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, 2004

                         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 2004 fiscal year were $22,452,098.

     The  aggregate   market  value  of  the  issuer's   voting  stock  held  by
non-affiliates computed by reference to the price of $17.70 per share, the price
at which the issuer's voting stock closed on March 24, 2005, is $29,562,523.

     The issuer had 2,116,316 shares of common stock outstanding as of March 25,
2005.

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of Britton & Koontz  Capital  Corporation's  Annual  Report to
Shareholders  for the fiscal year ended  December 31, 2004 are  incorporated  by
reference into Part II of this Annual Report on Form 10-KSB.

         Portions of the Definitive  Proxy Statement of Britton & Koontz Capital
Corporation with respect to its 2005 Annual Meeting of Shareholders,  filed with
the Securities and Exchange  Commission on March 25, 2005, are  incorporated  by
reference into Part III of this Annual Report on Form 10-KSB.

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



<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, RELATED STOCKHOLDER
                  MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
                  SECURITIES................................................**
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 ......................*
ITEM 8A           CONTROLS AND PROCEDURES...................................*
ITEM 8B           OTHER INFORMATION.........................................*

                                    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..................................................*
ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES....................**
-------

*        Included herein.

**       Incorporated  by reference from Britton & Koontz Capital  Corporation's
         2004 Annual Report to  Shareholders,  pursuant to  Instruction  E(2) of
         Form 10-KSB.

***      Incorporated  by reference from Britton & Koontz Capital  Corporation's
         Definitive  Proxy Statement for its 2005 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 Britton
& Koontz Capital  Corporation  (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  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  Bank,  National  Association,  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. On April 17, 2001, B&K Title Insurance Agency,  Inc. was
organized as a  Mississippi  corporation  ("B&K  Insurance");  in May 2001,  the
Company acquired all of the outstanding common stock of B&K Insurance, making it
the Company's second wholly-owned subsidiary.

         The  Company's  major source of income in 2004 was  dividends  from the
Bank in the amount of $1.7 million.  The Company expects that dividends from the
Bank will  continue to be the  Company's  major source of income in 2005.  As of
December 31, 2004,  the Company had total assets of  approximately  $377 million
and total consolidated shareholders' equity of approximately $31 million.

<PAGE>



         The Bank

         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.  A loan  production  office was opened in  Madison,  Mississippi,  on
February  1,  2003,  which was  converted  into a full  service  branch in 2004.
Management  decided to leave the Madison market in November in order to allocate
its  resources  to its  remaining  markets.  In  2004,  the Bank  completed  the
construction  of its new branch in  Vicksburg,  Mississippi,  and  closed  three
branches in Baton Rouge, Louisiana,  moving into a larger, more visible facility
on  Bluebonnet  Boulevard  in Baton  Rouge.  The Bank also sold its Shields Lane
branch in Natchez,  Mississippi, in 2004, while completing the renovation of its
existing Tracetown branch,  which houses its mortgage banking  operations.  As a
result of these actions, the Bank now conducts its full-service banking business
from its main  office  and two  branch  offices  in  Natchez,  Mississippi,  two
branches  in  Vicksburg,  Mississippi,  and one  branch  office in Baton  Rouge,
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,  2004,  the Bank had total  assets of  approximately  $377 million and total
deposits of  approximately  $228  million.  The Bank is not dependent on any one
depositor or other customer.

         The  products and  services  offered by the Bank  include  personal and
commercial checking accounts,  money market deposit accounts,  savings accounts,
safe deposit box facilities and automated  clearinghouse services. The Bank also
offers  access to a network of automated  teller  machines  and cash  management
services  including money  transfer,  direct deposit payroll and sweep accounts.
The Bank is a  full-service  residential  and  commercial  mortgage  lender  and
engages in other commercial and consumer lending  activities,  including,  among
other  things,  the  issuance  of VISA credit  cards and letters of credit.  The
Bank's trust  department  offers a range of trust  services,  acting as trustee,
executor,  administrator,  custodian,  guardian and agent.  The trust department
currently  has  approximately  $15  million  in assets  under  management  as of
December 31, 2004.

         In 1995,  the Bank became an Internet  service  provider  (ISP) for the
Natchez area and eventually  extended its service to the Vicksburg,  Mississippi
market.  In 1996,  the Bank began offering  Internet-based  online banking using
SumxNet, a software product developed by Sumx Inc. ("Sumx"),  See "Investment in
Sumx." In the second quarter of 2004, the Company  completed the sale of its ISP
to  Canufly.net,  a company  providing  Internet  services  in  Mississippi  and
Louisiana.

         The Insurance Agency

         B&K  Insurance  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.  B&K Insurance is not a separately-reportable  segment
for financial reporting purposes.

<PAGE>


         Investment in Sumx

         In  December  1998,  the  Company   invested  $1  million  in  Sumx,  a
Mississippi   corporation  established  to  develop  and  market  internet-based
electronic banking solutions for the financial industry.  On September 15, 2001,
the Company  acquired  240,000  shares of Series B  Preferred  Stock of Sumx for
$250,000.   In  exchange  for  such   investments,   the  Company   received  an
approximately  37%  preferred  interest in the voting stock of Sumx.  During the
second quarter of 2002, the Company wrote off its $1,250,000 investment in Sumx,
as well as  approximately  $711,000 of advances to Sumx, due to the  uncertainty
regarding Sumx's future prospects and valuation.

         On December 31, 2004, the Company sold its entire preferred interest in
Sumx back to Sumx for $20,000. As further consideration,  the Company received a
non-exclusive  license to use Sumx's Internet banking software at no charge. The
license has an initial term of five years, with automatic one year renewal terms
thereafter  unless a party gives the other party notice of  non-renewal at least
six months  prior to the  expiration  of the  then-current  term.  Finally,  the
Company  agreed  to  cancel  and  forgive  all  indebtedness,   obligations  and
encumbrances of any kind owed by Sumx to the Company.

Competition

         There is significant competition among banks and bank holding companies
in the Bank's market area and throughout  Mississippi  and  Louisiana.  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.

         In addition to the deregulation of the financial services industry, the
increasing  liberalization of the laws and regulations  affecting the conduct of
interstate  banking  activities makes it possible 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,"   as   defined   in  the   Gramm-Leach-Bliley   Financial   Services
Modernization  Act of 1999,  which allows such competitors to offer products and
services not offered by the Bank. In addition,  these  competitors are likely to
be better capitalized than the Bank and the Company.


<PAGE>

Employees

         As of December 31, 2004, the Company had one full-time employee, who is
also an employee of the Bank, and the Bank had  approximately  124 full-time and
13  part-time  employees.  The  employees  are not  represented  by a collective
bargaining unit. The Company  believes that its relationship  with its employees
is good.

Supervision and Regulation

         General

         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").  The examinations are undertaken to ensure the protection of the
Bank  Insurance  Fund  ("BIF").  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, 2004,  the Bank  maintained a capital  level which  qualified it as
being "well capitalized" under such regulations.

         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."

<PAGE>

         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.  Changes in any of these  policies can
affect how the Bank operates and generates revenues.

         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's banking laws 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.

         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.

<PAGE>

         Financial Modernization

         The  Gramm-Leach-Bliley  Financial  Services  Modernization Act of 1999
(the  "GLB  Act")  was  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  affecting  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 new  entity  called a  "financial  holding  company"  or
through 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.  To take advantage of the new provisions of the GLB Act, a bank holding
company must elect to become a financial  holding  company.  The Company has not
yet elected to become a financial holding company.

         Anti-Money Laundering

         On October 26, 2001,  the President  signed the USA PATRIOT Act of 2001
into law. This act contains the  International  Money  Laundering  Abatement and
Financial  Anti-Terrorism Act of 2001 (the "IMLAFA").  The IMLAFA  substantially
broadens existing  anti-money  laundering  legislation and the  extraterritorial
jurisdiction  of the United  States,  imposes new  compliance  and due diligence
obligations,  creates  new crimes  and  penalties,  compels  the  production  of
documents located both inside and outside the United States,  including those of
foreign  institutions  that  have a  correspondent  relationship  in the  United
States,  and  clarifies the safe harbor from civil  liability to customers.  The
U.S. Treasury Department has issued a number of regulations implementing the USA
PATRIOT Act that apply  certain of its  requirements  to financial  institutions
such  as  the  Bank.  The  regulations   impose  new  obligations  on  financial
institutions  to  maintain  appropriate  policies,  procedures  and  controls to
detect,  prevent  and report  money  laundering  and  terrorist  financing.  The
Treasury  Department  is  expected to issue a number of  additional  regulations
which will  further  clarify  the USA  PATRIOT  Act's  requirements.  The IMLAFA
requires all  "financial  institutions,"  as defined,  to  establish  anti-money
laundering  compliance and due diligence programs no later than April 2002. Such
programs must include, among other things, adequate policies, the designation of
a compliance  officer,  employee  training  programs,  and an independent  audit
function to review and test the program.

         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>

         Restrictions 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.  Under  federal law, the directors of a
national  bank,  after  making  proper  deduction  for all  expenses  and  other
deductions  required  by the  Comptroller,  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 have each  indicated  that banking  organizations  should  generally pay
dividends only out of current operating earnings.

         Further, in connection with the Company's  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 $2.8 million.

         Corporate Governance

         The  Sarbanes-Oxley  Act of 2002 (the "Sarbanes Act") requires publicly
traded companies to adhere to several  directives  designed to prevent corporate
misconduct.  Additional duties have been placed on officers, directors, auditors
and  attorneys of public  companies.  The  Sarbanes Act requires  certifications
regarding  financial  statement  accuracy and internal  control  adequacy by the
chief executive  officer and chief financial  officer of the Company in periodic
and annual  reports  filed with the  Securities  and  Exchange  Commission.  The
Sarbanes  Act  also  accelerates  Section  16  insider  reporting   obligations,
restricts  certain  executive  officer and  director  transactions,  imposes new
obligations on corporate  audit  committees and provides for enhanced  review by
the Securities and Exchange Commission.

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
occupied by the Bank.  The Bank owns the  property on which four of its branches
are located and leases the property for one of its branches.  In the judgment of
management,  the facilities of the Company and the Bank are generally  suitable,
adequately  insured and provide for the continuing  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:

<PAGE>
<TABLE>
<CAPTION>


                                                                                           Approximate Office
       Location                         Own/Lease                  Use                    Space (square feet)
    ---------------------               ----------            --------------             ---------------------
<S>                                     <C>                   <C>                        <C>
    Natchez
    500 Main Street
    Natchez, Mississippi                   Owned                Main Office                      33,723

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

    55A Sgt. Prentiss Drive
    Natchez, Mississippi                   Owned                Branch Office                    11,774

    Vicksburg
    2059 Highway 61 N.
    Vicksburg, Mississippi                 Owned                Branch Office                     3,153

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

    Baton Rouge
    8810 Bluebonnet.
    Suites A & B
    Baton Rouge, Louisiana                 Leased               Branch Office                     5,112

</TABLE>

         The  Company's  only leased  property for  branching is located at 8810
Bluebonnet Boulevard, in Baton Rouge,  Louisiana.  The property was leased for a
ten year period beginning October 1, 2003.

Item 3.  Legal Proceedings.

         The Company and the Bank are  currently  not  involved in any  material
pending legal proceedings.

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 2004.

                                     PART II

Item 5. Market for Common Equity, Related Stockholder Matters and Small Business
Issuer Purchases of Equity Securities.

         The  information  required in response to this item is  incorporated by
reference to the material under the heading "Managements Discussion and Analysis
of Financial  Condition and Results of  Operations -  Information  Regarding our
Common Stock" in the Company's  2004 Annual  Report to its  Shareholders  (the "
Annual  Report").  See the  information  under  Item 11  below  for  disclosures
relating to the Company's equity compensation plan.

<PAGE>

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's  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  consolidated  financial  statements of the Company included in
the Annual Report.

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

         None.

Item 8A.  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 Chief Executive Officer of the Company ("CEO") and the
Chief Financial Officer of the Bank ("CFO"),  who performs  functions similar to
those of a chief financial officer for the Company,  of the effectiveness of the
design and operation of the Company's  disclosure  controls and  procedures  (as
defined in Rule 13a-15(e) and Rule 15d-15(e)  under the Securities  Exchange Act
of 1934, as amended) as of December 31, 2004. Based on this evaluation,  the CEO
and CFO concluded  that the Company's  disclosure  controls and  procedures  are
effective  in  timely  alerting  them to  material  information  required  to be
included in the Company's SEC reports.

Item 8B.  Other Information.

         None.

                                    PART III

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

         The information  required in response to this item is incorporated into
this  report  by  reference  to  the  material  under  the  headings  "Board  of
Directors",  "Election of  Directors",  "Committees  of the Board of Directors",
"Executive  Officers and Executive  Compensation"  and "Section 16(a) Beneficial
Ownership Reporting  Compliance" in the Company's Definitive Proxy Statement for
its 2005 Annual Meeting of Shareholders (the "Proxy Statement").

         Code of Ethics

         The Board of  Directors  adopted a code of business  conduct and ethics
that applies to senior executive and financial officers of the Company, the Bank
and its  subsidiaries.  Access to the  Company's  Code of Ethics is available to
shareholders of the Company and customers of the Bank through the Bank's website
at  www4.bkbank.com  under  investor  relations.  Amendments  to or waivers from
provisions  of the  Company's  Code of Ethics will be disclosed on the Company's
website

<PAGE>

Item 10.  Executive Compensation.

         The information  required in response to this item is incorporated into
this report by reference to the material under the heading  "Executive  Officers
and Executive Compensation" in the Proxy Statement.

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

         In partial  response to this item, the Company  incorporates  into this
report the material under the heading "Stock Ownership" in the Proxy Statement.

         The following table summarizes the company's equity  compensation  plan
information as of December 31, 2004. The  underlying  plan,  which is more fully
described in Note J to the consolidated financial statements included in Item 7,
has been previously approved by a vote of the shareholders.

<TABLE>
<CAPTION>


                      Equity Compensation Plan Information


                                                                                                    (c)
                                                                                           Number of securities
                                                (a)                                        remaining  available
                                         Number of securities            (b)                for future issuance
                                          to be issued upon        Weighted-average            under equity
                                             exercise of           exercise price of        compensation plans
                                        outstanding options,     outstanding options,      (excluding securities
Plan category                            warrants and rights      warrants and rights         in column (a))
-------------                            -------------------      -------------------      ---------------------
<S>                                     <C>                      <C>                       <C>
Equity compensation plans
  approved by  security holders(1)             35,000                    16.84                    125,000

Equity compensation plans not
  approved by security holders                    -                        -                          -
                                         -------------------      -------------------      ---------------------
     Total                                     35,000                    16.84                    125,000

</TABLE>


(1)      The   shareholder-approved   plan  is  the  Britton  &  Koontz  Capital
         Corporation Long Term Incentive Plan. An aggregate of 160,000 shares of
         common stock were  authorized  for issuance under the plan, and options
         to acquire 35,000 shares were outstanding as of December 31, 2004.

Item 12.  Certain Relationships and Related Transactions.

         The information  required in response to this item is incorporated into
this report by reference to the material  under the heading "Board of Directors"
in the Proxy Statement.

<PAGE>


Item 13.  Exhibits.

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
          Current  Report on Form 8-K filed with the  Commission on December 21,
          2004.

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,  incorporated by reference to
          Exhibit 10.01 to Registrant's  Annual Report on Form 10-KSB filed with
          the Commission on March 27, 2003.

10.03*+   Salary  Continuation Plan Agreements dated September 26, 1994, between
          Britton & Koontz Capital  Corporation and W. Page Ogden,  incorporated
          by reference to Exhibit 10 to  Registrant's  Quarterly  Report on Form
          10-QSB filed with the  Commission  on November  14, 1994,  (Commission
          File Number 33-56204).

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+    Separation  Agreement  dated  June 14, 2004, by  and  among  Bazile R.
          Lanneau, Jr., the Company and the Bank.

13        Annual Report to Shareholders

21        Subsidiaries of the Registrant

23        Consent of Independent Registered Public Accountants

31.1      Certification  of Chief  Executive  Officer as  required  pursuant  to
          Section 302 of the Sarbanes-Oxley Act of 2002.

<PAGE>

31.2      Certification  of Chief  Financial  Officer as  required  pursuant  to
          Section 302 of the Sarbanes-Oxley Act of 2002.

32.1      Certification  of Chief  Executive  Officer as  required  pursuant  to
          Section 906 of the Sarbanes-Oxley Act of 2002

32.2      Certification  of Chief  Financial  Officer as  required  pursuant  to
          Section 906 of the Sarbanes-Oxley Act of 2002


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

+         Management contract or compensatory plan or arrangement required to be
          filed as an exhibit to this Form  10-KSB  pursuant  to Item 13 of Form
          10-KSB.

Item 14.   Principal Accountant Fees and Services

         The information  required in response to this item is incorporated into
this  report  by  reference  to the  material  under  the  heading  "Independent
Registered Public Accountants" in the Proxy Statement.


<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)


Date: March 15, 2005         By: /s/ W. Page Ogden
                                ------------------------------------------------
                                W. Page Ogden
                                Chairman and Chief Executive Officer


         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.

<TABLE>
<CAPTION>


Signature                                   Title                               Date
---------                                   -----                               ----
<S>                                         <C>                                 <C>

/s/ W. Page Ogden                                                               March 15, 2005
------------------------------------        Chairman,
W. Page Ogden                               Chief Executive Officer
                                            and Director
                                            (Principal Executive Officer)


/s/ W. W. Allen, Jr.
------------------------------------        Director                            March 15, 2005
W. W. Allen, Jr.


/s/ Craig A. Bradford, DMD
--------------------------------            Director                            March 15, 2005
Craig A. Bradford, DMD


/s/ A. J. Ferguson
------------------------------------        Director                            March 15, 2005
A. J. Ferguson


/s/ Albert W. Metcalfe
------------------------------------        Secretary and                       March 15, 2005
Albert W. Metcalfe                          Director


/s/ Bethany L. Overton
------------------------------------        Director                            March 15, 2005
Bethany L. Overton


/s/ R. Andrew Patty II
------------------------------------        Vice President and                  March 15, 2005
R. Andrew Patty II                          Director

</TABLE>

<PAGE>
<TABLE>
<CAPTION>



Signature                                   Title                               Date
---------                                   -----                               ----
<S>                                         <C>                                 <C>

/s/ Robert R. Punches
------------------------------------        Vice-Chairman and                   March 15, 2005
Robert R. Punches                           Director


/s/ Vinod K. Thukral, Ph.D.
---------------------------------           Director                            March 15, 2005
Vinod K. Thukral, Ph.D.

</TABLE>


<PAGE>




                                  EXHIBIT INDEX

Exhibit           Description of Exhibit
---------         ----------------------

10.06             Separation Agreement dated June 14, 2004, by  and among Bazile
                  R. Lanneau, Jr., the Company and the Bank.

13                Annual Report to Shareholders

21                Subsidiaries of the Registrant

23                Consent of Independent Registered Public Accountants

31.1              Certification of Chief Executive Officer as required  pursuant
                  to  Section  302  of  the Sarbanes-Oxley Act of 2002.

31.2              Certification of Chief Financial Officer as required  pursuant
                  to  Section  302  of  the Sarbanes-Oxley Act of 2002.

32.1              Certification of Chief Executive  Officer as required pursuant
                  to  Section  906  of  the Sarbanes-Oxley Act of 2002

32.2              Certification of Chief Financial  Officer as required pursuant
                  to Section 906 of the Sarbanes-Oxley Act of 2002

<PAGE>





                                  EXHIBIT 10.06

                              SEPARATION AGREEMENT


<PAGE>



                              SEPARATION AGREEMENT

     This Separation  Agreement (the "Agreement") is made this 14th day of June,
2004,  by and among  Bazile R.  Lanneau,  Jr.  ("Lanneau")  and Britton & Koontz
Capital Corporation (the "Corporation") and Britton & Koontz First National Bank
(the "Bank)  (hereinafter,  and solely for the purposes of this  Agreement,  the
Corporation and the Bank shall be collectively referred to as "Employer").

     1  Recitals.  This  Agreement  is made in  consideration  of the  following
recitals:  (a) that  Lanneau  has been  employed  by  Employer  pursuant  to the
Employment  Agreement by and among the parties  hereto  dated  December 31, 2002
(the  "Employment  Agreement"),  (b) that the  parties  hereto  wish to mutually
terminate Lanneau's  employment  relationship with Employer and to set forth the
rights and  obligations  of the parties in  connection  therewith,  and (c) that
Lanneau and Employer  wish to settle and resolve all matters  arising out of the
Employment Agreement.

     2 Termination of Employment.  Lanneau's  employment with the Employer shall
be  deemed  terminated  as of the  close  of  business  on  June  8,  2004  (the
"Termination Date").

     3  Compensation  Continuation.Commencing  as of the  Termination  Date  and
ending as of December 31, 2005 (the  "Coverage  Period"),  Employer shall pay to
Lanneau,  on a monthly  basis in accordance  with  Employer's  standard  payroll
practices and policies, a prorated amount that equals annual compensation in the
amount of $117,000.

     4 Group Medical Plan  Coverage.  Employer  shall provide for the benefit of
Lanneau  coverage  under any group  medical plan or policy,  including any major
medical  and/or  dental plan or policy,  that may be provided for the benefit of
its senior executives with duties comparable to those performed by Lanneau, from
time to time.  Any such  coverage  shall be subject to the terms and  conditions
generally  applicable to active senior  executives and in connection  therewith,
Lanneau agrees that:

         a.       Such  coverage  shall cease as of the last day of the Coverage
                  Period.

         b.       Nothing contained herein shall be deemed to restrict the right
                  of Employer to amend,  modify or terminate  any group  medical
                  plan or policy,  in whole or in part,  at any time and without
                  notice, except as may be limited by governing law.

         c.       The Coverage Period provided hereunder shall be in addition to
                  and shall not  offset  any  period  of  continuation  coverage
                  otherwise  due Lanneau  under  Section  4980B of the  Internal
                  Revenue  Code of  1986,  as  amended  (the  "Code")  (commonly
                  referred to as "COBRA").

         d.       During the Coverage  Period,  Employer  shall pay or remit for
                  the benefit of Lanneau the amount of any premium  subsidy that
                  it pays or remits for the  benefit  of its  senior  executives
                  with  duties   comparable  to  those   performed  by  Lanneau.
                  Otherwise, Lanneau shall be solely responsible for the payment
                  of any premium due with  respect to coverage  provided  during
                  the Coverage Period.

<PAGE>

         e.       During the Coverage  Period,  Employer shall have the right to
                  deduct from any payment due Lanneau hereunder any premium that
                  is due and  payable  with  respect to the  continued  coverage
                  consistent  with  Employer's  practice  with respect to senior
                  executives  with  duties  comparable  to  those  performed  by
                  Lanneau.

         f.       Lanneau agrees to cooperate with all reasonable  requests from
                  Employer  and/or  its  insurers  or  potential  insurers  as a
                  condition of continued coverage hereunder. Lanneau understands
                  that his  continued  coverage may be terminated at any time if
                  he fails to timely  complete,  provide or furnish  any form or
                  document reasonably requested by Employer or any such insurer,
                  consistent  with  Employer's  practice  with respect to senior
                  executives  with  duties  comparable  to  those  performed  by
                  Lanneau.

         g.       The  obligation  of  Employer  hereunder  shall be solely with
                  respect to Lanneau  and his  dependants  enrolled in the group
                  medical plan as of the date hereof.

     5 Insurance.  Employer  shall provide for the benefit of Lanneau during the
Coverage  Period term life insurance  coverage in form and amount  substantially
identical  to that  provided to Lanneau by Employer  as of the  Effective  Date;
nothing  contained herein shall require the provision of coverage for the amount
of any additional insurance voluntarily purchased by Lanneau pursuant to a plan,
policy or program maintained by Employer.

     In lieu of any obligation to provide disability  benefits to Lanneau during
the Coverage  Period,  the amount  payable to Lanneau  under  paragraph 3 hereof
shall be  increased  by the amount of $48.33,  which  amount  shall be paid each
month during such period.

     6.  Automobile.  Employer  shall provide access to that certain 2003 Toyota
Avalon  automobile for usage by Lanneau during the Coverage Period and shall pay
or provide in connection therewith reasonable amounts for the insurance,  repair
and maintenance  thereof during such period consistent with Employer's  practice
with respect to senior  executives with duties  comparable to those performed by
Lanneau.

     7. Dues.  Employer  shall pay during the Coverage  Period the fixed monthly
dues of Beau Pre  Country  Club for the  benefit  of  Lanneau,  but shall not be
liable  for any  additional  itemized  charges  incurred  by  Lanneau  in excess
thereof.  Lanneau  agrees that he shall pay such amounts  and/or that any amount
due him hereunder may be reduced by such amounts directly paid by Employer.

     During the Coverage Period, Employer shall pay additional dues with respect
to such civic or professional  organizations as Lanneau may be a member of as of
the Effective Date.

<PAGE>

     8.  Facility  of  Coverage.  To  facilitate  the  extension  of coverage in
accordance with paragraphs 3 and 4 hereof, Employer shall be permitted to:


         a.       Provide such coverage by the  continuation of coverage under a
                  group plan  maintained by Employer or by the  procurement  and
                  maintenance  of one or more  individual  polices of  insurance
                  with  commercially  reasonable  terms and conditions  that are
                  similar  to the  terms  and  conditions  of any  group  policy
                  offered,  from time to time, to senior  executives of Employer
                  with duties comparable to those performed by Lanneau; and

         b.       With respect to the group medical plan,  shall be permitted to
                  order the period of coverage  available  under COBRA and/or an
                  individual  policy or policies of insurance in its  reasonable
                  discretion,  subject to the  limitations  and  requirements of
                  comparability  set  forth  in this  paragraph  8 and  provided
                  further that  Lanneau  shall be afforded  the  opportunity  to
                  elect  continued  coverage,  at  his  sole  expense,  for  the
                  18-month  period  commencing as of December 31, 2005,  whether
                  such coverage is to be provided through an individual or group
                  policy.

     9.  Indemnification.  Employer will indemnify Lanneau to the fullest extent
permitted under the certificate of incorporation  and bylaws of Employer for any
cause of action related to or arising from Lanneau's  employment  with Employer,
except as may be limited by the terms of such governing  documents or applicable
law.

     10. Other Benefit Plans. Nothing contained herein shall be deemed to affect
any benefit payable to Lanneau under any qualified retirement plan maintained by
Employer  in which he  participates  and has an accrued  vested  benefit,  which
amounts  shall be  payable  in  accordance  with and  subject  to the  terms and
conditions thereof.

     Lanneau  acknowledges  that  he is a  participant  in that  certain  Salary
Continuation  Agreement  dated as of  September  26,  1994,  and that  under the
express  terms  thereof,  he is not  and  shall  not be  vested  in any  benefit
thereunder  either at the Termination  Date or at the conclusion of the Coverage
Period.

     11.  Other  Amounts.  In lieu of any  obligation  to provide  cell phone or
computer line access to Lanneau during the Coverage  Period,  the monthly amount
payable to Lanneau under  paragraph 3 hereof shall be increased by the amount of
$135, which amount shall be paid each month during such period.

     12.  Taxes.  Lanneau  acknowledges  and  agrees  that  the  payment  of the
foregoing amounts and the transfers of property  described herein may be subject
to  applicable  federal,  state and local income and  employment  taxes and that
Employer  shall be entitled to  withhold,  as a condition of any such payment or
transfer, any taxes it determines are required by law to be withheld.

     13. Satisfaction of Obligations.  By execution below,  Lanneau acknowledges
that  the  foregoing  benefits  and  amounts  satisfy,  in their  entirety,  the
obligations  of Employer to continue his  compensation  and other benefits under
the  terms  of  Section  VI  of  the  Employment   Agreement.   Lanneau  further
acknowledges  that he has been afforded the opportunity to provide to Employer a
waiver and  release in  consideration  of a single sum  payment in the amount of
$58,500,  which  satisfies the  obligations  of Employer under Section VI of the
Employment Agreement.

<PAGE>

     14. General Provisions

         a.       The  terms  of this  Agreement  and the  parties'  obligations
                  hereunder   shall   survive  the   termination   of  Lanneau's
                  employment.

         b.       This  Agreement  shall be  construed  in  accordance  with the
                  internal laws of the State of  Mississippi,  without regard to
                  its conflicts of law provisions.

         c.       Any  amendment to this  Agreement  shall be made,  in writing,
                  signed by the parties hereto.

         d.       Except for that certain Business Protection Agreement, of even
                  date herewith between  Lanneau,  the Bank and the Corporation,
                  and the  Release and Waiver  first  dated as of May 10,  2004,
                  Lanneau  acknowledges  that  there  are  no  other  agreements
                  between the parties,  whether oral or written,  concerning his
                  employment or the termination  thereof and that such documents
                  represent the entire  agreement among the parties with respect
                  to the subject matter contained herein.

         e.       The  parties  acknowledge  that any  dispute arising hereunder
                  shall  be  resolved  by  arbitration.   Any  such  arbitration
                  proceeding  shall be conducted in accordance with the rules of
                  the American Arbitration Association ("AAA"). Any such dispute
                  or claim will be presented to a single arbitrator  selected by
                  mutual  agreement  by the  parties  hereto (or, if the parties
                  fail to  reach a  mutual  agreement,  the  arbitrator  will be
                  selected  in  accordance  with  the  rules  of the  AAA).  All
                  determinations  of the  arbitrator  will be final and  binding
                  upon the  parties.  Each party to the  arbitration  proceeding
                  will bear its own costs in  connection  therewith,  except the
                  costs and expenses of the  arbitrator  will be divided  evenly
                  between the parties.  The venue of any arbitration  proceeding
                  and for any judicial  proceeding  related to this  arbitration
                  provision  (including  a judicial  proceeding  to enforce this
                  provisions) will be in Natchez, Mississippi.

     This Separation  Agreement was executed in multiple  counterparts,  each of
which shall be deemed an original, as of the dates set forth below.





/s/ W. Page Ogden                         /s/ Bazile R. Lanneau, Jr.
-------------------------------------     --------------------------------------
W. Page Ogden                             Bazile R. Lanneau,  Jr.
Britton & Koontz Capital Corporation      Date: June 14, 2004
Date: June 16, 2004


/s/ W. Page Ogden
-------------------------------------
w. Page Ogden
Britton & Koontz First National Bank
Date: June 16, 2004


<PAGE>



                                   EXHIBIT 13

                          ANNUAL REPORT TO SHAREHOLDERS



<PAGE>

BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
Message to Shareholders



To Our Shareholders

Your company's earnings  continued to improve in 2004.  Although the increase in
earnings  per share  showed a modest  increase of 3.8% for the year,  the fourth
quarter  ended on a promising  note  increasing  18% over the fourth  quarter of
2003. The price of a share of BKBK increased over 5% during the year;  and, with
a dividend  payout of $.64 per share,  the dividend  yield averaged in excess of
3.5%.

The  improvement  throughout the year -- especially in the fourth quarter -- was
primarily  attributable  to our  efforts  to reduce  overhead.  We closed  three
nonstrategic branches in Natchez and Baton Rouge, while significantly  upgrading
two  facilities  in  those  markets.  In  order to  focus  our  energies  on our
established presence in Vicksburg, Natchez, and Baton Rouge, we also pulled back
from the Madison market before making a significant  investment in personnel and
facilities.

We enter 2005 on a positive track. Having paid close attention to costs, we have
increased our sales efforts in our existing  markets,  as evidenced by continued
loan growth during 2004.  Competition for quality loans remains  intense,  while
demand,  particularly for commercial loans, continues to increase.  B&K's strong
capital and liquidity, as well as our motivated bankers,  position us to benefit
materially from improvement in loan demand.

Throughout  the  year  we have  focused  on our  theme  "Answers.  Since  1836."
reflecting  our long  standing  commitment  to  relationship  banking.  While we
continue to upgrade  facilities,  equipment and products,  the goal of providing
our customers  with  accessible,  professional  bankers who understand the local
communities in which they work remains unchanged. Banking always has been -- and
will continue to be --  fundamentally  a  relationship  business  built on trust
between  the banker  and the  customer.  Attention  to the  fundamentals  of our
business enhances our opportunities for growth.

In closing,  I would like to  recognize  Albert W.  Metcalfe for his 37 years of
service on the Board of  Directors.  Albert,  who will retire upon  reaching the
mandatory  retirement age set by the board,  has served actively as Secretary of
the company and as the Chairman of the Audit Committee.  On behalf of the entire
board, I thank Albert for his devotion and service to  shareholders,  customers,
and employees of Britton & Koontz Bank.


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


<PAGE>

<TABLE>
<CAPTION>

BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES


Financial Highlights


($ IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR END BALANCE                                       2004            2003              2002              2001             2000

<S>                                                 <C>             <C>               <C>               <C>              <C>
Total Assets                                        $ 377,196       $ 373,032         $ 308,879         $ 298,856        $ 270,119
Gross Loans (net of unearned income)                  219,311         206,591           180,398           179,711          186,861
Loans held for sale                                     1,688           3,102             4,393             5,416                -
Allowance for Loan Losses                               2,237           2,070             2,129             2,108            1,884
Total Deposits                                        226,288         232,934           233,012           217,680          211,323
Stockholders' Equity                                   31,152          30,197            29,329            28,291           25,524

FOR THE YEAR

Net Interest Income                                  $ 13,309        $ 13,236          $ 12,649          $ 12,080         $ 11,086
Net Income                                              2,844           2,739             1,240             3,248            2,691

PER SHARE

Earnings Per Share-Basic                               $ 1.35          $ 1.30            $ 0.59            $ 1.54           $ 1.29
Earnings Per Share-Diluted                               1.34            1.29              0.59              1.54             1.28
Cash Dividends                                           0.64            0.64              0.62              0.61             0.60
Book Value                                              14.72           14.29             13.88             13.41            12.15
Year End Stock Price                                    18.25           17.27             14.60             15.00            12.00

OTHER KEY INFORMATION

Return on Average Assets (%)                             0.76            0.80              0.41              1.19             0.98
Return on Average Equity (%)                             9.22            9.08              4.23             12.76            10.70
Dividend Payout (%)                                     47.58           49.38            105.67             39.61            43.00
Efficiency Ratio (%)                                    70.51           69.80             70.79             60.69            69.07
Net Interest Income/Average Earning Assets (%)           3.76            4.13              4.51              4.73             4.32
Allowance for Loan Losses/Loans (%)                      1.02            1.00              1.18              1.17             1.01
Non Performing Loans/Loans (%)                           0.41            0.74              1.29              1.56             0.74
Loans/Deposits (%)                                      96.92           88.69             77.42             82.56            88.42
Total Stockholders' Equity/Assets (%)                    8.26            8.09              9.50              9.47             9.45
Total  Risk-Based Ratio (%)                             15.43           15.39             14.71             14.81            14.81
Tier 1 Risk-Based Ratio (%)                             14.49           14.48             13.61             13.71            13.74
Tier 1 Leverage Ratio (%)                                9.23            9.23              8.71              9.52             8.76

Weighted Average Shares Outstanding:
Basic                                               2,114,649       2,113,087         2,109,809         2,108,973        2,080,046
Diluted                                             2,118,181       2,116,163         2,112,405         2,111,383        2,101,714


</TABLE>
<PAGE>



             Report of Independent Registered Public Accounting Firm


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

We have audited the accompanying Consolidated Balance Sheets of Britton & Koontz
Capital  Corporation and  Subsidiaries as of December 31, 2004 and 2003, and the
related Consolidated  Statements of Income, Changes in Stockholders' Equity, and
Cash  Flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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 financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Britton & Koontz
Capital  Corporation and  Subsidiaries as of December 31, 2004 and 2003, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with U. S. generally accepted accounting principles.



/s/ Hannis T. Bougeois, LLP
-----------------------
Hannis T. Bourgeois, LLP
Baton Rouge, Louisiana
January 26, 2005



<PAGE>

<TABLE>
<CAPTION>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003





                                     ASSETS

                                                                                       2004                 2003
                                                                                 ----------------    -----------------
<S>                                                                             <C>                  <C>
ASSETS:
    Cash and Due from Banks:
       Non-interest bearing                                                      $      5,739,604    $       7,390,638
       Interest bearing                                                                   837,221              969,117
                                                                                  ---------------     ----------------

              Total Cash and Due from Banks                                             6,576,825            8,359,755

    Federal funds sold                                                                    109,031               41,361
    Investment Securities:
       Held-to-maturity (market value of $41,337,742
          and $44,002,578, respectively)                                               39,803,853           42,289,409
       Available-for-sale (amortized cost of $91,068,652
          and $92,186,797, respectively)                                               91,947,189           93,663,436
       Other equity securities                                                          5,396,600            5,181,800
    Loans, less unearned income of $1,996 in 2004 and
       $3,931 in 2003, and allowance for loan losses of
       $2,236,778 in 2004 and $2,070,162 in 2003                                      217,073,919          204,521,159
    Loans held-for-sale                                                                 1,688,338            3,102,006
    Bank premises and equipment, net                                                    8,265,756            8,596,254
    Other real estate, net                                                              1,320,337            1,741,127
    Accrued interest receivable                                                         2,127,079            2,095,662
    Cash surrender value of life insurance                                                943,481              905,090
    Core deposits, net of accumulated amortization
       of $625,704 in 2004 and $518,088 in 2003                                           988,506            1,096,122
    Other assets                                                                          954,720            1,438,948
                                                                                   --------------       --------------

TOTAL ASSETS                                                                     $    377,195,634    $     373,032,129
                                                                                  ===============    =================




The accompanying notes are an integral part of these financial statements.


</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                       2004                 2003
                                                                                 ----------------    -----------------

<S>                                                                             <C>                  <C>
LIABILITIES:
    Deposits:
       Non-interest bearing                                                      $     39,868,482    $      37,523,263
       Interest bearing                                                               186,419,447          195,410,519
                                                                                  ---------------     ----------------
              Total Deposits                                                          226,287,929          232,933,782

    Federal funds purchased                                                             6,435,000            4,550,000
    Securities sold under repurchase agreements                                         8,103,381            9,935,300
    Federal Home Loan Bank advances                                                    96,922,871           87,575,761
    Junior subordinated debentures                                                      5,000,000            5,000,000
    Accrued interest payable                                                              984,859              830,498
    Advances from borrowers for taxes and insurance                                       399,443              367,375
    Accrued taxes and other liabilities                                                 1,910,383            1,642,814
                                                                                  ---------------     ----------------
              Total Liabilities                                                       346,043,866          342,835,530


STOCKHOLDERS' EQUITY:
    Common  stock,  $2.50 par value per  share;  12,000,000  shares  authorized;
       2,130,816 and 2,127,587  shares  issued;  2,116,316 and 2,113,087  shares
       outstanding
       at December 31, 2004 and 2003, respectively                                      5,327,040            5,318,968
    Additional paid-in capital                                                          7,254,113            7,225,408
    Retained earnings                                                                  18,181,718           16,690,918
    Accumulated other comprehensive income                                                646,272            1,218,680
                                                                                  ---------------     ----------------
                                                                                       31,409,143           30,453,974
    Less:  Treasury stock, 14,500 shares, at cost                                        (257,375)            (257,375)
                                                                                  ----------------    ----------------
              Total Stockholders' Equity                                               31,151,768           30,196,599
                                                                                  ---------------     ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $    377,195,634    $     373,032,129
                                                                                 ================    =================

</TABLE>



<PAGE>
<TABLE>
<CAPTION>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003




                                                                                       2004                 2003
                                                                                 ----------------    -----------------
INTEREST INCOME:
<S>                                                                              <C>                 <C>
    Interest and fees on loans                                                   $     14,030,704    $      14,518,794
    Interest on investment securities:
       Taxable interest income                                                          4,107,372            3,459,158
       Exempt from federal income taxes                                                 1,633,638            1,576,326
    Other interest income                                                                   2,598               10,590
                                                                                  ---------------     ----------------

          Total Interest Income                                                        19,774,312           19,564,868

INTEREST EXPENSE:
    Interest on deposits                                                                3,337,903            3,953,939
    Interest on Federal Home Loan Bank advances                                         2,667,895            2,130,880
    Interest on federal funds purchased                                                    77,662               16,292
    Interest on trust preferred securities                                                235,195              167,430
    Interest on securities sold under repurchase agreements                               146,633               60,177
                                                                                  ---------------     ----------------

          Total Interest Expense                                                        6,465,288            6,328,718
                                                                                  ---------------     ----------------

NET INTEREST INCOME                                                                    13,309,024           13,236,150

PROVISION FOR LOAN LOSSES                                                                 390,000              670,000
                                                                                  ---------------     ----------------

NET INTEREST INCOME AFTER PROVISION
    FOR LOAN LOSSES                                                                    12,919,024           12,566,150

OTHER INCOME:
    Service charges on deposit accounts                                                 1,350,548            1,355,639
    Income from fiduciary activities                                                       43,547               41,972
    Income from investment activities                                                     210,523              144,244
    Net gain on sales of loans                                                            331,593              628,705
    Net gain (loss) on sales of premises and equipment                                    175,091              (45,612)
    Other                                                                                 566,484             641,789
                                                                                  ---------------     ----------------

          Total Other Income                                                            2,677,786            2,766,737
                                                                                  ---------------     ----------------
          Income before Other Expenses                                                 15,596,810           15,332,887

</TABLE>
<PAGE>
<TABLE>
<CAPTION>





                                                                                       2004                 2003
                                                                                 ----------------    -----------------
OTHER EXPENSES:
<S>                                                                              <C>                 <C>
    Salaries                                                                            6,060,543            5,790,994
    Employee benefits                                                                     870,638            1,130,880
    Director fees                                                                         203,348              172,057
    Net occupancy expense                                                                 927,430              854,710
    Equipment expense                                                                     979,139              957,554
    Other real estate, net                                                                218,510              130,648
    FDIC assessment                                                                        34,358               35,279
    Advertising                                                                           259,284              261,770
    Stationery and supplies                                                               233,379              268,519
    Amortization                                                                          107,616              107,616
    Audit expense                                                                         165,074              157,457
    Other                                                                               1,913,037            1,976,924
                                                                                   --------------      ---------------

          Total Other Expenses                                                         11,972,356           11,844,408
                                                                                   --------------      ---------------

INCOME BEFORE INCOME TAX EXPENSE                                                        3,624,454            3,488,479

INCOME TAX EXPENSE                                                                        780,245              749,725
                                                                                   --------------      ---------------

NET INCOME                                                                       $      2,844,209    $       2,738,754
                                                                                   ==============      ===============

PER SHARE DATA:

    Basic earnings per share                                                     $           1.35    $            1.30
                                                                                   ==============      ===============

    Basic weighted shares outstanding                                                   2,114,649            2,113,087
                                                                                   ==============      ===============

    Diluted earnings per share                                                   $           1.34    $            1.29
                                                                                  ===============      ===============

    Diluted weighted shares outstanding                                                 2,118,181            2,116,163
                                                                                  ===============      ===============

    Cash dividends per share                                                     $           0.64    $            0.64
                                                                                  ===============     ================

</TABLE>



The accompanying notes are an integral part of these financial statements.


<PAGE>
<TABLE>
<CAPTION>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003



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

<S>                                         <C>                 <C>                 <C>                 <C>
BALANCE, December 31, 2002                       2,113,087      $      5,318,968    $     7,225,408     $   15,304,539

Comprehensive income:
     Net income                                          -                     -                  -          2,738,754

   Other comprehensive income:
         Change in fair value of
           available for sale securities,
           net of taxes of $278,307                      -                     -                  -                  -

         Change in fair value of
           derivatives, net of taxes of
           $30,578                                       -                     -                  -                  -


Total Comprehensive Income                               -                     -                  -                  -

Cash dividends declared
   ($0.64 per share)                                     -                     -                  -         (1,352,375)
                                            ----------------    ----------------    ---------------     --------------

BALANCE, December 31, 2003                       2,113,087             5,318,968          7,225,408         16,690,918

Comprehensive income:
     Net income                                          -                     -                  -          2,844,209

     Other comprehensive income:
         Change in fair value of
            available for sale securities,
            net of taxes of $128,353                     -                     -                  -                  -

         Change in fair value of
           derivatives, net of taxes of
           $61,073                                       -                     -                  -                  -

Total Comprehensive Income                               -                     -                  -                  -

Stock Options Exercised                              3,229                 8,072             28,705                  -

Cash dividends declared
   ($0.64 per share)                                     -                     -                  -         (1,353,409)
                                            -----------------   ----------------    ---------------     --------------

BALANCE, December 31, 2004                       2,116,316      $      5,327,040    $     7,254,113     $   18,181,718
                                            =================   ================    ===============     ==============


The accompanying notes are an integral part of these financial statements.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                        Accumulated
                                                          Other
                                                      Comprehensive          Treasury
                                                         Income                Stock                 Total
                                                    ----------------      ----------------      ----------------
<S>                                                 <C>                   <C>                   <C>
BALANCE, December 31, 2002                          $      1,737,934      $       (257,375)     $     29,329,474

Comprehensive income:
     Net income                                                    -                     -             2,738,754

   Other comprehensive income:
         Change in fair value of
           available for sale securities,
           net of taxes of $278,307                         (467,852)                    -              (467,852)

         Change in fair value of
           derivatives, net of taxes of
           $30,578                                           (51,402)                    -               (51,402)
                                                                                                ----------------

Total Comprehensive Income                                         -                     -             2,219,500

Cash dividends declared
   ($0.64 per share)                                               -                     -            (1,352,375)
                                                    ----------------      ----------------      ----------------

BALANCE, December 31, 2003                                 1,218,680              (257,375)           30,196,599

Comprehensive income:
     Net income                                                    -                     -             2,844,209

     Other comprehensive income:
         Change in fair value of
            available for sale securities,
            net of taxes of $128,353                        (469,749)                    -              (469,749)

         Change in fair value of
           derivatives, net of taxes of
           $61,073                                          (102,659)                    -              (102,659)
                                                                                                ----------------
Total Comprehensive Income
                                                                   -                     -             2,271,801
Stock Options Exercised
                                                                   -                     -                36,777
Cash dividends declared
   ($0.64 per share)                                               -                     -            (1,353,409)
                                                    ----------------      ----------------      ----------------

BALANCE, December 31, 2004                          $        646,272      $       (257,375)     $     31,151,768
                                                    ================      ================      ================



</TABLE>

<PAGE>
<TABLE>
<CAPTION>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


                                                                                        2004                2003
                                                                                   ---------------     ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>                 <C>
    Net income                                                                     $     2,844,209     $     2,738,754
    Adjustments to reconcile net income to
       net cash provided by operating activities:
          Deferred taxes                                                                   104,018             231,819
          Provision for loan losses                                                        390,000             670,000
          Provision for depreciation                                                       727,564             724,609
          Provision (credit) for other real estate losses                                        -            (150,000)
          Writedown of other real estate                                                   126,000             102,752
          (Gain) on sale of loans                                                         (331,593)           (628,705)
          (Gain) Loss on sale of other repossessed assets                                     (193)              6,971
          (Gain) Loss on sale of premises and equipment                                   (175,091)             45,612
          Loss on sale of other real estate                                                 42,970              97,119
          Stock dividends received                                                         (85,100)            (73,500)
          Net amortization (accretion) of securities                                       590,506             768,417
          Amortization of acquisition premium                                              107,616             107,616
    Net change in:
       Loans held for sale                                                               1,413,668           1,291,391
       Accrued interest receivable                                                         (31,417)             27,452
       Cash surrender value of life insurance                                              (38,391)             (4,540)
       Other assets                                                                        320,689            (178,021)
       Accrued interest payable                                                            154,361            (125,939)
       Accrued taxes and other liabilities                                                 352,977             (77,929)
                                                                                   ---------------     ----------------

              Net Cash Provided by Operating Activities                                  6,512,793           5,573,878
                                                                                   ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    (Increase) decrease in federal funds sold                                              (67,670)          3,518,639
    Proceeds from principal paydowns and maturities
       of investment securities held-to-maturity                                         2,813,609           2,778,056
    Proceeds from principal paydowns and maturities of
       investment securities available-for-sale                                         25,139,010          34,471,030
    Purchases of investment securities held-to-maturity                                   (473,892)        (12,103,638)
    Purchases of investment securities available-for-sale                              (24,465,532)        (68,899,060)
    Purchase of other equity securities                                                   (129,700)         (1,763,100)
    Net increase in loans                                                              (13,171,667)        (27,081,044)
    Proceeds from sale of other real estate                                              1,260,075             517,331
    Purchases of premises and equipment                                                 (1,444,730)         (2,343,500)
    Proceeds from sales of premises and equipment                                          775,000                   -
                                                                                   ---------------     ---------------

              Net Cash Used in Investing Activities                                     (9,765,497)        (70,905,286)
                                                                                   ----------------    ----------------
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                                                <C>                 <C>
    Net increase (decrease) in non-maturity deposits                                    (7,033,336)          7,728,910
    Net increase (decrease) in certificates of deposit                                     387,483          (7,807,166)
    Net increase (decrease) in federal funds purchased                                   1,885,000           4,550,000
    Advances from Federal Home Loan Bank                                                42,500,000          61,020,000
    Repayments of Federal Home Loan Bank advances                                      (33,152,890)        (14,759,723)
    Net increase (decrease) in securities sold under
       repurchase agreements                                                            (1,831,919)          7,793,510
    Proceeds from issuance of junior subordinated
       debentures                                                                                -           5,000,000
    Increase (decrease) in advances from borrowers
       for taxes and insurance                                                              32,068              41,133
    Cash dividends paid                                                                 (1,353,409)         (1,352,375)
    Cash received from stock options exercised                                              36,777                   -
                                                                                   ---------------     ---------------

              Net Cash Provided by Financing Activities                                  1,469,774          62,214,289
                                                                                   ---------------     ---------------

NET DECREASE IN CASH AND DUE FROM BANKS                                                 (1,782,930)         (3,117,119)

CASH AND DUE FROM BANKS AT BEGINNING OF YEAR                                             8,359,755          11,476,874
                                                                                    --------------      --------------

CASH AND DUE FROM BANKS AT END OF YEAR                                             $     6,576,825     $     8,359,755
                                                                                    ==============      ==============

</TABLE>
<TABLE>
<CAPTION>



SUPPLEMENTAL DISCLOSURES OF CASH FLOW
    INFORMATION:
<S>                                                                               <C>                  <C>
       Cash payments for:
          Income taxes                                                             $       644,624     $       474,931
                                                                                    ================    ==============

          Interest on deposits and borrowings                                      $     6,310,927     $     6,454,657
                                                                                    ==============      ==============

SCHEDULE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES:
       Transfers to other real estate                                              $     1,008,255     $       787,559
                                                                                    ==============      ==============

       Change in unrealized (gains) losses on
          securities available-for-sale                                            $      (598,102)    $      (746,159)
                                                                                    ===============     ==============


       Change in the deferred tax effect in unrealized
          gains (losses) on securities available-for-sale                          $      (128,353)    $      (278,307)
                                                                                    ===============     ===============

       Change in unrealized gains on derivative                                    $      (163,732)    $       (81,980)
                                                                                    ===============     ===============

       Change in the deferred tax effect in
          unrealized gains on derivative                                           $       (61,073)    $       (30,578)
                                                                                    ===============     ===============
</TABLE>


The accompanying notes are an integral part of these financial statements.


<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               Principles of Consolidation

               The  consolidated  financial  statements  include the accounts of
               Britton & Koontz Capital Corporation (the Company) and its wholly
               owned subsidiaries,  Britton & Koontz Bank, National  Association
               (the Bank) and B & K Title Insurance  Agency,  Inc. (the 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
               three  locations  in  Natchez,   Mississippi,  two  locations  in
               Vicksburg,   Mississippi,   and  one  location  in  Baton  Rouge,
               Louisiana.

               The Agency issues  policies of title  insurance for and on behalf
               of the Company  upon  properties  in all counties in the state of
               Mississippi.

               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.



<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



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  primarily include stock in the Federal
               Reserve Bank and the Federal Home Loan Bank, which are restricted
               and are carried at cost.

               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  unrealized  gains and losses are  reported as a
               component of comprehensive income in stockholders' equity, net of
               the  related  deferred  tax  effect.  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.



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



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. A loan
               is considered  impaired when,  based on current  information  and
               events,  it is  probable  that the Bank will be unable to collect
               the  scheduled   payments  of  principal  or  interest  when  due
               according  to  the  contractual  terms  of  the  loan  agreement.
               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 40 years.




<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               Other Real Estate

               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
               from  operations  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.





<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               Income Taxes - continued

               Deferred taxes are provided  utilizing 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  subsidiaries  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  represents  income  available to common
               stockholders divided by the weighted-average  number of shares of
               common stock outstanding during the period.  Diluted earnings per
               share  reflects  additional  common  shares  that would have been
               outstanding if dilutive  potential common shares had been issued,
               as well as any  adjustment  to income that would  result from the
               assumed issuance. 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.  Earnings  per  common
               share have been computed as follows:

<TABLE>
<CAPTION>





                                                                       Income            Shares         Per Share
                                                                    (Numerator)      (Denominator)        Amount
                                                                   -------------     -------------       ---------
<S>                                                               <C>                <C>                 <C>
               Year Ended December 31, 2004:
                  Basic Earnings Per Share:
                     Income Available to Common
                         Shareholders                             $   2,844,209         2,114,649        $  1.35
                                                                                                         ========
                  Diluted Earnings Per Share:
                     Options                                                  -             3,532
                                                                   -------------      ------------
                  Income Available to Common
                     Shareholders Assuming Conversion             $   2,844,209         2,118,181        $  1.34
                                                                   =============      ============       ========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>





              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               Earnings Per Share -continued
                                                                      Income              Shares        Per Share
                                                                     (Numerator)     (Denominator)       Amount
                                                                  --------------     -------------      ---------
<S>                                                               <C>                <C>                <C>
               Year Ended December 31, 2003:
                  Basic Earnings Per Share:
                     Income Available to Common
                         Shareholders                             $   2,738,754         2,113,087       $  1.30
                                                                                                        ========
                  Diluted Earnings Per Share:
                     Options                                                  -             3,076
                                                                   -------------    --------------

                  Income Available to Common
                     Shareholders Assuming Conversion             $   2,738,754         2,116,163       $  1.29
                                                                   ==============    ==============     ========


</TABLE>


               The Company has granted  options to purchase  various  amounts of
               the Company's  common stock at various prices ranging from $14.50
               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  standby  letters of  credit.  Financial  instruments
               related to loans are recorded in the  financial  statements  when
               they become payable.

               Statement of Cash Flows

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

               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  2004 and 2003 were  $259,284  and
               $261,770, respectively.





<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



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  balance  sheet.
               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.

               Stock Compensation Plans

               FASB   Statement   No.   123,    "Accounting    for   Stock-Based
               Compensation",  encourages  all  entities  to adopt a fair  value
               based method of accounting for employee stock compensation plans,
               whereby  compensation cost is measured at the grant date based on
               the value of the award and is recognized over the service period,
               which is usually the vesting period.  However,  it also allows an
               entity to continue to measure  compensation  cost for those plans
               using the intrinsic  value based method of accounting  prescribed
               by Accounting  Principles  Board Opinion No. 25,  "Accounting for
               Stock  Issued to  Employees,"  whereby  compensation  cost is the
               excess,  if any, of the quoted  market  price of the stock at the
               grant  date  (or  other  measurement  date)  over the  amount  an
               employee  must pay to acquire  the stock.  Stock  options  issued
               under the Company's  stock option plan have no intrinsic value at
               the grant date, and under Opinion No. 25 no compensation  cost is
               recognized for them. The Company has elected to continue with the
               accounting  methodology  in Opinion No. 25 and, as a result,  has
               provided,  under Note J, pro forma  disclosures of net income and
               earnings  per share and other  disclosures,  as if the fair value
               based method of accounting had been applied.




<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


               Comprehensive Income

               Accounting  principles generally require that recognized revenue,
               expenses,  gains and losses be included  in net income.  Although
               certain  changes in assets and  liabilities,  such as  unrealized
               gains and losses on available-for-sale  securities,  are reported
               as a  separate  component  of the equity  section of the  balance
               sheet,  such items,  along with net  income,  are  components  of
               comprehensive income.

               Recent Accounting Pronouncements

               In  November  of 2003,  the  FASB's  Emerging  Issues  Task Force
               released  Issue No. 03-1,  "The  Meaning of  Other-Than-Temporary
               Impairment and its Application to Certain Investments." The Issue
               addresses  disclosure  requirements  of  securities in unrealized
               loss positions for entities governed by SFAS No. 115, "Accounting
               for  Certain  Investments  in Debt  and  Equity  Securities."  In
               October  2004,  FASB Staff  Position  No.  EITF 03-1-1 was issued
               temporarily  delaying the effective date of the  recognition  and
               measurement  provisions  of EITF  Issue No.  03-1  until  further
               guidance    is    released    on    the     implementation     of
               "other-than-temporary." The disclosure requirements of Issue 03-1
               remain  effective.  The  disclosures  required  by  the  original
               pronouncement  are included in these  financial  statements as of
               December 31, 2004.

               In  January  of 2005,  the FASB  issued  Revised  Statement  123,
               "Accounting  for  Stock-Based  Compensation."  SFAS 123R replaces
               SFAS  123,   "Accounting  for  Stock-Based   Compensation,"   and
               supersedes  APB  Opinion  25,  "Accounting  for  Stock  Issued to
               Employees."  This  revised  statement  requires  that the cost of
               share-based payment transactions with employees and non-employees
               be recognized in the financial statements. This statement applies
               to all  share-based  payment  transactions  in  which  an  entity
               acquires goods or services by issuing its shares,  share options,
               or other equity  instruments  or by incurring  liabilities.  SFAS
               123R requires  measurement  for  share-based  transactions at the
               fair value of the equity instrument issued. This pronouncement is
               effective as of the first interim period or fiscal year beginning
               after  December 15, 2005.  The Company has  addressed  the future
               adoption  of  this   pronouncement  and  does  not  consider  its
               potential impact to be significant.

               Reclassifications

               Certain reclassifications have been made to the 2003 consolidated
               financial  statements in order to conform to the  classifications
               adopted for reporting in 2004.




<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>


NOTE B.        INVESTMENT SECURITIES
               The  amortized  cost and  approximate  market value of investment
               securities  classified as  held-to-maturity at December 31, 2004,
               are summarized as follows:

                                                                           Gross           Gross
                                                       Amortized        Unrealized      Unrealized          Fair
                                                         Cost              Gains          Losses            Value
                                                      -------------    ------------    ------------     ------------
<S>                                                   <C>              <C>             <C>              <C>
               Obligations of State and
                  Political Subdivisions               $ 35,321,402    $  1,511,364    $   (19,152)     $ 36,813,614
               Mortgage-Backed
                     Securities                           4,482,451          41,677              -         4,524,128
                                                        -----------    ------------    ------------     ------------
                                                       $ 39,803,853    $  1,553,041    $   (19,152)     $ 41,337,742
                                                       ============    ============    ============     ============
</TABLE>

               The  amortized  cost and  approximate  market value of investment
               securities classified as available-for-sale at December 31, 2004,
               are summarized as follows:
<TABLE>
<CAPTION>

                                                                           Gross           Gross
                                                        Amortized       Unrealized      Unrealized          Fair
                                                          Cost             Gains          Losses            Value
                                                       ------------    ------------    ------------     ------------
<S>                                                    <C>             <C>             <C>              <C>
               Mortgage-Backed
                  Securities                           $ 86,063,356    $  1,009,628    $  (144,495)     $ 86,928,489
               Agency Obligations                         3,997,544             576           (620)        3,997,500
               Other Debt Securities                      1,007,752          13,448              -         1,021,200
                                                       ------------    ------------    ------------     ------------
                                                       $ 91,068,652    $  1,023,652    $  (145,115)     $ 91,947,189
                                                       ============    ============    =============    ============

</TABLE>

               The  aggregate  fair values and  aggregate  unrealized  losses on
               securities whose fair values are below book values as of December
               31,  2004,  are  summarized  below.  Due  to  the  nature  of the
               investment and current market prices, these unrealized losses are
               considered a temporary impairment of the securities.

<TABLE>
<CAPTION>



                                     Less than 12 Months            12 Months or More                  Total
                                  -------------------------     --------------------------   -------------------------
                                                Unrealized                     Unrealized                   Unrealized
                                  Fair Value       Loss         Fair Value        Loss       Fair Value        Loss
                                  -----------  ------------     -----------    -----------   ----------     ----------

<S>                               <C>          <C>              <C>            <C>           <C>            <C>
  Held-to-Maturity:
    Obligations of
      State and Political
      Subdivisions
      (seven securities)          $ 1,863,665  $   (19,152)     $         -    $         -   $ 1,863,665    $  (19,152)
                                  ===========  ===========      ===========    ===========   ===========    ==========


Available-for-Sale:
    Mortgage-Backed
      Securities (seven
      securities)                 $21,279,225  $  (112,812)     $ 3,286,964    $   (31,683)  $24,566,189    $ (144,495)

    Agencies (one
      security)                   $ 1,999,380  $      (620)               -              -   $ 1,999,380    $     (620)
                                  -----------  ------------     -----------    -----------  ------------    ----------

                                  $23,278,605  $  (113,432)     $ 3,286,964    $   (31,683)  $26,565,569    $ (145,115)
                                  ===========  ===========      ===========    ===========   ===========    ==========

</TABLE>
<PAGE>




              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE B.        INVESTMENT SECURITIES  (Continued)

<TABLE>
<CAPTION>



               The  amortized  cost and  approximate  market value of investment
               securities  classified as  held-to-maturity at December 31, 2003,
               are summarized as follows:

                                                                           Gross           Gross
                                                       Amortized        Unrealized      Unrealized        Fair
                                                         Cost              Gains          Losses          Value
                                                     -------------    -------------   -------------    -------------
<S>                                                  <C>              <C>             <C>              <C>
               Obligations of State and
                  Political Subdivisions             $  34,834,072    $   1,674,117   $      (4,188)   $  36,504,001
               Mortgage-Backed
                     Securities                          7,455,337           43,240               -        7,498,577
                                                     -------------    -------------   -------------    -------------
                                                     $  42,289,409    $   1,717,357   $      (4,188)   $  44,002,578
                                                     =============    =============   =============    =============

               The  amortized  cost and  approximate  market value of investment
               securities classified as available-for-sale at December 31, 2003,
               are summarized as follows:

                                                                           Gross           Gross
                                                       Amortized        Unrealized      Unrealized          Fair
                                                         Cost              Gains          Losses            Value
                                                     --------------   -------------   -------------    -------------
               Mortgage-Backed
                  Securities                         $  88,152,991    $   1,466,654   $    (110,749)   $  89,508,896
               Other Debt Securities                     4,033,806          120,734               -        4,154,540
                                                     --------------   -------------   -------------    -------------
                                                     $  92,186,797    $   1,587,388   $    (110,749)   $  93,663,436
                                                     ==============   =============   =============    =============

</TABLE>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE B.        INVESTMENT SECURITIES  (Continued)

               Equity  securities  at December  31,  2004 and 2003,  include the
               following:  Federal  Home  Loan  Bank  stock  of  $4,727,100  and
               $4,512,300,  respectively;  the  Federal  Reserve  Bank  stock of
               $521,700 for 2004 and 2003;  First National Bankers Bank stock in
               the  amount  of  $47,800  for  2004  and  2003;  and  a  $100,000
               investment in ECD Investments,  LLC for both years. There were no
               redemptions  of any stock in the  Federal  Home Loan Bank  during
               2004 or 2003. 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.


               The Company  invested $1 million during 1998 and $250,000  during
               2001 in Sumx Inc ("Sumx"), a Mississippi  corporation established
               to  provide   electronic  banking  solutions  for  the  financial
               industry.  During  the  second  quarter  of 2002,  the  Company's
               investment in and advances to Sumx in the amount of approximately
               $711 thousand were written off and reflected in other expense due
               to  the  uncertainty   regarding   Sumx'  future   prospects  and
               valuation.  On December 31, 2004, the Company  divested itself of
               its equity interest in Sumx by selling its shares in Sumx to Sumx
               for $20,000.  In connection  with this sale, the Company and Sumx
               entered  into a 5 year  non-exclusive  license  to use  the  Sumx
               Internet  banking  software at no charge.  The Company  agreed to
               cancel and forgive all indebtedness, obligations and encumbrances
               of any kind to Sumx.


               Investment   securities  carried  at  approximately   $48,927,000
               (approximate  market value $50,674,000) at December 31, 2004, and
               approximately  $67,190,000 (approximate market value $69,621,000)
               at  December  31,  2003,  were  pledged to  collateralize  public
               deposits  and for other  purposes as required or permitted by law
               or agreement.

               The  amortized  cost and  approximate  market value of investment
               debt  securities at Decem-ber 31, 2004, by  contractual  maturity
               (including mortgage-backed  securities),  are shown below. Actual
               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
                                                                      Average         Amortized            Market
                                                                       Yield            Cost                Value
                                                                  --------------    --------------     ---------------

<S>                                                                  <C>            <C>                <C>
               Due in One Year or Less                               2.518%         $      430,223     $       430,680
               Due After One Year through Five Years                 4.248%              2,182,848           2,273,444
               Due After Five Years through Ten Years                4.632%              9,389,214           9,814,896
               Due After Ten Years                                   4.741%             27,801,568          28,818,722
                                                                                    --------------     ---------------

                                                                     4.665%         $   39,803,853     $    41,337,742
                                                                                    ==============     ===============


</TABLE>

<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>

NOTE B.        INVESTMENT SECURITIES  (Continued)

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

<S>                                                                  <C>           <C>                 <C>
               Due in One Year or Less                               6.009%        $     1,028,153     $     1,041,600
               Due After One Year through Five Years                 4.077%              9,706,991           9,763,511
               Due After Five Years through Ten Years                4.181%             48,053,256          48,313,175
               Due After Ten Years                                   5.087%             32,280,252          32,828,903
                                                                                   ---------------     ---------------

                                                                     4.513%        $    91,068,652     $    91,947,189
                                                                                   ===============     ===============
</TABLE>
<TABLE>
<CAPTION>

NOTE C.        LOANS

               The Bank's loan  portfolio  (rounded to the nearest  thousand) at
               December 31, 2004 and 2003, consists of the following:
                                                                                       2004                 2003
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Commercial, Financial and Agricultural                            $     31,589,000    $      31,853,000
               Real Estate-Construction                                                18,360,000           14,690,000
               Real Estate-Mortgage                                                   156,574,000          148,857,000
               Installment                                                             14,229,000           14,195,000
               Overdrafts                                                                 249,000              102,000
                                                                                 ----------------    -----------------

                  Total loans                                                    $    221,001,000    $     209,697,000
                                                                                 ================    =================


</TABLE>

               Loans on which  accrual  of  interest  has been  discontinued  or
               reduced were  approximately  $772,000 and  $1,184,000 at December
               31,  2004 and 2003,  respectively.  If interest on such loans had
               been  accrued,  the income  would have  approximated  $38,000 and
               $28,000 in 2004 and 2003, respectively.  At December 31, 2004 and
               2003,  respectively,  the recorded  investment in loans that were
               considered  to  be  impaired  was   approximately   $634,000  and
               $563,000,  primarily all of which were on a nonaccrual basis. The
               related  allowance  amount on impaired loans was not significant.
               Loans  which  are  contractually  90 days or more  past due as of
               December  31,  2004 and 2003,  were  approximately  $129,000  and
               $337,000, 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 $2,391,668  and $2,947,193 at
               December 31, 2004 and 2003,  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.
<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE C.        LOANS (Continued)

               The  aggregate  amount of loans to such related  parties for 2004
and 2003 is as follows:
<TABLE>
<CAPTION>

                                                                                       2004                 2003
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Balance at January 1                                              $      2,947,193    $       2,989,191
               New Loans                                                                1,124,203            2,868,208
               Repayments                                                              (1,679,728)          (2,910,206)
                                                                                 ----------------    -----------------

               Balance at December 31                                            $      2,391,668    $       2,947,193
                                                                                 ================    =================
</TABLE>
<TABLE>
<CAPTION>


NOTE D.        ALLOWANCE FOR LOAN LOSSES

               An analysis of the allowance for loan losses is as follows:
                                                                                           2004              2003
                                                                                     --------------     --------------
<S>                                                                                  <C>                <C>
               Balance at January 1                                                  $    2,070,162     $    2,129,328
                  Credits Charged Off:
                     Real Estate - Mortgage                                                (113,888)          (456,085)
                     Commercial, Financial and Agricultural                                (107,208)          (285,131)
                     Installment Loans                                                      (46,738)           (91,068)
                                                                                     --------------     --------------
                         Total Charge-Offs                                                 (267,834)          (832,284)
                  Recoveries:
                     Real Estate - Mortgage                                                   4,256             24,635
                     Commercial, Financial and Agricultural                                  23,032             59,832
                     Installment Loans                                                       17,162             18,651
                                                                                     --------------     --------------
                         Total Recoveries                                                    44,450            103,118
                                                                                     --------------     --------------
                  Net Credits Charged Off                                                  (223,384)          (729,166)
                                                                                     --------------     --------------
                  Provision for Loan Losses                                                 390,000            670,000
                                                                                     --------------     --------------
               Balance at December 31                                                $    2,236,778    $     2,070,162
                                                                                     ==============    ===============

</TABLE>

NOTE E.        LOAN SERVICING
               Loans  serviced for others are not  included in the  accompanying
               consolidated  balance sheets.  The unpaid  principal  balances of
               these loans were approximately  $9,740,772 and $6,434,458 in 2004
               and 2003, respectively.


<PAGE>
<TABLE>
<CAPTION>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


NOTE F.        BANK PREMISES AND EQUIPMENT
               A summary of Bank premises and equipment is as follows:
                                                                                       2004            2003
                                                                                   ------------    ------------
<S>                                                                                <C>             <C>
               Buildings and Improvements                                          $  7,238,369    $  6,697,473
               Furniture and Equipment                                                4,735,015       4,108,428
                                                                                   ------------    ------------
                                                                                     11,973,384      10,805,901
               Less: Accumulated Depreciation                                        (4,830,622)     (4,372,666)
               Land                                                                   1,122,994       1,447,994
               Construction in Progress                                                       -         715,025
                                                                                   ------------    ------------
Bank Premises and Equipment, Net                                                   $  8,265,756    $  8,596,254
                                                                                   ============    ============
</TABLE>


               The provision for depreciation  charged to operating expenses was
               $727,564 and  $724,609 for the years ended  December 31, 2004 and
               2003, respectively.


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  balance  sheets 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

               Deposits  at  December  31,  2004  and  2003,  consisted  of  the
following:
<TABLE>
<CAPTION>

                                                                                       2004                 2003
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Non-Interest Bearing Demand Deposits                              $     39,868,482    $      37,523,263
               NOW Accounts                                                            28,103,197           35,062,025
               Money Market Deposit Accounts                                           24,974,678           27,096,521
               Savings Accounts                                                        16,490,444           16,788,328
               Certificates of Deposit                                                116,851,128          116,463,645
                                                                                 ----------------    -----------------
                                                                                 $    232,933,782    $     226,287,929
                                                                                 ================    =================

</TABLE>


<PAGE>







              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003
<TABLE>
<CAPTION>

NOTE H.        DEPOSITS (Continued)
               Maturities  of  certificates  of  deposit  of  $100,000  or  more
               outstanding  at December  31, 2004 and 2003,  are  summarized  as
               follows:
                                                                                        2004                2003
                                                                                 ----------------    -----------------
               Time Remaining Until Maturity:
<S>                                                                              <C>                 <C>
                  Three Months or Less                                           $     14,385,622    $       9,249,501
                  Over Three Through Six Months                                        13,257,922           23,742,468
                  Over Six Through Twelve Months                                       11,775,185            7,023,633
                  Over Twelve Months                                                   11,874,328           10,798,348
                                                                                 ----------------    -----------------
                                                                                 $     51,293,057    $      50,813,950
                                                                                 ================    =================
</TABLE>


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

                                    2005                        $     89,244,342
                                    2006                              13,213,690
                                    2007                               7,808,671
                                    2008                               4,886,897
                                    2009                               1,697,528
                                                                 ---------------
                                                                $    116,851,128

               Interest expense on certificates of deposit greater than $100,000
               was  approximately  $1,084,000 and $1,208,000 for the years ended
               December 31, 2004, and 2003, respectively.

               The public fund  deposits were  $30,814,111  and  $44,513,641  at
               December 31, 2004 and 2003, respectively.

NOTE I.        BORROWINGS
               Federal Home Loan Bank Advances:
               During  2004  and  2003,  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.  Advances  outstanding
               at December 31, 2004, consist of:

                  Eighteen  fixed-rate  term  loans with the  Federal  Home Loan
                  Bank. The loans range from  $2,000,000 to $6,000,000,  and one
                  overnight advance of $13 million,  totaling $73,000,000,  with
                  interest  rates ranging from 1.765% to 5.348%.  The maturities
                  on these loans range from May 10, 2005, to November 30, 2007.

                  Five  amortizable  fixed-rate loans with the Federal Home Loan
                  Bank. The loans total  $23,922,871 with interest rates ranging
                  from 2.377% to 4.177%.  The maturities on these loans are from
                  January 2, 2007, to June 1, 2009.




<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE I.        BORROWINGS (Continued)

               The 2003 advances consist of:

                  Twelve  fixed-rate term loans with the Federal Home Loan Bank.
                  The  loans  range  from  $2,380,000  to  $8,000,000,  totaling
                  $65,020,000,  with  interest  rates  ranging  from  1.163%  to
                  5.348%.  The  maturities  on these  loans range from March 29,
                  2004, to December 29, 2006.

                  Four  amortizable  fixed-rate loans with the Federal Home Loan
                  Bank. The loans total  $22,555,761 with interest rates ranging
                  from 2.377% to 4.177%.  The maturities on these loans are from
                  January 2, 2007, to June 2, 2008.

               Annual maturities for the next five years as of December 31, 2004
               are as follows:

                                    2005                      $ 42,000,000
                                    2006                        25,000,000
                                    2007                        10,414,865
                                    2008                        12,692,478
                                    2009                         6,815,528
                                                              ------------
                                                              $ 96,922,871
                                                              ============

               Junior Subordinated Debentures:

               In 2003,  the Company  issued  $5,000,000 of junior  subordinated
               debentures.   The  $5,000,000  of  trust   preferred   securities
               qualifies as Tier 1 capital for regulatory  capital  purposes but
               is  classified  as  a  liability  under   accounting   principles
               generally  accepted  in  the  United  States  of  America.  These
               securities  carry an  interest  rate of  LIBOR + 3.15%,  adjusted
               quarterly,  with interest paid quarterly in arrears and mature in
               March,  2033. Under certain  circumstances,  these securities are
               subject to repayment on March 26, 2008, or thereafter.

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  $96,960  and
               $108,533 in 2004 and 2003, respectively.  This plan owned 210,407
               and  233,190   allocated  shares  of  Britton  &  Koontz  Capital
               Corporation  stock,  as of  December  31,  2004 and  2003,  at an
               overall   cost  to  the  plan  of  $6.58  and  $6.33  per  share,
               respectively.



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE J.        EMPLOYEE BENEFIT PLANS (Continued)

               Employees  with  one  year  of  service  and age  twenty-one  are
               eligible to participate in a 401(k) plan established by the Bank.
               Under this plan,  employees may  contribute a percentage of their
               salaries  subject to certain  limits  based on federal  tax laws.
               These  contributions  are immediately  vested.  Employer matching
               contributions  are 100% vested after six years.  Employer  profit
               sharing contributions are 100% vested after seven years. Employer
               contributions to the plan are made at the discretion of the Board
               of Directors  and  aggregated  $73,040 and $143,700 for the years
               ended December 31, 2004 and 2003, respectively.

               The Company has 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  23,410  shares  were
               exercisable  as of December 31, 2004. The summary of stock option
               activity is shown below:
                                                                   Weighted
                                            Options                Average
                                          Outstanding          Exercise Price
                                          -----------         ---------------
               December 31, 2002            53,229               $   17.38
               Options granted                   -                       -
               Options exercised                 -                       -
               Options forfeited                 -                       -
                                           ---------
               December 31, 2003            53,229               $   17.38
               Options granted                   -                       -
               Options exercised             3,229                   11.39
               Options forfeited           (15,000)                  19.94
                                           ---------
               December 31, 2004            35,000               $   16.84


               The following table  summarizes  information  about stock options
               outstanding at December 31, 2004:

              Exercise Price    Options Outstanding   Remaining Contractual Life
              --------------    -------------------   --------------------------
                $  19.94                15,000                 2.9 years
                $  14.50                20,000                 6.9 years



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE J.        EMPLOYEE BENEFIT PLANS (Continued)

               The Company applies APB Opinion 25 and related Interpretations in
               accounting for the stock options.  Accordingly,  no  compensation
               cost has been recognized. Had compensation cost for the Company's
               stock  options  been  determined  based on the fair  value at the
               grant  dates  consistent  with  the  method  prescribed  by  FASB
               Statement  No. 123,  the  Company's  net income and  earnings per
               share would have been adjusted to the pro forma amounts indicated
               below:
<TABLE>
<CAPTION>
                                                                                       2004                  2003
                                                                                 ---------------        --------------

<S>                                                                              <C>                    <C>
               Net Income, as Reported                                           $     2,844,209        $    2,738,754
               Pro Forma Net Income                                              $     2,837,413        $    2,718,254
               Basic Earnings Per Share, as Reported                             $          1.35        $         1.30
               Pro Forma Basic Earnings Per Share                                $          1.34        $         1.29
               Diluted Earnings Per Share, as Reported                           $          1.34        $         1.29
               Pro Forma Diluted Earnings Per Share                              $          1.34        $         1.28
</TABLE>

               The  Bank has a  nonqualified  salary  continuation  plan for 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  $340,000 if all covered  executives  selected this option.
               The financial  statements  for the years ended  December 31, 2004
               and 2003,  respectively,  include  $24,883 and $45,552 of expense
               related to this plan.


NOTE K.        LEASES

               The Bank leases  several  branch and mortgage  offices as well as
               parking  space under  operating  leases  which  expire in various
               years  through  2013.  Rent  expense was $148,402 and $107,948 in
               2004 and 2003, respectively.




<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE K.        LEASES (Continued)

               The  future  minimum  rental  commitments  for  these  leases  at
December 31, 2004, are as follows:

                                    2005                 $   126,417
                                    2006                     113,930
                                    2007                      88,992
                                    2008                      88,992
                                    2009                      88,992
                                    Thereafter               334,020
                                                         -----------
                                                         $   841,343
                                                         ===========

NOTE L.        INCOME TAXES

               The  provision  for income  taxes  included  in the  consolidated
               statements  of income is as follows for the years ended  December
               31, 2004 and 2003:

                                         2004              2003
                                   --------------     --------------
               Current             $      676,227     $      517,906
               Deferred                   104,018            231,819
                                    -------------     --------------
                                   $      780,245     $      749,725
                                    =============      =============



               The provision for federal income taxes differs from that computed
               by applying the federal  statutory  rate of 34% in 2004 and 2003,
               as indicated in the following analysis:

                                                    2004              2003
                                              --------------     --------------
               Tax Based on Statutory Rate    $    1,232,314     $    1,186,083
               State Taxes                           108,211             79,712
               Effect of Tax-Exempt Income          (569,345)          (555,675)
               Other                                   9,065             39,605
                                               -------------      -------------
                                              $      780,245     $      749,725
                                               =============      =============


<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

NOTE L.        INCOME TAXES  (Continued)
               The  net  deferred  tax  liability  of  $1,024,406  in  2004  and
               $1,204,554  in  2003 is  included  in  accrued  taxes  and  other
               liabilities.  The net  deferred  tax  liability  consists  of the
               following components at December 31, 2004 and 2003:
<TABLE>
<CAPTION>


                                                                                           2004              2003
                                                                                     --------------     --------------
               Deferred Tax Liabilities:
<S>                                                                                  <C>                <C>
                  Unrealized gain on available-for-sale securities                   $     (327,694)    $     (550,786)
                  Unrealized gain on derivatives                                            (56,770)          (117,843)
                  Depreciation                                                           (1,019,448)          (892,632)
                  Federal Home Loan Bank dividends                                         (309,575)          (277,833)
                  Other                                                                    (122,031)          (110,790)
                                                                                     --------------     --------------

(1,835,518) (1,949,884)
               Deferred Tax Assets:
                  Provision for loan losses                                                 544,517            482,370
                  Other real estate                                                          44,760             38,327
                  Other                                                                     221,835            224,633
                                                                                     --------------     --------------
                                                                                            811,112            745,330
                                                                                     --------------     --------------
               Net Deferred Tax Liability                                            $   (1,024,406)    $   (1,204,554)
                                                                                     ==============     ==============
</TABLE>

               A  summary  of  the  changes  in  the  net   deferred  tax  asset
               (liability) for the years ended December 31, 2004 and 2003, is as
               follows:
<TABLE>
<CAPTION>

<S>                                                                                     <C>                <C>
               Balance at beginning of year                                             $(1,204,554)       $(1,281,633)
                  Deferred tax expense, charged to operations                              (104,018)          (231,819)
                  Other comprehensive income, charged to
                     equity                                                                 284,166            308,898
                                                                                        -----------        -----------
               Balance at end of year                                                   $(1,024,406)       $(1,204,554)
                                                                                        ===========        ===========
</TABLE>

NOTE M.        SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
               At  December  31,  2004 and  2003,  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. These securities have coupon rates ranging
               from 4.50% to 6.50% and maturity dates ranging from 2013 to 2033.
               The related liability to repurchase these securities, included in
               securities sold under repurchase  agreements,  was $8,103,381 and
               $9,935,300  at  December  31,  2004 and 2003,  respectively.  The
               maximum  amount of  outstanding  agreements  at any month-end was
               $11,080,516  and $9,935,300  during 2004 and 2003,  respectively.
               The  monthly   average  amount  of  outstanding   agreements  was
               $10,022,995 and $4,576,679 during 2004 and 2003, respectively. At
               December 31,  2004,  the  securities  underlying  the  repurchase
               agreements had an approximate  amortized cost of $10,358,000  and
               an approximate market value of $10,471,000.



<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


NOTE N.        REGULATORY MATTERS

               The  primary  source  of  revenue  of  Britton  & Koontz  Capital
               Corporation  is dividends from its  subsidiary,  Britton & Koontz
               Bank, N.A..  Federal and state banking  regulations place certain
               restrictions  on dividends paid and loans or advances made by the
               Bank to the Company.  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 the 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 the
               Bank and no cash dividend may be paid on its capital stock if the
               effect  thereof would be to cause the  regulatory  capital of the
               Bank  to be  reduced  below  an  amount  equal  to  the  adjusted
               Liquidation Account balance.

               In  the  event  of a  complete  liquidation  of  the  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 the
               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.

               The  Company  and the  Bank are  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 Company's and Bank's  financial  statements.  Under
               capital  adequacy  guidelines  and the  regulatory  framework for
               prompt  corrective  action,  the  Company  and the Bank must meet
               specific capital guidelines that involve quantitative measures of
               their assets, liabilities, and certain off-balance-sheet items as
               calculated under  regulatory  accounting  practices.  The capital
               amounts  and  classification  are  also  subject  to  qualitative
               judgments by the regulators  about  components,  risk weightings,
               and other factors.  Prompt  corrective  action provisions are not
               applicable to bank holding companies.

               Quantitative measures established by regulation to ensure capital
               adequacy  require the  Company  and the Bank to maintain  minimum
               amounts  and  ratios  (set  forth in the  table  below)  of total
               capital and Tier I capital to risk-weighted  assets and of Tier I
               capital to average assets.  Management  believes,  as of December
               31, 2004 and 2003, that the Company and the Bank meet all capital
               adequacy requirements to which they are subject.






<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE N.        REGULATORY MATTERS (Continued)

               The most recent regulatory  notification  categorized the Bank as
               well  capitalized  under the  regulatory  capital  framework  for
               prompt corrective action. There are no conditions or events since
               that  notification  that  management  believes  have  changed the
               Bank's category.

               The  Company's  (consolidated)  and  the  Bank's  actual  capital
               amounts  and  ratios  as of  December  31,  2004  and  2003,  are
               presented in the table.

<TABLE>
<CAPTION>



                                                                                                    Minimum
                                                                                                   To be Well
                                                                          Minimum              Capitalized Under
                                                                          Capital              Prompt Corrective
                                             Actual                     Requirement            Action Provisions
                                   --------------------------    ------------------------   ----------------------
                                     Amount          Ratio         Amount        Ratio        Amount       Ratio
                                   --------------   ---------    ----------     --------    ----------   ---------
                                                                 (dollars in thousands)
As of December 31, 2004
-----------------------
<S>                                <C>              <C>          <C>            <C>         <C>           <C>
Total Capital (to Risk-
    Weighted Assets)
       Consolidated                 $  36,754        15.43%       $  19,061      8.00%           N/A           N/A
       The Bank                     $  34,836        14.64%       $  19,036      8.00%       $  23,796      10.00%
Tier I Capital (to Risk-
    Weighted Assets)
       Consolidated                 $  34,517        14.49%       $   9,530      4.00%           N/A           N/A
       The Bank                     $  32,599        13.70%       $   9,518      4.00%       $  14,277       6.00%
Tier I Capital (to Average
    Assets)
       Consolidated                 $  34,517         9.23%       $  14,954      4.00%           N/A           N/A
       The Bank                     $  32,599         8.69%       $  14,999      4.00%       $  18,749       5.00%

As of December 31, 2003
-----------------------
Total Capital (to Risk-
    Weighted Assets)
       Consolidated                 $  34,952        15.39%       $  18,208      8.00%           N/A           N/A
       The Bank                     $  33,252        14.64%       $  18,170      8.00%       $  22,713      10.00%
Tier I Capital (to Risk-
    Weighted Assets)
       Consolidated                 $  32,882        14.48%       $   9,104      4.00%           N/A           N/A
       The Bank                     $  31,182        13.73%       $   9,084      4.00%       $  13,627       6.00%
Tier I Capital (to Average
    Assets)
       Consolidated                 $  32,882         9.23%       $  14,244      4.00%           N/A           N/A
       The Bank                     $  31,182         8.77%       $  14,222      4.00%       $  17,778       5.00%


</TABLE>


<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



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  standby  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. At December 31, 2004
               and  2003,  the  Bank's  commitments  to  extend  credit  totaled
               $40,701,179 and $39,312,421, respectively.

               Standby 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.  The Bank had total
               unfunded  letters of credit of  $2,128,583  and  $2,881,559 as of
               December 31, 2004 and 2003, respectively.

               The Bank is required to maintain  average reserves at the Federal
               Reserve Bank. This requirement  approximated $275,000 at December
               31, 2004. The Bank is in compliance with this requirement.

               At  December   31,   2004,   the  Bank  had   committed  to  sell
               approximately $1,688,000 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.

               The Bank has  outstanding  lines of credit  with  several  of its
               correspondent  banks  available  to assist in the  management  of
               short-term  liquidity.  At December 31, 2004, the total available
               lines of credit were $34,500,000  with an outstanding  balance of
               $6,435,000 as reflected on the consolidated balance sheet.

               Britton  &  Koontz  Capital  Corporation  and  its  wholly  owned
               subsidiaries,  the 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.





<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE P.        CONCENTRATIONS OF CREDIT
               Substantially all of the Bank's loans,  commitments,  and standby
               letters of credit have been  granted to  customers  in the Bank's
               market area.  The majority of  investments in state and municipal
               securities 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.  Standby
               letters of credit are granted primarily to commercial borrowers.

               The Bank maintains  deposit  accounts and federal funds sold with
               correspondent banks which may, periodically, exceed the federally
               insured amount.

NOTE Q.        DIVIDENDS
               The Bank paid  dividends to the Company  amounting to  $1,700,000
               and $2,000,000 for the years 2004 and 2003, respectively.

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, 2004.  The original  term is for five
               years  expiring in May 2007.  The fixed  payment  rate was 7.635%
               during  2004.  The  average  variable-payment  rate was  4.41% at
               December  31, 2004.  The  collateral  at December 31, 2004,  is a
               Federal Home Loan Mortgage investment. The carrying amount of the
               swap  has  been   adjusted   to  its  fair   value  at   year-end
               approximating  $152,000 and is included in other assets. The swap
               is  assumed  to be  completely  effective,  and  accordingly,  is
               reported as other comprehensive income.

NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS
               The fair value of a financial  instrument  is the current  amount
               that would be exchanged between willing parties,  other than in a
               forced  liquidation.  Fair  value is best  determined  based upon
               quoted market prices.  However,  in many instances,  there are no
               quoted  market  prices  for  the  Company's   various   financial
               instruments.   In  cases  where  quoted  market  prices  are  not
               available, fair values are based on estimates using present value
               or other valuation techniques. Those techniques are significantly
               affected by the assumptions used, including the discount rate and
               estimates  of future  cash  flows.  Accordingly,  the fair  value
               estimates  may not be realized in an immediate  settlement of the
               instrument.  FASB  Statement No. 107 excludes  certain  financial
               instruments and all nonfinancial  instruments from its disclosure
               requirements.  Accordingly,  the  aggregate  fair  value  amounts
               presented may not necessarily represent the underlying fair value
               of the Company.





<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

               The following methods and assumptions were used by the Company in
               estimating fair value disclosures for financial instruments:

               Cash and Due From Banks - Fair value equals the carrying value of
such assets.

               Federal Funds Sold - Due to the short-term  nature of this asset,
               the carrying value of this item approximates its fair value.

               Investment Securities - Fair values for investment securities are
               based on quoted market prices, where available.  If quoted market
               prices are not available,  fair values are based on quoted market
               prices of comparable instruments.

               Cash  Surrender  Value of Life Insurance - The fair value of this
               item approximates its carrying value.

               Loans,  Net  -  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.

               Long-Term Borrowings - The fair values of the Company's long-term
               borrowings  are  estimated  using  discounted  cash flow analysis
               based on the Company's  current  incremental  borrowing ratio for
               similar types of borrowing arrangements.

               Federal Funds  Purchased  and  Securities  Sold Under  Repurchase
               Agreements  - The fair value of these  items  approximates  their
               carrying values.

               Off-Balance  Sheet  Instruments - Loan commitments are negotiated
               at current market rates and are relatively  short-term in nature.
               Therefore,  the estimated value of loan commitments  approximates
               the face amount. Fair values for interest rate swaps and caps are
               based on quoted market prices where  available.  If quoted market
               prices are not available,  fair values are based on quoted market
               prices of comparable instruments.





<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003



NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

               The estimated fair values of the Company's financial instruments,
               rounded to the nearest thousand, are as follows:

<TABLE>
<CAPTION>


                                                            2004                             2003
                                                 -------------------------         -------------------------
                                                    Carrying      Fair              Carrying       Fair
                                                     Amount       Value              Amount        Value
                                                 -----------    ----------         ----------    -----------

                                                   (Dollars in Thousands)            Dollars in Thousands)
                                                 -------------------------         -------------------------
     Financial Assets:
<S>                                              <C>            <C>                <C>            <C>
       Cash and due from banks                   $    6,577     $   6,577          $    8,360     $   8,360
       Federal funds sold                        $      109     $     109          $       41     $      41
       Investment securities:
          Held-to-maturity                       $   39,804     $  41,338          $   42,289     $  44,003
          Available-for-sale                     $   91,947     $  91,947          $   93,663     $  93,663
          Equity securities                      $    5,397     $   5,397          $    5,182     $   5,182
       Cash surrender value of
          life insurance                         $      943     $     943          $      905     $     905
       Loans, net                                $  218,762     $ 218,612          $  207,623     $ 209,207

     Financial Liabilities:
       Deposits                                  $  226,288     $ 226,118          $  232,934     $ 233,934
       Short-term borrowings                     $   42,000     $  42,010          $   27,020     $  27,140
       Long-term borrowings                      $   59,922     $  59,736          $   65,556     $  65,871
       Federal funds purchased                   $    6,435     $   6,435          $    4,550     $   4,550
       Securities sold under
          repurchase agreements                  $    8,103     $   8,103          $    9,935     $   9,935


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

     Other:
       Commitments to extend credit              $   40,701     $  40,701           $  39,312     $  39,312
       Standby letters of credit                 $    2,129     $   2,129           $   2,882     $   2,882
       Interest rate swap                        $      152     $     152           $     316     $     316

</TABLE>


<PAGE>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003


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

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


<TABLE>
<CAPTION>

                                 BALANCE SHEETS
                                                                                             December 31,
                                                                                       2004                 2003
                                                                                 ----------------    ---------------
               ASSETS:
<S>                                                                              <C>                 <C>
                  Cash                                                           $     1,508,691     $     1,172,379
                  Investment in subsidiaries                                          34,496,996          33,742,658
                  Premises and equipment, net                                                  -             188,038
                  Other assets                                                           305,977             252,236
                                                                                 ---------------     ---------------
               TOTAL ASSETS                                                      $    36,311,664     $    35,355,311
                                                                                 ===============     ===============
               LIABILITIES:
                  Junior subordinated debentures                                 $    5,155,000      $     5,155,000
                  Other liabilities                                                       4,896                3,712
                                                                                 ---------------     ---------------
               TOTAL LIABILITIES                                                      5,159,896            5,158,712
               STOCKHOLDERS' EQUITY                                                  31,151,768           30,196,599
                                                                                 ---------------     ---------------
               TOTAL LIABILITIES AND STOCKHOLDERS'
                  EQUITY                                                         $   36,311,664      $    35,355,311
                                                                                 ==============      ===============

                              STATEMENTS OF INCOME
                                                                                       Years Ended December 31,
                                                                                       2004                 2003
                                                                                 ----------------    ----------------
               REVENUE:
                  Dividends Received:
                     Britton & Koontz Bank, N.A.                                 $     1,700,000     $     2,000,000
                  Other income                                                             4,671              13,005
                                                                                 ---------------     ---------------
                                                                                       1,704,671           2,013,005
               EXPENSES                                                                  310,563             353,056
                                                                                 ---------------     ---------------
                                                                                       1,394,108           1,659,949
               INCOME TAX EXPENSE (BENEFIT)                                             (123,354)           (142,553)
                                                                                 ---------------     ---------------
                                                                                       1,517,462           1,802,502
               EQUITY IN UNDISTRIBUTED
                  EARNINGS (LOSSES):
                     Britton & Koontz Bank, N.A.                                       1,308,982             890,028
                     B & K Title Insurance Agency, Inc.                                   17,765              46,224
                                                                                 ---------------     ---------------
                            NET INCOME                                           $     2,844,209     $     2,738,754
                                                                                 ===============     ===============

</TABLE>


<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>


NOTE T.        CONDENSED FINANCIAL INFORMATION OF
                  BRITTON & KOONTZ CAPITAL CORPORATION (Continued)



                            STATEMENTS OF CASH FLOWS

                                                                                        Years Ended December 31,
                                                                                       2004                2003
                                                                                   --------------    --------------

               CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>               <C>
                  Net Income                                                       $    2,844,209    $    2,738,754
                  Adjustments to reconcile net income to net
                     cash provided by operating activities:
                         Provision for depreciation                                             -             1,565
                        Equity on undistributed earnings
                            and losses of affiliates                                   (1,326,747)         (936,252)
                  (Increase) decrease in other assets                                     (53,741)          (73,399)
                  Increase in other liabilities                                             1,184             3,712
                                                                                   --------------    --------------
                            Net Cash Provided by Operating Activities                   1,464,905         1,734,380
                                                                                   --------------    --------------
               CASH FLOWS FROM INVESTING ACTIVITIES:
                  Advances to subsidiaries                                                      -        (5,000,000)
               Transfer of bank premises to subsidiary                                    188,038                 -
                                                                                   --------------    --------------

                            Net Cash Provided by (Used in) Investing
                              Activities                                                  188,038        (5,000,000)
                                                                                   --------------    --------------

               CASH FLOWS FROM FINANCING ACTIVITIES:
                  Proceeds from issuance of junior subordinated
                     debentures                                                                 -         5,155,000
                  Cash dividends paid                                                  (1,353,409)       (1,352,375)
                  Cash received from stock options exercised                               36,778                 -
                                                                                   --------------    --------------

                            Net Cash Provided by (Used in)
                               Financing Activities                                    (1,316,631)        3,802,625
                                                                                   --------------    --------------

               NET INCREASE (DECREASE) IN CASH                                            336,312           537,005
               CASH AT BEGINNING OF YEAR                                                1,172,379           635,374
                                                                                   --------------    --------------
               CASH AT END OF YEAR                                                 $    1,508,691    $    1,172,379
                                                                                   ==============    ==============


</TABLE>

<PAGE>


Management's  Discussion  and  Analysis of  Financial  Condition  and 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 Bank, N.A. (the
"Bank") since year end and compares the operating  results for the twelve months
ended December 31, 2004, to the same period in 2003.

Summary

              In 2004, the Company  reported net income of $2.8 million or $1.34
per diluted  share  representing  a 3.8% increase over the $2.7 million or $1.29
per diluted share reported in 2003. Net income for the final quarter of 2004 was
$820  thousand  or $0.39 per  diluted  share,  an 18.1%  increase  over the $699
thousand or $0.33 per diluted share,  reported during the final quarter of 2003.
Return on average  equity for the year and fourth  quarter of 2004 was 9.22% and
10.44%, respectively compared to 9.08% for both periods in 2003.

             Higher  earnings  in the  final  quarter  of  2004  were  primarily
attributable  to  cost  savings  associated  with a  reduction  in  staff  and a
realignment  of branch  locations.  The Company began in 2004 with ten locations
and 149  employees,  and  ended the year with six  locations  and 131  full-time
equivalents.  Earlier,  in the second  quarter,  the Company closed and sold its
Shields  Lane  office in Natchez,  Mississippi.  During the third  quarter,  the
Company  completed the closure of two locations in Baton Rouge,  Louisiana.  The
Company also closed its Madison,  Mississippi,  office on November 19, 2004. The
Baton  Rouge  closures  follow a move into a larger,  more  updated  facility on
Bluebonnet Drive in Baton Rouge. The Madison branch closure decision was made in
order  to  focus  bank  resources  on  expansion  in  other  remaining  markets,
particularly in Baton Rouge. The Company had not made significant  investment in
facilities and had not deployed a significant number of personnel in Madison. In
Natchez,  the  Company  completed  the  renovation  of its  11,000  square  foot
Tracetown  branch  office,  which also  houses the  Company's  mortgage  banking
department.  Cost associated with the  consolidation and realignment of branches
has been expensed in 2004 and will not negatively impact future earnings.

Financial Condition

   Assets

             Total assets  increased  $4.2 million during 2004 to $377.2 million
from $373.0 million at December 31, 2003.  Contributing  to the growth in assets
were  increases  in loans of $11  million  offset by  reductions  in  investment
securities and reductions in non-earning cash.

             Average  Earning  Assets.   Interest  income  from  earning  assets
represents the Company's main source of revenue.  Average earning assets for the
period ended December 31, 2004,  totaled $354.0 million,  a $34 million or 10.5%
increase compared to December 31, 2003. Almost half of the increase was due to a
$16.7 million or 8.3% increase in average loans while the other half was from an
$18.5  million or 15.9%  increase in average  investment  securities.  Growth in
average earning assets was funded  primarily with increases in Federal Home Loan
Bank advances and proceeds from principal paydowns of investment securities.

             Investment  Securities.  Investment securities primarily consist of
mortgage-backed, municipal, corporate and agency securities. Securities that are
deemed to be  held-to-maturity  ("HTM") are accounted for by the amortized  cost
method and represent  approximately  30% of total  securities.  Those securities
designated  available-for-sale  ("AFS")  are  accounted  for at fair  value  and
represent   approximately   70%  of  the  total.   Management   determines   the
classification  of its  securities  at  acquisition.  While  average  securities
increased  form 2003 to 2004,  total HTM and AFS investment  securities  fell by
$4.2 million or 3% to $131.8  million at December 31, 2004,  from $136.0 million
at December 31, 2003.  Changes in the market  hindered late year purchases which
would have kept total investment securities level at December 31, 2004, compared
to December 31, 2003. Equity securities,  comprised primarily of Federal Reserve
Bank  stock of $522  thousand,  Federal  Home Loan Bank  ("FHLB")  stock of $4.7
million and ECD Investments,  LLC ("ECD") membership interests of $100 thousand,
increased  $215 thousand to $5.4 million in 2004 from $5.2 million in 2003,  due
to the purchase of additional stock at the FHLB.

<PAGE>


              The amortized cost of the Bank's investment securities at December
31, 2004, 2003 and 2002, are summarized as follows:

<TABLE>
<CAPTION>

                                                                  Amortized Cost
                                                  --------------------------------------------------
                                                     12/31/04          12/31/03          12/31/02
                                                  --------------------------------------------------
<S>                                               <C>                <C>               <C>
    Obligations of other U.S. Government
       Agencies and Corporations                  $  94,369,933      $  95,312,108     $  52,544,082
    Obligations of state and
       Political Subdivisions                        35,321,401         34,834,072        33,147,883
    Privately Issued Collateralized
       Mortgage Obligations                             173,419            296,220           720,866
    Corporate Securities                              1,007,752          4,033,806         5,078,192
                                                  =============      =============     =============
                                                  $ 130,872,505      $ 134,476,206     $  91,491,023
                                                  =============      =============     =============
</TABLE>

             The amortized  cost of investment  securities at December 31, 2004,
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                       $      1,458,376         4.979%
             Due after one year through five years               11,889,839         4.319%
             Due after five years through ten years              57,442,470         4.255%
             Due after ten years                                 60,081,820         4.927%
                                                           ----------------
                                                           $    130,872,505         4.559%
                                                           ================     ===============
</TABLE>

             Loans.  Loans  represent the Company's  largest  source of revenue.
Total loans for the twelve  month period  ended  December 31, 2004,  were $221.0
million,  an increase of $11.3 million  compared to the year ended  December 31,
2003.  Average  loans  increased  $16.7  million  or 8.2% to $218.3  million  at
December 31, 2004 compared to $201.6  million at December 31, 2003.  The Company
experienced  loan  growth in all  three  markets.  The  Vicksburg  market  ended
December 31, 2004, with $51 million in loans, representing 23% of the portfolio.
The Baton Rouge market ended the year with $42 million,  representing 19% of the
portfolio,  while the  majority of the  remaining  portfolio  was in the Natchez
areas.  Growth in loans was funded by  operating  activities,  excess cash flows
from  pay-downs  from  investment  securities  and a  portion  of the  Company's
increase in borrowed  funds.  Table 1 presents the Bank's loan  portfolio at the
end of the last five years. The Company has no foreign loan activities.

<TABLE>
<CAPTION>


     TABLE 1: COMPOSITION OF LOAN PORTFOLIO

                                  12/31/04         12/31/03        12/31/02          12/31/01        12/31/00
                                ------------   -------------  --------------    --------------   --------------
<S>                            <C>             <C>             <C>               <C>              <C>
   Commercial, financial and
       agricultural            $  31,589,000   $  31,853,000   $  34,264,000     $  38,101,000    $  33,102,000
   Real estate-construction       18,360,000      14,690,000       7,207,000         6,066,000       10,883,000
  Real estate-residential         73,277,000      78,128,000      65,624,000        63,379,000       76,150,000
   Real Estate-other              83,297,000      70,729,000      61,660,000        59,729,000       47,042,000
   Installment                    14,229,000      14,195,000      15,881,000        17,759,000       19,372,000
   Other                             249,000         102,000         170,000           117,000          359,000
                               -------------   -------------   -------------     -------------    -------------
       Total loans             $ 221,001,000   $ 209,697,000   $ 184,806,000     $ 185,151,000    $ 186,908,000
                               =============   =============   =============     =============    =============

</TABLE>
<PAGE>


             The following table sets forth as of December 31, 2004, the periods
in which a portion of 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.  Loan maturities are based
upon contract terms and specific  maturity dates.  Loans,  with balloon payments
and longer  amortization,  are often  repriced and  extended  beyond the initial
maturity when credit conditions remain satisfactory.

<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       $ 16,170,000    $ 14,437,000      $    982,000      $ 31,589,000
  Real estate-construction                        7,344,000       6,855,000         4,161,000        18,360,000
                                               -------------   -------------     ------------      ------------
        Total                                  $ 23,514,000    $ 21,292,000      $  5,143,000      $ 49,949,000
                                               =============   =============     ============      ============


  Predetermined interest rates                                 $ 17,475,000      $  2,042,000
                                                               ============      ============
  Floating or adjustable interest rates                        $  3,817,000      $  3,101,000
                                                               ============      ============

</TABLE>


Asset Quality

             Management  periodically  analyzes the  diversification of the loan
portfolio and the repayment ability of borrowers.  When it appears to management
that the Company will have trouble recapturing all outstanding  principal and/or
interest on a loan or loan relationship,  the debt is placed on non-accrual.  By
placing loans on non-accrual the Company  recognizes a problem credit,  foregoes
interest that is likely  uncollectible,  and adjusts the carried loan balance to
reflect the collection amount expected.  When problem credits are transferred to
non-accrual  status,  the accrual of  interest  income is  discontinued  and all
previously  accrued and  uncollected  interest for the year is reversed  against
interest income. A non-accrual loan may be restored to an accrual status when it
is no longer  delinquent and management no longer doubts the  collectibility  of
interest and principal.

             Several key measures are used to evaluate and monitor the Company's
asset  quality.  These  measures  include  the levels and  percentages  of total
nonperforming assets, loan delinquencies,  non-accrual loans,  foreclosed assets
and charge-offs.  Nonperforming  assets,  consisting of non-accrual loans, loans
past due 90 days or more and other real estate  owned  decreased to $2.2 million
at December  31, 2004,  from $3.3  million at December  31, 2003.  Nonperforming
loans as a percent of total loans net of unearned income and loans held for sale
decreased to .41% at December 31, 2004, from .74% the year before.  During 2004,
the Company resolved  certain problem credits,  primarily larger real estate and
commercial loans across all Company markets.  The resolution is reflected in the
improvement of some problem  credits and the migration of other problem  credits
from  past  due  status  through  liquidation  of  collateral.  A  breakdown  of
nonperforming loans at the end of the last five years is shown in Table 2.

<PAGE>
<TABLE>
<CAPTION>


     TABLE 2: BREAKDOWN OF NONPERFORMING LOANS

                                           12/31/04      12/31/03       12/31/02      12/31/01      12/31/00
                                         ----------    ----------     ----------    ----------     ----------
                                                                (dollars in thousands)
<S>                                      <C>           <C>            <C>           <C>            <C>
    Non-accrual loans by type
      Real estate                        $      532    $      584     $    1,513    $      750     $      950
      Installment                                26            20             16            86             39
      Commercial and all other loans            214           580            537           449             89
                                         ----------    ----------     ----------    ----------     ----------
          Total non-accrual loans               772         1,184          2,066         1,285          1,078
      Loans past due 90 days or more            129           337            253         1,510            311
                                         ----------    ----------     ----------    ----------     ----------
          Total nonperforming loans             901         1,521          2,319         2,795          1,389
          Other real estate owned (net)       1,320         1,741          1,554         1,526            773
                                         ----------    ----------     ----------    ----------     ----------
          Total nonperforming assets     $    2,221    $    3,262     $    3,873    $    4,321     $    2,162
                                         ==========    ==========     ==========    ==========     ==========

    Nonperforming loans as a percent
      of loans, net of unearned interest
      and loans held for sale                  .41%          .74%          1.29%         1.56%           .74%
                                         ==========   ===========     ==========    ==========     ==========

    Additional interest income foregone
       on non-accrual loans              $      38    $       28       $     141      $    167     $       78
                                         ==========   ===========     ==========    ==========     ==========

</TABLE>

             There were no loans in either 2004 or 2003  classified as "troubled
debt  restructurings" as defined in Statement of Financial  Accounting Standards
No.15.  At December 31, 2004,  management  was not aware of other loans that the
Company had serious  doubts as to the ability of the borrower to comply with the
present repayment terms.


Allowance for Loan Losses

             The  allowance  for  loan  losses  is  established  as  losses  are
estimated through a provision for loan losses charged against  operations and is
maintained at a level that management considers adequate to absorb losses in the
loan  portfolio.  The allowance is subject to change as management  re-evaluates
the adequacy of the  allowance on a quarterly  basis.  Management's  judgment in
determining the adequacy of the allowance is inherently  subjective and is based
on  the   evaluation   of  individual   loans,   the  known  and  inherent  risk
characteristics  and size of the loan  portfolios,  the  assessment  of  current
economic and real estate  market  conditions,  estimates of the current value of
underlying collateral, past loan loss experience, review of regulatory authority
examination  reports  and  evaluations  of  specific  loans and  other  relevant
factors.  The Bank risk rates each loan at the initiation of the transaction and
risk ratings are reviewed and changed,  when  necessary,  during the life of the
loan.

             The  allowance  consists  of  specific,   general  and  unallocated
components.  The  specific  component  relates  to  loans  that  are  considered
impaired.  Loan loss reserve factors are multiplied against the balances in each
risk rating  category to arrive at the  appropriate  level for the allowance for
loan losses.  Loans  assigned  higher risk ratings are monitored more closely by
management.  The general component of the allowance for loan losses groups loans
with similar  characteristics  and allocates a percentage  based upon historical
losses and the inherent risks within each category.  The unallocated  portion of
the allowance reflects  management's  estimate of probable but undetected losses
inherent in the portfolio;  such estimates are  influenced by  uncertainties  in
economic  conditions,  delays in obtaining  information,  including  unfavorable
information about a borrower's  financial  condition,  difficulty in identifying
triggering events that correlate to subsequent loss rates, and risk factors that
have not yet manifested  themselves in loss allocation factors.  The methodology
for  determining  the adequacy of the allowance for loan losses is  consistently
applied; however, revisions may be made to the methodology and assumptions based
on historical  information  related to charge-off  and recovery  experience  and
management's evaluation of the current loan portfolio.


             Based upon this evaluation,  management  believes the allowance for
loan losses of $2.2  million at December  31, 2004,  which  represents  1.02% of
gross loans held to maturity,  is more than adequate,  under prevailing economic
conditions,  to absorb  probable losses on existing loans. At December 31, 2004,
total reserves included specific reserves of $913 thousand,  general reserves of
$836 thousand and unallocated  reserves of $451 thousand.  At December 31, 2003,
the  allowance  for loan losses was $2.1 million or 1.00% of gross loans held to
maturity,  which was  composed of specific  reserves of $711  thousand,  general
reserves of $803 thousand and unallocated reserves of $586 thousand.

<PAGE>

             Table 3 presents the activity in the  allowance for loan losses for
the last five years.  In  establishing  the amounts of  provision  for each year
charged to operating expense,  management uses the basic methodologies described
above.  Table 4  presents  the  allocation  of the  allowance  for  loan  losses
applicable to each loan category for the periods ended  December 31, 2004,  2003
and 2002.  Information  for  2000-2001  is not  included in Table 4 because such
information is not available to the Company.

<TABLE>
<CAPTION>

     TABLE 3: ACTIVITY OF ALLOWANCE FOR LOAN LOSSES


                                              12/31/04    12/31/03    12/31/02      12/31/01     12/31/00
                                             ---------   ---------   ---------     ---------    ----------
                                                                (dollars in thousands)

<S>                                          <C>         <C>         <C>           <C>          <C>
Balance at beginning of year                 $   2,070   $   2,129   $   2,108     $   1,884    $   1,150

    Charge-offs:
      Commercial, financial & agricultural        (108)       (285)       (434)          (97)        (216)
      Real Estate-construction                     (22)         (0)        (11)          (29)          (0)
      Real Estate-residential                      (29)        (37)       (150)          (22)          (2)
      Real Estate-other                            (62)       (419)       (266)           (0)          (0)
      Installment and other                        (47)        (91)       (282)         (249)        (119)
    Recoveries:
      Commercial, financial & agricultural          23          60          64             7           75
      Real Estate-residential                        0           0          36            12            0
      Real Estate-other                              5          25           0             0            0
      Installment and other                         17          18          39            77           27
                                             ---------   ---------   ---------     ---------    ---------
    Net (charge-offs) / recoveries                (223)       (729)     (1,004)         (301)        (235)
    Provision charged to operations                390         670       1,025           525          969
                                             ---------   ---------   ---------     ---------    ---------
Balance at end of year                       $   2,237   $   2,070   $   2,129     $   2,108    $   1,884
                                             =========   =========   =========     =========    =========

     Allowance for loan losses as a percent
      of loans, net of unearned interest
      and loans held for sale                    1.02%       1.00%       1.18%         1.17%        1.01%
                                             =========   =========   =========     =========    =========

Net charge-offs as a percent of
      average loans                               .10%        .36%        .55%          .16%         .13%
                                             =========   =========   =========     =========    =========


</TABLE>

<PAGE>
<TABLE>
<CAPTION>





     TABLE 4: ALLOCATION OF ALLOWANCE FOR LOAN LOSSES


                                                                               Percentage of loans in
                                                Amount                      each category to total loans*
                                --------------------------------        -----------------------------------------
                                    2004        2003        2002            2004            2003           2002
                                ----------  ----------  ----------      ----------       ----------     ----------
<S>                             <C>         <C>         <C>              <C>             <C>             <C>
  Commercial, financial and
       agricultural             $    452    $    350    $    568           14.29%          15.19%          18.54%
   Real estate-construction           60          36         140            8.31            7.01            3.90
   Real estate-residential           149         136         112           33.16           37.26           35.51
   Real Estate-other                 764         811         673           37.69           33.73           33.36
   Installment                       361         151          95            6.44            6.77            8.59
   Other                             451         586         541             .11             .04             .10
                                --------    --------    --------       ---------        ---------       ---------
       Total loans              $  2,237    $  2,070    $  2,129          100.00%         100.00%         100.00%
                                ========    ========    ========       ==========       =========       =========

</TABLE>

     *Includes loans held for sale


Bank Premises and Equipment

             Bank Premises and equipment decreased $330 thousand to $8.3 million
at  December  31,  2004,  compared  to $8.6  million at December  31,  2003.  As
mentioned  earlier,  branch  consolidation,  renovations  and  movements to more
attractive  offices  reflect the Company's  efforts to strengthen  operations by
controlling  personnel,  occupancy and other fixed asset costs.  The Company has
budgeted $750 thousand in 2005 for future branch sites in existing  markets with
expectations  for  funding  from new  deposits  and  increased  cash  flows from
operating activities.

Other Real Estate

             The balances of other real estate (ORE)  decreased $421 thousand to
$1.3 million in 2004 from $1.7 million in 2003.  Activity  during 2004  included
foreclosures  of $560  thousand and  transfers of a closed branch office of $448
thousand,  largely offset by proceeds from sales of $1.3 million and write-downs
of $126 thousand.  After closing the Company's branch on Florida  Boulevard,  in
Baton Rouge,  Louisiana,  it was  transferred  to ORE and listed for sale with a
local realtor who is actively marketing the property.


     TABLE 5: OTHER REAL ESTATE ACTIVITY

        Balance at December 31, 2003                                   $ 1,741
                     Write-downs                      (126)
                     Proceeds from sales            (1,303)
                     Foreclosures                      560
                     Transfer bank premises            448                (421)
                                                    --------           --------
        Balance at December 31, 2004                                   $ 1,320
                                                                       ========

Funding

             Deposits.  Deposits are the Company's primary source of funding for
earning assets.  Total deposits ended 2004 at $226.3 million  compared to $232.9
million at December 31, 2003.  Average deposits decreased 2.8% from $237 million
at December  31, 2003,  to $230  million at December  31, 2004.  The decrease in
average  deposits was due primarily to normal  fluctuations  in public funds and
other non-core deposits. While non-core deposits resulted in a decrease, average
non-interest  bearing deposits increased 8.7% from $33.8 million at December 31,
2003, to $36.8 million at December 31, 2004.

<PAGE>

             During 2004, the Company joined the  Certificate of Deposit Account
Registry Service  ("CDARS"),  an innovative new deposit  placement  service that
helps banks attract and retain larger local  deposits.  Deposits at December 31,
2004, from CDARS amounted to $2.1 million.

             Maturities  of   certificates  of  deposits  of  $100,000  or  more
outstanding at December 31, 2004, and December 31, 2003, are summarized below.

<TABLE>
<CAPTION>

                                                                     12/31/04         12/31/03
                                                                ----------------  ----------------
<S>                                                             <C>               <C>
             Time remaining until maturity:
                 Three months or less                           $     14,385,622  $      9,249,501
                 Over three through six months                        13,257,922        23,742,468
                 Over six through twelve months                       11,775,185         7,023,633
                 Over twelve months                                   11,874,328        10,798,348
                                                                ----------------  ----------------
                                                                $     51,293,057  $     50,813,950
                                                                ================  ================

             Deposits at December  31, 2004,  and December 31, 2003,  consist of
the following:

                                                                     12/31/04          12/31/03
                                                                ----------------  ----------------
                  Non-interest bearing demand deposits          $     39,868,482  $     37,523,263
                  Now accounts                                        28,103,197        35,062,025
                  Money market deposit accounts                       24,974,678        27,096,521
                  Savings accounts                                    16,490,444        16,788,328
                  Certificates of deposit                            116,851,128       116,463,645
                                                                ----------------  ----------------
                                                                $    226,287,929  $    232,933,782
                                                                ================  ================
</TABLE>

             Short-Term Borrowings.  Average short-term borrowed funds increased
$17.3  million  to $42.4  million  in 2004 from  $25.1  million  in 2003.  These
borrowings  include overnight  funding through  established lines of credit with
correspondent  banks and the FHLB of Dallas.  Also  included are term  advances,
maturing  in one year or less  from  the  FHLB of  Dallas  along  with  customer
repurchase agreements Term advances from the FHLB at December 31, 2004, amounted
to $29 million, the highest balance throughout 2004, with an average balance and
rate of $21 million  and 3.03%,  compared to $20  million,  the highest  balance
throughout  2003,  and an average  balance  and rate of $9 million  and 2.82% at
December 31, 2003.  Securities sold under repurchase  agreements at December 31,
2004 were $8.1  million  with an  average  cost of 2.16%,  as  compared  to $9.9
million,  with an average  cost of 1.20% at  December  31,  2003.  Increases  in
borrowings  and cash provided from  operations  were used to replace lost public
deposits  and fund the  increase  in  loans.  Management  does not  believe  the
increase in  short-term  borrowings  will  negatively  affect  operations or its
ability to meet future liquidity needs.


Average Balances and Yield Analysis

             The following  table  presents the Bank's  average  balance  sheets
during 2004, 2003 and 2002. 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 in the
amount of $835  thousand 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 Balances and Yield Analysis
                                                                            (dollars in thousands)
                                                                       Twelve Months Ended December 31,

                                                         2004                          2003                         2002
                                            -----------------------------  ---------------------------- ---------------------------
                                                       Interest   Average            Interest  Average            Interest 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                                   $ 218,301   $ 14,031   6.43%   $ 201,595 $ 14,519    7.20%  $ 182,744 $ 14,735   8.06%
    Investment securities:
    U.S. Government                               339         12   3.54%           -        -        -      5,424      217   4.00%
    Mortgage Backed Securities                 91,870      3,819   4.16%      74,252    3,068    4.13%     45,107    2,826   6.26%
    State & municipal                          35,036      1,634   4.66%      33,424    1,576    4.72%     33,113    1,563   4.72%
    Other                                       7,748        267   3.44%       8,844      376    4.25%      8,858      397   4.49%
                                            ---------------------          -------------------          ------------------

    Total investment securities               134,993      5,732   4.25%     116,520    5,020    4.31%     92,502    5,003   5.41%

    Interest bearing bank balances                543          8   1.50%       1,447       15    1.03%      1,838       38   2.06%
    Federal funds sold                            167          3   1.56%         775       11    1.37%      2,267       33   1.47%
                                            ---------------------          -------------------          ------------------

    Total earning assets                      354,004     19,774   5.59%     320,337   19,565    6.11%    279,351   19,809   7.08%

    Allowance for loan losses                  (2,224)                        (2,209)                      (2,008)
    Cash & due from banks, non-interest
    bearing                                     8,610                          8,434                        7,818
    Bank premises & equipment                   8,547                          7,374                        7,096
    Cash Value Life Insurance and other           929                            922                          882
    Other assets                                5,630                          5,708                        6,461

                                            ----------                     ----------                   ----------
    TOTAL ASSETS                            $ 375,496                      $ 340,566                    $ 299,600
                                            ==========                     ==========                   ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Interest bearing deposits:
    Savings                                  $ 16,859      $ 122   0.72%    $ 16,910    $ 133    0.79%   $ 16,830    $ 259   1.54%
    Interest bearing checking                  34,150        186   0.54%      35,511      216    0.61%     34,300      214   0.62%
    Money rate savings                         25,631        250   0.97%      29,183      413    1.41%     21,758      460   2.11%
    Certificates of deposit and other
    time dep                                  117,039      2,780   2.38%     121,597    3,193    2.63%    115,568    4,125   3.57%
                                            ---------------------          -------------------          ------------------

    Total interest bearing deposits           193,679      3,338   1.72%     203,201    3,955    1.95%    188,456    5,058   2.68%

    Short term borrowed funds                  42,371      1,017   2.40%      25,147      451    1.79%     11,801      510   4.32%
    Long term debt                             67,665      2,110   3.12%      44,359    1,923    4.34%     34,088    1,637   4.80%
                                            ---------------------          -------------------          ------------------

    Total interest bearing liabilities        303,715      6,465   2.13%     272,707    6,329    2.32%    234,345    7,205   3.07%

    Non-interest bearing deposits              36,758                         33,818                       31,639
    Other liabilities                           4,170                          3,860                        4,293
    Shareholders' equity                       30,853                         30,181                       29,323

                                            ---------------------          -------------------          ------------------
    TOTAL LIABILITIES & SHAREHOLDERS' EQUITY$ 375,496   $  6,465           $ 340,566 $  6,329           $ 299,600 $  7,205
                                            =====================          ===================          ==================

    Interest income and rate earned                     $ 19,774   5.59%             $ 19,565    6.11%            $ 19,809   7.08%
    Interest expense and rate paid                         6,465   2.13%                6,329    2.32%               7,205   3.07%
                                                      -------------------            ------------------           -----------------
    Interest rate spread                                           3.46%                         3.79%                       4.01%
    NET INTEREST INCOME & NET YIELD ON
    AVERAGE EARNING ASSETS                              $ 13,309   3.76%             $ 13,236    4.13%            $ 12,604   4.51%
                                                      ===================            ==================           =================



</TABLE>
<PAGE>


Capital

             Stockholders'  equity  totaled  $31.2 million at December 31, 2004,
compared to $30.2  million at December 31, 2003.  The increase is primarily  the
result of net income of $2.8 million offset by dividend  payments  totaling $1.4
million,  and $572 thousand decrease in accumulated other comprehensive  income.
Comprehensive   income  is  the  result  of   unrealized   gains  or  losses  on
available-for-sale  securities and the  recognition of the fair value of certain
derivative instruments. The Company's AFS portfolio,  representing approximately
70% of investment  securities  are marked to market each month and the result of
these  unrealized  gains or losses,  net of  deferred  taxes are  reported  as a
component  of  comprehensive  income  in  stockholders'  equity.  The  ratio  of
stockholders' equity to assets increased to 8.3% at December 31, 2004, from 8.1%
at December 31, 2003. Combined capital expenditures for facilities and equipment
for 2005 are budgeted to be $1.4 million. Since depreciation expense for 2005 is
expected to be  approximately  $750 thousand,  management  does not anticipate a
significant increase in fixed assets.

             Capital  levels for the Company and the Bank  substantially  exceed
the  minimum  requirements  of  the  regulatory  agencies  for  well-capitalized
institutions in all three categories in both 2004 and 2003. Both the Company and
the Bank  maintain  levels in total  capital  to  risk-weighted  assets,  Tier 1
capital to risk-weighted  assets and a leverage ratio (Tier 1 capital to average
assets)  in excess of the  minimum  requirements  of  10.00%,  6.00% and  5.00%,
respectively.
<TABLE>
<CAPTION>

                                                      December 31, 2004              December 31, 2003
                                                    ---------------------           ---------------------
                                                    Company       Bank               Company       Bank
                                                    --------    ---------           --------    ---------
<S>                                                 <C>          <C>                 <C>         <C>
             Risk-based capital:
               Total                                $ 36,754     $ 34,836            $ 34,952    $ 33,252
               Tier 1                                 34,517       32,599              32,882      31,182
               Leverage                               34,517       32,599              32,882      31,182
             Assets:
               Quarterly average assets (1)          373,843      374,974             356,192     355,654
               Risk-weighted assets                  238,261      237,955             227,652     227,158
             Ratios:
               Total risk-based capital               15.43%       14.64%              15.39%      14.64%
               Tier 1 risk-based capital              14.49%       13.70%              14.48%      13.73%
               Leverage                                9.23%        8.69%               9.23%       8.77%

(1)      Excludes disallowed assets


</TABLE>
<TABLE>
<CAPTION>

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.
                                                                  2004          2003         2002
                                                               --------      --------    ---------
<S>                                                            <C>           <C>         <C>
             Return on average assets                             .76%          .80%         .41%
             Return on average equity                            9.22%         9.08%        4.23%
             Dividend payout ratio                              47.58%        49.38%      105.67%
             Average equity to average assets                    8.22%         8.86%        9.79%
             Net interest margin                                 3.76%         4.13%        4.51%
             Basic income per share                            $ 1.35        $ 1.30      $  0.59
             Diluted income per share                          $ 1.34        $ 1.29      $  0.59
</TABLE>

<PAGE>

Analysis of Net Income

             Net income for the twelve months ended  December 31, 2004, was $2.8
million  or $1.34 per  diluted  share,  compared  to $2.7  million  or $1.29 per
diluted  share for the same period in 2003.  Although net income was  relatively
unchanged for the two years,  management believes that the consolidation of bank
premises and reductions in bank-wide  personnel has enhanced the position of the
Company as it moves into the new year. The reduction of 20 full-time equivalents
since December 31, 2003,  and the  elimination of four locations will enable the
Company to be more efficient and productive in existing markets.

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 $73 thousand to $13.3 million for
the twelve months of 2004 compared to the same period in 2003.  While  increases
in volumes of earning assets and costing  liabilities  created a positive effect
of $870 thousand on NII, falling interest rates had the opposite effect. As more
assets than liabilities repriced in the lower rate environment, NII decreased by
$797 thousand from 2003 to 2004.  Net interest  margin  decreased  from 4.13% to
3.76%.

             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  multiplied  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.

<TABLE>
<CAPTION>



                                                                         2004 compared to 2003
                                                                   Increase/(Decrease) Due to Changes

                                                                      Total        Volume         Rate
                                                                 ---------------------------------------
                                                                          ($ in thousands)

       Interest earning assets:
<S>                                                                  <C>          <C>           <C>
       Loans                                                           (488)        1,147        (1,635)
       Investment securities:
       U.S. Government                                                   12            12             -
       Mortgage Backed Securities                                       752           732            20
       State & municipal                                                 57            75           (18)
       Other                                                           (109)          (43)          (66)
                                                                 ---------------------------------------

       Total investment securities                                      712           776           (64)

       Interest bearing bank balances                                    (7)          (12)            5
       Federal funds sold                                                (8)           (9)            1

                                                                 ---------------------------------------
       Total earning assets                                             209         1,902        (1,693)
                                                                 ---------------------------------------

       Interest bearing deposits:
       Savings                                                          (11)            -           (11)
       Interest bearing checking                                        (30)           (8)          (22)
       Money rate savings                                              (163)          (46)         (117)
       Certificates of deposit and other time deposits                 (413)         (117)         (296)
                                                                 ---------------------------------------

       Total interest bearing deposits                                 (617)         (171)         (446)

       Short term borrowed funds                                        566           378           188
       Long term debt                                                   187           826          (639)

                                                                 ---------------------------------------
       Total interest bearing liabilities                               136         1,033          (897)
                                                                 ---------------------------------------

       Change in Interest Earning Assets                                209         1,902        (1,693)
       Change in Interest Bearing Liabilities                           136         1,033          (897)
                                                                 ---------------------------------------
       Change in Net Interest Income                                     73           869          (796)
                                                                 =======================================


</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  2004. The
Company  recorded a provision for the twelve months ended  December 31, 2004, of
$390  thousand,  compared  to  $670  thousand  in  2003.  The  lower  levels  of
charge-offs  and the  quarterly  estimates  for the  level  of  reserves  in the
allowance for loan losses resulted in lower provisions for 2004.

Non-Interest Income/Non-Interest Expense

             Non-interest  income  decreased  $89 thousand  from $2.8 million in
2003 to $2.7  million in 2004.  Revenues  from the  Company's  mortgage  banking
department  were  substantially  reduced  due to a  sharp  decline  in  mortgage
production  after a rise in mortgage rates from the  historically  low levels of
2003.  Loans originated for sale to the secondary market decreased $35.1 million
from $74.5  million in 2003 to $39.4 million in 2004.  Due to this  reduction in
new originations,  gains on sale of mortgage loans decreased $297 thousand.  The
Company has budgeted modest increases in mortgage income during 2005. Additional
revenue of $66 thousand from the Company's  investment  department and a gain of
approximately  $175  thousand on the sale of the Shields  Lane branch in Natchez
helped offset the loss of revenue from mortgage loans.

             Non-interest  expense  increased  only $128 thousand or 1% to $12.0
million for the year ended December 31, 2004,  compared to $11.8 million for the
same period in 2003.  Salary expense for 2004 increased $270 thousand over 2003.
Included in the 2004 expense is approximately  $160 thousand related to deferred
compensation,  for the year 2005, associated with the resignation and retirement
of four  employees.  Non-interest  expense  also  improved  $260  thousand  from
decreases in employee benefits.

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 $8.4 million
at December 31, 2003, to $6.6 million at December 31, 2004.  The decrease is due
to a  reduction  in the amount of cash held at the Federal  Reserve  pursuant to
applicable  regulations.  Cash provided by operating  and  financing  activities
during  the  year  was $6.5 and  $1.5  million,  respectively,  while  investing
activities used $9.8 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.

Off-Balance-Sheet Arrangements

             The Bank enters into  off-balance-sheet  arrangements in the normal
course of its  business.  For a  discussion  of such  arrangements,  see Note A,
"Summary  of   Significant   Accounting   Policies-Off-Balance-Sheet   Financial
Instruments,"  "Interest-Rate Cap Agreements,"  "Interest-Rate Swap Agreements,"
Note O,  "Commitments  and  Contingencies,"  and  Note R,  "Interest  Rate  Risk
Management,"  in the  Notes  to the  Consolidated  Financial  Statements  of the
Company. Such discussion is incorporated by reference into this item.

<PAGE>

                 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.

This  statement  has not been reviewed or confirmed for accuracy or relevance by
the Office of the Comptroller of the Currency.


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 reported by NASDAQ. The sales price
information reflects  inter-dealer prices,  without retail mark-up, mark down or
commission, and may not represent actual transactions.

                          Dividends
                          Per Share              High              Low
Year 2004
         4th Quarter        $ .32               $ 18.75           $ 16.75
         3rd Quarter                            $ 18.46           $ 16.82
         2nd Quarter        $ .32               $ 20.00           $ 16.55
         1st Quarter                            $ 19.80           $ 16.64
Year 2003
         4th Quarter        $ .32               $ 19.49           $ 16.30
         3rd Quarter                            $ 17.79           $ 15.64
         2nd Quarter        $ .32               $ 17.76           $ 13.66
         1st Quarter                            $ 15.20           $ 13.64


         On December  31,  2004,  there were 529  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.

<PAGE>

         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,  $.62 per share for 2002 and
$.64 per share for 2003 and $.64 in 2004.  Historical  dividend  payout  ratios,
expressed as a percentage of net income,  for 2002, 2003 and 2004, were 105.67%,
49.38% and 47.58%, 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.

         Retained  earnings of the Bank  available for payment of cash dividends
under applicable dividend  regulations exceeded $2.8 million and $3.3 million as
of December 31, 2004, and December 31, 2003,  respectively.  The Bank intends to
retain most of these funds for capital and not pay them out as dividends.

<PAGE>

Corporate Information


Annual Meeting/ Principal Office:
         3:30 P.M., Tuesday, April 26, 2005
         Britton & Koontz Bank, National Association
         500 Main Street
         Natchez, Mississippi 39120

Transfer Agent and Registrar:
         American Stock Transfer & Trust
         59 Maiden Lane
         New York, New York 10038
         718-921-8200

Independent Auditors:
         Hannis T. Bourgeois, LLP
         2322 Tremont Drive, Suite 200
         Baton Rouge, Louisiana 70809

For Additional Information Contact:
         William M. Salters
         Chief Financial Officer
         601-445-5576
         e-mail: corporate@bkbank.com

For copies  of  the  Annual  Report  on Form 10-KSB or Quarterly Reports on Form
10-QSB filed with the Securities and Exchange  Commission, visit www4.bkbank.com
or contact:

         Cliffie Anderson
         Investor Relations
         500 Main Street
         P.O. Box 1407
         Natchez, Mississippi 39121
         601-445-5576
         e-mail: corporate@bkbank.com

Questions regarding stock holdings,  certificates,  replacement,  dividends, and
address changes should be addressed to:
         American Stock Transfer & Trust
         59 Maiden Lane
         New York, New York 10038
         718-921-8200

<PAGE>



Directors and Executive Officers

W. Page Ogden (1)
Chairman,
President & Chief Executive Officer
Britton & Koontz Capital Corporation
Britton & Koontz Bank, National Association

Robert R. Punches (1)
Partner
Gwin, Lewis & Punches, LLP, Attorneys
Vice Chairman
Britton & Koontz Capital Corporation
Britton & Koontz Bank, National Association

Albert W. Metcalfe (1)
President
Jordan Auto Company, Inc.
Secretary
Britton & Koontz Capital Corporation
Britton & Koontz Bank, National Association

W. W. Allen, Jr. (1)
President
Allen Petroleum Services, Inc.

Craig A. Bradford, D.M.D. (1)
Pediatric Dentist

A. J. Ferguson (1)
Petroleum Geologist

George R. Kurz (2)
Principal
Kurz & Hebert
Commercial Real Estate, Inc.

Bethany L. Overton (1)
President
Lambdin-Bisland Realty Co.

R. Andrew Patty II (1)
Member
Sieberth and Patty, LLC, Attorneys
Vice President
Britton & Koontz Capital Corporation

Vinod K. Thukral, Ph.D. (1)
Professor
Tulane University


(1)  Director of Britton & Koontz Capital Corporation and Britton & Koontz Bank,
     N.A.

(2)  Director of Britton & Koontz Bank, N.A. only


<PAGE>

Directors and Executive Officers


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 E. Killelea, M.D.
Pediatrician - retired

Bazile R. Lanneau
Life Insurance




<PAGE>


BRITTON & KOONTZ BANK, N.A. Locations:

Natchez, Mississippi

Main Office
500 Main Street, 39120

Tracetown Shopping Center
55 Seargent S. Prentiss Drive, 39120

St. Catherine
411 Highway 61 North, 39120


Vicksburg, Mississippi

South Frontage Road
2150 S. Frontage Road, 39180

Medical Center
2059 Highway 61 North, 39180


Baton Rouge, Louisiana

Bluebonnet
8810 Bluebonnet, 70810


<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, 2004:


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

Britton & Koontz Bank, National             United States            100%
Association

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

Britton & Koontz Statutory Trust # 1        Mississippi              100%






<PAGE>




                                   EXHIBIT 23


                                   CONSENT OF
                    INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS


<PAGE>




                       CONSENT OF HANNIS T. BOURGEOIS, LLP
                    INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS





We consent to the use of our Report of Independent  Registered Public Accounting
Firm dated January 26, 2005 on the consolidated  financial statements of Britton
& Koontz Capital  Corporation and  Subsidiaries for the years ended December 31,
2004 and 2003,  to be included in its Annual Report (Form 10-KSB) filed with the
Securities and Exchange Commission.



/s/ Hannis T. Bougeouis
--------------------------
Hannis T. Bougeois
Baton Rouge, Louisiana
February 18, 2005



<PAGE>





                                  EXHIBIT 31.1

             SECTION 302 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER


<PAGE>


                                  EXHIBIT 31.1


                    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  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 report;

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

         4. The small  business  issuer's  other  certifying  officer  and I are
         responsible for  establishing and maintaining  disclosure  controls and
         procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)),
         for the small business issuer and have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to ensure that material information relating to the small
         business issuer, including its consolidated subsidiaries, is made known
         to us by others within those entities,  particularly  during the period
         in which this report is being prepared;

         b)  evaluated  the   effectiveness  of  the  small  business   issuer's
         disclosure  controls and  procedures  and  presented in this report our
         conclusions  about the  effectiveness  of the  disclosure  controls and
         procedures,  as of the end of the period covered by the report based on
         such evaluation; and

         c) disclosed in this report any change in the small  business  issuer's
         internal  control over  financial  reporting  that occurred  during the
         small business  issuer's most recent fiscal quarter (the small business
         issuer's  fourth fiscal  quarter in the case of an annual  report) that
         has materially affected,  or is reasonably likely to materially affect,
         the small business issuer's internal control over financial  reporting;
         and

         5. The small  business  issuer's other  certifying  officers and I have
         disclosed, based on our most recent evaluation of internal control over
         financial  reporting,  to the small business  issuer's auditors and the
         audit  committee of the small business  issuer's board of directors (or
         persons performing the equivalent functions):

         a) all significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the small  business  issuer's
         ability to record, process, summarize and report financial information;
         and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who have a  significant  role in the  small  business
         issuer's internal control over financial reporting.


Date: March 15, 2005                   /s/ W. Page Ogden
                                       -----------------------------------------
                                       W. Page Ogden
                                       Chief Executive Officer



<PAGE>



                                  EXHIBIT 31.2

             SECTION 302 - CERTIFICATION OF CHIEF FINANCIAL OFFICER


<PAGE>


                                  EXHIBIT 31.2


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER


         I, William M. Salters, certify that:

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

         2. Based on my  knowledge,  this  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 report;

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

         4. The small  business  issuer's  other  certifying  officer  and I are
         responsible for  establishing and maintaining  disclosure  controls and
         procedures (as defined in Exchange Act Rules  13a-15(e) and 15d-15(e)),
         for the small business issuer and have:

         a) designed such  disclosure  controls and  procedures,  or caused such
         disclosure   controls  and   procedures   to  be  designed   under  our
         supervision,  to ensure that material information relating to the small
         business issuer, including its consolidated subsidiaries, is made known
         to us by others within those entities,  particularly  during the period
         in which this report is being prepared;

         b)  evaluated  the   effectiveness  of  the  small  business   issuer's
         disclosure  controls and  procedures  and  presented in this report our
         conclusions  about the  effectiveness  of the  disclosure  controls and
         procedures,  as of the end of the period covered by the report based on
         such evaluation; and

         c) disclosed in this report any change in the small  business  issuer's
         internal  control over  financial  reporting  that occurred  during the
         small business  issuer's most recent fiscal quarter (the small business
         issuer's  fourth fiscal  quarter in the case of an annual  report) that
         has materially affected,  or is reasonably likely to materially affect,
         the small business issuer's internal control over financial  reporting;
         and

         5. The small  business  issuer's other  certifying  officers and I have
         disclosed, based on our most recent evaluation of internal control over
         financial  reporting,  to the small business  issuer's auditors and the
         audit  committee of the small business  issuer's board of directors (or
         persons performing the equivalent functions):

         a) all significant  deficiencies and material  weaknesses in the design
         or operation of internal  control over  financial  reporting  which are
         reasonably  likely to  adversely  affect  the small  business  issuer's
         ability to record, process, summarize and report financial information;
         and

         b) any fraud,  whether or not  material,  that  involves  management or
         other  employees  who have a  significant  role in the  small  business
         issuer's internal control over financial reporting.


Date: March 15, 2005                   /s/ William M. Salters
                                       -----------------------------------------
                                       William M. Salters
                                       Chief Financial Officer of Britton &
                                       Koontz Bank, N.A.(1)


<PAGE>




                                  EXHIBIT 32.1

             SECTION 906 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER


<PAGE>


                                  EXHIBIT 32.1

                    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, 2004, 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 25, 2005                   /s/ W. Page Ogden
                                       -----------------------------------------
                                       W. Page Ogden
                                       Chief Executive Officer


<PAGE>


                                  EXHIBIT 32.2

             SECTION 906 - CERTIFICATION OF CHIEF FINANCIAL OFFICER


<PAGE>


                                  EXHIBIT 32.2

                    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, 2004, of Britton & Koontz Capital  Corporation (the "Company"),  as
filed with the  Securities  Exchange  Commission on the date hereof (the "Annual
Report"),  I,  William M.  Salters,  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 25, 2005                   /s/ William M. Salters
                                       -----------------------------------------
                                       William M. Salters
                                       Chief Financial Officer of Britton &
                                       Koontz Bank, N.A.(2)



1 Mr. Salters  performs  functions similar to those of a chief financial officer
  for the Company.

2 Mr. Salters  performs  functions similar to those of a chief financial officer
  for the Company.