BXS BancorpSouth Bank

Earns $1.57 per Diluted Share for Full-Year 2006 TUPELO, Miss., Jan. 18 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. (NYSE:BXS) today announced financial results for the fourth quarter and year ended December 31, 2006. Salient points of the announcement include: * Earnings per diluted share for 2006 of $1.57, an increase of 6.8 percent compared with $1.47 for 2005. * Growth in net interest revenue of 8.5 percent for 2006 compared with 2005. * An increase in the net interest margin for 2006 to 3.70 percent from 3.64 percent for 2005. * Continuing high credit quality with an 18.6 percent reduction in non- performing loans and leases at the end of 2006 from the end of 2005. * Substantial growth in insurance commission revenues, which increased 15.1 percent for 2006 from 2005 and 19.2 percent for the fourth quarter of 2006 from the fourth quarter of 2005. * Additional non-recurring income tax expense for the fourth quarter of 2006 of $6.8 million, or $0.08 per diluted share. * The signing of a definitive agreement to acquire City Bancorp, the parent company of The Signature Bank headquartered in Springfield, Missouri, which has assets in excess of $800 million and which, with offices in Springfield and the suburbs of St. Louis, brings BancorpSouth its initial access to strong markets in its eighth contiguous state. The announcement of this agreement complemented the fourth-quarter opening of a loan production office in Lafayette, Louisiana and the expansion of BancorpSouth's insurance operations to a fourth state with the opening of a new office in Mobile, Alabama. Fourth Quarter 2006 Summary Results BancorpSouth's net income was $21.3 million, or $0.27 per diluted share, for the fourth quarter of 2006, compared with $34.8 million, or $0.44 per diluted share, for the fourth quarter of 2005. The Company's earnings for the fourth quarter of 2006 included a pre-tax negative impact of $4.0 million, or $0.03 per diluted share after tax, related to a decline in value of its mortgage servicing asset while earnings for the fourth quarter of 2005 included a pre-tax negative impact of $1.1 million, or $0.01 per diluted share after tax, as a result of a decline in the value of the mortgage servicing asset. The fourth quarter of 2006 was also negatively impacted by $6.8 million, or $0.08 per diluted share, in additional income tax expense. This non-recurring provision for income taxes is the result of a statutory limitation identified in the fourth quarter of 2006 that prevents the Company from recovering excess income taxes paid in a prior year. In addition, the Company's earnings for the fourth quarter of 2005 benefited from a pre-tax gain of $6.9 million from insurance proceeds related to Hurricane Katrina and a $2.8 million reduction in the Company's previous provision for credit losses related to the hurricane. The impact of these two non-recurring items increased earnings for the fourth quarter of 2005 by $0.07 per diluted share. 2006 Summary Results BancorpSouth's net income for 2006 was $125.2 million, or $1.57 per diluted share, up from $115.2 million, or $1.47 per diluted share, for 2005. The Company's earnings for 2006 when compared with 2005 included a net pre-tax negative impact of $2.6 million, or $0.02 per diluted share after tax, related to changes in value of the Company's mortgage servicing asset and $6.8 million, or $0.08 per diluted share, in additional income tax expense as discussed above. Commenting on the announcement, Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, said, "BancorpSouth produced profitable results for the fourth quarter of 2006, contributing to our 8.7% earnings growth for the full year. While fourth quarter growth in our traditional banking business did not keep pace with the rest of the year -- reflecting a difficult interest rate environment and mixed economic signals -- our insurance business produced a fourth consecutive comparable quarter of accelerating revenue growth. We were also pleased with the continued successful implementation of our organic and acquisition expansion strategies, which, as most recently demonstrated by our agreement to acquire The Signature Bank, enhance our Company's potential for long-term profitable growth and increased shareholder value." Net Interest Revenue Interest revenue for the fourth quarter of 2006 increased 19.6 percent, or $29.4 million, to $179.4 million from $150.0 million for the fourth quarter of 2005 and increased 2.4 percent from $175.2 million for the third quarter of 2006. Interest expense increased 44.0 percent, or $25.4 million, to $83.1 million for the fourth quarter of 2006 from $57.7 million for the fourth quarter of 2005 and 5.4 percent from $78.8 million for the third quarter of 2006. The average taxable equivalent yield on earning assets increased to 6.70 percent for the fourth quarter of 2006 from 5.86 percent for the fourth quarter of 2005 and 6.58 percent for the third quarter of 2006. The average rate paid on interest bearing liabilities was 3.67 percent for the fourth quarter of 2006, compared with 2.69 percent for the fourth quarter of 2005 and 3.49 percent for the third quarter of 2006. Net interest revenue increased 4.3 percent to $96.3 million for the fourth quarter of 2006 from $92.3 million for the fourth quarter of 2005 and declined 0.2 percent from $96.4 million for the third quarter of 2006. Net interest margin was 3.64 percent for the fourth quarter of 2006 compared with 3.64 percent for the fourth quarter of 2005 and 3.66 percent for the third quarter of 2006. Patterson continued, "While we experienced a 4.3 percent growth in net interest revenue, our flat net interest margin illustrates the challenge posed by an inverted yield curve to our asset/liability management. With interest rates generally higher for shorter maturities than for longer maturities, the average rate paid on our interest-bearing liabilities rose at a faster pace than the average yield on our earning assets. As a result of our ongoing efforts to manage our balance sheet to reduce our interest rate sensitivity, our fourth quarter net interest margin was the same as the net interest margin for the fourth quarter of 2005 and essentially level with that for the third quarter of 2006. We will continue to implement our asset/liability management strategies throughout the interest rate cycle, focusing on loan growth, careful and competitive pricing of interest-bearing liabilities and maintaining relatively short-term maturities in our investment portfolio." Deposit and Loan Activity Total assets at December 31, 2006 increased 2.2 percent to $12.0 billion from $11.8 billion at December 31, 2005. Total deposits grew 1.1 percent to $9.7 billion at December 31, 2006 from $9.6 billion at December 31, 2005. Loans and leases, net of unearned income, increased 6.9 percent to $7.9 billion at December 31, 2006 from $7.4 billion at December 31, 2005. Patterson added, "We were pleased with BancorpSouth's loan growth for the fourth quarter of 2006, a historically slow quarter for us because of the holiday season. Loan demand continued to be driven by many of our higher growth and more urban markets, supporting our positive expectations about the acquisition of The Signature Bank, which, when complete, will take BancorpSouth into both the largest and the third largest markets in Missouri. We also continue to expect significant long-term loan demand from the rebuilding of the Mississippi Gulf Coast, where BancorpSouth remains well positioned to play a significant role in that market in the years ahead. "Consistent with our experience for the third quarter of 2006, our deposit base continued to be affected by increased interest rates. While we produced a 1.0 percent increase in non-interest bearing demand deposits for the fourth quarter of 2006 from the fourth quarter of 2005, interest-bearing demand deposits decreased 3.7 percent and savings and other time deposits increased 4.0 percent over the same periods. This shift was the result of consumers seeking higher yields, as well as our competitive response to the needs of our core customers." Provision for Credit Losses and Allowance for Credit Losses For the fourth quarter of 2006, the provision for credit losses was $6.3 million compared with $2.0 million for the fourth quarter of 2005 and $2.5 million for the third quarter of 2006. Annualized actual net charge-offs were 0.25 percent of average loans and leases for the fourth quarter of 2006 compared with 0.16 percent for the fourth quarter of 2005 and 0.07 percent for the third quarter of 2006. Non-performing loans and leases decreased 18.6 percent to $23.5 million, or 0.30 percent of loans and leases, at December 31, 2006, from $28.8 million, or 0.39 percent of loans and leases, at December 31, 2005, and decreased 6.5 percent from $25.1 million, or 0.32 percent of loans and leases, at September 30, 2006. The allowance for credit losses was 1.26 percent of loans and leases at December 31, 2006, compared with 1.38 percent of loans and leases at December 31, 2005 and 1.25 percent of loans and leases at September 30, 2006. "BancorpSouth's credit quality strengthened during 2006," said Patterson, "highlighted by the decline in non-performing loans and leases to 0.30 percent of total loans and leases at the end of the year from 0.39 percent at the end of 2005. While we increased our provision for credit losses in the fourth quarter of 2006 in response to increased charge-offs and expansion of our loan portfolio, we completed the year with strong credit reserves. We are confident that high credit quality will continue to be a hallmark of BancorpSouth." Noninterest Revenue Noninterest revenue was $50.5 million for the fourth quarter of 2006 compared with $53.7 million for the fourth quarter of 2005. As previously noted, these results include the impact of a $2.9 million net decline in mortgage revenue related to changes in the value of BancorpSouth's mortgage servicing asset for the fourth quarter of 2006 compared with the fourth quarter of 2005, as well as the $6.9 million gain in the fourth quarter of 2005 from insurance proceeds related to Hurricane Katrina. "BancorpSouth's noninterest revenue performance for the fourth quarter was again driven by the expansion of our insurance operations," stated Patterson. "Insurance commission revenues increased 19.2 percent for the fourth quarter of 2006 from the fourth quarter of 2005. We attribute this growth primarily to the expansion in our Mississippi and Louisiana insurance operations in the aftermath of Hurricane Katrina. Our long-term commitment to building our market-share on the Gulf Coast was evidenced by the launch of our insurance business in Mobile, Alabama during the fourth quarter, the fourth state in which we now conduct insurance operations." Noninterest Expense Noninterest expense increased 8.5 percent to $100.1 million for the fourth quarter of 2006 from $92.3 million for the fourth quarter of 2005 and increased 2.5 percent from $98.7 million for the third quarter of 2006. The growth in noninterest expense primarily resulted from additional salaries, employee benefits and occupancy expense associated with the acquisition of American State Bank Corporation in the fourth quarter of 2005, the opening of seven new loan production offices and seven new full-service branch bank offices since the start of the fourth quarter of 2005 and the launch of insurance operations in Mobile, Alabama. Capital Management BancorpSouth repurchased 25,000 shares of its common stock during the fourth quarter of 2006. The Company has repurchased 760,500 shares under the stock repurchase plan authorized in April 2005 for the repurchase of up to three million shares. Combined with the shares repurchased under earlier plans, BancorpSouth has repurchased approximately 11.3 million shares of its common stock since its original share repurchase program was initiated in 2001. BancorpSouth will continue to evaluate additional share repurchase opportunities under the April 2005 plan, which authorizes repurchases during a two-year period expiring April 30, 2007. Summary Patterson concluded, "For the fourth quarter and full-year 2006, BancorpSouth encountered many of the challenges and opportunities we face in 2007 and beyond. As an interest-rate spread dependent financial institution, we must continue our disciplined approach in our asset/liability management strategies, always cognizant and responsive to our customers' needs. In addition, we will continue to pursue profitable growth in both existing and new markets. As evidenced by our full-service and loan production office openings in 2006, as well as the expansion of our insurance business in Alabama, we remain focused on leveraging organic growth opportunities in existing and contiguous markets. We also have the ability to compliment this strategy through acquisitions that contribute to our long-term operating and financial goals. "As a result, we have entered 2007 with confidence in both BancorpSouth's market position and the resources we have to leverage the opportunities our market strength provides. We remain committed to our business model of providing our retail and small-to-midsize customers with high quality, community style service, backed by the sophisticated products and services of a large, integrated financial institution. We will also continue to manage our operations based on conservative policies and principles. We expect this proven approach will enable BancorpSouth to fulfill its potential for long- term profitable growth, which, combined with our share repurchase and dividend programs, will continue to build shareholder value." Conference Call BancorpSouth will conduct a conference call to discuss its fourth quarter and 2006 results tomorrow, January 19, 2007, at 10:00 a.m. (Central Time). Investors may listen via the Internet by accessing BancorpSouth's website at http://www.bancorpsouth.com/. A replay of the conference call will be available at BancorpSouth's website for at least two weeks following the call. Forward-Looking Statements Certain statements contained in this news release may not be based on historical facts and are "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. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "estimate," "expect," "may," "might," "will," "would," "could" or "intend." These forward-looking statements include, without limitation, statements relating to the implementation of our asset/liability management strategies, long-term loan demand from the rebuilding of the Mississippi Gulf Coast, our high credit quality, repurchases under our common stock repurchase plan, our ability to pursue profitable growth in existing and new markets, our ability to manage our operations based on conservative policies and principles, our ability to fulfill our potential for long-term profitable growth and our ability to build shareholder value. We caution you not to place undue reliance on the forward-looking statements contained in this news release in that actual results could differ materially from those indicated in such forward-looking statements because of a variety of factors. These factors may include, but are not limited to, the rate of economic recovery in the region affected by Hurricane Katrina, changes in economic conditions and government fiscal and monetary policies, fluctuations in prevailing interest rates and the ability of BancorpSouth to manage its assets and liabilities to limit exposure to changing interest rates, the ability of BancorpSouth to increase noninterest revenue and expand noninterest revenue business, the ability of BancorpSouth to maintain credit quality, changes in laws and regulations affecting financial service companies in general, the ability of BancorpSouth to compete with other financial services companies, the ability of BancorpSouth to provide and market competitive services and products, changes in BancorpSouth's operating or expansion strategy, geographic concentration of BancorpSouth's assets, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to repurchase its common stock on favorable terms, the ability of BancorpSouth to identify, close and effectively integrate potential acquisitions, the ability of BancorpSouth to expand geographically and enter growing markets, changes in consumer preferences, other factors generally understood to affect the financial results of financial services companies, and other factors described from time to time in BancorpSouth's filings with the Securities and Exchange Commission. We undertake no obligation to update these forward- looking statements to reflect events or circumstances that occur after the date on which such statements were made. BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi with approximately $12.0 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 283 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Tennessee and Texas. BancorpSouth, Inc. Selected Financial Data Three Months Ended Twelve Months Ended December 31, December 31, 2006 2005 2006 2005 (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $96,251 $92,270 $385,799 $355,557 Provision for credit losses 6,325 1,975 8,577 24,467 Noninterest revenue 50,490 53,708 206,094 198,812 Noninterest expense 100,141 92,326 393,154 362,102 Income before income taxes 40,275 51,677 190,162 167,800 Income tax provision 18,952 16,871 64,968 52,601 Net income $21,323 $34,806 $125,194 $115,199 Earning per share: Basic $0.27 $0.44 $1.58 $1.47 Diluted $0.27 $0.44 $1.57 $1.47 Balance sheet data at December 31: Total assets $12,038,807 $11,768,674 Total earning assets 10,879,587 10,622,578 Loans and leases, net of unearned income 7,871,471 7,365,555 Allowance for credit losses 98,834 101,500 Total deposits 9,710,578 9,607,258 Common shareholders' equity 1,022,538 977,166 Book value per share 12.93 12.33 Average balance sheet data: Total assets $11,854,667 $11,312,104 $11,798,007 $10,968,874 Total earning assets 10,771,897 10,314,889 10,712,327 10,023,974 Loans and leases, net of unearned income 7,797,381 7,165,025 7,579,935 7,026,009 Total deposits 9,479,773 9,336,366 9,554,441 9,110,411 Common shareholders' equity 1,013,082 959,680 999,989 934,563 Non-performing assets at December 31: Non-accrual loans and leases $6,603 $8,816 Loans and leases 90+ days past due 15,282 17,744 Restructured loans and leases 1,571 2,239 Other real estate owned 10,463 15,947 Net charge-offs as a percentage of average loans (annualized) 0.25% 0.16% 0.15% 0.23% Performance ratios (annualized): Return on average assets 0.71% 1.22% 1.06% 1.05% Return on common equity 8.35% 14.38% 12.52% 12.33% Net interest margin 3.64% 3.64% 3.70% 3.64% Average shares outstanding - basic 79,098,187 78,415,796 79,140,379 78,266,018 Average shares outstanding - diluted 79,513,993 78,707,893 79,542,734 78,596,899 BancorpSouth, Inc. Consolidated Balance Sheet (Unaudited) December 31, % 2006 2005 Change (Dollars in thousands) Assets Cash and due from banks $444,033 $461,659 (3.82%) Interest bearing deposits with other banks 7,418 6,809 8.94% Held-to-maturity securities, at amortized cost 1,723,420 1,412,529 22.01% Available-for-sale securities, at fair value 1,041,999 1,353,882 (23.04%) Federal funds sold and securities purchased under agreement to resell 145,957 409,531 (64.36%) Loans and leases 7,917,523 7,401,212 6.98% Less: Unearned income 46,052 35,657 29.15% Allowance for credit losses 98,834 101,500 (2.63%) Net loans and leases 7,772,637 7,264,055 7.00% Loans held for sale 89,323 74,271 20.27% Premises and equipment, net 287,215 261,172 9.97% Accrued interest receivable 89,090 78,730 13.16% Goodwill 143,718 138,754 3.58% Other assets 293,997 307,282 (7.85%) Total Assets $12,038,807 $11,768,674 2.20% Liabilities Deposits: Demand: Noninterest bearing $1,817,223 $1,798,892 1.02% Interest bearing 2,856,295 2,965,057 (3.67%) Savings 715,587 729,279 (1.88%) Other time 4,321,473 4,114,030 5.04% Total deposits 9,710,578 9,607,258 1.08% Federal funds purchased and securities sold under agreement to repurchase 672,438 748,139 (10.12%) Other short-term borrowings 200,000 2,000 N/A Accrued interest payable 36,270 24,435 48.43% Junior subordinated debt securities 144,847 144,847 0.00% Long-term debt 135,707 137,228 (1.11%) Other liabilities 116,429 127,601 (17.24%) Total Liabilities 11,016,269 10,791,508 1.98% Shareholders' Equity Common stock 197,774 198,093 (0.16%) Capital surplus 113,723 108,961 4.37% Accumulated other comprehensive income (loss) (28,789) (16,233) 77.35% Retained earnings 739,830 686,345 7.79% Total Shareholders' Equity 1,022,538 977,166 4.64% Total Liabilities & Shareholders' Equity $12,038,807 $11,768,674 2.20% BancorpSouth, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Quarter Ended Dec 2006 Sept 2006 Jun 2006 Mar 2006 Dec 2005 INTEREST REVENUE: Loans and leases $147,784 $143,712 $134,569 $127,200 $121,243 Deposits with other banks 217 295 176 141 177 Federal funds sold and securities purchased under agreement to resell 635 609 976 2,846 3,052 Held-to-maturity securities: Taxable 16,532 16,107 16,048 14,323 10,461 Tax-exempt 2,012 2,017 2,077 1,887 1,696 Available-for-sale securities: Taxable 9,653 10,405 11,389 10,904 11,048 Tax-exempt 1,170 1,215 1,276 1,363 1,400 Loans held for sale 1,366 878 871 1,238 920 Total interest revenue 179,369 175,238 167,382 159,902 149,997 INTEREST EXPENSE: Deposits 66,973 62,964 57,430 53,133 47,970 Federal funds purchased and securities sold under agreement to repurchase 8,940 8,498 6,549 5,902 4,896 Other 7,205 7,378 6,182 4,938 4,861 Total interest expense 83,118 78,840 70,161 63,973 57,727 Net interest revenue 96,251 96,398 97,221 95,929 92,270 Provision for credit losses 6,325 2,526 3,586 (3,860) 1,975 Net interest revenue, after provision for credit losses 89,926 93,872 93,635 99,789 90,295 NONINTEREST REVENUE: Mortgage lending (820) 41 3,720 3,176 2,191 Service charges 17,343 17,354 17,489 15,450 15,852 Trust income 3,703 2,344 2,325 2,016 2,412 Security gains, net 4 9 17 10 11 Insurance commissions 17,175 17,556 16,411 17,445 14,411 Other 13,085 11,930 13,638 14,673 18,831 Total noninterest revenue 50,490 49,234 53,600 52,770 53,708 NONINTEREST EXPENSES: Salaries and employee benefits 60,178 58,453 58,376 57,573 53,959 Occupancy, net of rental income 8,173 8,598 7,759 7,442 7,133 Equipment 5,941 5,896 5,822 5,763 5,592 Other 25,849 25,714 26,387 25,230 25,642 Total noninterest expenses 100,141 98,661 98,344 96,008 92,326 Income before income taxes 40,275 44,445 48,891 56,551 51,677 Income tax expense 18,952 13,818 13,392 18,806 16,871 Net income $21,323 $30,627 $35,499 $37,745 $34,806 Net income per share: Basic $0.27 $0.39 $0.45 $0.48 $0.44 Diluted $0.27 $0.38 $0.45 $0.47 $0.44 BancorpSouth, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Year To Date Dec 2006 Dec 2005 INTEREST REVENUE: Loans and leases $553,265 $450,722 Deposits with other banks 829 593 Federal funds sold and securities purchased under agreement to resell 5,066 4,701 Held-to-maturity securities: Taxable 63,010 38,839 Tax-exempt 7,993 6,518 Available-for-sale securities: Taxable 42,351 49,319 Tax-exempt 5,024 6,049 Loans held for sale 4,353 3,195 Total interest revenue 681,891 559,936 INTEREST EXPENSE: Deposits 240,500 171,097 Federal funds purchased and securities sold under agreement to repurchase 29,889 13,339 Other 25,703 19,943 Total interest expense 296,092 204,379 Net interest revenue 385,799 355,557 Provision for credit losses 8,577 24,467 Net interest revenue, after provision for credit losses 377,222 331,090 NONINTEREST REVENUE: Mortgage lending 6,117 9,573 Service charges 67,636 62,849 Trust income 10,388 8,466 Security gains, net 40 472 Insurance commissions 68,587 59,598 Other 53,326 57,854 Total noninterest revenue 206,094 198,812 NONINTEREST EXPENSES: Salaries and employee benefits 234,580 211,950 Occupancy, net of rental income 31,972 27,137 Equipment 23,422 22,179 Other 103,180 100,836 Total noninterest expenses 393,154 362,102 Income before income taxes 190,162 167,800 Income tax expense 64,968 52,601 Net income $125,194 $115,199 Net income per share: Basic $1.58 $1.47 Diluted $1.57 $1.47 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2006 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,876,801 $149,992 7.55% Held-to-maturity securities: Taxable 1,533,105 16,532 4.28% Tax-exempt 185,158 3,096 6.63% Available-for-sale securities: Taxable 1,018,403 9,653 3.76% Tax-exempt 98,101 1,800 7.28% Short-term investments 60,329 853 5.61% Total interest earning assets and revenue 10,771,897 181,926 6.70% Other assets 1,182,664 Less: allowance for credit losses (99,894) Total $11,854,667 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,765,276 $16,228 2.33% Savings 718,623 2,160 1.19% Other time 4,292,368 48,585 4.49% Short-term borrowings 925,273 11,197 4.80% Junior subordinated debt 144,847 2,965 8.12% Long-term debt 135,838 1,983 5.79% Total interest bearing liabilities and expense 8,982,225 83,118 3.67% Demand deposits - noninterest bearing 1,703,506 Other liabilities 155,854 Total liabilities 10,841,585 Shareholders' equity 1,013,082 Total $11,854,667 Net interest revenue $98,808 Net interest margin 3.64% Net interest rate spread 3.03% Interest bearing liabilities to interest earning assets 83.39% Net interest tax equivalent adjustment $2,557 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2005 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,242,759 $122,802 6.73% Held-to-maturity securities: Taxable 1,180,429 10,462 3.52% Tax-exempt 154,869 2,609 6.68% Available-for-sale securities: Taxable 1,303,933 11,048 3.36% Tax-exempt 120,821 2,154 7.07% Short-term investments 312,078 3,227 4.10% Total interest earning assets and revenue 10,314,889 152,302 5.86% Other assets 1,099,623 Less: allowance for credit losses (102,408) Total $11,312,104 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,888,641 $11,697 1.61% Savings 722,108 1,451 0.80% Other time 4,029,764 34,822 3.43% Short-term borrowings 601,703 4,915 3.24% Junior subordinated debt 140,403 2,835 8.01% Long-term debt 137,353 2,008 5.80% Total interest bearing liabilities and expense 8,519,972 57,728 2.69% Demand deposits - noninterest bearing 1,695,853 Other liabilities 136,599 Total liabilities 10,352,424 Shareholders' equity 959,680 Total $11,312,104 Net interest revenue $94,574 Net interest margin 3.64% Net interest rate spread 3.17% Interest bearing liabilities to interest earning assets 82.60% Net interest tax equivalent adjustment $2,305 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date December 31, 2006 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,647,131 $560,673 7.33% Held-to-maturity securities: Taxable 1,517,430 63,010 4.15% Tax-exempt 183,986 12,297 6.68% Available-for-sale securities: Taxable 1,135,506 42,351 3.73% Tax-exempt 106,635 7,730 7.25% Short-term investments 121,639 5,895 4.85% Total interest earning assets and revenue 10,712,327 691,956 6.46% Other assets 1,184,497 Less: allowance for credit losses (98,817) Total $11,798,007 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,886,030 $60,145 2.08% Savings 744,106 7,987 1.07% Other time 4,211,371 172,368 4.09% Short-term borrowings 807,860 35,835 4.44% Junior subordinated debt 144,847 11,791 8.14% Long-term debt 136,411 7,966 5.84% Total interest bearing liabilities and expense 8,930,625 296,092 3.32% Demand deposits - noninterest bearing 1,712,934 Other liabilities 154,460 Total liabilities 10,798,018 Shareholders' equity 999,989 Total $11,798,007 Net interest revenue $395,864 Net interest margin 3.70% Net interest rate spread 3.14% Interest bearing liabilities to interest earning assets 83.37% Net interest tax equivalent adjustment $10,065 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date December 31, 2005 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,098,300 $456,289 6.43% Held-to-maturity securities: Taxable 1,100,432 38,839 3.53% Tax-exempt 143,679 10,027 6.98% Available-for-sale securities: Taxable 1,412,600 49,319 3.49% Tax-exempt 129,519 9,307 7.19% Short-term investments 139,444 5,294 3.80% Total interest earning assets and revenue 10,023,974 569,075 5.68% Other assets 1,040,527 Less: allowance for credit losses (95,627) Total $10,968,874 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,849,199 $38,947 1.37% Savings 738,555 5,967 0.81% Other time 3,998,864 126,183 3.16% Short-term borrowings 526,274 14,080 2.68% Junior subordinated debt 138,714 11,142 8.03% Long-term debt 137,902 8,060 5.84% Total interest bearing liabilities and expense 8,389,508 204,379 2.44% Demand deposits - noninterest bearing 1,523,793 Other liabilities 121,010 Total liabilities 10,034,311 Shareholders' equity 934,563 Total $10,968,874 Net interest revenue $364,696 Net interest margin 3.64% Net interest rate spread 3.24% Interest bearing liabilities to interest earning assets 83.69% Net interest tax equivalent adjustment $9,139 DATASOURCE: BancorpSouth, Inc. CONTACT: L. Nash Allen, Jr., Treasurer and Chief Financial Officer, +1-662-680-2330, or Gary C. Bonds, Senior Vice President and Controller, +1-662-680-2332, both of BancorpSouth, Inc. Web site: http://www.bancorpsouth.com/

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