UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934

                   For the fiscal year ended December 31, 2005

[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                         Commission File Number: 0-22606

                      Britton & Koontz Capital Corporation
             (Exact name of registrant as specified in its charter)

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

                                 500 Main Street
                           Natchez, Mississippi 39120
               (Address of principal executive offices) (Zip Code)

                                 (601) 445-5576
              (Registrant'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)

Indicate  by  check  mark  if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  [  ] Yes   [X] No

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.  [  ] Yes    [X] No

Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.  [X] Yes   [ ] No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III of this  Form10-K  or any
amendment to the Form 10-K.  [X]


<PAGE>

Indicate by check mark whether  the  registrant  is a large  accelerated  filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.(Check One)

   Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  [ ] Yes    [X] No

The  aggregate  market  value of  the registrant's  voting  stock  held  by non-
affiliates  computed by reference to the price of  $19.60 per share,  the  price
at which the registrant's voting stock closed on June 30, 2005, is $35,201,776.

The registrant had 2,117,086 shares of common stock  outstanding as of March 15,
2006.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of Britton & Koontz  Capital  Corporation's  Annual  Report to
Shareholders  for the fiscal year ended December 31, 2005, are  incorporated  by
reference into Part II of this Annual Report on Form 10-K.

         Portions of the Definitive  Proxy Statement of Britton & Koontz Capital
Corporation with respect to its 2006 Annual Meeting of Shareholders,  filed with
the Securities and Exchange  Commission on March 17, 2006, are  incorporated  by
reference into Part III of this Annual Report on Form 10-KSB.



<PAGE>
<TABLE>
<CAPTION>


                              CROSS REFERENCE INDEX
                                       TO
                                    FORM 10-K

                                     PART I
<S>               <C>                                                                                          <C>

ITEM  1.          BUSINESS........................................................................................*
ITEM 1A.          RISK FACTORS....................................................................................*
ITEM  2.          PROPERTIES......................................................................................*
ITEM  3.          LEGAL PROCEEDINGS...............................................................................*
ITEM  4.          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................*

                                     PART II

ITEM  5.          MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
                  STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
                  SECURITIES.....................................................................................**
ITEM  6.          SELECTED FINANCIAL DATA........................................................................**
ITEM  7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........**
ITEM  7A.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................................**
ITEM  8.          FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................................**
ITEM  9.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE ............................................................*
ITEM  9A.         CONTROLS AND PROCEDURES.........................................................................*
ITEM 9B.          OTHER INFORMATION...............................................................................*

                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............................................***
ITEM 11.          EXECUTIVE COMPENSATION........................................................................***
ITEM 12           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AND RELATED STOCKHOLDER MATTERS....................................................***
ITEM 13           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................***
ITEM 14.          PRINCIPAL ACCOUNTING FEES AND SERVICES.........................................................**

                                     PART IV

ITEM 15           EXHIBITS, FINANCIAL STATEMENT SCHEDULES.........................................................*

SIGNATURES
</TABLE>

*        Included herein.
**       Incorporated  by reference from Britton & Koontz Capital  Corporation's
         2005 Annual Report to  Shareholders,  in accordance with to Instruction
         G(2) of Form 10-K.
***      Incorporated  by reference from Britton & Koontz Capital  Corporation's
         Definitive  Proxy Statement for its 2006 Annual Meeting of Shareholders
         in accordance with Instruction G(3) of Form 10-K.


<PAGE>





                                     PART I

         This Annual Report on Form 10-K 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.  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 2005 was  dividends  from the
Bank in the amount of $2.1 million.  The Company expects that dividends from the
Bank will  continue to be the  Company's  major source of income in 2006.  As of
December 31, 2005,  the Company had total assets of  approximately  $389 million
and total  consolidated  shareholders'  equity  of  approximately  $31  million.
Financial  information about the Company,  including information with respect to
revenues from external customers,  profit and loss and total assets is contained
in Item 8, "Financial  Statements and Supplementary Data," of this Annual Report
on Form 10-K.

<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,  2004 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. The Bank is not
dependent on any one  customer or group of  customers in any of its  activities,
and it has no foreign operations.

          The  products and  services  offered by the Bank include  personal and
commercial checking accounts,  money market deposit accounts,  savings accounts,
automated  clearinghouse  services,  safe deposit box  facilities  and brokerage
services.  The Bank also offers  access to  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  $14  million  in assets  under  management  as of
December 31, 2005.

         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.

         Income from the Bank's lending activities,  including loan interest and
fees,  represent the largest  component of the Bank's total operating  revenues.
This source accounted for 66%, 62% and 65% of the Bank's total operating revenue
during 2005,  2004 and 2003,  respectively,  and the Company expects that income
from lending activities will continue to be the leading source of income related
to the Bank's activities. In addition to business and consumer lending, the bank

<PAGE>

invests a portion of its total assets in the securities  market in order to earn
a higher return compared to overnight  positions.  Investment security purchases
are  monitored  closely  and  managed on a monthly  basis by an asset  liability
committee  comprised  of four  outside  directors  along with the  bank's  Chief
Executive Officer and Chief Financial Officer.  Investment income represents the
second  largest  source of  revenue  for the Bank.  For the 2005,  2004 and 2003
fiscal years, revenue in this segment amounted to 24%, 26% and 23% of the Bank's
total operating revenue, respectively.

         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.

         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 areas 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. All of these
numerous  institutions,  including the Bank, compete in the delivery of products
and services on the basis of availability, quality and pricing.

         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

<PAGE>

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.

Employees

         As of December 31, 2005, the Company had one full-time employee, who is
also an employee of the Bank and  compensated by the Bank. The Bank's  employees
decreased from 124 full-time and 13 part-time employees at December 31, 2004, to
102  full-time  and 10  part-time  at December  31,  2005.  Contributing  to the
decrease  was a  reduction  of 13  employees  taking  advantage  of a  voluntary
separation  package offered by the Company to employees with 10 or more years of
service. The employees are not represented by a collective bargaining agreement.
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 of the Federal  Deposit  Insurance
Corporation (the "FDIC").  Accordingly, the Bank is subject to regulation by the

<PAGE>

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, 2005,  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."

         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

<PAGE>

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,  can establish  additional de novo branch  offices
within the States of Mississippi and Louisiana.  The Company regularly evaluates
merger and  acquisition  opportunities,  as well as  opportunities  to establish
additional branch offices,  and it anticipates that it will continue to evaluate
such opportunities.

         Financial Modernization

         The  Gramm-Leach-Bliley  Financial  Services  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

<PAGE>

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.  The  Company  believes  that it has
complied with the IMLAFA requirements as currently in effect.

         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"   above.  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.

         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.

<PAGE>




         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
"SEC").  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 SEC. The SEC has delayed the compliance  date for  non-accelerated
filers to include a management report on internal control of financial reporting
(and make a related certification) until the filer's first fiscal year end after
July, 2007.

Item 1A.  Risk Factors.

         In addition to the other  information  contained in or  incorporated by
reference  into this Annual  Report on Form 10-K and the  exhibits  hereto,  the
following  risk  factors  should  be  considered  carefully  in  evaluating  our
business.  The risks  disclosed  below,  either alone or in  combination,  could
materially  adversely  affect the  business,  financial  condition or results of
operations of the Company.  Additional  risks not presently known to us, or that
we currently deem immaterial, may also adversely affect our business,  financial
condition or results of operations.

Risks Related To Our Business and Industry

We are subject to interest rate risk.

         Our earnings and cash flows are largely dependent upon the net interest
income of the Company.  Net interest income is the difference  between  interest
earned on assets, such as loans and securities, and the cost of interest-bearing
liabilities,  such as deposits and  borrowed  funds.  Interest  rates are highly
sensitive  to many  factors  that are  beyond  our  control,  including  general
economic conditions and policies of various governmental and regulatory agencies
and, in particular,  the FRB. Changes in monetary policy,  including  changes in
interest  rates,  could  influence not only the interest we receive on loans and
securities  and the amount of interest we pay on deposits  and  borrowings,  but
such  changes  could also affect (i) our ability to  originate  loans and obtain
deposits,  which could reduce the amount of fee income generated,  (ii) the fair
value of our financial assets and liabilities, and (iii) the average duration of
our mortgage-backed securities portfolio. If the interest rates paid on deposits
and other borrowings  increase at a faster rate than the interest rates received
on loans and other  investments,  our net  interest  income  could be  adversely
affected,  which in turn could  negatively  affect our earnings.  Earnings could
also be  adversely  affected if the interest  rates  received on loans and other
investments fall more quickly than the interest rates paid on deposits and other
borrowings.

<PAGE>

         Although  management  believes it has  implemented  effective asset and
liability  management  strategies to reduce the potential  effects of changes in
interest  rates on the results of  operations of the Company,  any  substantial,
unexpected,  prolonged  change in market  interest  rates  could have a material
adverse effect on our financial condition and results of operations.  Volatility
in  interest  rates may also result in  disintermediation,  which is the flow of
funds away from financial  institutions  into direct  investments,  such as U.S.
Government and Agency securities and other investment vehicles, including mutual
funds,  which  generally pay higher rates of return than financial  institutions
because of the absence of federal insurance  premiums and reserve  requirements.
Disintermediation could also result in material adverse effects on our financial
condition and results of operations.

         A discussion of the policies and  procedures  used to identify,  assess
and manage certain interest rate risk is set forth in Item 7A,  "Qualitative and
Quantitative Disclosures about Market Risk," of this Annual Report on Form 10-K.

We are subject to lending risk.

         There are inherent risks associated with our lending activities.  These
risks include,  among other things,  the impact of changes in interest rates and
changes in the economic  conditions  in the markets  where we operate as well as
those across the United  States.  Increases in interest  rates and/or  weakening
economic  conditions  could  adversely  impact the ability of borrowers to repay
outstanding loans or the value of the collateral securing these loans.

         As of December 31, 2005, approximately 55% of the bank's loan portfolio
consisted of commercial,  construction  and commercial real estate loans.  These
types of loans  are  generally  viewed  as  having  more  risk of  default  than
residential  real estate  loans or  consumer  loans due  primarily  to the large
amounts loaned to individual  borrowers.  Because the loan portfolio  contains a
significant number of commercial,  construction and commercial real estate loans
with relatively large balances, the deterioration of one or a few of these loans
could cause a  significant  increase  in  non-performing  loans.  An increase in
non-performing loans could result in a net loss of earnings from these loans, an
increase  in the  provision  for  possible  loan  losses and an increase in loan
charge-offs,  all of which could have a material adverse effect on our financial
condition and results of operations.

The allowance for possible loan losses may be insufficient.

         Although we try to maintain  diversification  within our loan portfolio
in order to  minimize  the effect of  economic  conditions  within a  particular
industry,  management  also  maintains an allowance for loan losses,  which is a
reserve  established  through a provision for loan losses charged to expense, to
absorb  probable  credit  losses  inherent  in the entire  loan  portfolio.  The
appropriate level of the allowance is based on management's  quarterly  analysis
of the loan portfolio and represents an amount that management deems adequate to
provide  for  inherent  losses,  including  collective  impairment.  Among other
considerations  in  establishing  the  allowance  for  loan  losses,  management
considers  economic   conditions   reflected  within  industry   segments,   the
unemployment rate in our markets, loan segmentation,  and historical losses that
are inherent in the loan portfolio.  The  determination of the appropriate level
of  the  allowance  for  loan  losses  inherently  involves  a  high  degree  of
subjectivity and requires  management to make  significant  estimates of current
credit  risks and future  trends,  all of which may  undergo  material  changes.
Changes in economic conditions  affecting borrowers,  new information  regarding
existing loans,  identification  of additional  problem loans and other factors,
both within and outside of our control, may require an increase in the allowance
for loan losses.



<PAGE>

         In addition, bank regulatory agencies periodically review the allowance
for loan losses and may require an increase in the  provision for loan losses or
the recognition of further loan charge-offs,  based on judgments  different than
those of  management.  In addition,  if charge-offs in future periods exceed the
allowance for loan losses,  we will need  additional  provisions to increase the
allowance  for loan losses.  Any increases in the allowance for loan losses will
result in a  decrease  in net  income  and,  possibly,  capital,  and may have a
material adverse effect on our financial condition and results of operations.  A
discussion of the policies and procedures  related to  management's  process for
determining the appropriate  level of the allowance for loan losses is set forth
in Item 7,  "Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations," of this Annual Report on Form 10-K.

Bank holding  companies  depend on the accuracy and  completeness of information
about customers and counterparties.

         In deciding whether to extend credit or enter into other  transactions,
we  often  rely on  information  furnished  by or on  behalf  of  customers  and
counterparties,   including  financial  statements,  credit  reports  and  other
financial  information.  We may also rely on representations of those customers,
counterparties or other third parties,  such as independent  auditors, as to the
accuracy  and  completeness  of that  information.  Reliance  on  inaccurate  or
misleading financial  statements,  credit reports or other financial information
could have a material adverse impact on our business and, in turn, our financial
condition and results of operations.

We  are  subject  to  environmental   liability  risk  associated  with  lending
activities.

         A  significant  portion  of the  loan  portfolio  is  secured  by  real
property.  During the ordinary course of business,  we may foreclose on and take
title to properties  securing  certain loans.  In doing so, there is a risk that
hazardous or toxic substances could be found on these  properties.  If hazardous
or toxic  substances are found, we may be liable for remediation  costs, as well
as for personal injury and property damage. Environmental laws may require us to
incur  substantial  expenses and may materially  reduce the affected  property's
value or limit the ability of the Company to use or sell the affected  property.
In  addition,  future  laws or more  stringent  interpretations  or  enforcement
policies   with   respect  to  existing   laws  may  increase  our  exposure  to
environmental  liability.  Although  management  has policies and  procedures to
perform an  environmental  review during the loan  application  process and also
before initiating any foreclosure action on real property, these reviews may not
be sufficient to detect all potential  environmental  hazards.  The  remediation
costs and any  other  financial  liabilities  associated  with an  environmental
hazard  could have a material  adverse  effect on our  financial  condition  and
results of operations.



<PAGE>

The profitability of the Company depends significantly on economic conditions in
the States of Mississippi and Louisiana.

         Our success depends primarily on the general economic conditions of the
State of  Mississippi  and the State of Louisiana and the specific local markets
in which we operate.  Unlike larger  national or other  regional  banks that are
more  geographically  diversified,  we provide banking and financial services to
customers  primarily  in Natchez and  Vicksburg,  Mississippi,  and Baton Rouge,
Louisiana.  The local  economic  conditions  in these  areas have a  significant
impact on the demand for our products and services as well as the ability of our
customers to repay loans,  the value of the  collateral  securing  loans and the
stability of our deposit funding sources.

The earnings of bank holding  companies  are  significantly  affected by general
business and economic conditions.

         In  addition  to  the  risks   associated  with  the  general  economic
conditions in the markets in which we operate,  our operations and profitability
are also  impacted by general  business  and economic  conditions  in the United
States and abroad.  These conditions  include  short-term and long-term interest
rates,  inflation,  money supply,  political issues,  legislative and regulatory
changes,  fluctuations in both debt and equity capital markets,  broad trends in
industry  and  finance,  and the  strength  of the U.S.  economy  and the  local
economies  in  which  we  operate,  all of  which  are  beyond  our  control.  A
deterioration  in  economic  conditions  could  result  in an  increase  in loan
delinquencies and non-performing assets, decreases in loan collateral values and
a decrease in demand for our products and services,  among other things,  any of
which  could have a  material  adverse  impact on our  financial  condition  and
results of operations.

We operate in a highly competitive industry and market area.

         We face  substantial  competition in all areas of our operations from a
variety  of  different  competitors,  many of which are larger and may have more
financial resources.  Such competitors primarily include national,  regional and
community  banks  within the various  markets in which we operate.  We also face
competition from many other types of financial  institutions,  including savings
and  loans,  credit  unions,  finance  companies,   brokerage  firms,  insurance
companies,   factoring  companies  and  other  financial   intermediaries.   The
information  under the  heading  "Competition"  in Item 1,  "Business,"  of this
Annual Report on Form 10-K provides more  information  regarding the competitive
conditions in our markets.

         Our  industry  could  become  even  more  competitive  as a  result  of
legislative,  regulatory and technological changes and continued  consolidation.
Banks,  securities firms and insurance companies can merge under the umbrella of
a financial  holding  company,  which can offer  virtually any type of financial
service, including banking, securities underwriting,  insurance (both agency and
underwriting)  and merchant  banking.  Also,  technology has lowered barriers to
entry  and made it  possible  for  non-banks  to  offer  products  and  services
traditionally  provided  by banks,  such as  automatic  transfer  and  automatic
payment systems.  Many of our competitors have fewer regulatory  constraints and
may have lower  cost  structures.  Additionally,  many of our  competitors  have
substantially  greater  resources  than us,  including  higher  total assets and
capitalization,  greater  access to capital  markets  and a broader  offering of
financial services.

         Our  ability to compete  successfully  depends on a number of  factors,
including, among other things:


<PAGE>


o    The  ability  to  develop,  maintain  and  build  upon  long-term  customer
     relationships  based on top quality  service,  high ethical  standards  and
     safe, sound assets.
o    The ability to expand the Company's market position.
o    The scope,  relevance and pricing of products and services  offered to meet
     customer  needs and demands.
o    The rate at which we introduce  new  products and services  relative to our
     competitors.
o    Customer satisfaction with our level of service.
o    Industry and general economic trends.

Failure  to  perform  in any of  these  areas  could  significantly  weaken  our
competitive position, which could adversely affect our growth and profitability,
which, in turn, could have a material adverse effect on our financial  condition
and results of operations.

We are subject to extensive government regulation and supervision.

         The  Company and the Bank are  subject to  extensive  federal and state
regulation  and  supervision.  Banking  regulations  are  primarily  intended to
protect  depositors'  funds,  federal  deposit  insurance  funds and the banking
system as a whole,  not the economic or other interests of  shareholders.  These
regulations  affect  our  lending  practices,   capital  structure,   investment
practices,  dividend policy and growth, among other things. Changes to statutes,
regulations  or regulatory  policies,  including  changes in  interpretation  or
implementation  of the  foregoing,  could affect the Company  and/or the Bank in
substantial and unpredictable  ways. Such changes could subject us to additional
costs,  limit the types of  financial  services and products we may offer and/or
increase  the ability of  non-banks to offer  competing  financial  services and
products, among other things.

         Under  regulatory  capital  adequacy  guidelines  and other  regulatory
requirements,  the  Company  and the Bank  must  meet  guidelines  that  include
quantitative  measures  of assets,  liabilities  and certain  off-balance  sheet
items,  subject to qualitative  judgments by regulators about  components,  risk
weightings  and  other  factors.  If we  fail  to  meet  these  minimum  capital
guidelines and other regulatory  requirements,  our financial condition would be
materially and adversely  affected.  Our failure to maintain the status of "well
capitalized"  under our regulatory  framework could affect the confidence of our
customers  in us, thus  compromising  our  competitive  position.  In  addition,
failure  to  maintain  the  status of "well  capitalized"  under our  regulatory
framework  or "well  managed"  under  regulatory  examination  procedures  could
compromise our status as a bank holding  company and related  eligibility  for a
streamlined review process for acquisition proposals.

         We are also  subject to laws,  regulations  and  standards  relating to
corporate  governance and public disclosure,  including the Sarbanes Act and new
SEC  regulations.  These laws,  regulations and standards are subject to varying
interpretations  in many cases, and as a result,  their  application in practice
may evolve over time as new  guidance is provided by  regulatory  and  governing
bodies,  which  could  result in  continuing  uncertainty  regarding  compliance
matters and higher costs  necessitated  by ongoing  revisions to disclosure  and
governance  practices.  We  are  committed  to  maintaining  high  standards  of
corporate  governance and public disclosure.  As a result, our efforts to comply
with evolving laws,  regulations  and standards have resulted in, and are likely
to continue to result in, increased  expenses and a diversion of management time
and attention.



<PAGE>


         Failure to comply with laws,  regulations or policies could also result
in sanctions by regulatory  agencies and/or civil money  penalties,  which could
have a material adverse effect on our business,  financial condition and results
of  operations.  While we have policies and  procedures  designed to prevent any
such violations,  there can be no assurance that such violations will not occur.
The  information  under the  heading  "Supervision  and  Regulation"  in Item 1,
"Business," of this Annual Report on Form 10-K and Note N, "Regulatory  Matters"
to the  Consolidated  Financial  Statements of the Company in Item 8, "Financial
Statements and Supplementary  Data," of this Annual Report on Form 10-K provides
more information  regarding the regulatory  environment in which we and our Bank
operate.

Our controls and procedures may fail or be circumvented.

         Management  regularly  reviews and updates our  internal  control  over
financial reporting, disclosure controls and procedures and corporate governance
policies  and  procedures.  Any system of controls,  however  well  designed and
operated, has inherent limitations, including the possibility that a control can
be circumvented or overridden, and misstatements due to error or fraud may occur
and not be detected.  Also,  because of changes in conditions,  internal control
effectiveness  may vary over  time.  Accordingly,  even an  effective  system of
internal  control  will provide only  reasonable  assurance  with respect to our
adherence to financial  reporting,  disclosure and corporate governance policies
and procedures.

Slower  than  anticipated  growth in new  branches  and new  product and service
offerings could result in reduced income.

         We have placed a strategic emphasis on expanding our branch network and
product  offerings.  Executing  this  strategy  carries  risks  of  slower  than
anticipated  growth both in new  branches  and new  products.  New  branches and
products  require a  significant  investment  of both  financial  and  personnel
resources.  Lower than expected loan and deposit growth in new  investments  can
decrease anticipated revenues and net income generated by those investments, and
opening  new  branches  and  introducing  new  products  could  result  in  more
additional  expenses than  anticipated  and divert  resources  from current core
operations.

We are substantially dependent on dividends from the Bank for our revenues.

         The Company is a separate and distinct  legal entity from the Bank, and
it receives substantially all of its revenue from dividends from the Bank. These
dividends are the principal source of funds to pay dividends on our common stock
and  interest  and  principal  on debt.  Various  federal  and/or state laws and
regulations  limit the amount of dividends that the Bank may pay to the Company.
In the event the Bank is  unable to pay  dividends  to us, we may not be able to
service  debt,  pay  obligations  or pay  dividends  on our  common  stock.  The
inability  to receive  dividends  from the Bank  could  have a material  adverse
effect on our  business,  financial  condition  and results of  operations.  The
information   under  the  heading   "Supervision  and  Regulation"  in  Item  1,
"Business,"  of this Annual Report on Form 10-K provides a discussion  about the
restrictions governing the Bank's ability to transfer funds to us.

<PAGE>


We may not be able to attract and retain skilled people.

         Our success depends in part on our ability to retain key executives and
to attract and retain additional qualified personnel who have experience both in
sophisticated  banking matters and in operating a bank of our size.  Competition
for  such  personnel  is  strong  in the  banking  industry,  and we may  not be
successful in attracting or retaining the personnel we require.  The  unexpected
loss of one or more of our key personnel could have a material adverse impact on
our  business  because  of their  skills,  knowledge  of our  markets,  years of
industry   experience   and  the  difficulty  of  promptly   finding   qualified
replacements.  We  expect  to  effectively  compete  in this  area  by  offering
financial packages that are competitive within the industry.

<PAGE>


Our information systems may experience an interruption or breach in security.

         We rely heavily on  communications  and information  systems to conduct
our business.  Any failure,  interruption or breach in security of these systems
could result in failures or disruptions in our customer relationship management,
general  ledger,  deposit,  loan and other  systems.  While we have policies and
procedures designed to prevent or limit the effect of the failure,  interruption
or security  breach of our information  systems,  there can be no assurance that
any such failures, interruptions or security breaches will not occur or, if they
do  occur,  that  they  will be  adequately  addressed.  The  occurrence  of any
failures,  interruptions or security  breaches of our information  systems could
damage our  reputation,  result in a loss of  customer  business,  subject us to
additional  regulatory  scrutiny,  or expose us to civil litigation and possible
financial  liability,  any of which could have a material  adverse effect on the
financial condition and results of operations of the Company.

We continually encounter technological change.

         Our industry is continually  undergoing rapid technological change with
frequent  introductions  of new  technology-driven  products and  services.  The
effective  use  of  technology   increases   efficiency  and  enables  financial
institutions  to better serve  customers  and reduce costs.  Our future  success
depends,  in part,  upon our  ability to address the needs of our  customers  by
using  technology to provide  products and services  that will satisfy  customer
demands, as well as to create additional efficiencies in our operations. Many of
our competitors have substantially  greater resources to invest in technological
improvements.  We may not be able to effectively implement new technology-driven
products and services or be successful in marketing  these products and services
to our customers.  Failure to successfully keep pace with  technological  change
affecting our industry could have a material adverse impact on our business and,
in turn, our financial condition and results of operations.

Consumers may decide not to use banks to complete their financial transactions.

         While we  continually  attempt to use  technology to offer new products
and  services,  at the same time,  technology  and other  changes  are  allowing
parties to complete financial transactions that historically have involved banks
through alternative  methods.  For example,  consumers can now maintain funds in
brokerage  accounts or mutual  funds that would have  historically  been held as
bank  deposits.  Consumers can also complete  transactions  such as paying bills
and/or  transferring funds directly without the assistance of banks. The process
of eliminating banks as intermediaries, known as disintermediation, could result
in the loss of fee  income,  as well as the loss of  customer  deposits  and the
related income generated from those deposits.  The loss of these revenue streams
and the lower cost  deposits as a source of funds could have a material  adverse
effect on our financial condition and results of operations.

Severe weather,  natural disasters,  acts of war or terrorism and other external
events could significantly impact our business.

         Severe weather,  natural disasters,  acts of war or terrorism and other
adverse  external  events could have a significant  impact on the ability of the
Company to conduct  business.  Such events  could  affect the  stability  of our
deposit base, impair the ability of borrowers to repay outstanding loans, impair
the value of collateral  securing  loans,  cause  significant  property  damage,
result in loss of revenue  and/or  cause us to incur  additional  expenses.  For
example, during 2005, Hurricanes Katrina and Rita made landfall and subsequently
caused extensive flooding and destruction along the coastal areas of the Gulf of
Mexico.  Although our operations were not disrupted by these hurricanes or their
aftermath,  other severe weather or natural disasters,  acts of war or terrorism
or other adverse  external events may occur in the future.  Although  management
has established disaster recovery policies and procedures, the occurrence of any
such event could have a material adverse effect on our business, which, in turn,
could have a material  adverse effect on our financial  condition and results of
operations.

<PAGE>

Risks Associated With Our Common Stock

Our stock price can be volatile.

         Stock price  volatility  may make it more  difficult  for you to resell
your  common  stock when you want and at prices you find  attractive.  Our stock
price can fluctuate significantly in response to a variety of factors including,
among other things:

o    Actual or anticipated variations in quarterly results of operations.
o    Recommendations by securities analysts.
o    Operating and stock price  performance  of other  companies  that investors
     deem comparable to the Company.
o    News reports  relating to trends,  concerns and other issues in the banking
     and financial services industry.
o    Perceptions in the marketplace regarding us and/or our competitors.
o    New technology used, or services offered, by competitors.
o    Significant acquisitions or business combinations,  strategic partnerships,
     joint   ventures  or  capital   commitments  by  or  involving  us  or  our
     competitors.
o    Failure to integrate  acquisitions  or realize  anticipated  benefits  from
     acquisitions.
o    Changes in government  regulations.
o    Geopolitical  conditions  such as acts or threats of  terrorism or military
     conflicts.

         General market fluctuations,  industry factors and general economic and
political  conditions  and events,  such as economic  slowdowns  or  recessions,
interest rate changes or credit loss trends, could also cause our stock price to
decrease regardless of operating results.

The trading  volume in  our common  stock is less than that of other larger bank
holding companies.

         Our common  stock is listed for trading on the Nasdaq  Capital  Market;
the average daily trading volume in our common stock is low, generally less than
that of many of the our competitors and other larger bank holding  companies.  A
public trading market having the desired characteristics of depth, liquidity and
orderliness  depends on the presence in the  marketplace  of willing  buyers and
sellers of our common  stock at any given  time.  This  presence  depends on the
individual  decisions of investors  and general  economic and market  conditions
over  which we have no  control.  Given the lower  trading  volume of our common
stock, significant sales of our common stock, or the expectation of these sales,
could cause  volatility in the price of our common  stock.

<PAGE>

An investment in our common stock is not an insured deposit.

         Our common stock is not a bank deposit and,  therefore,  is not insured
against loss by the FDIC,  any deposit  insurance fund or by any other public or
private  entity.  Investment  in our common  stock is  inherently  risky for the
reasons  described in this "Risk  Factors"  section and elsewhere in this report
and is subject to the same market  forces that affect the price of common  stock
in any company.  As a result, if you acquire our common stock, you may lose some
or all of your investment.

Our Restated  Articles of Association  and By-laws,  as well as certain  banking
laws, may have an anti-takeover effect.

         Provisions of our Restated  Articles of Association and By-laws,  which
are  exhibits to this Annual  Report on Form 10-K,  and  federal  banking  laws,
including regulatory approval  requirements,  could make it more difficult for a
third party to acquire the  Company,  even if doing so would be  perceived to be
beneficial to our  shareholders.  The combination of these provisions  impedes a
non-negotiated  merger or other  business  combination,  which,  in turn,  could
adversely affect the market price of our common stock.

Item 2.  Properties.

         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.  All branches  operated are full service and the list below  describes the
locations  and  general  character  of the  properties  owned and  leased by the
Company and the Bank:

                                                            Approximate Office
    Location                Own/Lease        Use            Space (square feet)
----------------------      ---------     ------------     ---------------------
Natchez

500 Main Street
Natchez, 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


<PAGE>

                                                            Approximate Office
    Location                Own/Lease        Use            Space (square feet)
----------------------      ---------     ------------     ---------------------
Baton Rouge

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


         The  lease  for  the  Company's   branch  located  at  8810  Bluebonnet
Boulevard,  in Baton Rouge, Louisiana is 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 2005.

                                     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  "Management's  Discussion  and
Analysis  of  Financial  Condition  and  Results  of  Operations  -  Information
Regarding  our  Common  Stock"  in  the  Company's  2005  Annual  Report  to its
Shareholders (the "2005 Annual Report"). See the information under Item 11 below
for disclosures  relating to the Company's equity  compensation  plan. A copy of
the 2005  Annual  Report is filed as an  exhibit to this  Annual  Report on Form
10-K.

         The Company did not  repurchase  any equity  securities  during the 4th
quarter of 2005.

Item 6.  Selected Financial Data

         The  information  required in response to this item is  incorporated by
reference  to the  material  under the  heading  "Financial  Highlights"  in the
Company's  2005 Annual  Report.  A copy of the 2005 Annual Report is filed as an
exhibit to this Annual Report on Form 10-K.

Item 7.  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  Company's
2005Annual  Report.  A copy of the 2005 Annual  Report is filed as an exhibit to
this Annual Report on Form 10-K.

<PAGE>



Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         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 -  Qualitative  and
Qualitative  Disclosures about Market Risk" in the Company's 2005 Annual Report.
A copy of the 2005 Annual Report is filed as an exhibit to this Annual Report on
Form 10-K.

Item 8.  Financial Statements and Supplementary Data

         The  information  required in response to this item is  incorporated by
reference  to the  material  under the headings  "Consolidated  Balance  Sheet",
"Consolidated  Statements  of Income",  "Consolidated  Statements  of Changes in
Stockholders'  Equity",  "Consolidated  Statements of Cash Flows", "Notes to the
Consolidated  Financial Statements" and Management's  Discussion and Analysis of
Financial  Conditions and Results of Operations - Quarterly Financial Trends" in
the Company's 2005 Annual  Report.  A copy of the 2005 Annual Report is filed as
an exhibit to this Annual Report on Form 10-K.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure.

         None.

Item 9A.  Controls and Procedures.

         Within  the 90 days  prior to the date of this  Annual  Report  on Form
10-K, the Company carried out an evaluation,  under the supervision and with the
participation  of the Chief  Executive  Officer of the  Company  ("CEO") and the
Chief  Financial  Officer of the  Company  ("CFO") of the  effectiveness  of the
design and operation of the Company's  disclosure  controls and  procedures  (as
defined in Rule 13a-15(e) and Rule 15d-15(e)  under the Securities  Exchange Act
of 1934, as amended) as of December 31, 2005. 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.

         During  the  fourth  quarter  of 2005,  there  were no  changes  to the
Company's internal control over financial reporting that materially affected, or
was reasonably likely to materially  affect, the Company's internal control over
financial reporting.

Item 9B.  Other Information.

         None.


<PAGE>





                                    PART III

Item 10.  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  "Stock  Ownership",
"Board of  Directors",  "Election  of  Directors",  "Committees  of the Board of
Directors" and "Executive Officers and Executive  Compensation" in the Company's
Definitive  Proxy  Statement for its 2006 Annual  Meeting of  Shareholders  (the
"2006 Proxy Statement").

         Code of Ethics

         The Board of Directors adopted a code of business conduct and ethics in
compliance  with  Item 406 of  Regulation  S-K  that  applies  to the  principal
executive officer, principal financial officer, principal accounting officer and
controller of the Company and the Bank.  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.

Item 11.  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 2006 Proxy Statement.

Item 12.  Security  Ownership  of  Certain  Beneficial Owners and Management and
          Related Stockholder Matters.

         In partial  response to this item, the Company  incorporates  into this
report by reference the material under the heading "Stock Ownership" in the 2006
Proxy Statement.

         The following table summarizes the company's equity  compensation  plan
information as of December 31, 2005. The  underlying  plan,  which is more fully
described in Note J to the consolidated financial statements included in Item 8,
"Financial  Statements  and  Supplementary  Data," of this Annual Report on Form
10-K, has been previously approved by a vote of the shareholders.

<PAGE>
<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
                                           warrants and rights     warrants and rights       in column (a))
                                          --------------------    ---------------------   ---------------------

Plan category

<S>                                       <C>                     <C>                     <C>
Equity compensation plans
  approved by security holders(1)               35,520                 $ 17.29                   124,480
Equity compensation plans not
  approved by security holders                       -                       -                         -

     Total                                      35,520                 $ 17.29                   124,480


</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 35,520 shares were outstanding as of December 31, 2005.

Item 13.  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 2006 Proxy Statement.

Item 14.  Principal Accounting 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 2006 Proxy Statement.

                                     Part IV

Item 15.  Exhibits, Financial Statement Schedules.

          (a)  Financial Statements

            1. Consolidated  Financial  Statements and Supplementary Information
               for  Years  Ended December 31, 2005, 2004 and 2003, which include
               the following:

              (a) Selected Financial Data
              (b) Report of Independent  Registered  Public  Accounting  Firm
              (c) Consolidated  Balance  Sheets

<PAGE>

              (d) Consolidated  Statements  of Income
              (e) Consolidated  Statements of Changes in Shareholders' Equity
              (f) Consolidated  Statement  of Cash Flows
              (g) Notes to the Consolidated Financial Statements

            2. Financial Statement Schedules

                None

            3. Exhibits required by Item 601 of Regulation S-K

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.


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 Agreement 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.

13                2005 Annual Report to Shareholders

21                Subsidiaries of the Company

23                Consent of Independent Registered Public Accountants


<PAGE>

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

*        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-K pursuant to Item 15 of Form 10-K.

The Company does not have any un-registered long-term debt exceeding ten percent
of the total assets of the Company and its subsidiaries on a consolidated basis.
The Company will file with the Securities and Exchange Commission, upon request,
a copy of all long-term debt instruments.



<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            BRITTON & KOONTZ CAPITAL CORPORATION


Date: March 21, 2006                     By: /s/ W. Page Ogden
                                            ------------------------------------
                                            W. Page Ogden
                                            Chairman and Chief Executive Officer
                                            Date:  March 21, 2006

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.


Signature                                  Title                       Date

/s/ W. Page Ogden                        Chairman,                March 21, 2006
------------------------------------     Chief Executive Officer
W. Page Ogden                            and Director


/s/ William M. Salters                   Treasurer,               March 21, 2006
------------------------------------     Chief Financial Officer,
William M. Salters                       Principal Accounting
                                         Officer and Controller


/s/ W. W. Allen Jr.                      Director                 March 21, 2006
------------------------------------
W. W. Allen, Jr.


/s/ Craig A. Bradford, DMD               Director                 March 21, 2006
--------------------------------
Craig A. Bradford, DMD


/s/ A. J. Ferguson                       Director                 March 21, 2006
------------------------------------
A. J. Ferguson


/s/ Bethany L. Overton                   Director                 March 21, 2006
------------------------------------
Bethany L. Overton


/s/ R. Andrew Patty II                   Director                 March 21, 2006
------------------------------------
R. Andrew Patty II


/s/ Robert R. Punches                    Vice-Chairman and        March 21, 2006
------------------------------------     Director
Robert R. Punches


<PAGE>




Signature                                  Title                      Date


/s/ Vinod K. Thukral, Ph.D.              Director                 March 21, 2006
---------------------------------
Vinod K. Thukral, Ph.D.


/s/ George R. Kurz                       Director                 March 21, 2006
---------------------------------
George R. Kurz




<PAGE>




                                  EXHIBIT INDEX

Exhibit         Description of Exhibit

3.2             By-laws of Britton & Koontz Capital Corporation, as amended

13              2005 Annual Report to Shareholders

21              Subsidiaries of Britton & Koontz Capital Corporation, as amended

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