,809       $       0.59
                                                                                                             ============
                  Diluted earnings per share:
                     Options                                                         -           2,596
                                                                           -----------     -------------


                  Income available to common
                     shareholders assuming conversion                      $ 1,239,912       2,112,405       $       0.59
                                                                           ===========     =============     ============



</TABLE>

Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
                                                                             Income             Shares        Per Share
               Earnings Per Share-continued                                (Numerator)     (Denominator)        Amount
                                                                           -----------     -------------     ------------
<S>                                                                       <C>              <C>               <C>
               Year ended December 31, 2001: Basic earnings per share:
                     Income available to common
                         shareholders                                      $ 3,247,782       2,108,973       $       1.54
                                                                                                             ============
                  Diluted earnings per share:
                     Options                                                         -             851
                                                                           -----------     ------------
                  Income available to common
                     shareholders assuming conversion                      $ 3,247,782       2,109,824       $       1.54
                                                                           ===========     ============      ============


</TABLE>

               The Company has granted  options to purchase  various  amounts of
               the Company's  common stock at various prices ranging from $11.39
               to $19.94 per share.  Those options whose exercise price exceeded
               the average market price of the common shares are not included in
               the options adjustment for diluted earnings per share.

               Off-Balance-Sheet Financial Instruments

               In the  ordinary  course of  business,  the Bank has entered into
               off-balance-sheet    financial    instruments    consisting    of
               interest-rate  swap and cap  agreements,  commitments  to  extend
               credit and commercial  letters of credit.  Financial  instruments
               related to loans are recorded in the  financial  statements  when
               they become payable.

               Cash Flows

               For  purposes  of the  statements  of  cash  flows,  the  Company
               considers only cash and due from banks to be cash equivalents.

               The Company paid income taxes of  $1,064,501  and  $1,483,096  in
               2002 and 2001, respectively. Interest paid on deposit liabilities
               and other  borrowings  was  $7,568,512 and $9,799,947 in 2002 and
               2001, respectively.

               Recent Accounting Pronouncements

               In April 2002, the Financial  Accounting  Standards  Board (FASB)
               issued SFAS 145,  Rescission of FASB  Statements No. 4 (Reporting
               Gains and Losses from Extinguishment of Debt), 44 (Accounting for
               Intangible Assets of Motor Carriers) and 64  (Extinguishments  of
               Debt Made to Satisfy  Sinking-Fund  Requirements),  Amendment  of
               FASB  Statement  No. 13  (Accounting  for Leases),  and Technical
               Corrections.  SFAS 145  eliminated an  inconsistency  between the
               required  accounting  for  sale-leaseback  transactions  and  the
               required  accounting  for certain lease  modifications  that have
               economic  effects similar to  sale-leaseback  transactions.  This
               statement is effective for all financial  statements issued on or
               after May 15, 2002.
Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

               Recent Accounting Pronouncements-continued

               In June 2002,  the FASB  issued  SFAS 146,  Accounting  for Costs
               Associated  with  Exit or  Disposal  Activities.  This  statement
               addresses financial  accounting and reporting for cost associated
               with exit or disposal  activities and nullifies  Emerging  Issues
               Task Force  (EITF)  Issue No. 94-3,  "Liability  Recognition  for
               Certain Employee  Termination Benefits and Other Costs to Exit an
               Activity  (including Certain Costs Incurred in a Restructuring)."
               This  statement  requires that a liability for a cost  associated
               with  an  exit  or  disposal  activity  be  recognized  when  the
               liability is incurred.  This statement also established that fair
               value is the objective for initial  measurement of the liability.
               This  statement  is  effective  for exit or  disposal  activities
               initiated after December 31, 2002.

               In  October  2002,  the FASB  issued  SFAS 147,  Acquisitions  of
               Certain  Financial  Institutions-an  amendment of FASB No. 72 and
               144 and  FASB  Interpretation  No.  9.  Except  for  transactions
               between two or more mutual  enterprises,  this Statement  removes
               acquisitions  of  financial  institutions  from the scope of both
               Statement  72  and  Interpretation  9  and  requires  that  those
               transactions  be accounted for in accordance with FASB Statements
               No. 141, Business  Combinations,  and No. 142, Goodwill and Other
               Intangible  Assets.  This statement is effective for acquisitions
               occurring after October 1, 2002.

               In  December  2002,  the FASB  issued  SFAS 148,  Accounting  for
               Stock-Based  Compensation-Transition  and Disclosure-an amendment
               of  FASB   Statement   No.  123,   Accounting   for   Stock-Based
               Compensation,  to provide alternative methods of transition for a
               voluntary change to the fair value based method of accounting for
               stock-based employee compensation.

               The  effects  of  these  statements  are not  expected  to have a
               material effect on the consolidated financial statements.

               Advertising Costs

               Advertising  and marketing  costs are recorded as expenses in the
               year in which they are incurred.  Advertising and marketing costs
               charged to  operations  during  2002 and 2001 were  $235,188  and
               $181,593, respectively.





Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

               Interest-Rate Cap Agreements

               The cost of interest-rate cap agreements is amortized to interest
               expense  over the  terms of the  caps.  The  unamortized  cost is
               included  in  other  assets  in  the  consolidated  statement  of
               financial  position.  Amounts receivable under cap agreements are
               accrued as a  reduction  of interest  expense.  The Bank does not
               engage in trading of derivatives.  All such financial instruments
               are used to manage interest rate risk.

               Interest-Rate Swap Agreements

               The Bank enters into  interest-rate swap agreements to modify the
               interest  rate  characteristics  of its assets  and  liabilities.
               These agreements may involve the receipt or payment of fixed rate
               amounts in  exchange  for  floating  rate  interest  receipts  or
               payments  over the life of the  agreement  without an exchange of
               the underlying  principal amount.  The differential to be paid or
               received is accrued as interest rates change and recognized as an
               adjustment  to  interest  income or expense.  The related  amount
               payable to or  receivable  from  counter-parties  is  included in
               other liabilities or assets.


               Core Deposits

               During 1999, the Company  acquired certain assets and liabilities
               of three Union Planters,  N.A. branches in Natchez and Vicksburg,
               Mississippi,  which were  accounted  for as a purchase.  The Bank
               paid a premium for the depositor relationship of $1,614,210. This
               premium is included in other assets and is being  amortized  over
               15 years which is the estimated life of the customer base.


NOTE B.        INVESTMENT SECURITIES

               The  amortized  cost and  approximate  market value of investment
               securities  classified as  held-to-maturity at December 31, 2002,
               are summarized as follows:
<TABLE>
<CAPTION>

                                                                           Gross           Gross         Approximate
                                                       Amortized        Unrealized      Unrealized         Market
                                                         Cost              Gains          Losses            Value
                                                   ----------------    ------------   -------------    ---------------

<S>                                               <C>                 <C>             <C>              <C>
               Obligations of state and
                  political subdivisions           $     33,147,883    $  1,160,272   $      (2,983)   $    34,305,172
                                                   ================    ============   ==============   ===============
</TABLE>

Continued

<PAGE>







              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>

NOTE B.        INVESTMENT SECURITIES-CONTINUED

               The  amortized  cost and  approximate  market value of investment
               securities classified as available-for-sale at December 31, 2002,
               are summarized as follows:

                                                                           Gross           Gross         Approximate
                                                       Amortized        Unrealized      Unrealized         Market
                                                         Cost              Gains          Losses            Value
                                                   ----------------    ------------   -------------    ---------------

<S>                                               <C>                 <C>             <C>              <C>
               Obligations of other U.S.
                  government agencies
                  and corporations                 $     53,264,948   $ 2,074,459     $          -     $    55,339,407
               Corporate securities                       5,078,192       148,339                -           5,226,531
                                                   ----------------    -------------  -------------    ---------------

                                                   $     58,343,140   $ 2,222,798     $          -     $    60,565,938
                                                   ================   ===========     =============    ===============

</TABLE>


               The  amortized  cost and  approximate  market value of investment
               securities  classified as  held-to-maturity at December 31, 2001,
               are summarized as follows:
<TABLE>
<CAPTION>

                                                                           Gross           Gross         Approximate
                                                       Amortized        Unrealized      Unrealized         Market
                                                         Cost              Gains          Losses            Value
                                                   ----------------    -------------  -------------    ---------------

<S>                                                <C>                 <C>            <C>              <C>
               Obligations of state and
                  political subdivisions           $     27,967,610    $     233,456  $    (333,391)   $    27,867,675
                                                   ================    =============  ==============   ===============

</TABLE>

               The  amortized  cost and  approximate  market value of investment
               securities classified as available-for-sale at December 31, 2001,
               are summarized as follows:
<TABLE>
<CAPTION>

                                                                           Gross           Gross         Approximate
                                                       Amortized        Unrealized      Unrealized         Market
                                                         Cost              Gains          Losses            Value
                                                   ----------------    -------------  -------------    ---------------

<S>                                               <C>                  <C>            <C>              <C>
               Obligations of other U.S.
                  government agencies
                  and corporations                 $     42,330,355     $ 1,144,737    $  (50,527)     $    43,424,565
               Privately issued collateralized
                  mortgage obligations                    6,137,974           2,576       (95,840)           6,044,710
               Corporate securities                       5,122,544          85,041       (10,985)           5,196,600
                                                   ----------------     -------------  ------------    ---------------

                                                   $     53,590,873     $ 1,232,354    $ (157,352)     $    54,665,875
                                                   ================     ============   ============    ===============

Continued
</TABLE>

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE B.        INVESTMENT SECURITIES - CONTINUED

               In 2001,  debt  securities  with an amortized cost of $50,648,250
               were  transferred  from  held-to-maturity  to  available-for-sale
               because of the  reclassification  opportunity allowed for in SFAS
               133. The securities had an unrealized gain of $653,280.

               Equity  securities  include the Bank's  investment in the Federal
               Home Loan Bank, the Federal Reserve Bank,  First National Bankers
               Bank and ECD  Investments,  LLC.  The Bank  acquired  $81,300 and
               $809,300 of  additional  stock in the Federal Home Loan Bank,  no
               additional  stock in the Federal  Reserve Bank or First  National
               Bankers Bank and $100,000 and $0 in ECD  Investments,  LLC during
               2002 and 2001, respectively. The Bank did not redeem any stock in
               the Federal  Home Loan Bank  during 2002 or 2001.  The stocks are
               considered  restricted stock as only banks,  which are members of
               these  organizations,  may acquire or redeem  them.  The stock is
               redeemable  at its  face  value;  therefore,  there  are no gross
               unrealized gains or losses associated with these investments.

               Equity securities also reflect an investment in Sumx Inc. Britton
               & Koontz Capital Corporation  invested $1 million during 1998 and
               $250,000 during 2001 in this electronic  banking  development and
               marketing company. This investment reflects an approximate 36.62%
               preferred  interest  in  the  voting  stock  of  Sumx  Inc.  This
               investment  is  carried  at  equity,  which  is the  cost  of the
               investment adjusted for the Company's  proportionate share of the
               investee's earnings or losses.

               Sumx Inc.  incurred net losses of $505,737  and  $644,357  during
               2002 and 2001, respectively. The Company's proportionate share of
               these  losses was  $185,201 and  $235,964,  respectively  and are
               reflected in other income. During 2002, the investment was deemed
               worthless.  The advances and investment  were written off and are
               reflected in other income.

               The President and CEO and the Vice  President of Britton & Koontz
               Capital  Corporation  serve as two of the  three  members  of the
               Board of Directors of Sumx Inc. In addition,  the Vice  President
               of Britton & Koontz Capital  Corporation  individually owns 19.5%
               of the voting stock of Sumx Inc. The Company also entered into an
               agreement with Sumx Inc. whereby this Vice President would devote
               substantially  all of his time to the management of Sumx Inc. for
               an annual fee of $90,000.

               Investment   securities  carried  at  approximately   $54,059,000
               (approximate  market value $56,236,000) at December 31, 2002, and
               approximately  $57,163,000 (approximate market value $58,046,000)
               at  December  31,  2001,  were  pledged to  collateralize  public
               deposits  and for other  purposes as required or permitted by law
               or agreement.


Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE B.        INVESTMENT SECURITIES - CONTINUED

               The  amortized  cost and  approximate  market value of investment
               debt  securities  at December 31, 2002, by  contractual  maturity
               (including mortgage-backed securities), are shown below. Expected
               maturities  will  differ  from  contractual   maturities  because
               borrowers may have the right to call or prepay  obligations  with
               or without call or prepayment penalties.
<TABLE>
<CAPTION>

                                                                               Securities held-to-maturity
                                                                  ----------------------------------------------------
                                                                     Weighted                          Approximate
                                                                      Average         Amortized            Market
                                                                       Yield            Cost                Value
                                                                ----------------   ---------------     ---------------

<S>                                                             <C>                <C>                 <C>
               Due in one year or less                                     -       $             -     $             -
               Due after one year through five years                 7.0446%               600,472             650,923
               Due after five years through ten years                6.8593%             3,461,145           3,726,960
               Due after ten years                                   6.7676%            29,086,266          29,927,289
                                                                                   ---------------     ---------------

                                                                                   $    33,147,883     $    34,305,172
                                                                                   ===============     ===============


                                                                            Securities available-for-sale
                                                                ------------------------------------------------------
                                                                     Weighted                            Approximate
                                                                      Average         Amortized            Market
                                                                      Yield             Cost                Value
                                                                ----------------   ---------------     ---------------

               Due in one year or less                               5.5916%       $     1,378,842     $     1,411,386
               Due after one year through five years                 4.7295%            15,217,479          15,380,641
               Due after five years through ten years                4.9657%            11,268,855          11,520,865
               Due after ten years                                   6.7341%            30,477,964          32,253,046
                                                                                   ---------------     ---------------

                                                                                   $    58,343,140     $    60,565,938
                                                                                   ===============     ===============
</TABLE>

               The Company had total unrealized holding gains on securities, net
               of deferred taxes, classified as available-for-sale of $1,301,971
               and $1,325,481 in 2002 and 2001,  respectively.  Upon disposition
               of an underlying security,  the Company reclassified $154,175 and
               $129,287  in 2002 and 2001,  respectively,  of these  gains  from
               other  comprehensive  income to a realized  gain  included in net
               income.






Continued

<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE C.        LOANS

               The Bank's loan  portfolio  (rounded to the nearest  thousand) at
               December 31, 2002 and 2001, consists of the following:

                                                                                       2002                 2001
                                                                                 ----------------    -----------------
<S>                                                                              <C>                 <C>
               Commercial, financial and agricultural                            $     32,826,000    $      35,886,000
               Real estate-construction                                                 6,857,000            9,890,000
               Real estate-mortgage                                                   128,900,000          121,296,000
               Installment                                                             16,054,000           17,962,000
               Overdrafts                                                                 169,000              117,000
                                                                                 ----------------    -----------------

                  Total loans                                                    $    184,806,000    $     185,151,000
                                                                                 ================    =================
</TABLE>

               Loans on which  accrual  of  interest  has been  discontinued  or
               reduced  amount to  approximately  $2,066,000  and  $1,285,000 at
               December  31,  2002 and 2001,  respectively.  If interest on such
               loans  had been  accrued,  the  income  would  have  approximated
               $141,000 and $167,000 in 2002 and 2001, respectively. At December
               31, 2002 and 2001, respectively, the recorded investment in loans
               that were  considered to be impaired was  approximately  $990,000
               and $390,000,  primarily all of which were on a nonaccrual basis.
               The  portion  of the  allowance  for loan  losses  attributed  to
               impaired loans was not material.  The average recorded investment
               in impaired  loans for the year ended December 31, 2002 and 2001,
               was  approximately  $372,000  and  $139,000,   respectively.   No
               material  amount of cash basis interest  income was recognized on
               impaired  loans  for  the  years  then  ended.  Loans  which  are
               contractually  90 days or more past due as of  December  31, 2002
               and   2001,   were   approximately   $253,000   and   $1,510,000,
               respectively.

               In the ordinary  course of business,  the Bank makes loans to its
               executive  officers,  principal  stockholders,  directors  and to
               companies in which these  borrowers are principal  owners.  Loans
               outstanding to such borrowers  (including companies in which they
               are principal  owners)  amounted to $2,989,191  and $3,407,502 at
               December 31, 2002 and 2001,  respectively.  These loans were made
               on  substantially  the same terms,  including  interest  rate and
               collateral,  as  those  prevailing  at the  time  for  comparable
               transactions  with other  persons and did not  involve  more than
               normal  risk  of  collectibility  or  present  other  unfavorable
               features.








Continued

<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE C.        LOANS-CONTINUED

               Changes in these loans are as follows:
                                                                                       2002                 2001
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Balance at January 1                                              $      3,407,502    $       2,616,613
               New loans                                                                2,597,447            2,842,375
               Repayments                                                              (3,015,758)          (2,051,486)
                                                                                 -----------------   ------------------

               Balance at December 31                                            $      2,989,191    $       3,407,502
                                                                                 ================    =================
</TABLE>



<TABLE>
<CAPTION>


NOTE D.        ALLOWANCE FOR LOAN LOSSES

               Changes in the allowance for loan losses are as follows:

                                                                                           2002              2001
                                                                                     --------------     --------------

<S>                                                                                 <C>                <C>
               Balance at January 1                                                  $    2,108,247     $    1,883,561
                                                                                     --------------     --------------

                  Credits charged off:
                     Commercial, financial and agricultural                                (555,005)           (96,761)
                     Real estate - mortgage                                                (389,736)           (22,150)
                     Installment loans                                                     (206,635)          (278,087)
                                                                                     ---------------    ---------------
                         Total charge-offs                                               (1,151,376)          (396,998)
                  Recoveries:
                     Commercial, financial and agricultural                                  48,716              6,885
                     Real estate - mortgage                                                  66,760             70,784
                     Installment loans                                                       31,981             19,015
                                                                                     --------------     --------------
                         Total recoveries                                                   147,457             96,684
                                                                                     --------------     --------------
                  Net credits charged off                                                (1,003,919)          (300,314)
                                                                                     ---------------    --------------

                  Provision for loan losses                                               1,025,000            525,000
                                                                                     --------------     --------------

               Balance at December 31                                                $    2,129,328     $    2,108,247
                                                                                     ==============     ==============
</TABLE>

NOTE E.        LOAN SERVICING

               Mortgage  loans  serviced  for  others  are not  included  in the
               accompanying  consolidated statements of financial condition. The
               unpaid  principal  balances  of these  loans  were  approximately
               $5,147,000 and $7,659,000 in 2002 and 2001, respectively.



Continued

<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE F.        BANK PREMISES AND EQUIPMENT

               A summary of Bank premises and equipment is as follows:

                                                                                           2002              2001
                                                                                     --------------     --------------

<S>                                                                                  <C>                <C>
               Land                                                                  $    1,257,747     $    1,257,747
               Buildings                                                                  5,992,937          5,673,606
               Furniture and equipment                                                    5,392,009          5,150,784
               Leasehold improvements                                                       106,401            102,251
                                                                                     --------------     --------------
                                                                                         12,749,094         12,184,388
               Less accumulated depreciation                                              5,726,119          5,013,434
                                                                                     --------------     --------------

               Bank premises and equipment, net                                      $    7,022,975     $    7,170,954
                                                                                     ==============     ==============
</TABLE>

NOTE G.        TRUST DEPARTMENT ASSETS

               Property (other than cash deposits) held by the Bank in fiduciary
               or agency  capacities  for its  customers  is not included in the
               accompanying  consolidated  statements of financial  condition as
               such items are not assets of the Bank. Trust fees are reported on
               the cash basis. The difference between cash basis and the accrual
               basis is immaterial.

NOTE H.        DEPOSITS

               Maturities  of  certificates  of  deposit  of  $100,000  or  more
               outstanding  at December  31, 2002 and 2001,  are  summarized  as
               follows:
<TABLE>
<CAPTION>

                                                                                        2002                2001
                                                                                   ---------------     ---------------

<S>                                                                               <C>                 <C>
               Time remaining until maturity:
                  Three months or less                                             $    18,610,257     $    22,743,964
                  Over three through six months                                         13,298,039          11,649,111
                  Over six through twelve months                                         6,340,736           5,969,317
                  Over twelve months                                                    16,130,975           7,227,437
                                                                                   ---------------     ---------------

                                                                                   $    54,380,007     $    47,589,829
                                                                                   ===============     ===============



</TABLE>




Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE H.        DEPOSITS - CONTINUED

               Approximate  scheduled maturities of certificates of deposits for
each of the next five years are:

                                    2003                      $    77,960,665
                                    2004                           37,094,304
                                    2005                            4,811,295
                                    2006                            1,864,267
                                    2007                            2,508,368
                                    Thereafter                         31,912
                                                              ---------------
                                                                 $   124,270,811
                                                              ===============

<TABLE>
<CAPTION>


               Deposits  at  December  31,  2002  and  2001,  consisted  of  the
following:

                                                                                       2002                 2001
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Non-interest bearing demand deposits                              $     33,843,654    $      33,165,781
               NOW accounts                                                            31,734,722           29,375,838
               Money market deposit accounts                                           26,817,953           18,352,807
               Savings accounts                                                        16,344,898           18,108,845
               Certificates of deposit                                                124,270,811          118,676,585
                                                                                 ----------------    -----------------

                                                                                 $    233,012,038    $     217,679,856
                                                                                 ================    =================
</TABLE>

NOTE I.        FEDERAL HOME LOAN BANK ADVANCES

               During  2002  and  2001,  the  Bank  received  advances  from and
               remitted  payments to the Federal Home Loan Bank.  These advances
               are  collateralized by a portion of the Bank's one-to-four family
               residential  mortgage  portfolio and certain  secured  commercial
               loans in  accordance  with the Advance  Security  and  Collateral
               Agreement  with the  Federal  Home Loan Bank.  The 2002  advances
               consist of:

                  Seven  fixed-rate  term loans with the Federal Home Loan Bank.
                  The  loans  range  from  $2,380,000  to  $8,000,000,  totaling
                  $33,000,000,  with  interest  rates  ranging  from  4.729%  to
                  5.348%.  These  loans  mature  from May 10, 2004 to January 2,
                  2007.

                  Two  amortizable  fixed-rate  loans with the Federal Home Loan
                  Bank. The loans total  $8,315,484  with interest rates ranging
                  from 3.967% to 4.177%. These loans mature on February 27, 2003
                  and May 12, 2003.


Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE I.        FEDERAL HOME LOAN BANK ADVANCES-CONTINUED

               The 2001 advances consist of:

                  Eight  fixed-rate  term loans with the Federal Home Loan Bank.
                  The  loans  range  from  $2,380,000  to  $8,000,000,  totaling
                  $37,000,000,  with  interest  rates  ranging  from  4.729%  to
                  5.348%.  These loans mature from February 27, 2002 to December
                  19, 2005.

                  Two  amortizable  fixed-rate  loans with the Federal Home Loan
                  Bank.  The loans are for  $5,000,000  each with interest rates
                  ranging  from 3.967% to 4.177%.  These loans mature on January
                  2, 2007.

               Annual maturities for the next five years as of December 31, 2002
are as follows:

                                        2003     $ 12,566,173
                                        2004        9,629,945
                                        2005       10,696,315
                                        2006        6,765,390
                                        2007        1,657,661

NOTE J.        EMPLOYEE BENEFIT PLANS

               The Bank has an employee  stock  ownership plan which is designed
               to invest primarily in employer stock. Essentially, all employees
               of the Bank with one year of service  and of age  twenty-one  are
               covered under this plan,  and are fully vested in their  benefits
               after  seven  years  of  service.   Employer   contributions  are
               determined by the Board of Directors  each year and are allocated
               among   participants   on  the  basis  of  their   total   annual
               compensation.  Dividends  on the Company  stock owned by the plan
               are  recorded as a  reduction  of  retained  earnings.  Operating
               expenses include contributions to the plan of $78,720 and $49,550
               in 2002 and 2001,  respectively.  This  plan  owned  241,970  and
               241,970 allocated shares of Britton & Koontz Capital  Corporation
               stock,  as of December  31, 2002 and 2001,  at an overall cost to
               the plan of $6.27 and $6.24 per share, respectively.

               Employees  with one year of  service  and of age  twenty-one  are
               eligible to participate in a 401(k) plan  established by the Bank
               effective  January  1,  1997.  Under  this  plan,  employees  may
               contribute  up to 12%  of  their  yearly  salary,  not to  exceed
               $12,000 (as adjusted for cost of living). These contributions are
               immediately 100% vested.  Employer  contributions  are vested 20%
               after  three  years of  service  and an  additional  20% for each
               additional  year of service,  fully  vesting after seven years of
               service.  Employer  contributions  to the  plan  are  made at the
               discretion of the Board of Directors and aggregated  $157,439 and
               $162,486  for  the  years  ended  December  31,  2002  and  2001,
               respectively.
Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE J.        EMPLOYEE BENEFIT PLANS - CONTINUED

               During 1996,  the Company  adopted a long-term  incentive plan in
               which all  employees  of the  Company  and its  subsidiaries  are
               eligible to  participate.  The plan  provides  for  discretionary
               grants of various incentives  including stock options;  shares of
               common stock subject to restrictions on transfer,  forfeitability
               provisions or other limitations;  and shares of common stock, the
               issuance and  delivery of which may be subject to the  attainment
               of specified performance objectives.  A maximum of 160,000 shares
               of common stock is available for grant under the plan, subject to
               adjustment  on  account  of  stock  dividends  or  stock  splits,
               recapitalizations,  mergers,  consolidations  or other  corporate
               reorganizations.  The plan is  administered  by a committee of at
               least two non-employee  directors  appointed by the full Board of
               Directors.  Since  adoption,  the Company has granted  options to
               purchase a total of 97,124  shares.  All options  expire 10 years
               from the date of grant.  Options  to  acquire  23,806  and 21,567
               shares  were  exercisable  as of  December  31,  2002  and  2001,
               respectively.  The  summary  of stock  option  activity  is shown
               below:

                                                                        Weighted
                                               Options                Average
                                             Outstanding          Exercise Price
                                        -------------------    -----------------

               December 31, 2000                  49,763            $    15.54
               Options granted                    20,000            $    14.50
               Options exercised                  (7,521)           $     6.93
               Options forfeited                  (4,533)           $     7.76
                                              ----------

               December 31, 2001                  57,709            $    16.91
               Options granted                         -            $        -
               Options exercised                  (4,032)           $    11.39
               Options forfeited                       -            $        -
                                              ----------

               December 31, 2002                  53,677            $    17.33
                                              ==========            ==========

               The following table  summarizes  information  about stock options
outstanding at December 31, 2002:


               Exercise Price   Options Outstanding   Remaining Contractual Life

                 $  19.94             30,000                   4.9 years
                 $  11.39              3,677                   6.3 years
                 $  14.50             20,000                   8.5 years


Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE J.        EMPLOYEE BENEFIT PLANS - CONTINUED

               During 1997,  the Company  adopted SFAS No. 123,  Accounting  for
               Stock-Based  Compensation,  which requires  companies to estimate
               the fair value for stock options on date of grant. Under SFAS No.
               123, the Company is required to record the  estimated  fair value
               of stock  options  issued as  compensation  expense in its income
               statements over the related  service  periods or,  alternatively,
               continue  to apply  accounting  methodologies  as  prescribed  by
               Accounting  Principles  Board ("APB") Opinion No. 25,  Accounting
               for Stock Issued to Employees, and disclose the pro forma effects
               of the  estimated  fair  value of  stock  options  issued  in the
               accompanying   footnotes  to  its   financial   statements.   The
               determination  of fair value is only  required for stock  options
               issued  beginning in 1996.  In adopting SFAS No. 123, the Company
               decided to continue  to follow the  accounting  methodologies  as
               prescribed by APB Opinion No. 25.

               The pro forma  effects  of the total  compensation  expense  that
               would have been recognized under SFAS No. 123 are as follows:
<TABLE>
<CAPTION>

                                                                                       2002                  2001
                                                                                 ---------------        --------------

<S>                                                                              <C>                    <C>
               Net income, as reported                                           $     1,239,912        $    3,247,782
               Pro forma net income                                              $     1,209,112        $    3,218,823
               Basic earnings per share, as reported                             $           .59        $         1.54
               Pro forma basic earnings per share                                $           .57        $         1.53
               Diluted earnings per share, as reported                           $           .59        $         1.54
               Pro forma diluted earnings per share                              $           .57        $         1.53

</TABLE>


               During  1994,  the  Bank  entered  into  a  nonqualified   salary
               continuation  plan with its executive  officers.  These  officers
               will be entitled to agreed-upon benefits which will begin vesting
               when each participant  reaches the age of fifty-five.  The vested
               percentage will increase  annually  through the age of sixty-five
               when the officers will be fully  vested.  Payment of any benefits
               is contingent  upon the officers'  continued  employment with the
               Bank through the age of fifty-five. The projected benefit to each
               officer at age  sixty-five  is allocated  through a present value
               calculation  to each year from  inception of the plan through age
               sixty-five.  The Plan also  includes a change of control  benefit
               for these officers.  If any or all of the covered  executives are
               terminated  from  employment  within  36  months  of  a  sale  or
               acquisition  of the Bank,  the  executive(s)  may elect  from the
               acquirer to receive fully vested income benefits as stated above,
               or to receive an agreed-upon lump-sum  distribution,  which would
               total  $640,000 if all covered  executives  selected this option.
               The financial  statements  for the years ended  December 31, 2002
               and 2001,  respectively,  include  $42,048 and $39,067 of expense
               related to this plan.


Continued


<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE J.        EMPLOYEE BENEFIT PLANS - CONTINUED


               In  addition to other  benefits,  the  Company  provides  medical
               insurance to its employees and makes medical insurance  available
               to  its  employees'  families.  The  Company  self-insures  up to
               $25,000 per person per year with a total annual  maximum based on
               the  number  of  covered  employees  ($539,738  and  $329,028  at
               December 31, 2002 and 2001, respectively). Claims exceeding these
               annual limits are covered by traditional insurance contracts.

NOTE K.        LEASES

               The Bank  assumed an  operating  lease  during  2000 for a branch
               office.  This facility is leased under a 10 year operating  lease
               expiring in 2006 with a renewal option for an additional 5 years.
               During 1999, the Bank also entered into an operating  lease for a
               branch  office.  This facility is leased under a 3 year operating
               lease  expiring in 2005 with a renewal option for an additional 3
               years.  All leases are of the normal operating type and generally
               short-term in nature and not  susceptible to  capitalization  for
               financial accounting reporting purposes.  Rent expense charged to
               income was $78,508 and $70,645 in 2002 and 2001, respectively.

               Future  obligations  for these leases at December 31, 2002 are as
follows:

                                    2003                         $      69,525
                                    2004                                69,525
                                    2005                                69,525
                                    2006                                69,525

NOTE L.        INCOME TAX PROVISION

               The  provision  for income  taxes  included  in the  consolidated
               statements of income is as follows:

                                           2002              2001
                                      --------------     --------------
               Current                 $   823,425        $  1,601,287
               Deferred                    165,025            (148,331)
                                      --------------     --------------
                                       $   988,450        $  1,452,956
                                      ==============     ==============

               Accrued  income  taxes  receivable  of $457,847 in 2002 and $0 in
2001 are included in other assets.



Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>


NOTE L.        INCOME TAX PROVISION-CONTINUED

               Net deferred tax  liabilities  of $1,281,633 in 2002 and $537,508
               in 2001,  are  included in accrued  taxes and other  liabilities.
               Amounts  comprising  deferred tax assets and  liabilities  are as
               follows:

                                                                                           2002              2001
                                                                                     --------------     --------------
               Deferred tax liability:
<S>                                                                                  <C>                <C>
                  Unrealized gain on available-for-sale securities                   $      734,354     $      398,427
                  Insurance                                                                  98,020             82,979
                  Other                                                                     108,070                  -
                  Unrealized gain on derivatives                                            148,421                  -
                  Depreciation                                                              755,815            687,429
                  Federal Home Loan Bank dividends                                          250,916            220,093
                  Purchase accounting adjustment amortization                                     -              7,479
                  Accrual to cash conversion                                                 16,265             32,532
                                                                                     --------------     --------------
               Total gross deferred tax liability                                    $    2,111,861     $    1,428,939
                                                                                     ==============     ==============


               Deferred tax asset:
                  Provision for loan losses                                          $      504,438     $      357,538
                  Other repossessed assets                                                    3,960                  -
                  Deferred compensation                                                      99,593             83,909
                  Investee losses                                                                 -            257,807
                  Purchase accounting adjustment amortization                                   323                  -
                  Other real estate                                                         170,162             74,693
                  Net operating loss                                                              -             65,732
                  Acquisition expenses                                                       51,752             51,752
                                                                                     --------------     --------------
               Total gross deferred tax asset, net
                  of valuation allowance of $-0-                                     $      830,228     $      891,431
                                                                                     ==============     ==============

</TABLE>




Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>


NOTE L.        INCOME TAX PROVISION - CONTINUED

               The temporary  differences resulting in deferred income taxes and
               the tax effect of each are as follows:

                                                                                           2002              2001
                                                                                     --------------     --------------

<S>                                                                                  <C>                <C>
               Discount accretion                                                    $            -     $       (5,392)
               Depreciation                                                                  68,386             13,387
               Federal Home Loan Bank dividends                                              30,823             30,624
               Provision for loan losses                                                   (146,900)          (195,825)
               Amortization of purchase accounting adjustments                               (7,802)            (5,285)
               Insurance                                                                     15,041             13,616
               Deferred compensation                                                        (15,684)           (14,572)
               Self-insured medical plan                                                          -             (9,681)
               Unrealized gain or loss on available-for-sale securities                     335,927            442,054
               Other                                                                        108,070                  -
               Investee losses                                                              257,807            (88,014)
               Accrual to cash conversion                                                   (16,267)            32,532
               Other real estate                                                            (95,469)             1,914
               Net operating loss                                                            65,732             78,365
               Other repossessed assets                                                      (3,960)                 -
               Unrealized gain on derivatives                                               148,421                  -
                                                                                     --------------     --------------
                                                                                     $      744,125     $      293,723
                                                                                     ==============     ==============

               The provision for federal income taxes differs from that computed
               by applying the federal  statutory  rate of 34% in 2002 and 2001,
               as indicated in the following analysis:

                                                                                           2002              2001
                                                                                     --------------     --------------

               Tax based on statutory rate                                           $      757,643     $    1,598,251
               State taxes                                                                   40,543            158,786
               Effect of tax-exempt income                                                 (500,693)          (231,600)
               Capital losses on investment                                                 425,000                  -
               Other                                                                        265,957            (72,481)
                                                                                     --------------     --------------
                                                                                     $      988,450     $    1,452,956
                                                                                     ==============     ==============

               The income  tax  provision  includes  approximately  $57,000  and
               $48,000 in 2002 and 2001,  respectively resulting from securities
               transactions.




Continued
</TABLE>

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE M.        SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

               At  December  31,  2002 and  2001,  the  Bank  had  sold  various
               investment  securities  with an  agreement  to  repurchase  these
               securities  at  various  times  within one year.  The  underlying
               securities are U.S.  Government  obligations  and  obligations of
               other U.S. Government agencies and corporations. These securities
               generally  remain  under the Bank's  control and are  included in
               investment securities.  The related liability to repurchase these
               securities  is  included  in  securities  sold  under  repurchase
               agreements. These securities have coupon rates ranging from 6.00%
               to 7.00%  and  maturity  dates  ranging  from  2009 to 2028.  The
               maximum  amount of  outstanding  agreements  at any month-end was
               $2,260,000 and $3,098,017 during 2002 and 2001, respectively. The
               monthly  average amount of outstanding  agreements was $2,098,899
               and $2,911,085  during 2002 and 2001,  respectively.  At December
               31, 2002, the securities underlying the repurchase agreements had
               an  approximate  amortized  cost of $3,319,000 and an approximate
               market value of $3,472,000.

NOTE N.        REGULATORY MATTERS

               The  primary  source  of  revenue  of  Britton  & Koontz  Capital
               Corporation  is dividends from its  subsidiary,  Britton & Koontz
               First  National   Bank.  On  December  21,  2002,   approximately
               $4,232,851 was available for future  distribution  by the Bank as
               dividends  without  prior  approval  of  the  banking  regulatory
               agencies.  However,  such  distribution  would be  subject to the
               requirements described in the following paragraphs.

               In accordance with Office of Thrift  Supervision  regulations,  a
               special  "Liquidation  Account"  has  been  established  for  the
               benefit of certain Qualifying Depositors of Natchez First Federal
               Savings Bank (acquired by Britton & Koontz First National Bank in
               1993) in an initial  amount of  approximately  $2.8 million.  The
               Liquidation  Account serves as a restriction on the  distribution
               of stockholders'  equity in Britton & Koontz First National Bank,
               and no cash  dividend  may be paid on its  capital  stock  if the
               effect  thereof  would  be to cause  the  regulatory  capital  of
               Britton  & Koontz  First  National  Bank to be  reduced  below an
               amount equal to the adjusted Liquidation Account balance.

               In the event of a complete  liquidation of Britton & Koontz First
               National Bank, each Qualifying Depositor would be entitled to his
               or her pro rata interest in the Liquidation Account.  Such claims
               would  be  paid  before  payment  to  Britton  &  Koontz  Capital
               Corporation  as  Britton  & Koontz  First  National  Bank's  sole
               shareholder.  A merger,  consolidation,  purchase  of assets  and
               assumption  of  deposits  and/or  other  liabilities  or  similar
               transaction,  with an  FDIC-insured  institution,  would not be a
               complete  liquidation  for the purpose of paying the  Liquidation
               Account. In such a transaction,  the Liquidation Account would be
               required to be assumed by the surviving institution.

Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE N.        REGULATORY MATTERS - CONTINUED

               The Bank is subject to various  regulatory  capital  requirements
               administered by federal banking agencies. Failure to meet minimum
               capital requirements can initiate certain mandatory, and possibly
               additional   discretionary   actions  by   regulators   that,  if
               undertaken,  could  have a direct  material  effect on the Bank's
               financial  statements.  Under capital adequacy guidelines and the
               regulatory  framework for prompt corrective action, the Bank must
               meet  specific  capital  guidelines  that  involve   quantitative
               measures  of  the  Bank's   assets,   liabilities,   and  certain
               off-balance-sheet items as calculated under regulatory accounting
               practices. The Bank's capital amounts and classification are also
               subject  to  qualitative   judgments  by  the  regulators   about
               components, risk weightings, and other factors.

               Quantitative measures established by regulation to ensure capital
               adequacy  require the Bank to maintain minimum amounts and ratios
               (set forth in the table  below) of total risk based  capital  and
               Tier I capital to risk-weighted  assets, and of Tier I capital to
               average  assets.  Management  believes,  as of December 31, 2002,
               that the Bank meets all capital adequacy requirements to which it
               is subject.

               The most recent regulatory  notification  categorized the Bank as
               well capitalized under the regulatory  capital  framework.  To be
               categorized as well  capitalized,  the Bank must maintain minimum
               total risk-based,  Tier I risk-based,  and Tier I leverage ratios
               as set  forth in the  table.  There are no  conditions  or events
               since that notification that management believes have changed the
               institution's category.

               The Bank's actual  capital  amounts and ratios are also presented
in the table.
<TABLE>
<CAPTION>

                                                                     To Be Adequately               To Be Well
                                             Actual                     Capitalized                 Capitalized
                                 ----------------------------   -------------------------    -------------------------
                                     Amount          Ratio         Amount         Ratio        Amount         Ratio
                                 --------------   -----------   -----------   -----------    -----------   -----------
                                                                 (amounts in thousands)

As of December 31, 2002
-----------------------
<S>                              <C>                <C>         <C>             <C>          <C>            <C>
Total Capital (to Risk-
    Weighted Assets)                $    27,314      14.15%      $  15,443        8.00%       $  19,303      10.00%
Tier I Capital (to Risk-
    Weighted Assets)                $    25,185      13.04%      $   7,725        4.00%       $  11,588       6.00%
Tier I Capital (to Average
    Assets)                         $    25,185       8.34%      $  12,079        4.00%       $  15,099       5.00%




Continued
</TABLE>

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>


NOTE N.        REGULATORY MATTERS - CONTINUED

                                                                     To Be Adequately               To Be Well
                                             Actual                     Capitalized                 Capitalized
                                 ----------------------------   -------------------------    -------------------------
                                     Amount          Ratio         Amount         Ratio        Amount         Ratio
                                 --------------   -----------   -----------   -----------    -----------   -----------
                                                                 (amounts in thousands)

As of December 31, 2001
-----------------------
<S>                                <C>             <C>           <C>             <C>          <C>            <C>
Total Capital (to Risk-
    Weighted Assets)               $   26,235      13.75%        $ 15,261        8.00%        $ 19,075       10.00%
Tier I Capital (to Risk-
    Weighted Assets)               $   24,127      12.65%        $  7,630        4.00%        $ 11,445        6.00%
Tier I Capital (to Average
    Assets)                        $   24,127       8.81%        $ 10,951        4.00%        $ 13,689        5.00%


</TABLE>

NOTE O.        COMMITMENTS AND CONTINGENCIES

               The   Bank   is   a   party   to   financial   instruments   with
               off-balance-sheet  risk in the normal  course of business to meet
               the financing needs of its customers. These financial instruments
               include  commitments to extend credit and  commercial  letters of
               credit,  which are not included in the accompanying  consolidated
               financial statements.

               Commitments  to extend  credit are  agreements to lend money with
               fixed expiration dates or termination  clauses.  The Bank applies
               the  same  credit  standards  used in the  lending  process  when
               extending  these  commitments,  and  periodically  reassesses the
               customer's creditworthiness through ongoing credit reviews. Since
               many of the  commitments  are  expected to expire  without  being
               drawn  upon,  the total  commitment  amounts  do not  necessarily
               represent future cash requirements.  Collateral is obtained based
               on the Bank's assessment of the transaction.

               Commercial  letters of credit are conditional  commitments issued
               by the Bank to guarantee the performance of a customer to a third
               party. The credit risk and  collateralization  policy involved in
               issuing  letters  of  credit  is  essentially  the  same  as that
               involved in extending loans to customers.









Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE O.        COMMITMENTS AND CONTINGENCIES-CONTINUED

               The Bank's maximum  exposure to credit loss is represented by the
               contractual  amount  of the  commitments  to  extend  credit  and
               letters of credit as follows:

                                                   2002                2001
                                             ---------------     ---------------

               Commitments to extend credit   $  34,499,574       $  37,531,926
                                             ===============     ===============

               Commercial letters of credit   $   1,459,963       $   1,371,568
                                             ===============     ===============

               The Bank is required to maintain  average reserves at the Federal
               Reserve  Bank.  This  requirement   approximated   $1,118,000  at
               December  31,  2002.   The  Bank  is  in  compliance   with  this
               requirement.

               At  December   31,   2002,   the  Bank  had   committed  to  sell
               approximately $4,393,000 of loans originated near year-end. These
               loans are  classified as loans  held-for-sale  and are carried at
               the  lower  of cost  or  market.  Due to the  short  period  from
               origination,  the  cost and  market  value  of  these  loans  are
               approximately the same.

               Britton  &  Koontz  Capital  Corporation  and  its  wholly  owned
               subsidiaries,  Britton  & Koontz  First  National  Bank and B & K
               Title Insurance Agency,  Inc., are involved in certain litigation
               incurred  in the normal  course of  business.  In the  opinion of
               management  and  legal  counsel,  liabilities  arising  from such
               claims,  if any,  would  not  have a  material  effect  upon  the
               Company's consolidated financial statements.

NOTE P.        CONCENTRATIONS OF CREDIT

               Substantially   all  of  the  Bank's  loans,   commitments,   and
               commercial  letters of credit have been  granted to  customers in
               the  Bank's  market  area.  Investments  in state  and  municipal
               securities also involve  governmental  entities in and around the
               Bank's market area. The  concentrations of credit by type of loan
               are set  forth  in Note C. The  distribution  of  commitments  to
               extend credit approximates the distribution of loans outstanding.
               Commercial  letters of credit are granted primarily to commercial
               borrowers.

NOTE Q.        DIVIDENDS

               Britton  & Koontz  Capital  Corporation's  subsidiary,  Britton &
               Koontz  First  National  Bank,  paid  dividends  to  the  Capital
               Corporation  amounting to  $1,500,000,  $1,550,000 and $1,550,000
               for the years 2002, 2001, and 2000, respectively.


Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE R.        INTEREST RATE RISK MANAGEMENT

               During 2002, the Bank entered into an off-balance  sheet interest
               rate swap  agreement  to  reduce  its  interest-rate  risk and to
               decrease its costs of funds for special deposit promotions. Under
               the terms of this  agreement,  the Bank receives a fixed rate and
               is obligated to pay a floating rate based on one month LIBOR plus
               3 basis points  calculated  on a contractual  notional  amount of
               $5,000,000  at December 31, 2002.  The original  term is for five
               years  expiring in May 2007.  The fixed  payment  rate was 7.635%
               during  2002.  The  average  variable-payment  rate was  4.75% at
               December  31,  2002.  The  collateral  at December  31, 2002 is a
               Federal Home Loan Mortgage investment. The carrying amount of the
               swap  has been  adjusted  to its fair  value at  year-end  and is
               included in other  assets.  The swap is assumed to be  completely
               effective,  and accordingly,  is reported as other  comprehensive
               income.

               During  2000,   the  Bank   entered  into  an   off-balance-sheet
               interest-rate  cap  agreement to reduce the  potential  impact of
               increases in interest  rates on  floating-rate  liabilities.  The
               agreement  entitles the Bank to receive from  counterparties on a
               quarterly  basis the  amounts,  if any, by which the  three-month
               LIBOR  exceeds 7.0%  computed on a $20 million  notional  amount.
               This  interest  rate cap expired on August 22, 2002.  At December
               31, 2002,  the original cost of the cap of $94,000 had been fully
               amortized into interest expense.

NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS

               In December of 1991,  the Financial  Accounting  Standards  Board
               issued  Statement  of  Financial  Accounting  Standards  No.  107
               relative  to   disclosures   about  fair   values  of   financial
               instruments.  The  statement  requires  disclosure  of  financial
               instruments'   fair  values,  as  well  as  the  methodology  and
               significant  assumptions  used in estimating  fair values.  These
               requirements have been  incorporated  throughout the notes to the
               consolidated  financial statements.  In cases where quoted market
               prices are not  available,  fair  values  are based on  estimates
               using   present   value   techniques.    Those   techniques   are
               significantly  affected by the  assumptions  used,  including the
               discount rate and estimates of future cash flows. In that regard,
               the derived fair value  estimates for those assets or liabilities
               cannot be substantiated by comparison to independent markets and,
               in many cases, can not be realized in immediate settlement of the
               instrument.  All nonfinancial  instruments,  by definition,  have
               been excluded from these  disclosure  requirements.  Accordingly,
               the aggregate  fair value amounts  presented do not represent the
               underlying  value of the  Company  and may not be  indicative  of
               amounts that might  ultimately  be realized upon  disposition  or
               settlement of those assets and liabilities.

               The following  methods and  assumptions  are used to estimate the
               fair value of each class of financial instruments for which it is
               possible to estimate that value:
Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS-CONTINUED

               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.

               Cash Surrender Value of Life Insurance

               The fair value of this item approximates its carrying value.

               Loans, Net and Loans Held-For-Sale

               For  variable-rate  loans which are repricing  immediately,  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.

               Federal Home Loan Bank Advances

               These  advances  were valued  using  discounted  cash flows.  The
               discount  rate  used to  determine  the  present  value  of these
               advances was based on interest rates  currently  being charged to
               the Bank.
Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED

               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:

<TABLE>
<CAPTION>

                                                                                                 2002
                                                                                 -------------------------------------
                                                                                     Carrying               Fair
                                                                                      Amount                Value
                                                                                 ----------------    -----------------

               Financial assets:
<S>                                                                              <C>                 <C>
                  Cash and due from banks                                        $     11,477,000    $      11,477,000
                  Federal funds sold                                             $      3,560,000    $       3,560,000
                  Investment securities:
                     Held-to-maturity                                            $     33,148,000    $      34,305,000
                     Available-for-sale                                          $     60,566,000    $      60,566,000
                     Equity securities                                           $      3,345,000    $       3,345,000
                  Cash surrender value of life insurance                         $        901,000    $         901,000
                  Loans, net                                                     $    182,662,000    $     188,996,000

               Financial liabilities:
                  Deposits                                                       $    233,012,000    $     234,961,000
                  Federal Home Loan Bank advances                                $     41,315,000    $      43,060,000
                  Securities sold under repurchase agreements                    $      2,142,000    $       2,142,000

                                                                                       Face                 Fair
                                                                                      Amount                Value
                                                                                 ----------------    -----------------

               Other:
                  Commitments to extend credit                                   $     34,500,000    $      34,500,000
                  Commercial letters of credit                                   $      1,460,000    $       1,460,000
                  Interest rate swap                                             $        397,000    $         397,000
Continued

<PAGE>
</TABLE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED

                                                                                                 2001
                                                                                 -------------------------------------
                                                                                     Carrying               Fair
                                                                                      Amount                Value
                                                                                 ----------------    -----------------

               Financial assets:
<S>                                                                              <C>                 <C>
                  Cash and due from banks                                        $     14,559,000    $      14,559,000
                  Federal funds sold                                             $      1,050,000    $       1,050,000
                  Investment securities:
                     Held-to-maturity                                            $     27,968,000    $      27,868,000
                     Available-for-sale                                          $     54,666,000    $      54,666,000
                     Equity securities                                           $      3,723,000    $       3,723,000
                  Cash surrender value of life insurance                         $        856,000    $         856,000
                  Loans, net                                                     $    183,019,000    $     186,348,000

               Financial liabilities:
                  Deposits                                                       $    217,680,000    $     219,245,000
                  Federal Home Loan Bank advances                                $     47,000,000    $      47,000,000
                  Securities sold under repurchase agreements                    $      3,098,000    $       3,098,000

                                                                                       Face                 Fair
                                                                                      Amount                Value
                                                                                 ----------------    -----------------

               Other:
                  Commitments to extend credit                                   $     37,532,000    $      37,532,000
                  Commercial letters of credit                                   $      1,372,000    $       1,372,000



</TABLE>


Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>


NOTE T.        SUMMARIZED FINANCIAL INFORMATION OF BRITTON & KOONTZ CAPITAL CORPORATION

               Summarized  financial  information  of  Britton & Koontz  Capital
               Corporation, parent company only, is as follows:

                        STATEMENTS OF FINANCIAL CONDITION

                                                                                            December 31,
                                                                                       2002                 2001
                                                                                 ----------------    ----------------
               ASSETS:
<S>                                                                              <C>                 <C>
                  Cash                                                           $        635,374    $        836,876
                  Investments in:
                     Britton & Koontz First National Bank                              28,126,549          26,115,147
                     B & K Title Insurance Agency, Inc.                                    44,111              20,338
                     Sumx Inc.                                                                  -             558,826
                  Loans                                                                         -              59,645
                  Premise and equipment, net                                              189,603             195,296
                  Cash surrender value of life insurance                                  112,762             108,926
                  Other assets                                                            221,075             396,086
                                                                                 ----------------    ----------------

               TOTAL ASSETS                                                      $     29,329,474    $     28,291,140
                                                                                 ================    ================

               STOCKHOLDERS' EQUITY                                              $     29,329,474    $     28,291,140
                                                                                 ================    ================




</TABLE>

Continued

<PAGE>

<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE T.        SUMMARIZED FINANCIAL INFORMATION OF BRITTON & KOONTZ CAPITAL CORPORATION - CONTINUED

                              STATEMENTS OF INCOME

                                                                                      Years Ended December 31,
                                                                                       2002                 2001
                                                                                 ----------------    ----------------
               REVENUE:
                  Dividends received:
<S>                                                                              <C>                 <C>
                     Britton & Koontz First National Bank                        $      1,500,000    $      1,550,000
                  Interest and other income earned                                          8,571              12,573
                                                                                 ----------------    ----------------
                                                                                        1,508,571           1,562,573

               EXPENSES                                                                   661,076              54,608
                                                                                 ----------------    ----------------
                                                                                          847,495           1,507,965

               INCOME TAX BENEFIT                                                          22,573             (88,014)
                                                                                 ----------------    -----------------
                                                                                          824,922           1,595,979

               EQUITY IN UNDISTRIBUTED
                  EARNINGS (LOSSES):
                     Britton & Koontz First National Bank                                 950,043           1,869,929
                     Sumx Inc.                                                           (558,826)           (235,964)
                     B & K Title Insurance Agency, Inc.                                    23,773              17,838
                                                                                 ----------------    ----------------

                            NET INCOME                                           $      1,239,912    $      3,247,782
                                                                                 ================    ================

</TABLE>


Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001
<TABLE>
<CAPTION>


NOTE T.        SUMMARIZED FINANCIAL INFORMATION OF BRITTON & KOONTZ
               CAPITAL CORPORATION - CONTINUED

                            STATEMENTS OF CASH FLOWS

                                                                                   Years Ended December 31,
                                                                                       2002                 2001
                                                                                   --------------    ----------------

               CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>               <C>
                  Net income                                                       $    1,239,912    $      3,247,782
                  Adjustments to reconcile net income to net
                     cash provided by operating activities:
                         Deferred taxes                                                   257,807                   -
                         Write off of advances to affiliate                               586,781                   -
                         Provision for depreciation                                         5,693               5,124
                        Equity on undistributed earnings
                            and losses of affiliates                                     (414,990)         (1,651,803)
                  Increase in cash surrender value of life insurance                       (3,836)            (11,556)
                  Increase in other assets                                               (218,868)           (224,091)
                                                                                   ---------------   ----------------
                            Net cash provided by operating activities                   1,452,499           1,365,456
                                                                                   ---------------   ----------------

               CASH FLOWS FROM INVESTING ACTIVITIES:
                  Investment in B & K Title Insurance Agency, Inc.                              -              (2,500)
                  Advances to affiliate                                                  (410,151)            (59,645)
                  Repayment of advances by affiliate                                       19,087                   -
                                                                                   --------------    ----------------
                            Net cash used in investing activities                        (391,064)            (62,145)
                                                                                   ---------------   ----------------

               CASH FLOWS FROM FINANCING ACTIVITIES:
                  Cash dividends paid                                                  (1,308,862)         (1,286,524)
                  Cash received from stock options exercised                               45,925              52,121
                                                                                   ---------------   ----------------
                            Net cash used in financing activities                      (1,262,937)         (1,234,403)
                                                                                   ---------------   -----------------

               NET INCREASE (DECREASE) IN CASH                                           (201,502)             68,908

               CASH AT BEGINNING OF YEAR                                                  836,876             767,968
                                                                                   ---------------   ----------------

               CASH AT END OF YEAR                                                 $      635,374    $        836,876
                                                                                   ===============   ================
</TABLE>








Continued

<PAGE>






              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE T.        SUMMARIZED FINANCIAL INFORMATION OF BRITTON & KOONTZ
               CAPITAL CORPORATION - CONTINUED

                      STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>


               SCHEDULE OF NONCASH INVESTING AND
                  FINANCING ACTIVITIES:
<S>                                                                                <C>               <C>
                     Change in unrealized (gains) losses on securities
                         available-for-sale, net of deferred income taxes          $     (811,869)   $        754,140
                                                                                   ===============   ================

                     Change in unrealized gain on derivative,
                         net of deferred income taxes                              $     (249,490)   $              -
                                                                                   ===============   ================

</TABLE>


Managements Discussion & Analysis of Financial Condition & Results of Operations

             This  discussion  presents a review of the major  factors that have
affected the financial  condition of Britton & Koontz Capital  Corporation  (the
"Company")  and its  subsidiaries,  principally  Britton & Koontz First National
Bank (the  "Bank")  since year end and compares  the  operating  results for the
twelve months ended December 31, 2002, to the same period in 2001.

Financial Condition

             Assets

             Total  assets  increased  3.2%  during  2002 to $308.4  million  as
compared to 2001,  supported by increases in  investment  securities,  while the
loan portfolio  remained stable.  Investment growth was funded primarily from an
increase in customer  deposits.  Deposits increased $15.3 million during 2002 to
$233.0 million at December 31, 2002. Most of the increase ($14.7 million) is due
to an increase in interest-bearing deposits.

             Interest  income from earning assets  represents the Company's main
source of income. Average earning assets for the period ended December 31, 2002,
totaled $280.2 million, a $24.9 million (9.8%) increase compared to December 31,
2001.  The  increase  was  due to  growth  in the  investment  portfolio  (38%),
primarily municipal  securities.  Investment growth was funded with increases in
customer  deposits  along with the  reinvestment  of  proceeds  from  securities
paydowns.

             Investment    Securities.    Securities    primarily   consist   of
mortgage-backed, municipal, corporate and agency securities. Securities that are
deemed to be  held-to-maturity  are accounted  for by the amortized  cost method
while securities in the available-for-sale  categories are accounted for at fair
value.   Management   determines  the   classification   of  its  securities  at
acquisition.  Approximately $51 million of the Company's  held-to-maturity (HTM)
portfolio was transferred to  available-for-sale  (AFS) pursuant to the adoption
of FAS 133 on January 1, 2001. Total HTM and AFS investment securities increased
13% to $93.7  million  from  December 31,  2001,  to December  31, 2002.  Equity
securities  decreased  $559  thousand  due to  the  write-off  of the  remaining
investment in Sumx Inc., a company  formed to develop and market  internet-based
electronic banking to financial institutions. Other equity securities, comprised
primarily of Federal Reserve Bank stock of $372 thousand, Federal Home Loan Bank
stock of $2.8  million and ECD  Investments,  LLC  membership  interests of $100
thousand,  increased  $181 thousand due to the receipt of a stock  dividend from
the Federal Home Loan Bank (FHLB)  during the year and the purchase of 4 Class A
Units  representing  interests in ECD  Investments,  LLC, a Mississippi  limited
liability  company  established  in  February  1997 to  provide  a  commercially
feasible  vehicle  through  which  banks,   individuals,   companies  and  other
institutions can participate with ECD Investments,  LLC in economic and business
development activities in economically depressed regions of the country, in this
instance, the states of Arkansas, Louisiana and Mississippi.

             The amortized cost of the Bank's investment  securities at December
31, 2002, 2001 and 2000, are summarized as follows:


<TABLE>
<CAPTION>

                                                                  Amortized Cost
                                                  -------------------------------------------------
                                                     12/31/02          12/31/01          12/31/00
                                                  -------------------------------------------------
<S>                                               <C>               <C>               <C>
Obligations of other U.S. Government
       Agencies and Corporations                   $ 52,544,082      $ 42,330,355      $ 46,940,954
    Obligations of state and
       Political Subdivisions                        33,147,883        27,967,610         7,385,130
    Privately Issued Collateralized
       Mortgage Obligations                             720,866         6,137,974         6,497,250
       Corporate Securities                           5,078,192         5,122,544                 -
                                                  =============      ============      =============
                                                   $ 91,491,023      $ 81,558,483      $ 60,823,334
                                                  =============      ============      =============
<PAGE>
</TABLE>

         The amortized  cost of  investment  securities at December 31, 2002, by
contractual  maturity  (including  mortgage  backed  securities) is shown below.
Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay  obligations with or without call or prepayment
penalties.  Yields on tax-exempt  municipal  securities  have been computed on a
book equivalent basis.
<TABLE>
<CAPTION>

                                                                 Amortized         Weighted
                                                                    Cost         Average Yield
                                                              -------------    ----------------
<S>                                                           <C>                 <C>
             Due in one year or less                          $   1,349,613          5.58%
             Due after one year through five years               15,817,952          4.73
             Due after five years through ten years              14,730,000          4.90
             Due after ten years                                 59,593,458          5.72
                                                              -------------    ---------------
                                                              $  91,491,023          5.42%
                                                              =============    ===============
</TABLE>

             Loans. Average loans for the twelve month period ended December 31,
2002, were $182.7 million, a decrease of $2.3 million compared to the year ended
December 31, 2001.  Table 1 presents the Bank's loan portfolio at the end of the
last five years.
<TABLE>
<CAPTION>

     TABLE 1: COMPOSITION OF LOAN PORTFOLIO

                                  12/31/02         12/31/01        12/31/00          12/31/99        12/31/98
                              ----------------------------------------------------------------------------------
<S>                           <C>              <C>             <C>               <C>              <C>
Commercial, financial and
    agricultural              $   32,826,000   $   35,886,000  $   33,102,000    $   25,730,000   $   25,428,000
Real estate-construction           6,857,000        9,890,000      10,883,000         6,997,000        6,439,000
Real estate-mortgage             128,900,000      121,296,000     123,192,000       118,258,000      100,310,000
Installment                       16,054,000       17,962,000      19,513,000        18,852,000       16,499,000
Other                                169,000          117,000         218,000           236,000          229,000
                              ----------------------------------------------------------------------------------
       Total loans            $  184,806,000   $  185,151,000  $  186,908,000    $  170,073,000   $  148,905,000
                              ==============   ==============  ==============    ==============   ==============
</TABLE>

             Accrued interest on approximately $2.1 and $1.3 million of loans at
December 31, 2002 and 2001, respectively, was discontinued or reduced throughout
those  two  years  because  of the  write-down  of  interest  on loans  moved to
non-accrual.  If interest on such loans had been accrued,  the income would have
approximated $141 and $167 thousand in 2002 and 2001, respectively.

             The following table sets forth as of December 31, 2002, the periods
in which the Bank's loan  portfolio  matures or reprices and the total amount of
all such loans due after one year having (a)  predetermined  interest  rates and
(b) floating or adjustable rates.
<TABLE>
<CAPTION>
                                                                   Due after
                                                   Due in          one year
                                                   one year        through          Due after
                                                  or less          five years       five years         Total
                                                -----------------------------     ---------------------------------
<S>                                             <C>             <C>                <C>              <C>
Commercial, financial and agricultural          $  19,263,000   $  12,074,000      $   1,489,000    $  32,826,000
  Real estate-construction                          5,599,000       1,090,000            168,000        6,857,000
                                                -------------   -------------      -------------    -------------
                                                $  24,862,000   $  13,164,000      $   1,657,000    $  39,683,000
                                                =============   =============      =============    =============


  Predetermined interest rates                  $  13,073,000   $  13,164,000      $   1,657,000
                                                =============   =============      =============
  Floating or adjustable interest rates         $  11,789,000
                                                =============
<PAGE>
</TABLE>

             Asset Quality

         Several key  measures  are used to evaluate  and monitor the  Company's
asset  quality.   These  measures  include  the  level  of  loan  delinquencies,
non-accrual  loans,  foreclosed  assets and  charge-offs  in  addition  to their
related ratios.  Nonperforming  assets,  consisting of non-accrual  loans, loans
past due 90 days or more and other real estate  owned  decreased to $3.9 million
at December  31, 2002,  from $4.3  million at December  31, 2001.  Nonperforming
loans as a percent of total loans net of unearned income and loans held for sale
at December 31, 2002,  was 1.29%,  down from 1.56% at December 31, 2001.  During
the year, the Company saw the resolution of various problem  credits,  primarily
larger  real  estate and  commercial  loans  across  all  Company  markets.  The
resolution is reflected in the migration of problem credits from past due status
through non-accrual to partial charge-off, foreclosure and sale of collateral. A
breakdown of  nonperforming  loans at the end of the last five years is shown in
the Table 2.

<TABLE>
<CAPTION>

     TABLE 2: BREAKDOWN OF NONPERFORMING LOANS

                                           12/31/02      12/31/01       12/31/00      12/31/99      12/31/98
                                          ---------    ----------     ----------    ----------    ----------
                                                                (dollars in thousands)
    Non-accrual loans by type
<S>                                      <C>           <C>            <C>          <C>          <C>
      Real estate                         $   1,513     $     750       $    950       $   665    $     97
      Installment                                16            86             39            59          35
      Commercial and all other loans            537           449             89            26         114
                                         ----------    ----------     ----------    ----------    -----------
          Total non-accrual loans             2,066         1,285          1,078           750         246
      Loans past due 90 days or more            253         1,510            311           306         448
                                         ----------    ----------     ----------    ----------    -----------
          Total nonperforming loans           2,319         2,795          1,389         1,056         694
      Other real estate owned (net)           1,554         1,526            773           401         497
                                         ----------    ----------     ----------    ----------    -----------
          Total nonperforming assets      $   3,873     $   4,321      $   2,162    $    1,457    $  1,191
                                         ==========     =========     ==========    ==========    ===========
    Nonperforming loans as a percent
      of loans, net of unearned interest
      and loans held for sale                 1.29%         1.56%           .74%          .62%        .47%
                                         ==========     =========     ==========    ==========    ==========

</TABLE>


             Allowance for Loan Losses

             The  allowance  for loan losses is comprised  of specific  reserves
(assessed for each loan that is reviewed for  impairment or for which a probable
loss has been  identified),  general reserves (based on historical loss factors)
and  an  unallocated  reserve  for  exposures  arising  from  factors  that  are
undetectable and are not addressed by the general and specific reserves.

             The allowance for loan losses remained  constant at $2.1 million at
December 31, 2002, compared to December 31, 2001. The ratio of the allowance for
loan losses to loans,  net of unearned  income and loans held for sale increased
slightly to 1.19% at December 31, 2002, from 1.17% at December 31, 2001.

             Factors  contributing  to the  determination  of specific  reserves
include the financial condition of the borrower, changes in the value of pledged
collateral and general  economic  conditions.  General  reserves are established
based on historical  charge-offs  considering factors which include risk rating,
industry concentration and loan type, with the most recent charge-off experience
weighted more heavily. The unallocated reserve, which is judgmentally

<PAGE>


determined,  generally  serves to compensate  for the  uncertainty in estimating
loan  losses,  particularly  in  times  of  changing  economic  conditions,  and
considers  the  possibility  of  improper  risk  ratings and  possible  over- or
under-allocations  of specific reserves.  In addition,  the unallocated  reserve
considers trends in delinquencies and non-accrual loans, industry concentration,
the  volatility  of risk  ratings  and the  evolving  portfolio  mix in terms of
collateral,  relative  loan size and the degree of seasoning in the various loan
products.   Changes  in  underwriting   standards,   credit  administration  and
collection,  regulation  and other factors  which impact the credit  quality and
collectibility of the loan portfolio also impact the unallocated reserve levels.
The results of reviews  performed by internal and  external  examiners  are also
considered.

             The methodology  used in the periodic  review of reserve  adequacy,
which is performed at least quarterly,  is designed to be dynamic and responsive
to changes in actual and expected credit losses.  These changes are reflected in
both the general and unallocated reserves. The historical loss ratios, which are
key  factors in this  analysis,  are updated  quarterly  and are  weighted  more
heavily  for recent  charge-off  experience.  The review of reserve  adequacy is
performed by executive  management  and  presented to the Board of Directors for
its review, consideration and ratification.

             The basic  assumptions  and  methodologies  used in allocating  the
reserve  were  unchanged  during  2002;  however,  refinements  to the  existing
methodology continue to be made as evolving risk trends are identified. The loan
loss  methodology  weights  recent  history more  heavily and also  reflects the
current risk profile of the portfolio.

             The present  level of the  reserve  for loan  losses is  considered
adequate to absorb  probable loan losses  inherent in the portfolio  considering
the  level  and  mix  of  the  loan  portfolio,  the  level  of  delinquent  and
nonperforming  loans,  the Company's  risk  management  strategies,  and current
expectations with respect to economic conditions and market trends.

             Table 3 presents the activity in the  allowance for loan losses for
the last five years.  Table 4 presents the  allocation of the allowance for loan
losses  applicable to each loan category for the period ended December 31, 2002.
Information for 1998-2001 is not included in Table 4 because such information is
not available to Company.


<TABLE>
<CAPTION>

     TABLE 3: ACTIVITY OF ALLOWANCE FOR LOAN LOSSES

                                              12/31/02    12/31/01    12/31/00      12/31/99     12/31/98
                                            -----------  ---------- -----------    ----------   ----------
                                                               (dollars in thousands)
<S>                                         <C>          <C>         <C>           <C>          <C>
             Balance at beginning of year     $  2,108    $  1,884    $   1,150     $  1,061     $  1,039
    Charge-offs:
      Real Estate                                 (427)        (51)          (2)         (30)         (45)
      Commercial                                  (434)        (97)        (216)        (120)         (51)
      Installment and other                       (282)       (249)        (119)        (101)         (83)
    Recoveries:
      Real Estate                                   36          12            0            9            -
      Commercial                                    64           7           75           27           15
      Installment and other                         39          77           27           18           15
                                            ----------  ----------  -----------    ---------    ----------
    Net (charge-offs)/recoveries                (1,004)       (301)        (235)        (197)        (149)
      Provision charged to operations            1,025         525          969          286          171
                                            ----------  ----------  -----------    ---------    ----------
    Balance at end of period                  $  2,129    $  2,108    $   1,884     $  1,150     $  1,061
                                            ==========  ==========  ===========    =========    ==========


     Allowance for loan losses as a percent
       of loans, net of unearned interest
       and loans held for sale                   1.19%       1.17%        1.01%         .68%         .71%
                                                ======      ======      ========   ==========   ==========
Net charge-offs as a percent of
    average loans                                 .55%        .16%         .13%         .12%         .10%
                                                ======      ======      ========   ==========   ==========


<PAGE>
</TABLE>

     TABLE 4: ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>


                                                                    December 31, 2002
                                            --------------------------------------------------------
                                                                                    Percent of loans
                                                                                    in each category
                                                               Amount              to total loans *
                                                   --------------------         --------------------
<S>                                                 <C>                         <C>
        Commercial, financial and agricultural      $           597,605                   17.76%
        Real estate-construction                                206,015                    3.71%
        Real estate-mortgage                                  1,077,513                   69.75%
        Installment                                             134,908                    8.69%
        Other                                                   113,287                     .09%
                                                    -------------------         --------------------
                                                      $       2,129,328                   100.0%
                                                    ===================         ====================

</TABLE>

* Includes loans held for sale



             Other Real Estate. The balances of other real estate (ORE) remained
largely  unchanged at $1.6  million.  Significant  activity,  however,  included
foreclosures  of $1.4  million,  which  were  largely  offset  by  sales of $1.1
million. Other real estate activity for 2002, is presented in Table 5.



     TABLE 5: OTHER REAL ESTATE ACTIVITY


        Balance at December 31, 2001                                   $ 1,526

                     Writedowns                        (146)
                     Sales                           (1,094)
                     Foreclosures                     1,418
                     Reserves                          (150)                28
                                                   ------------      -----------
        Balance at December 31, 2002                                   $ 1,554
                                                                     ===========



             Deposits.  Deposits are the Company's primary source of funding for
earning  assets.  Average  deposits  increased from $210 million at December 31,
2001, to $220 million at December 31, 2002. The increase in average deposits was
due primarily to normal  fluctuations  in public funds deposits and increases in
the bank's money market account. Average borrowings, which include federal funds
purchased,  securities sold under repurchase  agreements,  and advances from the
Federal  Home Loan Bank of Dallas  increased  from $31 million at  December  31,
2001,  to $46 million at December 31, 2002.  Management  plans  continued use of
nontraditional  funding sources to manage overall funding costs and to meet loan
demand in new locations.


             Maturities  of   certificates  of  deposits  of  $100,000  or  more
outstanding at December 31, 2002 and December 31, 2001, are summarized below.
<PAGE>
<TABLE>
<CAPTION>


                                                                     12/31/02           12/31/01
                                                                ----------------  ----------------
             Time remaining until maturity:
<S>                                                                 <C>          <C>
                 Three months or less                               $ 18,610,257      $ 22,743,964
                 Over three through six months                        13,298,039        11,649,111
                 Over six through twelve months                        6,340,736         5,969,317
                 Over twelve months                                   16,130,975         7,227,437
                                                               ----------------- -----------------
                                                                    $ 54,380,007      $ 47,589,829
                                                               ================= =================
</TABLE>


             Deposits at December 31, 2002 and December 31, 2001, consist of the
following:
<TABLE>
<CAPTION>


                                                                     12/31/02           12/31/01
                                                               ----------------- -----------------
<S>                                                            <C>               <C>
                  Non-interest bearing demand deposits           $   33,843,654   $     33,165,781
                  Now accounts                                       31,734,722         29,375,838
                  Money market deposit accounts                      26,817,953         18,352,807
                  Savings accounts                                   16,344,898         18,108,845
                  Certificates of deposit                           124,270,811        118,676,585
                                                              ------------------ -----------------
                                                                 $  233,012,038   $    217,679,856
                                                              ================== =================

</TABLE>

The following table presents the Bank's average balance sheets during 2002, 2001
and 2000.  Dividing  income  or  expense  by the  average  balance  of assets or
liabilities,  respectively,  derives  yields  and costs.  Non-accrual  loans are
included  in loans  for  yield  computations.  Loan  fees and late  charges  are
included  in both  income and yield  computations  in loans.  Income and expense
resulting  from interest  rate caps and swaps used to manage  interest rate risk
are  included   appropriately   in  loans  and   certificates  of  deposit.   No
tax-equivalent adjustments have been made. All averages are derived from monthly
average balances.

<PAGE>
<TABLE>
<CAPTION>
                       AVERAGE BALANCE AND YIELD ANALYSIS

                                                2002                             2001                            2000
                                    -------------------------------  ------------------------------  -------------------------------
                                                         Average                          Average                         Average
                                     Average   Income/      %         Average   Income/      %        Average   Income/      %
                                     Balance   Expense  Yield/Rate    Balance   Expense  Yield/Rate   Balance   Expense  Yield/Rate
                                    -------------------------------  ------------------------------  -------------------------------
ASSETS

<S>                                 <C>        <C>         <C>       <C>        <C>       <C>        <C>        <C>        <C>
Loans                               $ 182,744  $ 14,735      8.06%   $ 185,012  $ 16,898   9.13%     $ 187,176  $ 16,944    9.05%
Investment securities:
U.S. Government                         5,424       217      4.00%       3,995       200   5.00%         8,655       557    6.44%
Mortgage Backed Securities             45,107     2,825      6.26%      43,540     3,104   7.13%        46,126     3,167    6.87%
State & municipal                      33,113     1,563      4.72%      13,060       649   4.97%         6,096       312    5.11%
Other                                   8,858       397      4.49%       6,553       340   5.19%         2,325       152    6.54%
                                    -------------------------------  ------------------------------   -----------------------------
Total investment securities            92,502     5,003      5.41%      67,148     4,294   6.39%        63,202     4,188    6.63%

Interest bearing bank balances          1,838        38      2.06%       1,680        60   3.57%           918        54    5.90%
Federal funds sold                      2,267        33      1.47%         612        18   2.94%         4,477       262    5.86%
Cash Value Life Insurance and other       882        45      5.15%         836        43   5.14%           790        45    5.64%

                                    -------------------------------  ------------------------------  -------------------------------
Total earning assets                  280,233    19,854      7.08%     255,288    21,313   8.35%       256,563    21,493    8.38%
                                    -------------------------------  ------------------------------  -------------------------------

Allowance for loan losses              (2,008)                          (2,037)                         (1,330)
Cash & due from banks                   7,818                            7,088                           6,857
Bank premises & equipment               7,096                            7,088                           7,033
Other assets                            6,461                            5,594                           4,976
                                    ----------                       ----------                      ----------
TOTAL ASSETS                        $ 299,600                        $ 273,021                       $ 274,099
                                    ==========                       ==========                      ==========

LIABILITIES AND SHAREHOLDERS EQUITY

Interest bearing deposits:
Savings                             $  16,830  $    259      1.54%   $  17,046  $    367   2.15%     $  16,137  $    362    2.24%
Interest bearing checking              34,300       214      0.62%      34,276       652   1.90%        33,745       954    2.83%
Money rate savings                     21,758       460      2.11%      14,938       448   3.00%        11,418       318    2.79%
Certificates of deposit               115,568     4,125      3.57%     112,249     6,147   5.48%       124,660     7,074    5.67%
                                    -------------------------------  ------------------------------  -------------------------------
Total interest bearing deposits       188,456     5,058      2.68%     178,509     7,614   4.27%       185,960     8,708    4.68%

Short term borrowed funds              11,801       510      4.32%      14,744       826   5.60%        26,934     1,699    6.31%
Long term debt                         34,088     1,637      4.80%      16,468       793   4.81%             -         -    0.00%

                                    -------------------------------  ------------------------------  -------------------------------
Total interest bearing liabilities    234,345     7,205      3.07%     209,721     9,233   4.40%       212,894    10,407    4.89%
                                    -------------------------------  ------------------------------  -------------------------------

Non-interest bearing deposits          31,639                           31,516                          30,724
Other liabilities                       4,293                            4,217                           5,339
Shareholders' equity                   29,323                           27,567                          25,142

                                    --------------------             --------------------            --------------------
TOTAL LIABILITIES & SHAREHOLDERS'
  EQUITY                            $ 299,600  $  7,205              $ 273,021  $  9,233             $ 274,099  $ 10,407    4.89%
                                    ====================             ====================            ====================


Interest income and rate earned                $ 19,854      7.08%              $ 21,313   8.35%                $ 21,493    8.38%
Interest expense and rate paid                    7,205      3.07%                 9,233   4.40%                  10,407    4.89%
                                               -------------------             -----------------                --------------------
Interest rate spread                                         4.01%                         3.95%                            3.49%

NET INTEREST INCOME & NET YIELD ON
  AVERAGE EARNING ASSETS                       $ 12,649      4.51%              $ 12,080   4.73%                $ 11,086    4.32%
                                               ===================              ================                ====================



</TABLE>

<PAGE>

             Capital. Shareholders' equity totaled $29.3 million at December 31,
2002,  compared to $28.3 million at December 31, 2001. The increase is primarily
the result of net income,  dividend payments and  comprehensive  income over the
year  totaling  $1.2  million,  $1.3  million  and $1.1  million,  respectively.
Comprehensive  income is the result of  unrealized  gains on  available-for-sale
securities  and  the  recognition  of  the  fair  value  of  certain  derivative
instruments.  The ratio of shareholders'  equity to assets remained  constant at
December 31, 2002, at 9.5%.

             The Bank maintained a Tier 1 capital to risk-weighted  assets ratio
of  13.04%,  a total  capital  to risk  weighted  assets  ratio of 14.15%  and a
leverage  ratio  (Tier 1 capital  to  average  assets)  of 8.34%.  These  levels
substantially  exceed the minimum  requirements  of the regulatory  agencies for
well-capitalized institutions of 10.00%, 6.00% and 5.00% respectively.

<TABLE>
<CAPTION>

                                                         December 31, 2002              December 31, 2001
                                                --------------------------       ------------------------
             Risk-based capital:
<S>                 <C>                               <C>                           <C>
               Tier 1                                       $  25,185                     $  24,127
               Total                                           27,314                        26,235
             Assets:
               Quarterly average assets (1)                   301,964                       273,771
               Risk-weighted assets                           193,099                       190,757
             Ratios:
               Tier 1 risk-based capital                       13.04%                        12.65%
               Total risk-based capital                        14.15%                        13.75%
               Leverage                                         8.34%                         8.81%

(1)      Excludes disallowed assets

</TABLE>

Results of Operations

             The  following  are  measurements  of  the  Company's  earnings  in
relation to assets, equity and earnings per share for the past three years.

<TABLE>
<CAPTION>

                                                                2002          2001         2000
                                                            ----------    ----------    ---------
<S>                                                          <C>           <C>           <C>
             Return on average assets                             .41%         1.19%         .98%
             Return on average equity                            4.23%        12.76%       10.70%
             Dividend payout ratio                             105.67%        39.61%       43.00%
             Average equity to average assets                    9.79%        10.10%        9.17%
             Net interest margin                                 4.51%         4.73%        4.32%
             Basic income per share                              $.59         $1.54        $1.29
             Diluted income per share                            $.59         $1.54        $1.28

</TABLE>

             Analysis  of Net  Income.  Net income for the twelve  months  ended
December 31, 2002, was $1.2 million or $.59 per diluted share,  compared to $3.2
million or $1.54 per diluted share for the same period in 2001.

             A  portion  of the  decrease  in net  income  from  2001 to 2002 is
attributed to increased  expenses in 2002 related to expansion in the Vicksburg,
Mississippi, and Baton Rouge, Louisiana, markets and a $1.4 million write-off of
the remaining  investment in Sumx Inc., an Internet banking technology provider,
which is owned 38.25% by the Company. The $1.4 million write-off consists of the
remaining  book value of $374  thousand,  a deferred tax asset of $327  thousand
established  because of accumulated equity losses and the write-off of loans and
receivables and equity losses for 2002 totaling $771 thousand. At year end, Sumx
Inc. was in litigation with Diebold, Incorporated which entered into a marketing
alliance with Sumx Inc. in May of 2001. The Company's  decision to write off its
remaining  investment in Sumx Inc. was driven by the  uncertainty  regarding the
timing  and  outcome of the  litigation  with  Diebold  and its impact on future
business  prospects  for Sumx Inc.  The Company is one of eight banks and credit
unions utilizing Sumx' Internet banking platform.


<PAGE>

             Analysis of Net Interest  Income.  Net interest  income (NII),  the
amount by which interest income on loans, investments and other interest earning
assets exceed interest  expense on deposits and other borrowed funds,  increased
$569  thousand,  a 4.7%  increase to $12.6 million for the twelve months of 2002
compared  to the same  period in 2001.  The  increase  in NII is  primarily  the
function of continued lower rates creating a rate variance of $551 thousand. The
lower interest rate  environment  provided for a decrease in interest  earned on
assets of $2.5 million while interest paid on liabilities  fell by $3.1 million.
NII  increased  despite a decrease in net interest  margin for the year to 4.51%
from 4.73%.

             The  following  table  presents  the  dollar  amount of  changes in
interest income and interest  expense for major  components of interest  earning
assets and interest bearing  liabilities.  It distinguishes  between the changes
related to outstanding  balances and those due to changes in interest rates. For
each  category of interest  earning  assets and  interest  bearing  liabilities,
information is provided on changes  attributable to (a) changes in volume (i.e.,
changes in volume  multiplied  by the old rate) and (b) changes in rates  (i.e.,
changes in rates divided by the old volume.) For purposes of this table, changes
attributable to both rate and volume have been allocated  proportionately to the
change due to volume and rates.
<PAGE>

<TABLE>
<CAPTION>






                                                         2002  compared to  2001
                                                    Increase/(Decrease) Due to Changes

                                                      Total          Volume       Rates
                                                  -------------------------------------
                                                           ($ in thousands)
Interest Earning Assets:
<S>                                                <C>             <C>        <C>
Loans                                                 (2,163)         (205)      (1,958)
Investment securities:
U.S. Government                                           17            62          (45)
Mortgage Backed Securities                              (279)          109         (388)
State & municipal                                        914           948          (34)
Other                                                     57           108          (51)
                                                  --------------------------------------

Total investment securities                              709         1,022       (2,476)

Interest bearing bank balances                           (22)            5          (27)
Federal funds sold                                        15            28          (13)
Cash Value Life Insurance and other                        2             2            -

                                                  --------------------------------------
Total earning assets                                  (1,459)        1,057       (2,516)
                                                  --------------------------------------

Interest bearing deposits:
Savings                                                 (108)           (5)        (103)
Interest bearing checking                               (438)            -         (438)
Money rate savings                                        12           168         (156)
Certificates of deposit and other time deposits       (2,022)          177       (2,199)
                                                  --------------------------------------

Total interest bearing deposits                       (2,556)          340       (2,896)

Short term borrowed funds                               (316)         (147)        (169)
Long term debt                                           844           846           (2)

                                                  --------------------------------------
Total interest bearing liabilities                    (2,028)        1,039       (3,067)
                                                  --------------------------------------

Change in interest earning assets                     (1,459)        1,057       (2,516)
Change in interest bearing liabilities                (2,028)        1,039       (3,067)
                                                  --------------------------------------
Change in Net Interest Income                            569            18          551
                                                  ======================================


</TABLE>


<PAGE>

             Provision  for Loan  Losses.  The  provision  for loan  losses is a
charge to earnings to maintain the reserve for loan losses at a level consistent
with management's  assessment of the risk of loss in the loan portfolio in light
of current risk management strategies,  economic conditions and market trends. A
migration in the  non-performing  status of certain problem  commercial and real
estate  loans  from past due to  partial  charge-off  and  foreclosure  occurred
throughout the year.  Resolution of these credits included  partial  charge-offs
and foreclosures and higher levels than in the immediate past. The higher levels
of  charge-offs  and the  quarterly  estimates  for the level of reserves in the
allowance for loan losses resulted in higher provisions for 2002.

             The  Company  recorded  a  provision  for the twelve  months  ended
December 31,  2002,  of $1.0  million,  compared to $525  thousand in 2001.  The
increase  primarily  occurred in the fourth  quarter due to an  additional  $440
thousand  added to the reserve for loan losses,  following net loan  charge-offs
during the quarter of $398 thousand.  Excluding this adjustment, the 4th quarter
assessment would have been $180 thousand.

             Non-Interest  Income.  Non-interest  income  decreased $1.2 million
from $2.1 million in 2001 to $870 thousand in 2002  substantially due to charges
associated with the write-off of the Sumx Inc.  investment  explained above. The
Bank's  core  income  remains  solid  with  increases  in the  mortgage  banking
operation and service charges on deposit  accounts,  offset by a slight decrease
in trust income. Life insurance  commissions  decreased as well this year due to
eliminating the offer of credit life insurance.

             Non-Interest  Expense.  Non-interest  expense  increased  to  $10.3
million for the year ended  December 31, 2002,  compared to $8.9 million for the
same period in 2001.  The  increase  for the twelve  months  includes  increased
expenses for employee salaries and benefits and marketing and occupancy costs in
2002  related to  expansion  in the  Vicksburg,  Mississippi,  and Baton  Rouge,
Louisiana,   markets.   The  Company  also  recorded   additional   expenses  of
approximately $300 thousand related to other real estate including $150 thousand
for ORE reserves and $146 thousand for  processing  foreclosed  and  repossessed
assets.

             Liquidity.  Liquidity  is a  measure  of the  ability  to fund loan
commitments  and  meet  deposit  maturities  and  withdrawals  in a  timely  and
cost-effective way. These needs can be met by generating profits, attracting new
deposits,  converting assets (including short-term  investments,  mortgage loans
held  for sale and  securities  available  for  sale) to cash  through  sales or
securitizations,   and  increasing   borrowings.   To  minimize  funding  risks,
management  monitors  liquidity  monthly  through reviews of basic surplus which
includes  investment  securities  available for pledging or borrowing  offset by
short-term liabilities along with loan and deposit forecasts.

             Principal  sources  of  liquidity  for the  Company  are asset cash
flows, customer deposits and the ability to borrow against investment securities
and loans. The Company's cash and cash equivalents  decreased from $14.6 million
at December 31, 2001,  to $11.5  million at December 31, 2002.  Cash provided by
operating and financing  activities  during the year  increased by $3.6 and $7.4
million, respectively, while investing activities used $14.1 million.

             Management   believes   that  the  current   level  of   short-term
investments and securities  available for sale is more than adequate to meet the
Company's current liquidity needs.  Additional sources of liquidity available to
the Company include the ability to issue additional retail brokered certificates
of deposit  and the  ability to sell or  securitize  a portion of the  Company's
residential  first mortgage  portfolio.  The Company also has available  federal
funds  lines and its  membership  in the FHLB to further  augment  liquidity  by
providing a readily accessible source of funds at competitive rates.

<PAGE>







         Information Regarding our Common Stock

         The  Company's  common  stock is listed on the NASDAQ Small Cap Market,
and trades under the symbol  "BKBK." The table below sets forth the high and low
sales prices ranges for the common stock, as quoted by Yahoo Finance.


                                Dividends
                                Per Share         High              Low
Year 2002
         4th Quarter             $    .31        $14.89            $12.83
         3rd Quarter                             $18.99            $14.20
         2nd Quarter             $    .31        $18.16            $14.97
         1st Quarter                             $15.95            $14.50

Year 2001
         4th Quarter             $    .31        $15.25            $13.50
         3rd Quarter                             $14.85            $12.26
         2nd Quarter             $    .30        $13.70            $11.51
         1st Quarter                             $13.75            $11.50



         On December  31,  2002,  there were 536  shareholders  of record of the
Company's common stock.

         Pursuant to  Mississippi  law, the  Company's  Board of  Directors  may
authorize  the  Company  to pay cash  dividends  to its  shareholders.  The only
limitation  on such a dividend  is that no  distribution  may be made if,  after
giving effect to the  distribution  (a) the Company would not be able to pay its
debts as they come due in the usual  course of  business,  or (b) the  Company's
total assets would be less than the sum of its total liabilities plus the amount
that would be needed,  if the Company  were to be  dissolved  at the time of the
distribution,  to  satisfy  the  preferential  rights  upon  dissolution  of any
shareholders  whose  preferential  rights are  superior to those  receiving  the
distribution.

         The principal  source of the Company's cash revenues are dividends from
the Bank.  There are  certain  limitations  under  federal law 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 is also limited by prudence,  statutory and  regulatory
guidelines, and a variety of other factors.

         Further, in connection with the acquisition of Natchez First Federal in
1993, the Bank assumed a liquidation account of approximately $2.8 million which
has the effect of  prohibiting  the payment of dividends if the Bank's net worth
would thereby be reduced below the amount required for the liquidation  account.
Management  does not  anticipate  that this  restriction  will  have a  material
adverse effect on the Bank's ability to pay dividends to the Company.

         The Company has declared  semiannual cash dividends in each of the last
three fiscal years  totaling,  on an annual  basis,  $.60 per share for 2000 and
$.61 per share for 2001 and $.62 in 2002.  Historical  dividend  payout  ratios,
expressed as a percentage of net income,  for 2000,  2001 and 2002, were 43.00%,
39.61% and 105.67%, respectively.

         The declaration of future dividends is at the discretion of the Company
and generally will be dependent upon the earnings of the Bank, the assessment of
capital requirements, considerations of safety and soundness, applicable law and
regulation and other factors.  Subject to the limitations set forth above, it is
the present  policy of the Board of  Directors  of the  Company to continue  the
declaration  of cash  dividends  on the  Company's  common stock on a semiannual
basis, to the extent practicable.

<PAGE>

         Retained  earnings of the Bank  available for payment of cash dividends
under applicable dividend  regulations  exceeded $4.2 million as of December 31,
2002,  although  the Bank  intends to retain most of these funds for capital and
not pay them out as dividends.





                 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 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.


<PAGE>





Directors and Executive Officers


W. Page Ogden
Chairman
President & Chief Executive Officer
Britton & Koontz Capital Corporation
Britton & Koontz First National Bank


Robert R. Punches
Partner
Gwin, Lewis & Punches, LLP, Attorneys
Vice Chairman
Britton & Koontz Capital Corporation
Britton & Koontz First National Bank


Albert W. Metcalfe
President
Jordan Auto Company, Inc.
Secretary
Britton & Koontz Capital Corporation
Britton & Koontz First National Bank


Bazile R. Lanneau, Jr.
Vice-President, Assistant Secretary,
Treasurer & Chief Financial Officer
Britton & Koontz Capital Corporation and
Executive Vice-President
Britton & Koontz First National Bank
President & Chief Executive Officer
Sumx Inc.


W. W. Allen, Jr.
President
Allen Petroleum Services, Inc.


Craig A. Bradford, D.M.D.
Pediatric Dentist


A. J. Ferguson
Petroleum Geologist


<PAGE>


Directors and Executive Officers


Bethany L. Overton
President
Lambdin-Bisland Realty, Co.


R. Andrew Patty II
Member
Sieberth and Patty, LLC, Attorneys


Vinod K. Thukral, Ph.D.
Professor
Tulane University



Directors Emeriti:

W. J. Feltus III
President
Feltus Brothers, Ltd

Wilton R. Dale
Petroleum Geologist
Co-Owner, Dale Exploration Company

C.H. Kaiser, Jr.
Partner
Jordan, Kaiser and Sessions, Engineering

Donald Killelea, M.D.
Pediatrician - retired

Bazile R. Lanneau
Life Insurance




<PAGE>


Britton & Koontz First National Bank Locations:

Natchez, Mississippi

Main Office
500 Main Street, 39120

Tracetown Shopping Center
55 Seargent S. Prentiss Drive, 39120

Shields Lane
148 N. Shields Lane, 39120

Highway 61 N. at St. Catherine Creek
411 Highway 61 North, 39120


Vicksburg, Mississippi

2150 S. Frontage Road, 39180


Baton Rouge, Louisiana

Florida
7142 Florida Boulevard, 70806

Perkins
12716 Perkins Road, 70810

Bluebonnet
10626 Linkwood Court, Suite A, 70810


Madison, Mississippi

141 Executive Drive, Suite 5
(Loan Production Office)


Future Locations:

Carter Street
Vidalia, Louisiana

Highway 61 N at Sherman Avenue
Vicksburg, Mississippi













<PAGE>






                                   EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT



<PAGE>


                                   EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT


         The following is a list of  subsidiaries of the Company at December 31,
2002 and all are included in the Company's consolidated financial statements:


                                      Jurisdiction              Percentage of
                                           of                 Voting Securities
Subsidiaries                          Incorporation                 Owned
------------                         ---------------        --------------------

Britton & Koontz First National Bank   Federal Law                    100%

B&K Title Insurance Agency, Inc.       Mississippi                    100%

Sumx Inc.                              Mississippi                   36.6%




<PAGE>




                                   EXHIBIT 23

                         CONSENT OF INDEPENDENT AUDITORS






<PAGE>


                                   EXHIBIT 23




                         CONSENT OF INDEPENDENT AUDITORS


We consent to the incorporation by reference in this Annual Report (Form 10-KSB)
of Britton & Koontz Capital  Corporation  and  Subsidiaries  of our report dated
January 16, 2003,  included in the 2002 Annual Report to Shareholders of Britton
&  Koontz  Capital  Corporation  and  Subsidiaries.   We  also  consent  to  the
incorporation by reference in the Registration Statements on Form S-8 (File Nos.
333-51148  and  333-20631)   previously   filed  by  Britton  &  Koontz  Capital
Corporation  of our report dated  January 16, 2003,  included in the 2002 Annual
Report to Shareholders of Britton & Koontz Capital Corporation and Subsidiaries.




/s/ May & Company

Vicksburg, Mississippi
March 5, 2003

<PAGE>



                                  EXHIBIT 99.1

             Section 906 - Certification of Chief Executive Officer



<PAGE>

                                  EXHIBIT 99.1

 Certification of Chief Executive Officer Pursuant to 18 U.S.C.ss.1350 (Section
                     906 of the Sarbanes-Oxley Act of 2002)


         In connection  with the Annual Report on Form 10-KSB for the year ended
December 31, 2002 of Britton & Koontz Capital  Corporation (the  "Company"),  as
filed with the  Securities  Exchange  Commission on the date hereof (the "Annual
Report"),  I, W. Page Ogden,  Chief Executive  Officer of the Company,  certify,
pursuant  to 18 U.S.C.  ss.  1350,  as adopted  pursuant  to Section  906 of the
Sarbanes-Oxley Act of 2002, that:

         (1)      the  Annual  Report  fully  complies  with  the   requirements
                  of  Section  13(a) or 15(d) of the Securities  Exchange Act of
                  1934, as amended; and

         (2)      the   information   contained  in  the  Annual  Report  fairly
                  presents,  in all material respects,  the financial  condition
                  and results of operations of the Company.



Date: March 26, 2003                        /s/ W. Page Ogden
                                            --------------------------------
                                            W. Page Ogden,
                                            Chief Executive Officer





A signed  original of this  written  statement  required by Section 906 has been
provided to Britton & Koontz Capital Corporation and will be retained by Britton
& Koontz  Capital  Corporation  and  furnished  to the  Securities  and Exchange
Commission or its staff upon request.







<PAGE>


                                  EXHIBIT 99.2

             Section 906 - Certification of Chief Financial Officer


<PAGE>

                                  EXHIBIT 99.2

 Certification of Chief Financial Officer Pursuant to 18 U.S.C.ss.1350 (Section
                     906 of the Sarbanes-Oxley Act of 2002)


         In connection  with the Annual Report on Form 10-KSB for the year ended
December 31, 2002 of Britton & Koontz Capital  Corporation (the  "Company"),  as
filed with the  Securities  Exchange  Commission on the date hereof (the "Annual
Report"),  I, Bazile R. Lanneau,  Jr., Chief  Financial  Officer of the Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:

         (1)      the  Annual  Report  fully  complies  with   the  requirements
                  of  Section  13(a) or 15(d) of the Securities  Exchange Act of
                  1934, as amended; and

         (2)      the   information   contained  in  the  Annual  Report  fairly
                  presents,  in all material respects,  the financial  condition
                  and results of operations of the Company.



Date:  March 26, 2003                       /s/ Bazile R. Lanneau, Jr.
                                            --------------------------------
                                            Bazile R. Lanneau, Jr.,
                                            Chief Financial Officer




A signed  original of this  written  statement  required by Section 906 has been
provided to Britton & Koontz Capital Corporation and will be retained by Britton
& Koontz  Capital  Corporation  and  furnished  to the  Securities  and Exchange
Commission or its staff upon request.