BXS BancorpSouth Bank

Achieves Double-Digit Growth in Net Interest Revenue and Noninterest Revenue TUPELO, Miss., Oct. 23 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. (NYSE:BXS) today announced financial results for the third quarter and nine months ended September 30, 2007. Highlights of the announcement include: -- Net income for the third quarter of 2007 of $36.3 million, or $0.44 per diluted share, compared with $23.9 million, or $0.30 per diluted share, for the third quarter of 2006. -- Total loans and leases, net of unearned income, of $9.1 billion at September 30, 2007, up 16.5 percent from the same date in 2006. -- An 11.9 percent comparable-quarter increase in net interest revenue to $107.9 million for the third quarter of 2007. -- Noninterest revenue of $57.9 million for the third quarter of 2007, an increase of 17.6 percent from the same quarter in 2006, including an increase in insurance commission revenue of 9.8 percent. -- Continued strong credit quality, with minimal exposure in subprime residential mortgages. -- The opening of two full service banking locations in the St. Louis, Missouri market and the acquisition of Insurance Network of Jonesboro, Arkansas. Third Quarter 2007 Summary Results The Company's net income for the third quarter of 2007 increased 51.8 percent to $36.3 million from $23.9 million for the third quarter of 2006. Net income per diluted share rose 46.7 percent to $0.44 for the third quarter of 2007 from $0.30 for the third quarter of 2006. Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, commented, "BancorpSouth produced significant profitable growth for the third quarter of 2007, driven by the double-digit rate of expansion of both our traditional banking business and other noninterest revenue. We again achieved solid organic growth in loans and in insurance commission revenue, even as demand softened relative to the second quarter in both our regional markets and nationally. In spite of the interest volatility associated with the Federal Reserve interest rate cut during the third quarter, as well as market turmoil related to subprime mortgages, we have maintained our net interest margin within a five basis-point range for the last five quarters, our credit quality continues to be strong, and we have minimal exposure to subprime residential mortgages. In addition, our third quarter results also reflected the substantial positive impact of our March 2007 acquisition of The Signature Bank, further validating the ongoing potential inherent in our multi-faceted growth strategies." Net Interest Revenue Interest revenue for the third quarter of 2007 increased 18.7 percent, or $32.7 million, to $208.0 million from $175.2 million for the third quarter of 2006 and increased 2.7 percent from $202.6 million for the second quarter of 2007. Interest expense increased 26.9 percent, or $21.2 million, to $100.0 million for the third quarter of 2007 from $78.8 million for the third quarter of 2006 and 4.3 percent from $95.9 million for the second quarter of 2007. The average taxable equivalent yield on earning assets increased to 6.98 percent for the third quarter of 2007 from 6.58 percent for the third quarter of 2006 and 6.94 percent for the second quarter of 2007. The average rate paid on interest bearing liabilities was 3.92 percent for the third quarter of 2007, compared with 3.49 percent for the third quarter of 2006 and 3.86 percent for the second quarter of 2007. Net interest revenue increased 11.9 percent to $107.9 million for the third quarter of 2007 from $96.4 million for the third quarter of 2006 and increased 1.2 percent from $106.7 million for the second quarter of 2007. Net interest margin was 3.66 percent for the third quarter of 2007 compared with 3.66 percent for the third quarter of 2006 and 3.69 percent for the second quarter of 2007. "We attribute the substantial growth in net interest revenue for the third quarter of 2007 from the third quarter last year to both the favorable impact of the Signature Bank acquisition and to our ongoing asset/liability management strategies," said Patterson. "The principal goal of these strategies is to reduce our interest rate risk through active management of our interest bearing liabilities, while primarily funding our loan growth through redeploying capital from maturing investment securities into higher- rate loans. While we continue to work diligently to increase our net interest margin, the 3.66 percent margin for the latest quarter is within the relatively narrow range of 3.64 percent to 3.69 percent that we have produced for the last five quarters. This consistency in the face of significant market pressure from a variety of factors is a tribute to the hard work of people throughout our banking operations." Deposit and Loan Activity Total assets at September 30, 2007 increased 10.6 percent to $13.1 billion from $11.9 billion at September 30, 2006. Total deposits grew 7.4 percent to $10.2 billion at September 30, 2007 from $9.5 billion at September 30, 2006. Loans and leases, net of unearned income, increased 16.5 percent to $9.1 billion at September 30, 2007 from $7.8 billion at September 30, 2006. Patterson added, "These relatively large year-over-year increases primarily result from the favorable effect of the Signature acquisition, complemented by significant organic growth for the 12 months ended September 30, 2007. On a sequential-quarter basis, our third quarter organic loan growth totaled a solid 1.0 percent. Nonetheless, following sequential-quarter loan growth of 2.6 percent for the second quarter, we believe the trend evident in the slowing rate of growth is consistent with the environment nationally and will continue in the fourth quarter, as well. Total deposits at the end of the third quarter of 2007 declined 2.4 percent from the end of the second quarter of 2007, mainly as a result of the 3.8 percent reduction in savings and other time deposits. This reduction is primarily the result of our continuing asset/liability management initiatives to minimize the impact of interest rate volatility." Provision for Credit Losses and Allowance for Credit Losses For the third quarter of 2007, the provision for credit losses was $5.7 million compared with $2.5 million for the third quarter of 2006 and $7.8 million for the second quarter of 2007. Annualized net charge-offs were 0.13 percent of average loans and leases for the third quarter of 2007 compared with 0.07 percent for the third quarter of 2006 and 0.14 percent for the second quarter of 2007. Non-performing loans and leases increased 24.8 percent to $31.3 million, or 0.35 percent of loans and leases, at September 30, 2007 from $25.1 million, or 0.32 percent of loans and leases, at September 30, 2006 and 31.1 percent from $23.9 million, or 0.27 percent of loans and leases, at June 30, 2007. The allowance for credit losses was 1.24 percent of loans and leases at September 30, 2007 compared with 1.25 percent of loans and leases at September 30, 2006 and 1.22 percent of loans and leases at June 30, 2007. Patterson stated, "Our commitment to maintaining strong credit quality has been a core operating principle for this Company for many years. For the third quarter, the increase in our provision for credit losses was primarily driven by loan growth, while our metrics for non-performing loans and annualized net charge offs remained solidly within historic ranges. Because our mortgage lending decisions are based on our conservative lending policies, we continue to have nominal exposure, only approximately $429,000, to the credit issues affecting the subprime residential mortgage market." Noninterest Revenue For the third quarter of 2007, noninterest revenue increased 17.6 percent to $57.9 million from $49.2 million for the third quarter of 2006. These results included a decline in the value of the mortgage servicing asset totaling $3.2 million for the third quarter of 2007 and $3.7 million for the third quarter of 2006. In addition, the Company recorded a gain of $2.4 million in other noninterest revenue for the third quarter of 2007 related to the sale of shares of MasterCard Incorporated. "We were pleased with the 9.8 percent expansion in insurance commission revenue for the third quarter of 2007 from the third quarter of 2006, which follows five consecutive quarters of double-digit growth," remarked Patterson. "We believe we have outstanding potential for further growth in our insurance business, both through the long-term rebuilding of the Gulf Coast and throughout the four states in which our insurance business is located. During the third quarter, we enhanced our ability to leverage this potential with the acquisition of Insurance Network, headquartered in Jonesboro, Arkansas. Building on our acquisition of American State Bank headquartered in Jonesboro in the fourth quarter of 2005, Insurance Network will combine with our Little Rock insurance division to increase our penetration of attractive markets in northern Arkansas." Noninterest Expense Noninterest expense increased 7.8 percent to $106.4 million for the third quarter of 2007 from $98.7 million for the third quarter of 2006 and increased 0.4 percent from $105.9 million for the second quarter of 2007. The comparable-quarter growth in noninterest expense is attributable to additional salaries, employee benefits and occupancy expense associated with the opening of new loan production offices and full-service branch bank offices during the 12 months ended September 30, 2007, including two new full-service banking locations opened during the third quarter of 2007 in suburban St. Louis. In addition, the increased expense is related to the launch of insurance operations in Mobile, Alabama in the fourth quarter of 2006 and the acquisitions of Signature, effective March 1, 2007, and Insurance Network on September 1, 2007. The sequential-quarter increase in noninterest expense of 0.4 percent for the third quarter of 2007, following a 0.3 percent sequential increase for the second quarter of 2007, reflects the Company's continued focus on cost control during the integration of Signature's operations into BancorpSouth's. Income Taxes Income tax expense was $17.5 million for the third quarter of 2007, a 15.0 percent decrease from $20.6 million for the third quarter of 2006. The decrease is attributable to the recognition of approximately $6.8 million in additional income tax expense during the third quarter of 2006 due to statutory limitations which prevented the recovery of excess taxes paid in prior years. The statute of limitations relating to the amendment of certain prior year tax returns lapsed during the third quarter of 2006. Capital Management BancorpSouth repurchased 157,000 shares of its common stock during the third quarter of 2007 under a stock repurchase plan for the repurchase of up to three million shares that commenced on May 1, 2007 and expires on April 30, 2009. BancorpSouth will continue to evaluate additional share repurchase opportunities under this plan. The Company has repurchased approximately 11.9 million shares of its common stock since its original share repurchase program was initiated in 2001. Summary Patterson concluded, "Our profitable growth for the third quarter was the combined result of growth strategies and operating philosophies we have implemented for many years. In an environment that has grown more challenging, our results were based on our ability to drive growth through both our traditional banking business and our complementary noninterest based business; to drive growth organically -- through new products and services, through cross-sales to existing customers, through new customers in existing or new markets -- and to expand our long record of successful acquisitions. The foundation of these growth strategies has always been a conservative, disciplined operating philosophy, focused on strong credit quality, outstanding customer service and steady long-term growth. As in many previous economic cycles, the difficulties and uncertainties affecting the industry today demonstrate the value of this proven long-term approach to expanding our business and shareholder value." Conference Call BancorpSouth will conduct a conference call to discuss its third quarter 2007 results tomorrow, October 24, 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 slowing of loan growth, our potential for growth in our insurance business and repurchases under our common stock repurchase plan. 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, 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 $13.1 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 290 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. BancorpSouth, Inc. Selected Financial Data Unaudited Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $107,916 $96,398 $313,242 $289,548 Provision for credit losses 5,727 2,526 14,925 2,252 Noninterest revenue 57,894 49,234 176,485 155,604 Noninterest expense 106,351 98,661 317,889 293,013 Income before income taxes 53,732 44,445 156,913 149,887 Income tax provision 17,475 20,568 51,198 52,766 Net income $36,257 $23,877 $105,715 $97,121 Earning per share: Basic $0.44 $0.30 $1.30 $1.23 Diluted $0.44 $0.30 $1.30 $1.22 Balance sheet data at September 30: Total assets $13,134,317 $11,870,764 Total earning assets 11,958,168 10,747,814 Loans and leases, net of unearned income 9,054,725 7,773,682 Allowance for credit losses 112,134 97,391 Total deposits 10,190,817 9,492,374 Common shareholders' equity 1,169,739 1,024,609 Book value per share 14.22 12.95 Average balance sheet data: Total assets $13,084,787 $11,814,101 $12,781,787 $11,780,102 Total earning assets 11,954,777 10,719,354 11,679,681 10,692,252 Loans and leases, net of unearned interest 8,995,863 7,668,909 8,676,921 7,506,656 Total deposits 10,246,437 9,447,788 10,252,233 9,579,602 Common shareholders' equity 1,141,295 1,015,658 1,106,907 994,834 Non-performing assets at September 30: Non-accrual loans and leases $7,301 $6,289 Loans and leases 90+ days past due 23,158 16,859 Restructured loans and leases 878 1,952 Other real estate owned 10,966 11,808 Net charge-offs as a percentage of average loans (annualized) 0.13% 0.07% 0.12% 0.11% Performance ratios (annualized): Return on average assets 1.10% 0.80% 1.11% 1.10% Return on common equity 12.60% 9.33% 12.77% 13.05% Net interest margin 3.66% 3.66% 3.67% 3.71% Average shares outstanding - basic 82,165,256 79,104,471 81,263,864 79,154,443 Average shares outstanding - diluted 82,467,583 79,577,609 81,631,582 79,552,314 BancorpSouth, Inc. Consolidated Balance Sheets (Unaudited) September 30, % 2007 2006 Change (Dollars in thousands) Assets Cash and due from banks $273,616 $377,005 (27.42%) Interest bearing deposits with other banks 18,069 7,231 149.88% Held-to-maturity securities, at amortized cost 1,706,350 1,684,483 1.30% Available-for-sale securities, at fair value 1,018,301 1,184,976 (14.07%) Federal funds sold and securities purchased under agreement to resell 57,000 20,851 173.37% Loans and leases 9,103,307 7,819,408 16.42% Less: Unearned income 48,582 45,726 6.25% Allowance for credit losses 112,134 97,391 15.14% Net loans and leases 8,942,591 7,676,291 16.50% Loans held for sale 103,722 76,590 35.42% Premises and equipment, net 312,832 281,349 11.19% Accrued interest receivable 101,118 92,099 9.79% Goodwill 254,587 143,700 77.17% Other assets 346,131 326,189 6.11% Total Assets $13,134,317 11,870,764 10.64% Liabilities Deposits: Demand: Noninterest bearing $1,687,157 1,753,566 (3.79%) Interest bearing 3,215,632 2,775,033 15.88% Savings 705,519 728,168 (3.11%) Other time 4,582,509 4,235,607 8.19% Total deposits 10,190,817 9,492,374 7.36% Federal funds purchased and securities sold under agreement to repurchase 797,177 715,108 11.48% Short-term Federal Home Loan Bank borrowings 500,000 200,000 150.00% Accrued interest payable 42,509 37,349 13.82% Junior subordinated debt securities 163,405 144,847 12.81% Long-term Federal Home Loan Bank borrowings 141,605 136,096 4.05% Other liabilities 129,065 120,381 7.21% Total Liabilities 11,964,578 10,846,155 10.31% Shareholders' Equity Common stock 205,663 197,828 3.96% Capital surplus 195,323 112,644 73.40% Accumulated other comprehensive income (loss) (18,004) (13,879) 29.72% Retained earnings 786,757 728,016 8.07% Total Shareholders' Equity 1,169,739 1,024,609 14.16% Total Liabilities & Shareholders' Equity $13,134,317 $11,870,764 10.64% BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Quarter Ended Sep-07 Jun-07 Mar-07 INTEREST REVENUE: Loans and leases $174,787 $169,717 $153,241 Deposits with other banks 316 268 286 Federal funds sold and securities purchased under agreement to resell 232 633 2,511 Held-to-maturity securities: Taxable 17,585 16,962 16,705 Tax-exempt 2,077 2,044 2,015 Available-for-sale securities: Taxable 10,554 10,839 9,592 Tax-exempt 960 1,010 1,115 Loans held for sale 1,454 1,082 1,675 Total interest revenue 207,965 202,555 187,140 INTEREST EXPENSE: Interest bearing demand 22,189 21,992 19,887 Savings 2,503 2,481 2,383 Other time 55,728 55,459 51,985 Federal funds purchased and securities sold under agreement to repurchase 9,151 9,283 7,824 Other 10,478 6,682 6,393 Total interest expense 100,049 95,897 88,472 Net interest revenue 107,916 106,658 98,668 Provision for credit losses 5,727 7,843 1,355 Net interest revenue, after provision for credit losses 102,189 98,815 97,313 NONINTEREST REVENUE: Mortgage lending 100 5,484 1,779 Credit card, debit card and merchant fees 7,667 7,391 6,874 Service charges 17,281 17,677 15,396 Trust income 2,487 2,457 2,214 Security gains, net 7 10 7 Insurance commissions 17,542 17,665 19,794 Other 12,810 9,548 12,295 Total noninterest revenue 57,894 60,232 58,359 NONINTEREST EXPENSES: Salaries and employee benefits 63,269 63,851 63,628 Occupancy, net of rental income 8,959 8,709 8,463 Equipment 6,057 6,053 6,026 Other 28,066 27,315 27,493 Total noninterest expenses 106,351 105,928 105,610 Income before income taxes 53,732 53,119 50,062 Income tax expense 17,475 17,238 16,485 Net income $36,257 $35,881 $33,577 Net income per share: Basic $0.44 $0.44 $0.42 Diluted $0.44 $0.43 $0.42 Quarter Ended Year To Date Dec-06 Sep-06 Sep-07 Sep-06 INTEREST REVENUE: Loans and leases $147,784 $143,712 $497,745 $405,481 Deposits with other banks 217 295 870 612 Federal funds sold and securities purchased under agreement to resell 635 609 3,376 4,431 Held-to-maturity securities: Taxable 16,532 16,107 51,252 46,478 Tax-exempt 2,012 2,017 6,136 5,981 Available-for-sale securities: Taxable 9,653 10,405 30,985 32,698 Tax-exempt 1,170 1,215 3,085 3,854 Loans held for sale 1,366 878 4,211 2,987 Total interest revenue 179,369 175,238 597,660 502,522 INTEREST EXPENSE: Interest bearing demand 16,228 15,514 64,068 43,916 Savings 2,160 2,089 7,367 5,826 Other time 48,585 45,361 163,172 123,785 Federal funds purchased and securities sold under agreement to repurchase 8,940 8,498 26,258 20,949 Other 7,205 7,378 23,553 18,498 Total interest expense 83,118 78,840 284,418 212,974 Net interest revenue 96,251 96,398 313,242 289,548 Provision for credit losses 6,325 2,526 14,925 2,252 Net interest revenue, after provision for credit losses 89,926 93,872 298,317 287,296 NONINTEREST REVENUE: Mortgage lending (820) 41 7,363 6,937 Credit card, debit card and merchant fees 6,793 6,447 21,932 18,988 Service charges 16,262 16,247 50,354 46,861 Trust income 3,703 2,344 7,158 6,685 Security gains, net 4 9 24 36 Insurance commissions 16,146 15,977 55,001 47,139 Other 8,402 8,169 34,653 28,958 Total noninterest revenue 50,490 49,234 176,485 155,604 NONINTEREST EXPENSES: Salaries and employee benefits 60,178 58,453 190,748 174,402 Occupancy, net of rental income 8,173 8,598 26,131 23,799 Equipment 5,941 5,896 18,136 17,481 Other 25,849 25,714 82,874 77,331 Total noninterest expenses 100,141 98,661 317,889 293,013 Income before income taxes 40,275 44,445 156,913 149,887 Income tax expense 12,202 20,568 51,198 52,766 Net income $28,073 $23,877 $105,715 $97,121 Net income per share: Basic $0.35 $0.30 $1.30 $1.23 Diluted $0.35 $0.30 $1.30 $1.22 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2007 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,087,608 $177,093 7.73% Held-to-maturity securities: Taxable 1,568,959 17,585 4.45% Tax-exempt 191,397 3,196 6.62% Available-for-sale securities: Taxable 987,901 10,555 4.24% Tax-exempt 80,696 1,476 7.26% Short-term investments 38,216 548 5.69% Total interest earning assets and revenue 11,954,777 210,453 6.98% Other assets 1,241,511 Less: allowance for credit losses (111,501) Total $13,084,787 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,178,394 $22,189 2.77% Savings 715,875 2,503 1.39% Other time 4,711,683 55,729 4.69% Short-term borrowings 1,207,633 14,230 4.67% Junior subordinated debt 163,405 3,342 8.11% Long-term debt 142,000 2,058 5.75% Total interest bearing liabilities and expense 10,118,990 100,051 3.92% Demand deposits - noninterest bearing 1,640,485 Other liabilities 184,017 Total liabilities 11,943,492 Shareholders' equity 1,141,295 Total $13,084,787 Net interest revenue $110,402 Net interest margin 3.66% Net interest rate spread 3.06% Interest bearing liabilities to interest earning assets 84.64% Net interest tax equivalent adjustment $2,487 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2006 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,723,076 $145,396 7.47% Held-to-maturity securities: Taxable 1,521,496 16,107 4.20% Tax-exempt 185,576 3,103 6.63% Available-for-sale securities: Taxable 1,124,841 10,406 3.67% Tax-exempt 102,493 1,869 7.24% Short-term investments 61,872 904 5.79% Total interest earning assets and revenue 10,719,354 177,785 6.58% Other assets 1,193,058 Less: allowance for credit losses (98,311) Total $11,814,101 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,771,419 $15,514 2.22% Savings 741,102 2,089 1.12% Other time 4,236,396 45,361 4.25% Short-term borrowings 922,735 10,920 4.70% Junior subordinated debt 144,847 2,968 8.13% Long-term debt 136,229 1,988 5.79% Total interest bearing liabilities and expense 8,952,728 78,840 3.49% Demand deposits - noninterest bearing 1,698,871 Other liabilities 146,844 Total liabilities 10,798,443 Shareholders' equity 1,015,658 Total $11,814,101 Net interest revenue $98,945 Net interest margin 3.66% Net interest rate spread 3.09% Interest bearing liabilities to interest earning assets 83.52% Net interest tax equivalent adjustment $2,546 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date September 30, 2007 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $8,767,096 $504,470 7.69% Held-to-maturity securities: Taxable 1,540,910 51,252 4.45% Tax-exempt 188,145 9,440 6.71% Available-for-sale securities: Taxable 995,567 30,985 4.16% Tax-exempt 85,934 4,746 7.38% Short-term investments 102,029 4,246 5.56% Total interest earning assets and revenue 11,679,681 605,139 6.93% Other assets 1,208,881 Less: allowance for credit losses (106,775) Total $12,781,787 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,183,663 $64,068 2.69% Savings 723,977 7,367 1.36% Other time 4,678,320 163,172 4.66% Short-term borrowings 947,498 33,778 4.77% Junior subordinated debt 159,394 9,765 8.19% Long-term debt 144,820 6,268 5.79% Total interest bearing liabilities and expense 9,837,672 284,418 3.87% Demand deposits - noninterest bearing 1,666,273 Other liabilities 170,935 Total liabilities 11,674,880 Shareholders' equity 1,106,907 Total $12,781,787 Net interest revenue $320,721 Net interest margin 3.67% Net interest rate spread 3.06% Interest bearing liabilities to interest earning assets 84.23% Net interest tax equivalent adjustment $7,479 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date September 30, 2006 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,569,732 $410,681 7.25% Held-to-maturity securities: Taxable 1,512,148 46,477 4.11% Tax-exempt 183,591 9,202 6.70% Available-for-sale securities: Taxable 1,174,969 32,698 3.72% Tax-exempt 109,511 5,930 7.24% Short-term investments 142,301 5,042 4.74% Total interest earning assets and revenue 10,692,252 510,030 6.38% Other assets 1,186,303 Less: allowance for credit losses (98,453) Total $11,780,102 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,926,723 $43,916 2.01% Savings 752,693 5,825 1.03% Other time 4,184,075 123,785 3.96% Short-term borrowings 768,293 24,640 4.29% Junior subordinated debt 144,847 8,826 8.15% Long-term debt 136,605 5,983 5.86% Total interest bearing liabilities and expense 8,913,236 212,975 3.20% Demand deposits - noninterest bearing 1,716,111 Other liabilities 155,921 Total liabilities 10,785,268 Shareholders' equity 994,834 Total $11,780,102 Net interest revenue $297,055 Net interest margin 3.71% Net interest rate spread 3.18% Interest bearing liabilities to interest earning assets 83.36% Net interest tax equivalent adjustment $7,508 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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