UNITED STATES
                       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, 2003

                         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 2003 fiscal year were $22,331,606.

The aggregate  market value of the issuer's voting stock held by  non-affiliates
computed by reference  to the price of $18.55 per share,  the price at which the
issuer's voting stock was sold on March 22, 2004, is $29,497,134.

The issuer had 2,113,087 shares of common stock outstanding as of March 1, 2004.

<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Definitive  Proxy Statement of Britton & Koontz Capital
Corporation with respect to its 2004 Annual Meeting of Shareholders,  filed with
the Securities and Exchange  Commission on March 26, 2004, and its Annual Report
to  Shareholders  for fiscal year ended December 31, 2003, are  incorporated  by
reference into Parts II and III of this Annual Report on Form 10-KSB.

Transmittal 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 AND RELATED STOCKHOLDER MATTERS....**
ITEM  6.          MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...**
ITEM  7.          FINANCIAL STATEMENTS........................................**
ITEM  8.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE ........................**
ITEM  8A          CONTROLS AND PROCEDURES......................................*

                                    PART III

ITEM  9.          DIRECTORS AND EXECUTIVE OFFICER OF THE REGISTRANT..........***
ITEM 10.          EXECUTIVE COMPENSATION.....................................***
ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AND RELATED STOCKHOLDER MATTERS.................***
ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............***
ITEM 13.          EXHIBITS, LIST AND REPORTS ON FORM 8-K.......................*
ITEM 14.          PRINCIPAL ACCOUNTANT FEES AND SERVICES.....................***

-------

*        Included herein.

**       The material required by Items 5 through 7 is incorporated by reference
         from the Britton & Koontz Capital  Corporation's  2003 Annual Report to
         Shareholders pursuant to Instruction E(2) of Form 10-KSB.

***      The  material  required  by  Items  9  through  12 is  incorporated  by
         reference  from the Britton & Koontz Capital  Corporation's  Definitive
         Proxy Statement for its 2004 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 First National Bank, a national  banking  association
headquartered in Natchez,  Mississippi (the "Bank").  The Bank is a wholly-owned
subsidiary  of the  Company,  and  stock  of the  Bank  is  the  Company's  most
significant asset. In December 1998, the Company invested $1.0 million for a 35%
interest  in Sumx  Inc.  ("Sumx"),  a  company  formed  to  develop  and  market
internet-based electronic banking to financial institutions.  See "Sumx Inc." On
September 15, 2000,  the Company  acquired  250,000 shares of Series B Preferred
Stock in Sumx for $250,000, bringing the Company's total percentage ownership in
Sumx up to  approximately  37%. On April 17, 2001, B&K Title  Insurance  Agency,
Inc.  was  organized  as a  Mississippi  corporation;  in May 2001,  the Company
acquired  all of the  outstanding  common stock of B&K Title  Insurance  Agency,
Inc., making B&K Title Insurance Agency,  Inc. the Company's second wholly-owned
subsidiary.  On June 1, 2001, the Company received  approval to convert the loan
production  office in Baton  Rouge,  Louisiana  to a full  service  branch.  The
Company opened a loan production  office in Madison,  Mississippi on February 1,
2003  which was  converted  into a full  service  branch in 2004.  In 2004,  the
Company  also  completed  the   construction  of  a  new  branch  in  Vicksburg,
Mississippi  and moved  into a larger  more  visible  facility  in Baton  Rouge,
Louisiana.  The  Company  is  continuing  renovation  of an  existing  branch in
Natchez, Mississippi.

<PAGE>

         The  Company's  major source of income in 2003 was  dividends  from the
Bank in the amount of  $2,000,000.  The Company  expects that dividends from the
Bank will  continue to be the  Company's  major source of income in 2004.  As of
December 31, 2003, the Company had total assets of  approximately  $374 million,
and total consolidated shareholders' equity of approximately $30 million.

         The Bank

         The Bank conducts a full service banking  business from its main office
and three branch  offices in Natchez,  Mississippi,  two branches in  Vicksburg,
Mississippi,  one branch office in Madison, Mississippi and three branch offices
in Baton Rouge, Louisiana. The Bank provides commercial and consumer banking and
trust services to customers in Adams,  Madison and Warren Counties,  Mississippi
and East Baton Rouge Parish,  Louisiana, and the adjoining counties and parishes
in Mississippi  and  Louisiana.  The  geographical  area serviced by the Bank is
economically   diverse  and  includes  public  and  private  sector  industries,
including government service,  manufacturing,  tourism,  agriculture and oil and
gas  exploration.  As of  December  31,  2003,  the Bank  had  total  assets  of
approximately $373 million and total deposits of approximately $234 million.

         The  products and  services  offered by the Bank  include  personal and
commercial  checking accounts,  money market deposit accounts,  savings accounts
and  automated  clearinghouse  services.  The Bank also  offers  money  transfer
services,  safe  deposit  box  facilities  and access to a network of  automated
teller machines. The Bank is a full-service  residential and commercial mortgage
lender.  The  Bank  also  engages  in  other  commercial  and  consumer  lending
activities,  including,  among other things,  the issuance of VISA credit cards.
The Bank's trust department offers a range of trust services, acting as trustee,
executor,  administrator,  custodian,  guardian and agent with approximately $13
million in assets under management as of December 31, 2003.

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

         The Insurance Agency

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

         Sumx Inc.

         Since 1998, the Company has funded Sumx, Inc.  ("Sumx"),  a Mississippi
corporation   established  to  provide  electronic  banking  solutions  for  the
financial  industry,  to the extent of approximately  $2,000,000.  Sumx is owned

<PAGE>


approximately 37% (a $1,250,000  preferred interest) by the Company,  19% by Mr.
Bazile R. Lanneau,  Jr. and 44% by Summit Research,  Inc., a Texas  corporation.
The  funds  provided  to  Sumx  have  been  used  for  marketing  and  continued
development of the SumxNet  Internet banking system.  Sumx maintains  offices in
Natchez,  Mississippi and Highland  Village,  Texas.  During 2002, the Company's
investment  in and  advances  to Sumx were  written off and  reflected  in other
expense due to the uncertainty  regarding Sumx' future  prospects and valuation.
Sumx  continues  to  support  its eight  financial  institution  clients  and is
actively seeking business partners.

          Prior to August,  2002, Mr. Lanneau, Jr. devoted a substantial portion
of his time to the business of Sumx. Mr.  Lanneau,  Jr. now devotes the majority
of his time to traditional  banking  activities  with a small portion devoted to
the activities of Sumx. Mr. Lanneau,  Jr. receives no compensation from Sumx and
is compensated by the Company and the Bank. Mr. Ogden,  President and CEO of the
Company  and  the  Bank,   serves  without   compensation   as  a  director  and
Secretary-Treasurer of Sumx.  As of March 26, 2004, eight financial institutions
used Sumxs internet banking technology to provide  internet banking services for
their customers.


Supervision and Regulation

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

         As a national  bank,  the Bank is subject to  supervision  and  regular
examination   by  the  Office  of  the   Comptroller   of  the   Currency   (the
"Comptroller").  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


<PAGE>

December 31, 2003,  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."  For additional  information  regarding  restrictions on the
Bank's payment of dividends,  see Item 5 - "Market for Common Equity and Related
Stockholder Matters."

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


<PAGE>

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.

         Financial Modernization

         The  Gramm-Leach-Bliley  Financial Services Moderation 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 structure
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.

         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.

         Restriction on Dividends

         The Company is a legal entity  separate and distinct from the Bank, and
substantially  all of the  Company's  revenues  result from  amounts paid by the

<PAGE>


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

         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.


Employees

          As of December 31, 2003,  the Company had two full-time  employees who
are also employees of the Bank, and the Bank had approximately 145 full-time and
9  part-time  employees.  The  employees  are not  represented  by a  collective
bargaining unit. The Company  believes that its relationship  with its employees
is good.

Competition

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

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


<PAGE>

         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.  In addition,  these competitors are likely to be better  capitalized
than the Bank and the Company.

Reports to Security Holders

         The Company files reports with the Securities and Exchange  Commission.
These reports include annual reports on Form 10-KSB,  quarterly  reports on Form
10-QSB  and  current  reports  on Form 8-K.  The  Company  also  files its proxy
statements with the Securities and Exchange Commission.  The public may read and
copy the materials the Company files at the Securities and Exchange Commission's
Reading Room at 450 Fifth Street, N.W., Washington,  D.C. 20549.  Information on
the operation of the Reading Room may be obtained by calling 1-800-SEC-0330. The
Securities and Exchange Commission also maintains a website  (www.sec.gov) which
contains reports, proxy statements and other information regarding the Company.

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 six of its  branches
are  located  and  leases  the  property  for two of its  branches  and its loan
production office. In the judgment of management,  the facilities of the Company
and the Bank are  generally  suitable  and adequate for the needs of the Company
and the Bank. The following  list describes the locations and general  character
of the properties owned and leased by the Company and the Bank:


<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
    148 N. Shields Lane
    Natchez, Mississippi                   Owned                Branch Office                     6,000
    55A Sgt. Prentiss Drive
    Natchez, Mississippi                   Owned                Branch Office                     9,900

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

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

    Baton Rouge
    -----------
    7142 Florida Boulevard
    Baton Rouge, LA.                       Owned                Branch Office                     6,000
    12716 Perkins Road
    Baton Rouge, LA.                       Leased               Branch Office                     2,000
    8810 Bluebonnet.
    Suites A & B
    Baton Rouge, LA.                       Leased               Branch Office                     2,500

    Madison
    -----------
    141 Executive Drive
    Suite 5
    Madison, MS                            Leased               Branch Office                     2,200

</TABLE>

Item 3.  Legal Proceedings.

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

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

         There were no matters  submitted to the Company's  shareholders  during
the fourth quarter of 2003.

                                     PART II

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

         The  information  required in response to this item is  incorporated by
reference to the material  under the heading  "Information  Regarding our Common
Stock" in the  Company's  2003 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.

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

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

<PAGE>


Item 7.  Financial Statements.

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

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

         The  Company's  consolidated  financial  statements  for the year ended
December  31,  2003 were  audited  by the firm of Hannis T.  Bourgeois,  LLP.  A
representative  of Hannis T.  Bourgeois,  LLP is  expected  to be present at the
annual meeting. If present, the representative will have the opportunity to make
a statement  if he or she desires to do so and will be  available  to respond to
appropriate questions.

         On March 18, 2003, May & Company,  Inc. notified the Company that May &
Company  would  decline to stand for  re-election  as the  Company's  certifying
accountant  for the fiscal year ending  December  31, 2003 because May & Company
intended to discontinue  auditing  publicly traded  companies.  In addition,  on
April 15, 2003, the Company's audit committee  approved the engagement of Hannis
T. Bourgeois as the Company's  certifying  accountant for the fiscal year ending
December  31,  2003.  The  report of May & Company  on the  Company's  financial
statements  for the  fiscal  year ended  December  31,  2002 did not  contain an
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty,  audit scope or accounting principles. During the fiscal year ended
December 31, 2002 and through March 18, 2003, there were no  disagreements  with
May & Company on any matter of accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedure,  which disagreements,  if
not resolved to the satisfaction of May & Company,  would have caused it to make
reference  thereto  in  its  report  on  the  Company's  consolidated  financial
statements for such year.

         The above  information  was  disclosed in a Current  Report on Form 8-K
filed with the Securities and Exchange Commission on March 18, 2003. The Company
filed as an exhibit  to the Form 8-K a letter  from May & Company in which May &
Company agreed to the disclosure in the Form 8-K.


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 Company's Chief  Executive  Officer ("CEO") and Chief
Financial  Officer ("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, 2003. Based on this evaluation, the Company's 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.

<PAGE>



                                    PART III

Item 9.  Directors and Executive Officers.

         The information  required in response to this item is incorporated into
this report by reference to the material under the headings  "Nominees (Class II
Directors),"  "Continuing  Directors  (Class I and III  Directors),"  "Executive
Officers",  "Audit Committee" and "Section 16(a) Beneficial  Ownership Reporting
Compliance"  in the  Company's  Definitive  Proxy  Statement for its 2004 Annual
Meeting of Shareholders (the "Proxy Statement").

         Code of Ethics

         The Board of Directors adopted a code of business conduct and ethics as
a guide for senior executive and financial officers of the Company, the Bank and
its  subsidiaries  which is attached to this report as Exhibit 14. Access to the
Company's Code of Ethics will become  available to  shareholders  of the Company
and  customers of the Bank through the Bank's  website at  www.bkbank.com  later
this year.

Item 10.  Executive Compensation.

         The information  required in response to this item is incorporated into
this  report  by  reference  to  the  material  under  the  headings  "Executive
Compensation", "Stock Options", "Aggregate Option Exercises in 2003 and Year-End
Option Values" and "Employment Agreements" 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 by reference to the material  under the headings  "Security  Ownership of
Management" and "Security  Ownership of Certain  Beneficial Owners" in the Proxy
Statement.

         The following table summarizes the company's equity  compensation  plan
information as of December 31, 2003. 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.

<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))
                                          --------------------    ---------------------   ---------------------

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

     Total                                     53,677                    17.33                  110,000



</TABLE>

(1)      Includes 110,000 shares that remain available for future issuance under
         the Company's Long Term Incentive Plan. See the  information  under the
         heading "Stock Options" in the Proxy Statement.

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   "Certain
Relationships and Related Transactions" in the Proxy Statement.

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

(a)      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
          Annual  Report on Form 10-KSB filed with the  Commission  on March 30,
          1998.

4.1*      Shareholder  Rights  Agreement  dated June 1, 1996  between  Britton &
          Koontz Capital  Corporation  and Britton & Koontz First National Bank,
          as  Rights  Agent,   incorporated  by  reference  to  Exhibit  4.3  to
          Registrant's  Registration  Statement  on Form S-8,  Registration  No.
          333-20631, filed with the Commission on January 29, 1997.


<PAGE>

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.

10.02*    Employment Agreement dated December 31, 2002, between Britton & Koontz
          Capital  Corporation  and  Bazile  R.  Lanneau,  Jr.  incorporated  by
          reference  to  Exhibit  10.02 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,  W. Page Ogden,  and Bazile R.
          Lanneau,  Jr., incorporated by reference to Exhibit 10 to Registrant's
          Current  Report on Form 10-QSB filed with the  Commission  on November
          14, 1994, (Commission File Number 33-56204).

10.04*    System Purchase Agreement dated January 22, 1996 between the Britton &
          Koontz First National Bank and InterBank Systems,  Inc.,  incorporated
          by  reference to Exhibit 10.5 to  Registrant's  Annual  Report on Form
          10-KSB filed with the  Commission on March 29, 1996 and Form 10-KSB/A,
          Amendment  Number  1,  filed  with the  Commission  on June 14,  1996,
          (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*    Stock Purchase  Agreement  dated December 3, 1998,  between  Britton &
          Koontz Capital Corporation and Sumx Inc.  incorporated by reference to
          Exhibit 10.09 to Registrant's  Annual Report on Form 10-KSB filed with
          the Commission on March 30, 1999.

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

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

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

<PAGE>


13        Annual Report to Shareholders

14        Code of Ethics

16*       Letter from May & Company,  Inc.  incorporated by reference to Exhibit
          16 to the Company's current report on Form 8-K filed March 18, 2003.

21        Subsidiaries of the Registrant

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.

 (b)     Reports on Form 8-K

         On October 22,  2003,  the Company  filed a Current  Report on Form 8-K
reporting 2003 third quarter earnings.

         On October 23,  2003,  the Company  filed a Current  Report on Form 8-K
announcing the declaration of a semi-annual dividend.

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  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)


                                        By:/s/ W. Page Ogden
                                           -------------------------------------
                                           W. Page Ogden
                                           Chairman and Chief Executive Officer
                                           Date: March 26, 2004


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


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

/s/ W. Page Ogden                 Chairman,                       March 26, 2004
--------------------------        Chief Executive
W. Page Ogden                     Officer and
                                  Director
                                  (Principal Executive Officer)


/s/ W. W. Allen, Jr.              Director                        March 26, 2004
--------------------------
W. W. Allen, Jr.


/s/ Craig A. Bradford             Director                        March 26, 2004
--------------------------
Craig A. Bradford, DMD


/s/ A. J. Ferguson                Director                        March 26, 2004
--------------------------
A. J. Ferguson


/s/ Bazile R. Lanneau, Jr.        Vice President, Chief           March 26, 2004
--------------------------        Financial Officer, Treasurer,
Bazile R. Lanneau, Jr.            Asst. Secretary and Director
                                  (Principal Financial Officer)
                                  (Principal Accounting Officer)


/s/ Albert W. Metcalfe            Secretary and                   March 26, 2004
--------------------------        Director
Albert W. Metcalfe


<PAGE>



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


/s/ Bethany L. Overton            Director                        March 26, 2004
--------------------------
Bethany L. Overton


/s/ R. Andrew Patty II            Director                        March 26, 2004
--------------------------
R. Andrew Patty II


/s/ Robert R. Punches             Vice-Chairman and               March 26, 2004
--------------------------        Director
Robert R. Punches


/s/ Vinod K. Thukral, Ph.D.        Director                       March 26, 2004
--------------------------
Vinod K. Thukral, Ph.D.



<PAGE>




                                   EXHIBIT 13

                          ANNUAL REPORT TO SHAREHOLDERS



<PAGE>



To our Shareholders


The performance of your bank showed marked improvement in 2003 over the previous
year.  Earnings per share  amounted to $1.29 versus $.59 in the prior year,  and
the stock  price of the  corporation  increased  from  $14.60 to  $17.27.  While
reflecting the recovery from the disappointing  write-off of the Sumx technology
investment  in 2002,  the 2003  earnings  increase  included the benefits of the
tremendous  amount of mortgage  refinancing that occurred in the midst of record
low mortgage  rates.  B&K's  origination  and sale of mortgages  amounted to $74
million, compared to $43 million in the previous year.

Although we do not expect to see the same volume of  mortgage  refinancing  this
year,  B&K  is  establishing  itself  in  growing  markets  where  we  have  the
opportunity  not only to refinance  existing  mortgages but also to finance home
construction  and purchases.  In 2003, for example,  we opened a small office in
the dynamic Madison, Mississippi, market where Nissan Corporation has brought on
line a state of the art assembly  plant that  promises to transform  the central
Mississippi  economy.  Vicksburg  and Baton  Rouge also  reflect  very  vibrant,
although highly competitive, economies that afford us the opportunity to sustain
and enlarge our mortgage line of business.

In addition  to the leased  Madison  office,  the bank built and opened a second
facility in Vicksburg,  moved into larger, more visible quarters in Baton Rouge,
and began the long needed  renovation  of the bank's highly  utilized  Tracetown
Branch in Natchez.  Addressing the physical plant needs of the bank and staffing
such facilities with well trained,  highly motivated  individuals in new markets
have  dented  earnings,  but such  efforts  position  the bank for new levels of
growth and profitability. Not surprisingly, the bank's 2003 performance included
solid growth in loans and transaction deposits.

We enter 2004 with prospects of continued  growth,  particularly  in the area of
commercial  loans.  The  national  economy  shows  signs  of  recovery,  and the
confidence of many  businesses in the  mid-market  sector to commit to expansion
and renewal may well drive demand for  commercial  loans.  B&K is  positioned to
respond with personal, quick service.

Amidst incidences of tragic corporate  mis-governance,  your bank remains one of
the most trusted  institutions in the communities we serve.  Britton & Koontz is
proud and honored to be a recipient of this of trust.  As always,  thank you for
your continued support and I look forward to hearing from you.



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


<PAGE>



                You will notice an updated bank logo and message

                       on the cover of this year's report.

                  It boldly reflects what we have long provided

                         in our home market of Natchez.



                             "Answers. Since 1836."



                   Today as we grow our presence in new cities

                        and enhance products system wide,

                    we will continue to confidently encourage

                          future and existing customers

              to "Ask Us" for the answers to their financial needs.


                  Convenient locations and superior technology

                           Are expected and necessary,

                       but ultimately providing solutions

                  to our customers' needs in personal, timely,

                               and innovative ways

                     will continue to be the key to success.



                  Thus, we increase brand loyalty, the value of

              our franchise and the trust of you our shareholders.




<PAGE>

<TABLE>
<CAPTION>



BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES


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


YEAR END BALANCE                                      2003               2002              2001              2000
                                                    ---------          ---------         ---------         ---------
<S>                                                 <C>                <C>               <C>               <C>
Total Assets                                        $ 374,406          $ 308,879         $ 298,856         $ 270,119
Gross Loans (net of unearned income)                  206,591            180,398           179,711           186,861
Loans held for sale                                     3,102              4,393             5,416                 -
Allowance for Loan Losses                               2,070              2,129             2,108             1,884
Total Deposits                                        232,934            233,012           217,680           211,323
Stockholders' Equity                                   30,197             29,329            28,291            25,524


FOR THE YEAR

Net Interest Income                                  $ 13,451           $ 12,649          $ 12,080          $ 11,086
Net Income                                              2,739              1,240             3,248             2,691


PER SHARE

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


OTHER KEY INFORMATION

Return on Average Assets (%)                             0.80               0.41              1.19              0.98
Return on Average Equity (%)                             9.13               4.23             12.76             10.70
Dividend Payout (%)                                     49.38             105.67             39.61             43.00
Efficiency Ratio (%)                                    69.82              70.79             60.69             69.07
Net Interest Income/Average Earning Assets (%)           4.19               4.51              4.73              4.32
Allowance for Loan Losses/Loans (%)                      1.00               1.18              1.17              1.01
Non Performing Loans/Loans (%)                           0.74               1.29              1.56              0.74
Loans/Deposits (%)                                      88.69              77.42             82.56             88.42
Total Stockholders' Equity/Assets (%)                    8.07               9.50              9.47              9.45
Total  Risk-Based Ratio (%)                             13.16              14.71             14.81             14.81
Tier 1 Risk-Based Ratio (%)                             12.25              13.61             13.71             13.74
Tier 1 Leverage Ratio (%)                                7.83               8.71              9.52              8.76
Weighted Average Shares Outstanding:
Basic                                               2,113,087          2,109,809         2,108,973         2,080,046
Diluted                                             2,116,163          2,112,405         2,111,383         2,101,714

</TABLE>




                      BRITTON & KOONTZ CAPITAL CORPORATION
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2003 AND 2002



<PAGE>


                          INDEPENDENT AUDITOR'S REPORT



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


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

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

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


/s/May and Company
Vicksburg, Mississippi
January 16, 2003


<PAGE>


                                January 22, 2004

                          INDEPENDENT AUDITOR'S REPORT



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


We have  audited  the  Consolidated  Balance  Sheet of Britton & Koontz  Capital
Corporation  and   Subsidiaries  as  of  December  31,  2003,  and  the  related
Consolidated  Statements of Income,  Changes in Stockholders'  Equity,  and Cash
Flows for the year then ended. These consolidated  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  based on our  audit.  The
consolidated  financial  statements of Britton & Koontz Capital  Corporation and
Subsidiaries  as of December 31,  2002,  were  audited by other  auditors  whose
report  dated  January  16,  2003,  expressed  an  unqualified  opinion on those
statements.

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

In our opinion,  the 2003 consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial  position of Britton &
Koontz Capital  Corporation  and  Subsidiaries  as of December 31, 2003, and the
results  of their  operations  and their  cash  flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.


                                                     Respectfully submitted,

                                                    /s/Hannis T. Bourgeois, LLP




<PAGE>
<TABLE>
<CAPTION>



              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2003 AND 2002





                                     ASSETS

                                                                                       2003                 2002
                                                                                 ----------------    -----------------

ASSETS:
<S>                                                                             <C>                  <C>
    Cash and Due from Banks:
       Non-interest bearing                                                      $      7,390,638    $       8,914,638
       Interest bearing                                                                   969,117            2,562,236
                                                                                  ---------------     ----------------

              Total Cash and Due from Banks                                             8,359,755           11,476,874

    Federal funds sold                                                                     41,361            3,560,000
    Investment Securities:
       Held-to-maturity (market value of $44,002,578
          and $34,305,172, respectively)                                               42,289,409           33,147,883
       Available-for-sale (amortized cost of $92,186,797
          and $58,343,140, respectively)                                               93,663,436           60,565,938
       Other equity securities                                                          5,181,800            3,345,200
    Loans, less unearned income of $3,931 in 2003 and
       $14,782 in 2002, and allowance for loan losses of
       $2,070,162 in 2003 and $2,129,328 in 2002                                      204,521,159          178,268,969
    Loans held-for-sale                                                                 3,102,006            4,393,397
    Bank premises and equipment, net                                                    8,596,254            7,022,975
    Other real estate, net                                                              1,741,127            1,554,323
    Accrued interest receivable                                                         2,095,662            2,123,114
    Cash surrender value of life insurance                                                905,090              900,550
    Core deposits, net of accumulated amortization
       of $518,088 in 2003 and $410,472 in 2002                                         1,096,122            1,203,738
    Other assets                                                                        2,813,267            1,316,327
                                                                                   --------------     ----------------

TOTAL ASSETS                                                                     $    374,406,448    $     308,879,288
                                                                                   ==============     ================




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


<PAGE>

</TABLE>
<TABLE>
<CAPTION>











                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                       2003                 2002
                                                                                 ----------------    -----------------

LIABILITIES:
    Deposits:
<S>                                                                             <C>                 <C>
       Non-interest bearing                                                     $      37,523,263   $       33,843,654
       Interest bearing                                                               195,410,519          199,168,384
                                                                                  ---------------     ----------------
              Total Deposits                                                          232,933,782          233,012,038

    Federal funds purchased                                                             4,550,000          -
    Securities sold under repurchase agreements                                         9,935,300            2,141,790
    Federal Home Loan Bank advances                                                    87,575,761           41,315,484
    Junior subordinated debentures                                                      5,000,000           -
    Accrued interest payable                                                              830,498              956,437
    Advances from borrowers for taxes and insurance                                       367,375              326,242
    Accrued taxes and other liabilities                                                 3,017,133            1,797,823
                                                                                  ---------------     ----------------
              Total Liabilities                                                       344,209,849          279,549,814


STOCKHOLDERS' EQUITY:
    Common  stock,  $2.50 par value per  share;  12,000,000  shares  authorized;
       2,127,587 shares issued and 2,113,087 shares outstanding
       at December 31, 2003 and 2002                                                    5,318,968            5,318,968
    Additional paid-in capital                                                          7,225,408            7,225,408
    Retained earnings                                                                  16,690,918           15,304,539
    Accumulated other comprehensive income                                              1,218,680            1,737,934
                                                                                  ---------------     ----------------
                                                                                       30,453,974           29,586,849
    Less:  Treasury stock, 14,500 shares, at cost                                        (257,375)            (257,375)
                                                                                  ---------------     ----------------
              Total Stockholders' Equity                                               30,196,599           29,329,474
                                                                                  ---------------     ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $     374,406,448   $      308,879,288
                                                                                 ================    =================

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002




                                                                                       2003                 2002
                                                                                 ----------------    -----------------

INTEREST INCOME:
<S>                                                                              <C>                 <C>
    Interest and fees on loans                                                   $     14,518,794    $      14,734,982
    Interest on investment securities:
       Taxable interest income                                                          3,459,158            3,477,193
       Exempt from federal income taxes                                                 1,623,748            1,608,837
    Other interest income                                                                  10,589               33,329
                                                                                  ---------------     ----------------

          Total Interest Income                                                        19,612,289           19,854,341

INTEREST EXPENSE:
    Interest on deposits                                                                3,953,939            5,057,718
    Interest on Federal Home Loan Bank advances                                         2,130,880            2,082,094
    Interest on short-term borrowings                                                      76,469               65,324
                                                                                  ---------------     ----------------

          Total Interest Expense                                                        6,161,288            7,205,136
                                                                                  ---------------     ----------------

NET INTEREST INCOME                                                                    13,451,001           12,649,205

PROVISION FOR LOAN LOSSES                                                                 670,000            1,025,000
                                                                                  ---------------     ----------------

NET INTEREST INCOME AFTER PROVISION
    FOR LOAN LOSSES                                                                    12,781,001           11,624,205

OTHER INCOME:
    Service charges on deposit accounts                                                 1,355,639            1,273,892
    Income from fiduciary activities                                                       41,972               40,667
    Net gain on sales of loans                                                            628,705              311,283
    Net gain on sales of available-for-sale securities                                          -              154,175
    Other                                                                                 693,001              615,204
                                                                                  ---------------        -------------

          Total Other Income                                                            2,719,317            2,395,221
                                                                                  ---------------     ----------------
          Income before Other Expenses                                                 15,500,318           14,019,426



</TABLE>


<PAGE>
<TABLE>
<CAPTION>


                                                                                       2003                 2002
                                                                                 ----------------    -----------------

OTHER EXPENSES:
<S>                                                                              <C>                 <C>
    Salaries                                                                            5,790,994            4,886,180
    Employee benefits                                                                   1,130,880              839,758
    Director fees                                                                         172,057              173,980
    Net occupancy expense                                                                 854,710              754,100
    Equipment expense                                                                     957,554              953,669
    Other real estate, net                                                                130,648              379,723
    FDIC assessment                                                                        35,279               37,099
    Advertising                                                                           261,770              235,188
    Stationery and supplies                                                               268,519              275,268
    Amortization                                                                          107,616              107,616
    Other investee losses                                                                       -            1,145,607
    Other                                                                        ----------------    -----------------

          Total Other Expenses                                                         12,011,839           11,791,064
                                                                                 ----------------    -----------------

INCOME BEFORE INCOME TAX EXPENSE                                                        3,488,479            2,228,362

INCOME TAX EXPENSE                                                                        749,725              988,450
                                                                                   --------------    -----------------

NET INCOME                                                                       $      2,738,754    $       1,239,912
                                                                                  ===============    =================
PER SHARE DATA:
    Basic earnings per share                                                     $           1.30    $            0.59
                                                                                  ===============    =================

    Diluted earnings per share                                                   $           1.29    $            0.59
                                                                                  ===============    =================

    Cash dividends per share                                                     $           0.64    $            0.62
                                                                                  ===============    =================


</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, 2003 AND 2002



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

<S>                                          <C>                <C>                 <C>                 <C>
BALANCE, December 31, 2001                        2,109,055     $     5,308,888     $    7,189,563      $  15,373,489
   Comprehensive income:
     Net income                                           -                   -                  -          1,239,912
     Other comprehensive income
       (net of tax):
         Net change in unrealized gain
           on derivative                                  -                   -                  -                  -
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment                                     -                   -                  -                  -
                                             ---------------    ----------------    ---------------     --------------
         Total Comprehensive Income                       -                   -                  -          1,239,912
                                             ---------------    ----------------    ---------------     --------------

Stock options exercised                               4,032              10,080             35,845                  -
Cash dividends declared
   ($0.62 per share)                                      -                   -                  -         (1,308,862)
                                             ---------------    ----------------    ---------------     --------------
BALANCE, December 31, 2002                        2,113,087           5,318,968          7,225,408         15,304,539
   Comprehensive income:
     Net income                                           -                   -                  -          2,738,754
     Other comprehensive income
       (net of tax):
         Net change in unrealized gain
           on derivative                                  -                   -                  -                  -
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment                                     -                   -                  -                  -
                                             ---------------    ----------------    ---------------     --------------
         Total Comprehensive Income                       -                   -                  -          2,738,754
                                             ---------------    ----------------    ---------------     --------------
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
                                             ===============    ================    ===============     ==============





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, 2001                             $       676,575       $     (257,375)       $     28,291,140
   Comprehensive income:
     Net income                                                      -                    -               1,239,912
     Other comprehensive income
       (net of tax):
         Net change in unrealized gain
           on derivative                                       249,490                    -                 249,490
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment                                          811,869                    -                 811,869
                                                       ----------------      ----------------      ----------------
         Total Comprehensive Income                          1,061,359                    -               2,301,271
                                                       ----------------      ----------------      ----------------

Stock options exercised                                              -                    -                  45,925
Cash dividends declared
   ($0.62 per share)                                                 -                    -              (1,308,862)
                                                       ----------------      ----------------      ----------------
BALANCE, December 31, 2002                                   1,737,934             (257,375)             29,329,474
   Comprehensive income:
     Net income                                                      -                    -               2,738,754
     Other comprehensive income
       (net of tax):
         Net change in unrealized gain
           on derivative                                       (51,402)                   -                 (51,402)
         Net change in unrealized
           gain on securities available
           for sale, net of reclassification
           adjustment                                         (467,852)                   -                (467,852)
                                                       ----------------      ----------------      ----------------
         Total Comprehensive Income                           (519,254)                   -               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
                                                       ================      ================      ================


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


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002


                                                                                        2003                2002
                                                                                   ---------------     ---------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>                 <C>
    Net income                                                                     $     2,738,754     $     1,239,912
    Adjustments to reconcile net income to
       net cash provided by operating activities:
          Deferred taxes                                                                   231,819             165,025
          Provision for loan losses                                                        670,000           1,025,000
          Loss on advances to affiliate                                                          -             586,781
          Provision for depreciation                                                       724,609             785,747
          Provision for other real estate losses                                           (47,248)            296,120
          Gain on sale of investments available-for-sale                                         -            (154,175)
          Loss on sale of premises and equipment                                            45,612                   -
          (Gain) loss on sale of other real estate                                          97,119              (8,400)
          Stock dividends received                                                         (73,500)            (81,300)
          Net amortization (accretion) of securities                                       768,417             (79,656)
          Amortization of valuation adjustment on acquired loans                                 -              10,305
          Amortization of acquisition premium                                              107,616             107,616
          Equity in investee losses                                                              -             558,826
    Net change in:
       Loans held for sale                                                               1,291,391           1,022,146
       Accrued interest receivable                                                          27,452             202,158
       Cash surrender value of life insurance                                               (4,540)            (44,160)
       Other assets                                                                     (1,545,369)           (372,294)
       Accrued interest payable                                                           (125,939)           (363,376)
       Accrued taxes and other liabilities                                               1,296,390              (4,623)
                                                                                   ---------------     ---------------

              Net Cash Provided by Operating Activities                                  6,202,583           4,891,652
                                                                                   ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    (Increase) decrease in federal funds sold                                            3,518,639          (2,510,000)
    Proceeds from principal paydowns of investment
       securities held-to-maturity                                                       2,778,056                   -
    Proceeds from sales and maturities of investment
       securities available-for-sale                                                     1,001,558           8,249,296
    Proceeds from principal paydowns of investment
       securities available-for-sale                                                    33,469,472          14,123,566
    Advances to affiliate                                                                        -            (410,151)
    Repayment of advances by affiliate                                                           -              19,087


</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                                                                                        2003                2002
                                                                                   ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES (Continued):
<S>                                                                               <C>                  <C>
    Purchases of investment securities held-to-maturity                                (12,103,638)         (5,170,133)
    Purchases of investment securities available-for-sale                              (68,899,060)        (26,901,438)
    Purchase of other equity securities                                                 (1,763,100)           (100,000)
    Net increase in loans                                                              (27,709,749)         (3,179,498)
    Proceeds from sale of other real estate                                                517,331           1,102,847
    Purchases of premises and equipment                                                 (2,343,500)           (637,768)
                                                                                   ---------------     ---------------

              Net Cash Used in Investing Activities                                    (71,533,991)        (15,414,192)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Net increase in demand deposits                                                      7,728,910           9,737,956
    Net increase (decrease) in certificates of deposit                                  (7,807,166)          5,594,226
    Net increase (decrease) in federal funds purchased                                   4,550,000                   -
    Advances from Federal Home Loan Bank                                                61,020,000                   -
    Repayments of  Federal Home Loan Bank advances                                     (14,759,723)         (5,684,516)
    Net increase (decrease) in securities sold under
       repurchase agreements                                                             7,793,510            (956,227)
    Proceeds from issuance of junior subordinated
       debentures                                                                        5,000,000                   -
    Increase (decrease) in advances from borrowers
       for taxes and insurance                                                              41,133              11,676
    Cash dividends paid                                                                 (1,352,375)         (1,308,862)
    Cash received from stock options exercised                                                   -              45,925
                                                                                   ---------------     ---------------

              Net Cash Provided by Financing Activities                                 62,214,289           7,440,178
                                                                                   ---------------     ---------------

NET DECREASE IN CASH AND DUE FROM BANKS                                                 (3,117,119)         (3,082,362)

CASH AND DUE FROM BANKS AT BEGINNING OF YEAR                                            11,476,874          14,559,236
                                                                                    --------------      --------------

CASH AND DUE FROM BANKS AT END OF YEAR                                             $     8,359,755     $    11,476,874
                                                                                    ==============      ==============


</TABLE>

<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                 FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
<TABLE>
<CAPTION>



                                                                                        2003                2002
                                                                                   ---------------     ---------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
    INFORMATION:
       Cash payments for:
<S>                                                                                <C>                 <C>
          Income taxes                                                             $       474,931     $     1,209,772
                                                                                    ==============      ==============

          Interest on deposits and borrowings                                      $     6,454,657     $     7,568,512
                                                                                    ==============      ==============

SCHEDULE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES:
       Transfer of loans foreclosed to other real estate                           $       787,559     $     1,418,677
                                                                                    ==============      ==============

       Change in unrealized (gains) losses on
          securities available-for-sale                                            $      (746,159)    $    (1,147,796)
                                                                                    ==============      ==============

       Change in the deferred tax effect in unrealized
          gains (losses) on securities available-for-sale                          $      (278,307)    $       335,927
                                                                                    ==============      ==============

       Change in unrealized gains on derivative                                    $       (81,980)    $      (397,911)
                                                                                    ==============      ==============

       Change in the deferred tax effect in
          unrealized gains on derivative                                           $       (30,578)    $       148,421
                                                                                    ==============      ==============



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

</TABLE>

<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2003 AND 2002



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 First  National  Bank (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
               four  locations  in  Natchez,   Mississippi,   two  locations  in
               Vicksburg,  Mississippi,  one in Madison,  Mississippi, and three
               locations 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, 2003 AND 2002



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  includes stock in the Federal Reserve
               Bank and the Federal Home Loan Bank, which are restricted and are
               carried at cost.  Equity securities also include an investment in
               the voting stock of Sumx Inc. which was recorded at cost adjusted
               for the Company's share of the investee's earnings or losses.

               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, 2003 AND 2002



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 30 years.



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



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, 2003 AND 2002



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
               Year Ended December 31, 2003:
                  Basic Earnings Per Share:
                     Income Available to Common
<S>                                                               <C>                   <C>              <C>
                         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>
<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002


<TABLE>
<CAPTION>

NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               Earnings Per Share -continued
                                                                      Income              Shares           Per Share
                                                                     (Numerator)     (Denominator)      Amount

               Year Ended December 31, 2002:
                  Basic Earnings Per Share:
                     Income Available to Common
<S>                                                               <C>                 <C>                <C>
                         Shareholders                             $     1,239,912         2,109,809       $       0.59
                                                                                                           =============
                  Diluted Earnings Per Share:
                     Options                                                    -             2,596
                                                                    -------------    --------------

                  Income Available to Common
                     Shareholders Assuming Conversion             $     1,239,912         2,112,405       $        0.59
                                                                   ==============    ==============        ============

</TABLE>


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

               Off-Balance-Sheet Financial Instruments

               In the  ordinary  course of  business,  the Bank has entered into
               off-balance-sheet    financial    instruments    consisting    of
               interest-rate  swap and cap  agreements,  commitments  to  extend
               credit  and  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  2003 and 2002 were  $261,770  and
               $235,188, respectively.







<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



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





<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               Stock Compensation Plans - continued

               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  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.

               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 December of 2002, the FASB issued FASB  Interpretation  No. 45
               which  requires  recognition  at fair  value of a  liability  for
               certain  types  of  guarantees  at  the  time  of  issuance.  The
               interpretation also provides guidance on disclosures required for
               guarantees.   The  provisions  of   Interpretation   No.  45  are
               applicable for  guarantees  issued or modified after December 31,
               2002. The application of this  Interpretation  by the Company had
               no material effect on its financial position.

               In May 2003, the FASB issued  Statement No. 150,  "Accounting for
               Certain  Financial   Instruments  with  Characteristics  of  both
               Liabilities   and  Equity,"  to  establish   new   standards  for
               classification,  measurement,  and disclosure of certain types of
               financial instruments having  characteristics of both liabilities
               and equity.  SFAS No. 150 is effective for financial  instruments
               entered into or modified after May 31, 2003, and for contracts in
               existence  at the start of the  first  interim  period  beginning
               after June 15, 2003.  For financial  instruments  existing at the
               beginning  of the  effective  interim  period  that were  created
               before SFAS No. 150 was issued, the impact of initial measurement
               should be  treated  as the  cumulative  effect  of an  accounting
               change.  The Company is in compliance  with the  requirements  of
               this  Statement  as  the  applicable   financial   instrument  is
               reflected as a liability  on the  consolidated  balance  sheet at
               December 31, 2003.







<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE A.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

               Recent Accounting Pronouncements      - continued

               In November of 2003,  the FASB  issued  FASB Staff  Position  No.
               144-1 which  addresses the  accounting  for assets  acquired by a
               lender upon  foreclosure and subsequent gain from  disposition of
               the asset. This pronouncement is effective November 11, 2003. The
               adoption of FASB Staff  Position  No. 144-1 by the Company had no
               effect on its financial position or results of operations.

               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." The new
               disclosure  requirements  apply  to  fiscal  years  ending  after
               December 15, 2003. The disclosures required by this pronouncement
               are  included in these  financial  statements  as of December 31,
               2003.

               Issued in January 2003,  FASB  Interpretation  No. 46 establishes
               new standards  regarding the consolidation of a variable interest
               entity  (VIE)  when the  controlling  enterprise  does not hold a
               majority  voting  interest  in the entity.  Interpretation  46 is
               effective immediately for VIEs created after January 31, 2003. In
               January 2004, Revised FASB  Interpretation 46,  "Consolidation of
               Variable   Interest    Entities,"   was   issued   and   replaces
               Interpretation  No. 46.  Revised  Interpretation  46 provides the
               same general principles from the previous  interpretation,  makes
               technical corrections to the original interpretation and provides
               additional  clarifying guidance on certain  application  matters.
               Generally,   such  disclosure  is  effective  for  all  financial
               statements issued after December 31, 2003, regardless of the date
               in which the VIE was created.  The Company is in compliance  with
               the requirements of this Interpretation.

               Reclassifications

               Certain reclassifications have been made to the 2002 consolidated
               financial  statements in order to conform to the  classifications
               adopted for reporting in 2003.



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>


NOTE B.        INVESTMENT SECURITIES
               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
                                                     --------------    ------------     -----------    --------------
               Obligations of State and
<S>                                                    <C>              <C>             <C>            <C>
                  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
                                                      =============     ============    ===========    ==============

</TABLE>
<TABLE>
<CAPTION>


               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
                                                    ---------------    ------------   -------------    ---------------

<S>                                                 <C>                <C>             <C>              <C>
               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>

<TABLE>
<CAPTION>

               The  aggregate  fair values and  aggregate  unrealized  losses on
               securities whose fair values are below book values as of December
               31,  2003,  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.

                                      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>            <C>
  Held-to-Maturity:
    Obligations of
      State and Political
      Subdivisions
      (one security)              $    330,534    $     (4,188)     $        -      $           -      $    330,534   $   (4,188)
                                  ============    =============     ===========     ==============     ============   ===========
  Available-for-Sale:
    Mortgage-Backed
      Securities (six
      securities)                 $ 34,877,431    $   (110,749)     $        -      $           -      $ 34,877,431   $ (110,749)
                                  ============    =============     ===========     ==============     ============   ===========
</TABLE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>


NOTE B.        INVESTMENT SECURITIES  (Continued)

               The  amortized  cost and  approximate  market value of investment
               securities  classified as  held-to-maturity at December 31, 2002,
               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             $   33,147,883    $   1,160,272   $     (2,983)    $   34,305,172
                                                      =============     ============    ===========      =============
</TABLE>

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

                                                                           Gross           Gross
                                                       Amortized        Unrealized      Unrealized          Fair
                                                         Cost              Gains          Losses            Value
                                                   ----------------    -------------  -------------    ---------------
<S>                                                  <C>                <C>            <C>              <C>
               Mortgage-Backed Securities            $  53,264,948      $  2,074,459   $         -      $  55,339,407
               Other Debt Securities                     5,078,192           148,339`            -          5,226,531
                                                    ---------------     ------------   ------------    ---------------
                                                     $  58,343,140      $  2,222,798   $         -      $  60,565,938
                                                    ===============     ============   ============     ==============
</TABLE>


               Equity  securities  at December  31,  2003 and 2002,  include the
               following:  Federal  Home  Loan  Bank  stock  of  $4,512,300  and
               $2,825,700,  respectively;  the Federal  Reserve Bank of $521,700
               and $371,700,  respectively;  First National  Bankers Bank in the
               amount of $47,800 for 2003 and 2002; and a $100,000 investment in
               ECD Investments,  LLC for both years. The Bank did not redeem any
               stock in the  Federal  Home Loan Bank  during  2003 or 2002.  The
               stocks are considered  restricted stock as only banks,  which are
               members of these  organizations,  may acquire or redeem them. The
               stock is  redeemable at its face value;  therefore,  there are no
               gross   unrealized   gains  or  losses   associated   with  these
               investments.

               Equity  securities  also reflect an  investment  in Sumx Inc., an
               electronic banking  development and marketing company.  Britton &
               Koontz  Capital  Corporation  invested $1 million during 1998 and
               $250,000  during 2001 in Sumx Inc.  This  investment  reflects an
               approximate  37%  preferred  interest in the voting stock of Sumx
               Inc. This  investment is carried at equity,  which is the cost of
               the investment adjusted for the Company's  proportionate share of
               the investee's earnings or losses.

               Sumx Inc.  incurred net losses of $-0- and  $505,737  during 2003
               and 2002,  respectively.  The  Company's  proportionate  share of
               these  losses  was  $-0-  and  $185,201,   respectively  and  are
               reflected  in  other  expense.  During  2002,  the  advances  and
               investment  were written off, as reflected in other expense,  due
               to uncertainty regarding Sumx's future prospects and value.
<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE B.        INVESTMENT SECURITIES  (Continued)

               The President and CEO and the Vice  President of Britton & Koontz
               Capital  Corporation  serve as two of the  three  members  of the
               Board of Directors of Sumx Inc. In addition,  the Vice  President
               of Britton & Koontz Capital  Corporation  individually owns 19.5%
               of the voting stock of Sumx Inc.

               Investment   securities  carried  at  approximately   $67,190,000
               (approximate  market value $69,621,000) at December 31, 2003, and
               approximately  $54,059,000 (approximate market value $56,236,000)
               at  December  31,  2002,  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, 2003, by  contractual  maturity
               (including mortgage-backed securities), are shown below. Expected
               maturities  will  differ  from  contractual   maturities  because
               borrowers may have the right to call or prepay  obligations  with
               or without call or prepayment penalties.
<TABLE>
<CAPTION>

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

<S>                                                                  <C>             <C>                 <C>
               Due After One Year through Five Years                 5.657%          $   2,217,382       $   2,342,220
               Due After Five Years through Ten Years                6.726%              5,483,185           5,852,078
               Due After Ten Years                                   6.326%             34,588,842          35,808,280
                                                                                    --------------      --------------

                                                                                     $  42,289,409       $  44,002,578
                                                                                    ==============      ==============

</TABLE>
<TABLE>
<CAPTION>

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


<S>                                                                  <C>           <C>                 <C>
               Due in One Year or Less                               5.614%        $     3,030,504     $     3,097,582
               Due After One Year through Five Years                 3.952%             10,542,884          10,703,015
               Due After Five Years through Ten Years                4.133%             47,513,960          47,827,418
               Due After Ten Years                                   5.514%             31,099,449          32,035,421
                                                                                   ---------------     ---------------

                                                                                   $    92,186,797     $    93,663,436
                                                                                   ===============     ===============

</TABLE>



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>


NOTE C.        LOANS

               The Bank's loan  portfolio  (rounded to the nearest  thousand) at
               December 31, 2003 and 2002, consists of the following:
                                                                                       2003                 2002
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Commercial, Financial and Agricultural                            $     31,853,000    $      34,264,000
               Real Estate-Construction                                                14,690,000            7,207,000
               Real Estate-Mortgage                                                   148,857,000          127,284,000
               Installment                                                             14,195,000           15,881,000
               Overdrafts                                                                 102,000              170,000
                                                                                 ----------------    -----------------

                  Total loans                                                    $    209,697,000    $     184,806,000
                                                                                 ================    =================
</TABLE>

               Loans on which  accrual  of  interest  has been  discontinued  or
               reduced were approximately  $1,184,000 and $2,066,000 at December
               31,  2003 and 2002,  respectively.  If interest on such loans had
               been  accrued,  the income  would have  approximated  $28,000 and
               $141,000 in 2003 and 2002, respectively. At December 31, 2003 and
               2002,  respectively,  the recorded  investment in loans that were
               considered  to  be  impaired  was   approximately   $563,000  and
               $1,716,366,  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, 2003 and 2002, were approximately $337,000
               and $253,000, 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 $2,947,193  and $2,989,191 at
               December 31, 2003 and 2002,  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.

               The  aggregate  amount of loans to such related  parties for 2003
and 2002 is as follows:
<TABLE>
<CAPTION>

                                                                                       2003                 2002
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Balance at January 1                                              $      2,989,191    $       3,407,502
               New Loans                                                                2,868,208            2,597,447
               Repayments                                                              (2,910,206)          (3,015,758)
                                                                                 ----------------    -----------------

               Balance at December 31                                            $      2,947,193    $       2,989,191
                                                                                 ================    =================

</TABLE>


<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002

<TABLE>
<CAPTION>


NOTE D.        ALLOWANCE FOR LOAN LOSSES
               An analysis of the allowance for loan losses is as follows:
                                                                                           2003              2002
                                                                                     --------------     --------------
<S>                                                                                  <C>                <C>
               Balance at January 1                                                  $    2,129,328     $    2,108,247
                                                                                      -------------      -------------
                  Credits Charged Off:
                     Commercial, Financial and Agricultural                                (285,131)          (555,005)
                     Real Estate - Mortgage                                                (456,085)          (389,736)
                     Installment Loans                                                      (91,068)          (206,635)
                                                                                       ------------       -------------
                         Total Charge-Offs                                                 (832,284)        (1,151,376)
                  Recoveries:
                     Commercial, Financial and Agricultural                                  59,832             48,716
                     Real Estate - Mortgage                                                  24,635             66,760
                     Installment Loans                                                       18,651             31,981
                                                                                       ------------       ------------
                         Total Recoveries                                                   103,118            147,457
                                                                                       ------------       ------------
                  Net Credits Charged Off                                                  (729,166)        (1,003,919)
                                                                                       ------------      -------------
                  Provision for Loan Losses                                                 670,000          1,025,000
                                                                                       ------------     --------------
               Balance at December 31                                                $    2,070,162     $    2,129,328
                                                                                      =============     ==============
</TABLE>

NOTE E.        LOAN SERVICING
               Mortgage  loans  serviced  for  others  are not  included  in the
               accompanying  consolidated  balance sheets.  The unpaid principal
               balances  of  these  loans  were  approximately   $2,607,000  and
               $5,147,000 in 2003 and 2002, respectively.
<TABLE>
<CAPTION>

NOTE F.        BANK PREMISES AND EQUIPMENT
               A summary of Bank premises and equipment is as follows:
                                                                                           2003              2002
                                                                                       ------------       ------------
<S>                                                                                    <C>                <C>
               Buildings and Improvements                                              $  6,697,473       $  6,099,338
               Furniture and Equipment                                                    4,108,428          5,392,009
                                                                                         ----------         ----------
                                                                                         10,805,901         11,491,347
               Less: Accumulated Depreciation                                            (4,372,666)        (5,726,119)
               Land                                                                       1,447,994          1,257,747
               Construction in Progress                                                     715,025                  -
                                                                                       ------------       ------------
               Bank Premises and Equipment, Net                                        $  8,596,254       $  7,022,975
                                                                                       ============       ============


</TABLE>



<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE F.        BANK PREMISES AND EQUIPMENT (Continued)

               The  construction  in progress is the remodeling of a bank branch
               in Natchez, Mississippi. The total contractual commitment of this
               project  is   approximately   $1,400,000.   The   provision   for
               depreciation  charged to  operating  expenses  was  $724,609  and
               $785,747  for  the  years  ended  December  31,  2003  and  2002,
               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.
<TABLE>
<CAPTION>


NOTE H.        DEPOSITS

               Deposits  at  December  31,  2003  and  2002,  consisted  of  the
               following:

                                                                                       2003                 2002
                                                                                 ----------------    -----------------

<S>                                                                              <C>                 <C>
               Non-Interest Bearing Demand Deposits                              $     37,523,263    $      33,843,654
               NOW Accounts                                                            35,062,025           31,734,722
               Money Market Deposit Accounts                                           27,096,521           26,817,953
               Savings Accounts                                                        16,788,328           16,344,898
               Certificates of Deposit                                                116,463,645          124,270,811
                                                                                 ----------------    -----------------
                                                                                 $    232,933,782    $     233,012,038
                                                                                 ================    =================
</TABLE>

               Maturities  of  certificates  of  deposit  of  $100,000  or  more
               outstanding  at December  31, 2003 and 2002,  are  summarized  as
               follows:
<TABLE>
<CAPTION>

               Time Remaining Until Maturity:
<S>                                                                              <C>                 <C>
                  Three Months or Less                                           $      9,249,501    $      18,610,257
                  Over Three Through Six Months                                        23,742,468           13,298,039
                  Over Six Through Twelve Months                                        7,023,633            6,340,736
                  Over Twelve Months                                                   10,798,348           16,130,975
                                                                                 ----------------    -----------------
                                                                                 $     50,813,950    $      54,380,007
                                                                                 ================    =================

</TABLE>




<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE H.        DEPOSITS (Continued)
               The approximate scheduled maturities of certificates of deposits
               for each of the next five years are:

                                    2004                       $     87,079,187
                                    2005                             15,636,181
                                    2006                              4,972,069
                                    2007                              4,301,396
                                    2008                              4,468,832
                                    Thereafter                            5,980
                                                                 --------------
                                                               $    116,463,645


               Interest expense on certificates of deposit greater than $100,000
               was  approximately  $1,208,000 and $1,556,000 for the years ended
               December 31, 2003 and 2002, respectively.

               The public fund  deposits were  $44,513,641  and  $48,305,698  at
               December 31, 2003 and 2002, respectively.

NOTE I.        LONG-TERM DEBT
               Federal Home Loan Bank Advances:
               During  2003  and  2002,  the  Bank  received  advances  from and
               remitted  payments to the Federal Home Loan Bank.  These advances
               are  collateralized by a portion of the Bank's one-to-four family
               residential  mortgage  portfolio and certain  secured  commercial
               loans in  accordance  with the Advance  Security  and  Collateral
               Agreement  with the  Federal  Home Loan Bank.  The 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.

               The 2002 advances consist of:

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

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

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002


NOTE I.        LONG-TERM DEBT (Continued)

               Federal Home Loan Bank Advances - continued

               Annual maturities for the next five years as of December 31, 2003
               are as follows:

                                    2004                     $ 27,020,000
                                    2005                       21,000,000
                                    2006                       17,000,000
                                    2007                        6,404,809
                                    2008                       16,150,952
                                                             ------------
                                                             $ 87,575,761
                                                             ============

               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  $109,543  and
               $78,720 in 2003 and 2002,  respectively.  This plan owned 233,190
               and  241,970   allocated  shares  of  Britton  &  Koontz  Capital
               Corporation  stock,  as of  December  31,  2003 and  2002,  at an
               overall   cost  to  the  plan  of  $6.33  and  $6.27  per  share,
               respectively.

               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  $141,136 and $157,439 for the years
               ended December 31, 2003 and 2002, respectively.


<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE J.        EMPLOYEE BENEFIT PLANS (Continued)

               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  22,377  shares  were
               exercisable  as of December 31, 2003. The summary of stock option
               activity is shown below:

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

               December 31, 2001              57,709            $    16.91
               Options granted                     -            $        -
               Options exercised              (4,032)           $    11.39
               Options forfeited                   -            $        -
                                          ----------
               December 31, 2002              53,677            $    17.33
               Options granted                     -            $        -
               Options exercised                   -            $        -
               Options forfeited                   -            $        -
                                          ----------
               December 31, 2003              53,677            $    17.33
                                          ==========            ===========

               The following table  summarizes  information  about stock options
               outstanding at December 31, 2003:

               Exercise Price   Options Outstanding   Remaining Contractual Life

                 $  19.94             30,000                 3.9 years
                 $  11.39              3,677                 5.3 years
                 $  14.50             20,000                 7.9 years


<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



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>
                                                                                       2003                  2002
                                                                                 ---------------        --------------

<S>                                                                              <C>                    <C>
               Net Income, as Reported                                           $     2,738,754        $    1,239,912
               Pro Forma Net Income                                              $     2,718,254        $    1,219,612
               Basic Earnings Per Share, as Reported                             $          1.30        $         0.59
               Pro Forma Basic Earnings Per Share                                $          1.29        $         0.57
               Diluted Earnings Per Share, as Reported                           $          1.29        $         0.59
               Pro Forma Diluted Earnings Per Share                              $          1.28        $         0.57



</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  $640,000 if all covered  executives  selected this option.
               The financial  statements  for the years ended  December 31, 2003
               and 2002,  respectively,  include  $45,552 and $42,048 of expense
               related to this plan.


NOTE K.        LEASES

               The  Bank  leases  several  branch  and  mortgage  offices  under
               operating leases which expire in various years through 2013. Rent
               expense was $111,688 and $78,508 in 2003 and 2002, respectively.








<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE K.        LEASES (Continued)

               The  future  minimum  rental  commitments  for  these  leases  at
               December 31, 2003 are as follows:

                                    2004                           $   191,995
                                    2005                               156,967
                                    2006                               117,717
                                    2007                                97,767
                                    2008                                87,792
                                    Thereafter                         417,012
                                                                   -----------
                                                                   $ 1,069,250


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, 2003 and 2002:

                                2003              2002
                          --------------     --------------

               Current    $      517,906     $      823,425
               Deferred          231,819            165,025
                           -------------     --------------

                          $      749,725     $      988,450
                          ==============     ==============


               Accrued income taxes  receivable of $412,860 in 2003 and $457,847
in 2002 are included in other assets.

               The provision for federal income taxes differs from that computed
               by applying the federal  statutory  rate of 34% in 2003 and 2002,
               as indicated in the following analysis:

                                                    2003              2002
                                              --------------     --------------

               Tax Based on Statutory Rate    $    1,186,083     $      757,643
               State Taxes                            79,712             40,543
               Effect of Tax-Exempt Income          (555,675)          (500,693)
               Capital Losses on Investment                -            425,000
               Other                                  39,605            265,957
                                               -------------     --------------
                                              $      749,725     $      988,450
                                              ==============     ==============



<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002


NOTE L.        INCOME TAXES  (Continued)
               The  net  deferred  tax  liability  of  $1,204,554  in  2003  and
               $1,281,633  in  2002 is  included  in  accrued  taxes  and  other
               liabilities.  The net  deferred  tax  liability  consists  of the
               following components at December 31, 2003 and 2002:
<TABLE>
<CAPTION>

                                                                                           2003              2002
                                                                                     --------------     --------------
               Deferred Tax Liabilities:
<S>                                                                                   <C>                 <C>
                  Unrealized gain on available-for-sale securities                    $    (550,786)      $   (734,354)
                  Unrealized gain on derivatives                                           (117,843)          (148,421)
                  Depreciation                                                             (892,632)          (755,815)
                  Federal Home Loan Bank dividends                                         (277,833)          (250,916)
                  Other                                                                    (110,790)          (222,355)
                                                                                      -------------       ------------
                                                                                         (1,949,884)        (2,111,861)
               Deferred Tax Assets:
                  Provision for loan losses                                                 482,370            504,438
                  Other real estate                                                          38,327            170,162
                  Other                                                                     224,633            155,628
                                                                                      -------------       ------------
                                                                                            745,330            830,228
                                                                                      -------------       ------------
               Net Deferred Tax Liability                                             $  (1,204,554)      $ (1,281,633)
                                                                                      ==============      ============

               A  summary  of  the  changes  in  the  net   deferred  tax  asset
               (liability) for the years ended December 31, 2003 and 2002, is as
               follows:

               Balance at beginning of year                                           $  (1,281,633)      $   (537,508)
                  Deferred tax expense, charged to operations                              (231,819)          (165,025)
                  Other comprehensive income, charged to
                     equity                                                                 308,898           (579,100)
                                                                                      -------------       ------------
               Balance at end of year                                                 $  (1,204,554)      $ (1,281,633)
                                                                                      =============       ============
</TABLE>

NOTE M.        SECURITIES SOLD UNDER REPURCHASE AGREEMENTS
               At  December  31,  2003 and  2002,  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 4.00% to 6.50% and maturity dates ranging from 2008 to 2033.
               The related liability to repurchase these securities, included in
               securities sold under repurchase agreements,  was $9,935, 300 and
               $2,141,790  at  December  31,  2003 and 2002,  respectively.  The
               maximum  amount of  outstanding  agreements  at any month-end was
               $9,935,300 and $2,260,000 during 2003 and 2002, respectively. The
               monthly  average amount of outstanding  agreements was $4,576,679
               and $2,098,899  during 2003 and 2002,  respectively.  At December
               31, 2003, the securities underlying the repurchase agreements had
               an approximate  amortized cost of $19,400,000  and an approximate
               market value of $19,500,000.

<PAGE>

              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE N.        REGULATORY MATTERS

               The  primary  source  of  revenue  of  Britton  & Koontz  Capital
               Corporation  is dividends from its  subsidiary,  Britton & Koontz
               First National Bank. 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 Britton & Koontz First National Bank in
               1993) in an initial  amount of  approximately  $2.8 million.  The
               Liquidation  Account serves as a restriction on the  distribution
               of stockholders'  equity in Britton & Koontz First National Bank,
               and no cash  dividend  may be paid on its  capital  stock  if the
               effect  thereof  would  be to cause  the  regulatory  capital  of
               Britton  & Koontz  First  National  Bank to be  reduced  below an
               amount equal to the adjusted Liquidation Account balance.

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

               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, 2003 and 2002, 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, 2003 AND 2002



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,  2003  and  2002,  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)
<S>                              <C>              <C>        <C>            <C>           <C>          <C>
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%

As of December 31, 2002
-----------------------
Total Capital (to Risk-
    Weighted Assets)
       Consolidated               $    28,516      14.71%     $  15,508        8.00%             N/A      N/A
       The Bank                   $    27,314      14.15%     $  15,443        8.00%      $   19,303    10.00%
Tier I Capital (to Risk-
    Weighted Assets)
       Consolidated               $    26,387      13.61%     $   7,755        4.00%             N/A      N/A
       The Bank                   $    25,185      13.04%     $   7,725        4.00%      $   11,588     6.00%
Tier I Capital (to Average
    Assets)
       Consolidated               $    26,387       8.71%     $  12,118        4.00%             N/A      N/A
       The Bank                   $    25,185       8.34%     $  12,079        4.00%      $   15,099     5.00%

</TABLE>


<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE O.        COMMITMENTS AND CONTINGENCIES

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

               Commitments  to extend  credit are  agreements to lend money with
               fixed expiration dates or termination  clauses.  The Bank applies
               the  same  credit  standards  used in the  lending  process  when
               extending  these  commitments,  and  periodically  reassesses the
               customer's creditworthiness through ongoing credit reviews. Since
               many of the  commitments  are  expected to expire  without  being
               drawn  upon,  the total  commitment  amounts  do not  necessarily
               represent future cash requirements.  Collateral is obtained based
               on the Bank's assessment of the transaction. At December 31, 2003
               and  2002,  the  Bank's  commitments  to  extend  credit  totaled
               $39,312,421 and $34,499,574, 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  $2,881,559  and  $1,459,963 as of
               December 31, 2003 and 2002, respectively. In accordance with FASB
               Intrepretation  No.  45,  letters  of  credit of  $1,374,319  are
               included   in  other   assets  and  other   liabilities   on  the
               consolidated balance sheet at December 31, 2003.

               The Bank is required to maintain  average reserves at the Federal
               Reserve  Bank.  This  requirement   approximated   $1,270,000  at
               December  31,  2003.   The  Bank  is  in  compliance   with  this
               requirement.

               At  December   31,   2003,   the  Bank  had   committed  to  sell
               approximately $3,102,000 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, 2003, the total available
               lines of credit was  $18,500,000  with an outstanding  balance of
               $4,550,000 as reflected on the consolidated balance sheet.

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



<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



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.  Investments in state and municipal  securities also
               involve  governmental  entities  in and around the Bank's  market
               area. The  concentrations of credit by type of loan are set forth
               in Note C. The  distribution  of  commitments  to  extend  credit
               approximates  the  distribution  of  loans  outstanding.  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
               Britton  & Koontz  Capital  Corporation's  subsidiary,  Britton &
               Koontz  First  National  Bank,  paid  dividends  to  the  Capital
               Corporation  amounting to $2,000,000 and $1,500,000 for the years
               2003 and 2002, 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, 2003.  The original  term is for five
               years  expiring in May 2007.  The fixed  payment  rate was 7.635%
               during  2003.  The  average  variable-payment  rate was  4.00% at
               December  31,  2003.  The  collateral  at December  31, 2003 is a
               Federal Home Loan Mortgage investment. The carrying amount of the
               swap  has been  adjusted  to its fair  value at  year-end  and is
               included in other  assets.  The swap is assumed to be  completely
               effective,  and accordingly,  is reported as other  comprehensive
               income.

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, 2003 AND 2002



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 and Loans Held-For-Sale
               For  variable-rate  loans which are repricing  immediately,  fair
               values are based on carrying values.  Other variable-rate  loans,
               fixed-rate  commercial  loans,  installment  loans,  and mortgage
               loans are valued using  discounted cash flows. The discount rates
               used to determine  the present  value of these loans are based on
               interest rates  currently being charged by the Bank on loans with
               comparable credit risk and terms.

               Deposits
               The fair  values of  demand  deposits  are equal to the  carrying
               value of such  deposits.  Demand  deposits  include  non-interest
               bearing demand  deposits,  savings  accounts,  NOW accounts,  and
               money market  demand  accounts.  Discounted  cash flows have been
               used to value fixed rate term deposits. The discount rate used is
               based on interest  rates  currently  being offered by the Bank on
               deposits with comparable amounts and terms.

               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.





<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



NOTE S.        FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

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

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

<TABLE>
<CAPTION>


                                                                     2003                                   2002
                                                          ------------------------              ------------------------
                                                           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                            $   8,360     $   8,360               $  11,477      $  11,477
       Federal funds sold                                 $      41     $      41               $   3,560      $   3,560
       Investment securities:
          Held-to-maturity                                $  42,289     $  44,003               $  33,148      $  34,305
          Available-for-sale                              $  93,663     $  93,663               $  60,566      $  60,566
          Equity securities                               $   5,182     $   5,182               $   3,345      $   3,345
       Cash surrender value of
          life insurance                                  $     905     $     905               $     901      $     901
       Loans, net                                         $ 207,623     $ 209,207               $ 182,662      $ 188,996

     Financial Liabilities:
       Deposits                                           $ 232,934     $ 233,934               $ 233,012      $ 234,961
       Long-term borrowings                               $  92,576     $  93,011               $  41,315      $  43,060
       Federal funds purchased                            $   4,550     $   4,550               $       -      $       -
       Securities sold under
          repurchase agreements                           $   9,935     $   9,935               $   2,142      $   2,142



                                                              Face         Fair                    Face          Fair
                                                             Amount        Value                  Amount         Value
                                                          ----------    ---------               ---------      ---------
     Other:
       Commitments to extend credit                       $  39,312     $  39,312               $  34,500      $  34,500
       Standby letters of credit                          $   2,882     $   2,882               $   1,460      $   1,460
       Interest rate swap                                 $     316     $     316               $     397      $     397

</TABLE>




<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002


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,
                                                                                       2003                 2002
                                                                                 ----------------    ----------------
               ASSETS:
<S>                                                                              <C>                 <C>
                  Cash                                                           $      1,172,379    $        635,374
                  Investment in subsidiaries                                           33,742,658          28,170,660
                  Premises and equipment, net                                             188,038             189,603
                  Other assets                                                            252,236             333,837
                                                                                 ----------------    ----------------
               TOTAL ASSETS                                                      $     35,355,311    $     29,329,474
                                                                                 ================    ================
               LIABILITIES:
                  Junior subordinated debentures                                        5,155,000                   -
                  Other liabilities                                                         3,712                   -
                                                                                 ----------------    ----------------
               TOTAL LIABILITIES                                                        5,158,712                   -
               STOCKHOLDERS' EQUITY                                                    30,196,599          29,329,474
                                                                                 ----------------    ----------------
               TOTAL LIABILITIES AND STOCKHOLDERS'
                  EQUITY                                                         $     35,355,311    $     29,329,474
                                                                                 ================    ================
</TABLE>
<TABLE>
<CAPTION>

                              STATEMENTS OF INCOME
                                                                                       Years Ended December 31,
                                                                                       2003                 2002
                                                                                 ----------------    ----------------
               REVENUE:
                  Dividends Received:
<S>                                                                              <C>                 <C>
                     Britton & Koontz First National Bank                        $      2,000,000    $      1,500,000
                  Other income                                                             13,005               8,571
                                                                                 ----------------    ----------------
                                                                                        2,013,005           1,508,571
               EXPENSES                                                                   353,056             661,076
                                                                                 ----------------    ----------------
                                                                                        1,659,949             847,495
               INCOME TAX EXPENSE (BENEFIT)                                              (142,553)             22,573
                                                                                 ----------------    ----------------
                                                                                        1,802,502             824,922
               EQUITY IN UNDISTRIBUTED
                  EARNINGS (LOSSES):
                     Britton & Koontz First National Bank                                 890,028             950,043
                     Sumx Inc.                                                                  -            (558,826)
                     B & K Title Insurance Agency, Inc.                                    46,224              23,773
                                                                                 ----------------    ----------------
                            NET INCOME                                           $      2,738,754    $      1,239,912
                                                                                 ================    ================

</TABLE>
<PAGE>


              BRITTON & KOONTZ CAPITAL CORPORATION AND SUBSIDIARIES
           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2003 AND 2002



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

<TABLE>
<CAPTION>


                            STATEMENTS OF CASH FLOWS

                                                                                      Years Ended December 31,
                                                                                       2003                 2002
                                                                                   --------------    ----------------

               CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                <C>               <C>
                  Net Income                                                       $    2,738,754    $      1,239,912
                  Adjustments to reconcile net income to net
                     cash provided by operating activities:
                         Deferred taxes                                                         -             257,807
                         Write-off of advances to affiliate                                     -             586,781
                         Provision for depreciation                                         1,565               5,693
                         Equity on undistributed earnings
                            and losses of affiliates                                     (936,252)           (414,990)
                  Increase (decrease) in other assets                                     (73,399)           (222,704)
                  Increase in other liabilities                                             3,712                   -
                                                                                   --------------    -----------------
                            Net Cash Provided by Operating Activities                   1,734,380           1,452,499
                                                                                   --------------    ----------------
               CASH FLOWS FROM INVESTING ACTIVITIES:
                  Advances to subsidiaries                                             (5,000,000)                  -
                  Advances to affiliate                                                         -            (410,151)
                  Repayment of advances by affiliate                                            -              19,087
                                                                                   --------------    ----------------
                            Net Cash Used in Investing Activities                      (5,000,000)           (391,064)
                                                                                   --------------    ----------------
               CASH FLOWS FROM FINANCING ACTIVITIES:
                  Proceeds from issuance of junior subordinated
                     debentures                                                         5,155,000                   -
                  Cash dividends paid                                                  (1,352,375)         (1,308,862)
                  Cash received from stock options exercised                                    -              45,925
                                                                                   --------------    ----------------
                            Net Cash Provided by (Used in)
                               Financing Activities                                     3,802,625          (1,262,937)
                                                                                   --------------    ----------------

               NET INCREASE (DECREASE) IN CASH                                            537,005            (201,502)
               CASH AT BEGINNING OF YEAR                                                  635,374             836,876
                                                                                   --------------    ----------------
               CASH AT END OF YEAR                                                 $    1,172,379    $        635,374
                                                                                   ==============    ================
</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 First National
Bank (the  "Bank")  since year end and compares  the  operating  results for the
twelve months ended December 31, 2003, to the same period in 2002.

Financial Condition

   Assets

             Total  assets  increased  21% during  2003 to $374.4  million  from
$308.9 million at December 31, 2002.  Contributing  to the growth in assets were
significant  increases in investment  securities of $44 million and loans of $25
million.  Deposits  ended 2003 at $232.9  million  compared to $233.0 million at
December 31, 2002.

             Average  Earning  Assets.   Interest  income  from  earning  assets
represents the Company's main source of income.  Average  earning assets for the
period ended December 31, 2003,  totaled $321.3  million,  a $41 million (14.6%)
increase  compared to December 31,  2002.  The increase was due to 26% growth in
the  average  investment  portfolio,  primarily  from the  purchase  of short to
medium-term  mortgage backed securities and 10% growth in average loans.  Growth
in earning assets was funded  primarily with increases in Federal Home Loan Bank
advances,  increases  in customer  repurchase  agreements  and  reinvestment  of
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  while  securities  in  the  available-for-sale  ("AFS")  categories  are
accounted for at fair value.  Management  determines the  classification  of its
securities at acquisition. Total HTM and AFS investment securities increased 45%
to $136  million at December  31, 2003 from $94  million at December  31,  2002.
Equity  securities,  comprised  primarily of Federal  Reserve Bank stock of $522
thousand,  Federal  Home  Loan  Bank  ("FHLB")  stock  of $4.5  million  and ECD
Investments,  LLC ("ECD") membership interests of $100 thousand,  increased $1.8
million in 2003 from $3.3  million in 2002,  due to the  purchase of  additional
stock at both the Federal Reserve and FHLB. During 2002, the Company purchased 4
Class A Units  representing  interests in ECD  Investments,  LLC, a  Mississippi
limited  liability  company.  ECD was  established in February 1997 to provide a
commercially  feasible vehicle through which banks;  individuals,  companies and
other  institutions  can  participate  in  economic  and  business   development
activities in economically  depressed regions of the country,  in this instance,
the states of Arkansas, Louisiana and Mississippi.

             The amortized cost of the Bank's  investment securities at December
31, 2003,  2002 and 2001, are summarized as follows:

<TABLE>
<CAPTION>

                                                                  Amortized Cost
                                                  -------------------------------------------------
                                                     12/31/03          12/31/02          12/31/01
                                                  -------------------------------------------------
<S>                                               <C>              <C>               <C>
    Obligations of other U.S. Government
       Agencies and Corporations                   $ 95,312,108      $ 52,544,082     $  42,330,355
    Obligations of state and
       Political Subdivisions                        34,834,072        33,147,883        27,967,610
    Privately Issued Collateralized
       Mortgage Obligations                             296,220           720,866         6,137,974
       Corporate Securities                           4,033,806         5,078,192         5,122,544
                                                  =============    ==============     =============
                                                  $ 134,476,206      $ 91,491,023     $  81,558,483
                                                  =============    ==============     =============
</TABLE>

<PAGE>

             The amortized  cost of investment  securities at December 31, 2003,
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                           $   3,030,504           5.61%
             Due after one year through five years                12,760,266           4.25%
             Due after five years through ten years               52,997,145           4.40%
             Due after ten years                                  65,688,291           5.95%
                                                               -------------     --------------
                                                               $ 134,476,206           5.17%
                                                               =============     ==============

</TABLE>

             Loans. Average loans for the twelve month period ended December 31,
2003,  were $201.6  million,  an increase of $18.9 million  compared to the year
ended  December 31, 2002.  Table 1 presents the Bank's loan portfolio at the end
of the last five years.

<TABLE>
<CAPTION>

     TABLE 1: COMPOSITION OF LOAN PORTFOLIO

                                  12/31/03         12/31/02        12/31/01          12/31/00        12/31/99
                               -------------    -------------   -------------     -------------    -------------
<S>                            <C>              <C>             <C>               <C>              <C>
  Commercial, financial and
       agricultural            $  31,853,000    $  34,264,000   $  38,101,000     $  33,102,000    $  25,730,000
   Real estate-construction       14,690,000        7,207,000       6,066,000        10,883,000        6,997,000
  Real estate-residential         78,128,000       65,624,000      63,379,000        76,150,000       63,708,000
   Real Estate-other              70,729,000       61,660,000      59,729,000        47,042,000       54,557,000
   Installment                    14,195,000       15,881,000      17,759,000        19,372,000       18,852,000
   Other                             102,000          170,000         117,000           359,000          229,000
                               -------------    -------------   -------------     -------------    -------------
       Total loans             $ 209,697,000    $ 184,806,000   $ 185,151,000     $ 186,908,000    $ 170,073,000
                               =============    =============   =============     =============    =============
</TABLE>


             The following table sets forth as of December 31, 2003, the periods
in which the Bank's loan  portfolio  matures or reprices and the total amount of
all such loans due after one year having (a)  predetermined  interest  rates and
(b) floating or adjustable  rates. Loan maturities are based upon contract terms
and specific maturity dates. In the course of business,  some loans are renewed,
resulting in an extension of the maturity date of the loan.  However,  it is the
Bank's customary  practice that loans renewed beyond their initial maturity date
are usually extended and secured for a fixed period.

<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         $   16,863,000    $ 14,107,000      $    883,000     $ 31,853,000
  Real estate-construction                         10,395,000       3,899,000           396,000       14,690,000
                                               --------------    ------------      ------------     ------------
        Total                                  $   27,258,000    $ 18,006,000      $  1,279,000     $ 46,543,000
                                               ==============    ============      ============     ============

  Predetermined interest rates                                   $ 17,687,000      $   1,202,000
                                                                 ============      =============
  Floating or adjustable interest rates                          $    319,000      $      77,000
                                                                 ============      =============

</TABLE>

<PAGE>


Asset Quality

             Management  periodically  analyzes the  diversification of the loan
portfolio and the repayment ability of borrowers.  When it appears to management
that the Bank  will have  trouble  recapturing  all  outstanding  principal  and
interest on a loan or loan relationship,  the debt is placed on non-accrual.  By
placing loans on non-accrual  the bank  recognizes a problem with the credit and
is willing to forgo  interest in hopes of at least  collecting all principal due
on the loan. As 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  is  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  level  of  loan  delinquencies,
non-accrual  loans,  foreclosed  assets and  charge-offs  in  addition  to their
related ratios.  Nonperforming  assets,  consisting of non-accrual  loans, loans
past due 90 days or more and other real estate  owned  decreased to $3.3 million
at December  31, 2003,  from $3.9  million at December  31, 2002.  Nonperforming
loans as a percent of total loans net of unearned income and loans held for sale
decreased to .74% at December 31, 2003, from 1.29% the year before. During 2003,
the Company resolved  certain problem credits,  primarily larger real estate and
commercial loans across all Company markets.  The resolution is reflected in the
migration of problem credits from past due status through non-accrual to partial
charge-off,  foreclosure  and sale of collateral.  A breakdown of  nonperforming
loans at the end of the last five years is shown in Table 2.

<TABLE>
<CAPTION>

     TABLE 2: BREAKDOWN OF NONPERFORMING LOANS

                                           12/31/03      12/31/02       12/31/01      12/31/00       12/31/99
                                          ---------     ---------      ---------      --------      ----------
                                                               (dollars in thousands)
    Non-accrual loans by type
<S>                                       <C>           <C>            <C>            <C>           <C>
      Real estate                         $     584     $   1,513      $     750      $    950      $     665
      Installment                                20            16             86            39             59
      Commercial and all other loans            580           537            449            89             26
                                          ----------    ----------     ---------      ---------     ----------
          Total non-accrual loans             1,184         2,066          1,285         1,078            750
      Loans past due 90 days or more            337           253          1,510           311            306
                                          ----------    ----------     ---------      ---------     ----------
          Total nonperforming loans           1,521         2,319          2,795         1,389          1,056
      Other real estate owned (net)           1,741         1,554          1,526           773            401
                                          ----------    ----------     ---------      ---------     ----------
          Total nonperforming assets      $   3,262     $   3,873      $   4,321      $  2,162      $   1,457
                                          =========     =========      =========      ========      =========
    Nonperforming loans as a percent
      of loans, net of unearned interest
      and loans held for sale                  .74%         1.29%          1.56%          .74%           .62%
                                          =========     =========      =========      ========      =========
    Additional interest income foregone
       on non-accrual loans               $      28     $     141      $     167      $     78      $      18
                                          =========     =========      =========      ========      =========

</TABLE>

             There were no loans in either 2003 or 2002  classified as "troubled
debt  restructurings" as defined in Statement of Financial  Accounting Standards
No.15. At December 31, 2003, there were no other loans that the Bank had serious
doubts as to the ability of the  borrower  to comply with the present  repayment
terms.

<PAGE>




Allowance for Loan Losses

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

             The allowance for loan losses  remained  relatively  stable at $2.1
million at December  31, 2003,  compared to December 31, 2002.  The ratio of the
allowance  for loan losses to loans,  net of unearned  income and loans held for
sale  decreased to 1.00% at December 31, 2003,  from 1.18% at December 31, 2002.
The decrease in the ratio is due to the resolution of various problem credits.

             Factors  contributing  to the  determination  of specific  reserves
include the financial condition of the borrower, changes in the value of pledged
collateral and general  economic  conditions.  General  reserves are established
based on historical  charge-offs  considering factors which include risk rating,
industry concentration and loan type, with the most recent charge-off experience
weighted  more  heavily.   The  unallocated   reserve,   which  is  judgmentally
determined,  generally  serves to compensate  for the  uncertainty in estimating
loan  losses,  particularly  in  times  of  changing  economic  conditions,  and
considers  the  possibility  of  improper  risk  ratings and  possible  over- or
under-allocations  of specific reserves.  In addition,  the unallocated  reserve
considers trends in delinquencies and non-accrual loans, industry concentration,
the  volatility  of risk  ratings  and the  evolving  portfolio  mix in terms of
collateral,  relative  loan size and the degree of seasoning in the various loan
products.   Changes  in  underwriting   standards,   credit  administration  and
collection,  regulation  and other factors  which impact the credit  quality and
collectibility of the loan portfolio also impact the unallocated reserve levels.
The results of reviews  performed by internal and  external  examiners  are also
considered.

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

             The basic  assumptions  and  methodologies  used in allocating  the
reserve  were  unchanged  during  2003;  however,  refinements  to the  existing
methodology continue to be made as evolving risk trends are identified. The loan
loss  methodology  weights  recent  history more  heavily and also  reflects the
current risk profile of the portfolio.

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

             Table 3 presents the activity in the  allowance for loan losses for
the last five years.  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, 2003,  and
2002.  Information  for  1999-2001  is not  included  in  Table 4  because  such
information is not available to the Company.


Bank Premises and Equipment

             Bank Premises and  equipment  increased to $8.6 million at December
31, 2003  compared to $7.0 million at December 31, 2002.  The increase  reflects
the Company's  expansion  efforts,  particularly  in the Vicksburg,  Mississippi
market,  including the  construction  of a new branch at an approximate  cost of
$1.1 million. The Company expects to complete in April 2004, a branch renovation
project in Natchez,  Mississippi  which began in the fall of 2003. Total cost of
the project is estimated to be $1.4 million of which approximately 50% was spent
in 2003.  The Company has proposed $1 million in 2004 for future branch sites in
existing  markets with  expectations  of funding from new deposits and increased
cash flows from operating activities.

<PAGE>

<TABLE>
<CAPTION>


     TABLE 3: ACTIVITY OF ALLOWANCE FOR LOAN LOSSES

                                             12/31/03    12/31/02    12/31/01      12/31/00     12/31/99
                                             --------    --------    --------      --------     --------
                                                              (dollars in thousands)

<S>                                          <C>         <C>         <C>           <C>          <C>
  Balance at beginning of year               $ 2,129     $ 2,108     $ 1,884       $ 1,150      $ 1,061
    Charge-offs:
      Commercial, financial & agricultural      (285)       (434)        (97)         (216)        (104)
      Real Estate-construction                    (0)        (11)        (29)            0            0
      Real Estate-residential                    (37)       (150)        (22)           (2)         (30)
      Real Estate-other                         (419)       (266)         (0)           (0)          (0)
      Installment and other                      (91)       (282)       (249)         (119)        (101)
    Recoveries:
      Commercial, financial & agricultural        60          64           7            75           11
      Real Estate-residential                      0          36          12             0            9
      Real Estate-other                           25           0           0             0            0
      Installment and other                       18          39          77            27           18
                                             --------    --------    ---------     --------     --------
    Net (charge-offs)/recoveries                (729)     (1,004)       (301)         (235)        (197)
    Provision charged to operations              670       1,025         525           969          286
                                             ---------   --------    ---------     --------     --------
  Balance at end of year                     $ 2,070     $ 2,129     $ 2,108       $ 1,884      $ 1,150
                                             =========   ========    =========     ========     ========
  Allowance for loan losses as a percent
    of loans, net of unearned interest
    and loans held for sale                    1.00%       1.18%       1.17%         1.01%         .68%
                                             =========   ========    =========     ========     ========
  Net charge-offs as a percent of
    average loans                               .36%        .55%        .16%          .13%         .12%
                                             =========   ========    =========     ========     ========

</TABLE>
<TABLE>
<CAPTION>

     TABLE 4: ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

                                                                   Percentage of loans in
                                      Amount                    each category to total loans *
                              ----------------------          ------------------------------
                                 2003         2002                 2003            2002
                              ----------  ----------          -----------      -----------
<S>                             <C>         <C>               <C>              <C>
  Commercial, financial and
       agricultural             $    439    $    598              15.19%          18.54%
   Real estate-construction           69         206               7.01            3.90
   Real estate-residential           421         338              37.26           35.51
   Real Estate-other                 919         739              33.73           33.36
   Installment                       211         135               6.77            8.59
   Other                              11         113                .04             .10
                                --------    --------          -----------      -----------
       Total loans                $2,070     $ 2,129             100.00%         100.00%
                                ========    ========          ===========      ===========

* Includes loans held for sale

</TABLE>
<PAGE>


Other Real Estate

             The balances of other real estate  (ORE)  increased to $1.7 million
in 2003 from $1.6 million in 2002. Activity during 2003 included foreclosures of
$988  thousand,  largely  offset  by sales of $848  thousand.  Reserves  of $150
thousand on selected  properties  were  reversed when the property sold in 2003.
Other real estate activity for 2003 is presented in Table 5.


     TABLE 5: OTHER REAL ESTATE ACTIVITY

        Balance at December 31, 2002                                    $ 1,554
                     Write-downs                              (103)
                     Sales                                    (848)
                     Foreclosures                              988
                     Reserves                                  150          187
                                                              -----     -------
        Balance at December 31, 2003                                    $ 1,741
                                                                        =======

Funding

             Deposits.  Deposits are the Company's primary source of funding for
earning assets.  Average  deposits  increased 7.8% from $220 million at December
31, 2002, to $237 million at December 31, 2003. The increase in average deposits
was due primarily to normal  fluctuations in public funds deposits and increases
in the bank's money market account.

             Maturities  of   certificates  of  deposits  of  $100,000  or  more
outstanding at December 31, 2003, and December 31, 2002, are summarized below.

<TABLE>
<CAPTION>

                                                                     12/31/03           12/31/02
                                                                   -------------      ------------
             Time remaining until maturity:
<S>                                                                <C>                <C>
                 Three months or less                              $   9,249,501      $ 18,610,257
                 Over three through six months                        23,742,468        13,298,039
                 Over six through twelve months                        7,023,633         6,340,736
                 Over twelve months                                   10,798,348        16,130,975
                                                                   -------------      ------------
                                                                   $  50,813,950      $ 54,380,007
                                                                   =============      ============

</TABLE>


             Deposits at December  31, 2003,  and December 31, 2002,  consist of
the following:
<TABLE>
<CAPTION>

                                                                     12/31/03         12/31/02
                                                                   -------------    -------------
<S>                                                                <C>              <C>
                  Non-interest bearing demand deposits             $  37,523,263    $  33,843,654
                  Now accounts                                        35,062,025       31,734,722
                  Money market deposit accounts                       27,096,521       26,817,953
                  Savings accounts                                    16,788,328       16,344,898
                  Certificates of deposit                            116,463,645      124,270,811
                                                                   -------------    -------------
                                                                   $ 232,933,782    $ 233,012,038
                                                                   =============   ==============
</TABLE>

             Short-Term Borrowings.  Average short-term borrowed funds increased
to $25.1 million in 2003 from $11.8 million in 2002.  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, such as securities sold under repurchase  agreements and advances from the
FHLB of Dallas.  Securities  sold under  repurchase  agreements at 12/31/03 were
$9.9 million with an average cost of 1.26%.


<PAGE>

             The following  table  presents the Bank's  average  balance  sheets
during 2003, 2002 and 2001. Dividing income or expense by the average balance of
assets or liabilities, respectively, derives yields and costs. Non-accrual loans
are  included in loans for yield  computations.  Loan fees and late  charges are
included  in both  income and yield  computations  in loans.  Income and expense
resulting  from interest  rate caps and swaps used to manage  interest rate risk
are  included   appropriately   in  loans  and   certificates  of  deposit.   No
tax-equivalent adjustments have been made. All averages are derived from monthly
average balances.

<PAGE>


<TABLE>
<CAPTION>

                                               Average Balances and Yield Analysis
                                                     (dollars in thousands)



                                                                 Twelve Months Ended December 31,
                                              2003                             2002                             2001
                                 -------------------------------  -------------------------------- --------------------------------
                                                       Average                           Average                          Average
                                  Average    Income/      %        Average    Income/       %        Average    Income/      %
                                  Balance    Expense  Yield/Rate   Balance    Expense   Yield/Rate   Balance    Expense  Yield/Rate
                                 -------------------------------  --------------------------------  -------------------------------


ASSETS

<S>                              <C>         <C>          <C>      <C>        <C>           <C>      <C>         <C>          <C>
Loans                            $ 201,595   $ 14,519     7.20%    $ 182,744  $  14,735     8.06%    $ 185,012   $ 16,898     9.13%
Investment securities:
U.S. Government                          -          -         -        5,424        217     4.00%        3,995        200     5.00%
Mortgage Backed Securities          74,252      3,068     4.13%       45,107      2,826     6.26%       43,540      3,105     7.13%
State & municipal                   33,424      1,576     4.72%       33,113      1,563     4.72%       13,060        649     4.97%
Other                                8,844        376     4.25%        8,858        397     4.49%        6,553        340     5.19%
                                 ---------------------             --------------------              --------------------

Total investment securities        116,520      5,020     4.31%       92,502      5,003     5.41%       67,148      4,294     6.39%

Interest bearing bank balances       1,447         15     1.03%        1,838         38     2.06%        1,680         60     3.57%
Federal funds sold                     775         11     1.37%        2,267         33     1.47%          612         18     2.94%
Cash Value Life Insurance
   and other                           922         47     5.14%          882         45     5.15%          836         43     5.14%
                                 ---------------------             --------------------              --------------------

Total earning assets               321,259     19,612     6.10%      280,233     19,854     7.08%      255,288     21,313     8.35%

Allowance for loan losses           (2,209)                           (2,008)                           (2,037)
Cash & due from banks,
   non-interest bearing              8,434                             7,818                             7,088
Bank premises & equipment            7,374                             7,096                             7,088
Other assets                         5,708                             6,461                             5,594

                                 --------------------              --------------------              --------------------
TOTAL ASSETS                     $ 340,566   $19,612               $ 299,600  $  19,854              $ 273,021   $ 21,313
                                 ====================              ====================              ====================


LIABILITIES AND SHAREHOLDERS'
EQUITY

Interest bearing deposits:
Savings                          $  16,910   $    133     0.79%    $  16,830  $     259     1.54%    $  17,046   $    367     2.15%
Interest bearing checking           35,511        216     0.61%       34,300        214     0.62%       34,276        652     1.90%
Money rate savings                  29,183        413     1.41%       21,758        460     2.11%       14,938        448     3.00%
Certificates of deposit
   and other time deposits         121,597      3,192     2.63%      115,568      4,125     3.57%      112,249      6,147     5.48%
                                 ---------------------             --------------------              --------------------

Total interest bearing deposits    203,201      3,953     1.95%      188,456      5,058     2.68%      178,509      7,614     4.27%

Short term borrowed funds           25,147        451     1.79%       11,801        510     4.32%       14,744        826     5.60%
Long term debt                      40,513      1,756     4.34%       34,088      1,637     4.80%       16,468        793     4.81%
                                 ---------------------             --------------------              --------------------

Total interest bearing
   liabilities                     268,861      6,161     2.29%      234,345      7,205     3.07%      209,721      9,233     4.40%

Non-interest bearing deposits       33,999                            31,639                            31,516
Other liabilities                    7,710                             4,293                             4,217
Shareholders' equity                29,996                            29,323                            27,567

                                 ---------------------             --------------------              --------------------
TOTAL LIABILITIES & SHAREHOLDERS
    EQUITY                       $ 340,566   $  6,161              $ 299,600  $   7,205              $ 273,021   $  9,233
                                 =====================             ====================              ====================


Interest income and rate earned              $ 19,612     6.10%               $  19,854     7.08%                $ 21,313     8.35%
Interest expense and rate paid                  6,161     2.29%                   7,205     3.07%                   9,233     4.40%
                                                                                                                -------------------
                                             -------------------              -------------------
Interest rate spread                                      3.81%                             4.01%                             3.95%

NET INTEREST INCOME & NET YIELD ON
AVERAGE EARNING ASSETS                       $ 13,451     4.19%               $  12,649     4.51%                $ 12,080     4.73%
                                             ===================              ===================                ==================

</TABLE>
<PAGE>



Capital

             Shareholders'  equity  totaled  $30.2 million at December 31, 2003,
compared to $29.3  million at December 31, 2002.  The increase is primarily  the
result of an increase in net income and dividend payments over the year totaling
$2.7 million, $1.4 million,  respectively which was offset by a decrease of $400
thousand  in  comprehensive  income.  Comprehensive  income  is  the  result  of
unrealized  gains on  available-for-sale  securities and the  recognition of the
fair value of certain derivative instruments.  The ratio of shareholders' equity
to assets  decreased to 8.10% at December  31,  2003,  from 9.5% at December 31,
2002.

             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 2003 and 2002. 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, 2003                December 31, 2002
                                                  -------------------------          -----------------------
                                                     Company       Bank                Company      Bank
                                                  ------------ ------------          ----------- -----------
             Risk-based capital:
<S>                                               <C>          <C>                   <C>         <C>
               Total                              $   29,952   $   33,252            $  28,516   $  27,314
               Tier 1                                 27,882       31,182               26,387      25,185
               Leverage                               27,882       31,182               26,387      25,185
             Assets:
               Quarterly average assets (1)          356,192      355,654              302,994     301,168
               Risk-weighted assets                  227,652      227,158              193,813     193,099
             Ratios:
               Total risk-based capital               13.16%       14.64%               14.71%      14.15%
               Tier 1 risk-based capital              12.25%       13.73%               13.61%      13.04%
               Leverage                                7.83%        8.77%                8.71%       8.34%

(1)      Excludes disallowed assets

</TABLE>

Results of Operations

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



                                                                  2003          2002         2001
                                                            ----------    ----------    ---------
<S>                                                         <C>           <C>           <C>
             Return on average assets                             .80%          .41%        1.19%
             Return on average equity                            9.13%         4.23%       12.76%
             Dividend payout ratio                              49.38%       105.67%       39.61%
             Average equity to average assets                    8.81%         9.79%       10.10%
             Net interest margin                                 4.19%         4.51%        4.73%
             Basic income per share                            $ 1.30        $  .59       $ 1.54
             Diluted income per share                          $ 1.29        $  .59       $ 1.54

</TABLE>

Analysis of Net Income

             Net income for the twelve months ended  December 31, 2003, was $2.7
million or $1.29 per diluted share, compared to $1.2 million or $.59 per diluted
share for the same period in 2002.  The increase in net income from 2002 to 2003
is primarily due to charge-offs during 2002,  of $1.4  million on the  remaining
investment in Sumx Inc., an Internet banking technology provider, which is owned
37% by the Company.


<PAGE>

Analysis of Net Interest Income

             Net interest  income (NII),  the amount by which interest income on
loans,  investments and other interest earning assets exceed interest expense on
deposits and other borrowed  funds,  increased $802 thousand.  This represents a
6.3%  increase to $13.5  million for the twelve  months of 2003  compared to the
same period in 2002. The increase in NII is primarily related to the substantial
growth in earning assets offset by a lower interest rate  environment.  Due to a
15% growth in average  earning  assets  from 2002 to 2003,  NII  increased  $1.7
million.  While  increases in earning assets  created a positive  effect on NII,
falling interest rates had the opposite effect.  As more assets than liabilities
repriced in the lower rate environment, NII decreased by $947 thousand from 2002
to 2003.  Net  interest  margin  decreased  from 4.51% to 4.19% due to the lower
interest rates which prompted  increased  premium  amortization from accelerated
cash flows on investments and loans.

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

<TABLE>
<CAPTION>



                                                                       2003 compared to 2002
                                                                Increase/(Decrease) Due to Changes

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

<S>                                                          <C>               <C>           <C>
Interest earning assets:
Loans                                                                (216)        1,439      (1,655)
Investment securities:
U.S. Government                                                      (217)         (109)       (108)
Mortgage Backed Securities                                            242         1,417      (1,175)
State & municipal                                                      13            15          (2)
Other                                                                 (21)           (1)        (20)
                                                            -----------------------------------------
Total investment securities                                            17         1,322      (1,305)

Interest bearing bank balances                                        (23)           (7)        (16)
Federal funds sold                                                    (22)          (20)         (2)
Cash Value Life Insurance and other                                     2             2           -
                                                            -----------------------------------------
Total earning assets                                                 (242)        2,736      (2,978)
                                                            -----------------------------------------

Interest bearing deposits:
Savings                                                              (126)            1        (127)
Interest bearing checking                                               2             7          (5)
Money rate savings                                                    (47)          131        (178)
Certificates of deposit and other time deposits                      (933)          205      (1,138)
                                                            -----------------------------------------
Total interest bearing deposits                                    (1,104)          344      (1,448)

Short term borrowed funds                                             (59)          354        (413)
Long term debt                                                        119           289        (170)
                                                            -----------------------------------------
Total interest bearing liabilities                                 (1,044)          987      (2,031)
                                                            -----------------------------------------
Change in Interest Earning Assets                                    (242)        2,736      (2,978)
Change in Interest Bearing Liabilities                             (1,044)          987      (2,031)
                                                            -----------------------------------------
Change in Net Interest Income                                         802         1,749        (947)
                                                            =========================================

</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  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 2003.

             The  Company  recorded  a  provision  for the twelve  months  ended
December  31, 2003,  of $670  thousand,  compared to $1.0  million in 2002.  The
decrease was primarily due to an additional  $440 thousand in reserves posted in
the fourth quarter of 2002, following net loan charge-offs during the quarter of
$398 thousand.

Non-Interest Income/Non-Interest Expense

             Non-interest  income  increased  $324 thousand from $2.4 million in
2002 to $2.7  million  in 2003  substantially  due to gains on sale of  mortgage
loans  originated  by the bank and  increases  in  service  charges  on  deposit
accounts.  Non-interest  expense  increased to $12.0  million for the year ended
December 31, 2003,  compared to $11.8  million for the same period in 2002.  The
increase in 2003 includes increased expenses for employee salaries and benefits,
marketing   and  occupancy   costs  related  to  expansion  in  the   Vicksburg,
Mississippi,  and Baton  Rouge,  Louisiana,  markets and costs  associated  with
changes in the Company's  medical plan.  Non-interest  expense for 2002 includes
$1.1 million in charge-offs  of debt,  receivables  and the Company's  remaining
investment in Sumx Inc.

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 $11.5 million
at December 31, 2002,  to $8.4  million at December 31, 2003.  Cash  provided by
operating and financing  activities  during the year increased by $6.2 and $62.2
million, respectively, while investing activities used $71.5 million.

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

<PAGE>



                 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.


<PAGE>


Information Regarding our Common Stock

         The  Company's  common  stock is listed on the NASDAQ Small Cap Market,
and trades under the symbol  "BKBK." The table below sets forth the high and low
sales prices ranges for the common stock, as 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 2003
         4th Quarter          $    .32                $18.50            $16.00
         3rd Quarter                                  $17.50            $15.70
         2nd Quarter          $    .32                $17.75            $14.35
         1st Quarter                                  $14.85            $14.14

Year 2002
         4th Quarter          $    .31                $15.11            $13.10
         3rd Quarter                                  $18.99            $14.20
         2nd Quarter          $    .31                $18.50            $14.76
         1st Quarter                                  $15.95            $14.50

         On December  31,  2003,  there were 603  shareholders  of record of the
Company's common stock.

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

         The principal  source of the Company's cash revenues are dividends from
the Bank.  There are  certain  limitations  under  federal law on the payment of
dividends by national  banks.  Under  federal  law, the  directors of a national
bank,  after making  proper  deduction  for all  expenses  and other  deductions
required  by the  Comptroller  of the  Currency,  may credit net  profits to the
bank's undivided  profits account,  and may declare a dividend from that account
of so much of the net profits as they judge  expedient.  The Comptroller and the
Federal  Reserve Board have each  indicated  that banking  organizations  should
generally  pay  dividends  only out of current  operating  earnings.  The Bank's
ability to pay dividends is also limited by prudence,  statutory and  regulatory
guidelines, and a variety of other factors.

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

         The Company has declared  semiannual cash dividends in each of the last
three fiscal years  totaling,  on an annual  basis,  $.61 per share for 2001 and
$.62 per share for 2002 and $.64 in 2003.  Historical  dividend  payout  ratios,
expressed as a percentage of net income,  for 2001,  2002 and 2003, were 39.61%,
105.67% and 49.38%, 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 $3.2 million and $3.4 million as
of December 31, 2003, and December 31, 2002,  respectively.  The Bank intends to
retain most of these funds for capital and not pay them out as dividends.
Corporate Information

<PAGE>


Annual Meeting/ Principal Office:
         3:30 P.M., Tuesday, April 27, 2004
         Britton & Koontz First National Bank
         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:
         Bazile R. Lanneau, Jr.
         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 www.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
         715-921-8200

<PAGE>



Directors and Executive Officers


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


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


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


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


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


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


A. J. Ferguson
Petroleum Geologist


<PAGE>


Directors and Executive Officers


Bethany L. Overton
President
Lambdin-Bisland Realty Co.


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


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



Directors Emeriti:

W. J. Feltus III President Feltus Brothers, Ltd

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

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

Donald E. Killelea, M.D.
Pediatrician - retired

Bazile R. Lanneau
Life Insurance




<PAGE>


Britton & Koontz First National Bank Locations:


Natchez, Mississippi

Main Office
500 Main Street, 39120

Tracetown Shopping Center
55 Seargent S. Prentiss Drive, 39120

Shields Lane
148 N. Shields Lane, 39120

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

Florida
7142 Florida Boulevard, 70806

Perkins
12716 Perkins Road, 70810

Bluebonnet
8810 Bluebonnet, 70810


Madison, Mississippi

Madison
141 Executive Drive, Suites 1 & 5, 39110


Future Locations:

Carter Street
Vidalia, Louisiana




<PAGE>



                                   EXHIBIT 14

                                 CODE OF ETHICS


<PAGE>



                   BRITTON & KOONTZ CAPITAL CORPORATION, INC.
                                 CODE OF ETHICS
                   FOR SENIOR EXECUTIVE AND FINANCIAL OFFICERS


I.       Introduction

This  Code of  Ethics  is  applicable  to the  chief  executive  officer,  chief
financial officer,  principal  accounting  officer,  and controller of Britton &
Koontz Capital  Corporation,  Inc. (the  "Company")  (or any persons  performing
similar  functions,  together,  the "Senior Executive and Financial  Officers").
References  in this Code of  Ethics  to the  Company  mean the  Company  and its
subsidiaries.

While we expect  honest and ethical  conduct in all aspects of our business from
all of our employees,  we expect the highest possible honest and ethical conduct
from our Senior  Executive  and  Financial  Officers.  As a Senior  Executive or
Financial  Officer,  you are an example for other employees and we expect you to
foster a culture of  transparency,  integrity and honesty.  Compliance with this
Code is a condition to your employment and any violations of the Code may result
in disciplinary action, up to and including termination of your employment.

Waivers  of this Code may be made only by the Board or the Audit  Committee  and
will be disclosed in accordance with applicable law.

II.      Purpose of Code of Ethics

The purpose of this Code of Ethics is:

         (a)      To  promote  the  honest  and  ethical  conduct  of our Senior
                  Executive  and  Financial  Officers,   including  the  ethical
                  handling of actual or apparent  conflicts of interest  between
                  personal and professional relationships;

         (b)      To promote full,  fair,  accurate,  timely and  understandable
                  disclosure  in  periodic  reports  required to be filed by the
                  Company with the  Securities and Exchange  Commission  ("SEC")
                  and in other public communications made by the Company; and

         (c)      To promote  compliance with all applicable  governmental laws,
                  rules and regulations.

III.     Conflict of Interest

A conflict of interest occurs when your personal interests interfere,  or appear
to interfere, with the interests of the Company. Conflicts of interest can arise
when you, or a member of your immediate  family,  receive improper benefits as a
result of your position  with the Company.  Conflicts of interest can also arise
when you or a member of your  immediate  family have  interests that may make it
difficult for you to perform your duties effectively.

Although we cannot  identify all possible  conflicts,  following are some of the
more common conflicts, which must be avoided:

o    Gifts:  Senior  Executive  and  Financial  Officers  or  members  of  their
     immediate  families may not accept gifts from persons or entities where any
     such  gifts are  being  made in order to  influence  your  actions  in your
     position  with the Company,  or where  acceptance of the gifts could create
     the appearance of a conflict of interest.

o    Compensation  from  non-Company  sources:  Senior  Executive  and Financial
     Officers may not accept  compensation (in any form) for services  performed
     for the Company from any source other than the Company.

o    Improper conduct and activities:  Senior  Executive and Financial  Officers
     may not engage in any conduct or activities that are inconsistent  with the
     Company's   best   interests  or  that  disrupt  or  impair  the  Company's
     relationship  with any  person or entity  with  which  the  Company  has or
     proposes to enter into a business or contractual relationship.

o    Personal use of Company assets: Senior Executive and Financial Officers may
     not use Company  assets,  labor or information for personal use, other than
     incidental  use,  unless  approved  by the Chief  Executive  Officer of the
     Company or as part of a compensation or expense reimbursement program.

o    Financial  interests in other  business:  Senior  Executive  and  Financial
     Officers  should avoid having an ownership  interest in any other entity if
     that  interest  compromises  or appears to  compromise  your loyalty to the
     Company.

o    Outside employment or activities with a competitor: Simultaneous employment
     with or serving as a director  of a  competitor  of the Company is strictly
     prohibited,  as is any  activity  that  is  intended,  or that  you  should
     reasonably  expect,  to advance a competitor's  interests at the expense of
     the Company.

If you have  any  doubt as to  whether  or not  conduct  would be  considered  a
conflict of interest, please consult with the Audit Committee Chairman.

IV.      Accurate Periodic Reports and Other Public Communications

As you are aware, full, fair, accurate,  timely and understandable disclosure in
our periodic  reports filed with the SEC and in our other public  communications
is required by SEC rules and is  essential  to our  continued  success.  You are
expected to provide information that is accurate, complete, objective, relevant,
fair,   timely  and   understandable  in  all  such  reports  and  other  public
disclosures.  Please  exercise the highest  standard of care in  preparing  such
materials.  We have established the following  guidelines in order to ensure the
quality of our periodic reports.

o        All Company accounting  records, as well as reports produced from those
         records, must be kept and presented in accordance with the laws of each
         applicable jurisdiction.

o All records must fairly and accurately reflect the transactions or occurrences
to which they relate.

o        All records must fairly and accurately reflect in reasonable detail the
         Company's assets, liabilities, revenues and expenses.

o The Company's  accounting  records must not contain any false or intentionally
misleading entries.

o        No  transactions  may  be  intentionally   misclassified  to  accounts,
         departments or accounting periods or in any other manner.

o        All  transactions  must  be  supported  by  accurate  documentation  in
         reasonable  detail and recorded in the proper account and in the proper
         accounting period.

o No information  may be concealed from the internal  auditor or the independent
auditors.

o        Compliance  with  Generally  Accepted  Accounting  Principles  and  the
         Company's  system of  internal  accounting  controls is required at all
         times.

V.       Compliance with Laws and Ethics Code

You are  required  to comply  with both the letter and spirit of all  applicable
governmental  statutes,  rules and  regulations and this Code, and to report any
suspected  violations of applicable  governmental  rules and regulations or this
Code to the Audit Committee.  No one will be subject to retaliation because of a
good faith report of a suspected violation. If you fail to comply with this Code
or any  applicable  laws or  regulations,  you may be  subject  to  disciplinary
measures, up to and including discharge.

No Rights Created

This  Code is a  statement  of  certain  fundamental  principles,  policies  and
procedures that govern the Company's Senior Executive and Financial  Officers in
the conduct of the Company's business. It is not intended to and does not create
any rights in any employee, officer, director, customer,  supplier,  competitor,
shareholder or any other person or entity.



<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,
2003, and all are included in the Company's consolidated  financial  statements,
except for Sumx Inc:




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

Britton & Koontz First National Bank       United States            100%

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

Sumx Inc.*                                  Mississippi              37%

Britton & Koontz Statutory Trust # 1        Mississippi             100%


* Sumx Inc. is not consolidated  with the Company because it is not considered a
  significant subsidiary.

<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 26, 2004                         /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, Bazile R Lanneau, Jr., certify that:

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

         2. Based on my  knowledge,  this  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 26, 2004                        /s/ Bazile R Lanneau, Jr.
                                            -------------------------------
                                            Bazile R. Lanneau, Jr.
                                            Chief Financial Officer


<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, 2003, of Britton & Koontz Capital  Corporation (the "Company"),  as
filed with the  Securities  Exchange  Commission on the date hereof (the "Annual
Report"),  I, W. Page Ogden,  Chief Executive  Officer of the Company,  certify,
pursuant  to 18 U.S.C.  ss.  1350,  as adopted  pursuant  to Section  906 of the
Sarbanes-Oxley Act of 2002, that:


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

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



Date: March 26, 2004                                 /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, 2003, of Britton & Koontz Capital  Corporation (the "Company"),  as
filed with the  Securities  Exchange  Commission on the date hereof (the "Annual
Report"),  I, Bazile R. Lanneau,  Jr., Chief  Financial  Officer of the Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:


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

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


Date: March 26, 2004                                 /s/ Bazile R. Lanneau, Jr.
                                                     --------------------------
                                                     Bazile R. Lanneau, Jr.
                                                     Chief Financial Officer