TUPELO, Miss., Jan. 21 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. (NYSE: BXS) today announced financial results for the quarter and year ended December 31, 2009. Highlights of the fourth quarter include: -- Net income of $19.4 million, or $0.23 per diluted share, representing increases of 16 percent and 15 percent, respectively, over the comparable period for 2008. -- Improvement in the net interest margin to 3.83 percent, the highest quarterly level since the first quarter of 2003. -- Increased net interest revenue on a comparable and sequential quarter basis for three consecutive quarters. -- Annualized net charge-offs of 1.01 percent of average loans and leases and non-performing loans and leases of 1.48 percent of total loans and leases. Net charge-offs for the year ended December 31, 2009 were 0.69 percent. -- Strong mortgage originations with mortgage lending revenue, excluding mortgage servicing rights valuation adjustment, doubling from the fourth quarter of 2008 and increasing 46.3 percent from the third quarter of 2009. -- A decline of 4.9 percent in noninterest expense from the third quarter of 2009. -- Continued growth in capital levels with common equity to assets increasing to 9.83 percent at the end of 2009. Summary Results BancorpSouth's net income for the fourth quarter of 2009 was $19.4 million, or $0.23 per diluted share, compared with $16.8 million, or $0.20 per diluted share, for the fourth quarter of 2008. Net income for the year ended December 31, 2009 was $104.3 million, or $1.25 per diluted share, compared with $120.4 million, or $1.45 per diluted share, for 2008. Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, remarked, "BancorpSouth's fourth quarter results reflected a strong operating performance given difficult industry conditions. Consistent with our performance throughout 2009, we maintained solidly profitable operations, stability in our net interest margin at a relatively high and improving level, and strong growth in mortgage originations. Through effective pricing and extending the maturities of our deposit portfolio, we continued to manage our interest rate risk. We also significantly strengthened our already ample liquidity through reduced bank borrowings. We continued to expand our capital in each quarter of 2009 and have now achieved 14 consecutive quarters of growth in our ratio of equity to assets on a comparable quarter basis. "As anticipated throughout a year of steadily declining real estate values, our credit quality continues to be affected by a slow economy, particularly in the housing sector. While non-performing assets and net charge-offs have increased, both remain at manageable levels, and we continue to focus on early identification of potential problems and work aggressively to resolve those problems. To remain well reserved against inherent credit losses, we continued to build the allowance for credit losses through a fourth quarter provision for credit losses significantly in excess of net charge offs for the quarter. While we saw some signs of increased economic stability during the fourth quarter, we expect real estate values to remain under pressure in 2010. "Given the uncertain economic environment, we also remain appropriately conservative in our plans for branch expansion during 2010. On the other hand, we anticipate growth through market consolidation opportunities, especially those assisted by the FDIC. We are focused on acquiring strategic franchises with growth potential and strong core deposits. In addition to having the financial strength to support significant transactions, we have a long and successful record of integrating acquired companies with minimum market disruption, thereby maintaining or increasing market share." Net Interest Revenue Net interest revenue was $113.0 million for the fourth quarter of 2009, an increase of 1.5 percent from $111.3 million for the fourth quarter of 2008 and 1.1 percent from $111.7 million for the third quarter of 2009. The fully taxable equivalent net interest margin was 3.83 percent for the fourth quarter of 2009, compared with 3.74 percent for the fourth quarter of 2008 and 3.77 percent for the third quarter of 2009. "With our fourth quarter results, BancorpSouth has produced three sequential quarters of growth in net interest revenue and increased net interest margin," continued Patterson. "We expect this performance, as well as the stability our operations have exhibited throughout the economic turmoil of the last two years, to continue to differentiate BancorpSouth favorably from industry peers. As industry year end data is reported, we also expect to be further differentiated for having modestly increased our loan portfolio during 2009, even though growth opportunities were limited by the weak economy. In addition, because of the continuing strength of our asset/liability management strategies, our net interest margin for the fourth quarter rose to its highest level in nearly seven years. "For the fourth quarter of 2009, the net interest margin primarily reflected the impact of a substantial increase in deposits, which enabled a substantial reduction in short-term borrowings. Demand deposits rose 10.4 percent for the fourth quarter of 2009 from the fourth quarter of 2008 and 6.9 percent from the third quarter of 2009. Time deposits increased 9.8 percent from the fourth quarter of 2008. This deposit growth enabled us to reduce short-term borrowings by 60.8 percent, or $1.2 billion, during 2009. We also lengthened the average maturity of our time deposits, which rose to 13.9 months from 10.6 months at the end of 2009 and 2008, respectively. "Our asset/liability management strategy during 2009 reflects our conservative operating principles. Steps to increase the average maturity of our time deposits while reducing lower cost FHLB borrowings cost us in the short term, but place us in a better position to profitably fund balance sheet growth when that opportunity occurs. This shift to increased deposit funding substantially increased our liquidity, enhancing our ability to act decisively with regard to strategic growth opportunities." Asset, Deposit and Loan Activity Total assets at December 31, 2009 were $13.2 billion, compared with $13.5 billion at December 31, 2008. Total deposits were $10.7 billion at December 31, 2009, an increase of 9.9 percent from $9.7 billion at December 31, 2008. Loans and leases, net of unearned income, increased 0.9 percent to $9.8 billion at December 31, 2009 from $9.7 billion at December 31, 2008. Patterson said, "Unlike many banks, we were able to offset loan runoff during 2009 with new loan production as we continued to serve the needs of our customers. Much of our new loan growth was produced in our newer markets, such as western Louisiana and eastern Texas, validating the strategic expansion of our geographic footprint. At the same time, the double-digit growth in demand deposits for the fourth quarter demonstrated the benefits of our focus on developing, maintaining and enhancing a strong deposit franchise. Demand deposits increased to 54.5 percent of our funding at the end of 2009 from 48.6 percent at the end of 2008. Because of the strength and relative stability of the diversified markets across our eight-state franchise, we remain confident of their inherent growth potential as the economic cycle improves." Provision for Credit Losses and Allowance for Credit Losses For the fourth quarter of 2009, the provision for credit losses was $34.7 million compared with $17.8 million for the fourth quarter of 2008 and $22.5 million for the third quarter of 2009. Annualized net charge-offs were 1.01 percent of average loans and leases for the fourth quarter of 2009 compared with 0.57 percent for the fourth quarter of 2008 and 0.68 percent for the third quarter of 2009. Non-performing loans and leases increased to $145.1 million, or 1.48 percent of net loans and leases, at December 31, 2009 from $64.0 million, or 0.66 percent of net loans and leases, at December 31, 2008 and from $111.6 million, or 1.14 percent of net loans and leases, at September 30, 2009. The allowance for credit losses increased to 1.58 percent of net loans and leases at December 31, 2009 compared with 1.37 percent at December 31, 2008 and 1.48 percent at September 30, 2009. "The growth in our non-performing loans during the fourth quarter was primarily related to real estate loans in our more urban markets," added Patterson. "Many of these loans reflect the cumulative pressure that the extended economic downturn in these markets has had on established customers that were performing well prior to and earlier in the downturn. As the increase in net charge-offs indicates, we took decisive action when warranted. This action included making a significant provision for credit losses for the fourth quarter. At the end of 2009, our allowance for credit losses was 1.1 times total non-performing loans and 1.6 times annualized fourth quarter net charge-offs." Noninterest Revenue Noninterest revenue was $64.5 million for the fourth quarter of 2009, an increase of 60.9 percent from $40.1 million for the fourth quarter of 2008 and 3.2 percent from $62.5 million for the third quarter of 2009. Results for the fourth quarter of 2009 included a $1.6 million increase in the value of BancorpSouth's mortgage servicing rights (MSR) compared with a $15.0 million decline for the fourth quarter of 2008 and a $2.7 million decline for the third quarter of 2009. Results for the fourth quarter of 2008 also included an $8.6 million write down of other than temporary impairment of certain investments in pooled trust preferred securities. Patterson commented, "At 36.4 percent of total revenue for the fourth quarter, noninterest revenue again provided significant diversification of our revenue streams, mitigating any potential impact of interest rate volatility on our inherently spread dependent business. We were very pleased with the strong performance of our mortgage business. Mortgage lending revenue, excluding changes in the MSR valuation, increased 149.5 percent to $7.0 million for the fourth quarter of 2009 from $2.8 million for the fourth quarter of 2008 and 46.3 percent from $4.8 million for the third quarter of 2009. We have continued to invest in this business line throughout 2009 through the addition of proven mortgage originators. "All our mortgages are originated within our eight-state franchise by BancorpSouth originators, who typically work in our branch bank offices. The borrowers are either existing or potential customers for our other services and nearly 40 percent of these customers make their monthly mortgage payment in our branch bank offices. Consistent with our strong service culture, we retain mortgage servicing rights to these mortgages to provide an outstanding service experience for these customers. "The increase in our mortgage originations contributed significantly to the growth in mortgage lending revenue for the fourth quarter of 2009, which was especially notable after the record refinancing volume during the first half of the year. We expect our strategy will support additional growth as the real estate market recovers. "Growth for some of our noninterest revenue products and services was challenging in the current environment. Specifically, we experienced soft insurance market conditions during 2009 after a record year for 2008, reflected in a 6.2 percent decline in commission revenue for the fourth quarter of 2009 from the fourth quarter of 2008. Through an ongoing focus on outstanding customer service, we have maintained a strong customer base, which we expect will provide growth momentum as industry conditions improve. Fourth quarter revenues from service charges and credit and debit card fees also declined compared with the fourth quarter of 2008. Like our insurance operations, these business lines continued to make substantial contributions to our profitability." Noninterest Expense Noninterest expense was $116.6 million for the fourth quarter of 2009, an increase of 4.4 percent from $111.7 million for the fourth quarter of 2008 and a decline of 4.9 percent from $122.7 million for the third quarter of 2009. The comparable quarter results again reflected the substantial increase in BancorpSouth's FDIC premium. Although the Company continues to be assessed at the FDIC's lowest rate, the FDIC premium for the fourth quarter of 2009 increased $2.3 million over the fourth quarter of 2008. The growth in noninterest expense from the fourth quarter of 2008 is also attributable to the opening of full-service branch bank offices. Capital Management BancorpSouth's commitment to a strong capital base is one of its fundamental operating principles. The Company's capital base strengthened further during the fourth quarter of 2009, as the ratio of shareholders' equity to assets improved on a comparable quarter basis for the 14th consecutive quarter, increasing to 9.83 percent at the end of 2009 from 9.20 percent at the end of 2008 and 9.69 percent at the end of the third quarter of 2009. The ratio of tangible equity to assets also increased to 7.78 percent at the end of 2009 from 7.15 percent at the end of 2008 and 7.64 percent at the end of the third quarter of 2009. BancorpSouth remains a "well capitalized" financial holding company, as defined by federal regulations, with Tier 1 risk-based capital of approximately 11.56 percent at year end and total risk based capital of approximately 12.81 percent, compared with required minimum levels of 6 percent and 10 percent, respectively, to meet the definition of "well capitalized." Summary Patterson concluded, "We are encouraged by early signs of a stabilizing economy, but we are very cautious about prospects for a sustained recovery in 2010. Longer term, we remain fully confident about our ability to achieve our growth objectives. This confidence is reinforced by the Company's performance during the past two years in the most challenging environment we have experienced. Throughout, BancorpSouth has produced solid profits, demonstrated strong credit metrics and risk management, and expanded its liquidity and capital while also increasing cash dividends that, in 2009, rose for the 26th consecutive year. "Importantly, we have remained fully engaged in our markets, making new loans, working with our customers who have experienced financial difficulty and offering strength and stability for our communities in a difficult economic environment. As a result, we have not only benefitted from expanding business with new customers attracted by our service orientation, financial stability and consistent performance, but also from the addition to our team of seasoned professionals who appreciate BancorpSouth's business model and potential for long-term growth. While we expect the challenging environment to continue in the months ahead, our performance for 2009 is compelling evidence that we are positioned to perform well in the year to come and to take full advantage of strategic growth opportunities." Conference Call BancorpSouth will conduct a conference call to discuss its fourth quarter 2009 results tomorrow, January 22, 2010, 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 real estate values in 2010, branch expansion in 2010, growth through market consolidation opportunities, our ability to acquire strategic franchises, growth in net interest revenue and increased net interest margin, differentiation with respect to our loan portfolio, the strength and stability of the markets in our eight-state franchise, our expansion strategy, our strong customer base, revenue from service charges and credit and debit card fees and the continuation of the challenging environment. 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 general business or economic conditions or government fiscal and monetary policies, volatility and disruption in national and international financial markets, 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, BancorpSouth's business model, 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 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 $13.2 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 318 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. BancorpSouth Bank also operates an insurance location in Illinois. BancorpSouth, Inc. Selected Financial Data ----------------------- Three Months Ended December 31, ------------ 2009 2008 ---- ---- (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $112,954 $111,321 Provision for credit losses 34,659 17,822 Noninterest revenue 64,505 40,085 Noninterest expense 116,612 111,728 ------- ------- Income before income taxes 26,188 21,856 Income tax provision 6,754 5,060 ----- ----- Net income $19,434 $16,796 ======= ======= Earning per share: Basic $0.23 $0.20 ===== ===== Diluted $0.23 $0.20 ===== ===== Balance sheet data at December 31: Total assets Total earning assets Loans and leases, net of unearned income Allowance for credit losses Total deposits Common shareholders' equity Book value per share Average balance sheet data: Total assets $13,076,196 $13,279,593 Total earning assets 11,968,679 12,109,660 Loans and leases, net of unearned interest 9,753,163 9,604,142 Total deposits 10,448,617 9,598,321 Common shareholders' equity 1,274,260 1,239,498 Non-performing assets at December 31: Non-accrual loans and leases Loans and leases 90+ days past due, still accruing Restructured loans and leases, still accruing Other real estate owned Total non-performing assets Net charge-offs as a percentage of average loans (annualized) 1.01% 0.57% Performance ratios (annualized): Return on average assets 0.59% 0.50% Return on common equity 6.05% 5.39% Total shareholders' equity to total assets 9.83% 9.20% Tangible shareholders' equity to tangible assets 7.78% 7.15% Net interest margin 3.83% 3.74% Average shares outstanding - basic 83,399,113 83,096,799 Average shares outstanding - diluted 83,527,596 83,239,216 Cash dividends per share $0.22 $0.22 Tier I capital 11.56% (1) 10.79% Total Capital 12.81% (1) 12.04% Tier I leverage capital 9.11% (1) 8.65% Twelve Months Ended December 31, ------------ 2009 2008 ---- ---- (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $445,506 $440,836 Provision for credit losses 89,712 56,176 Noninterest revenue 275,276 245,607 Noninterest expense 483,268 455,913 ------- ------- Income before income taxes 147,802 174,354 Income tax provision 43,493 53,943 ------ ------ Net income $104,309 $120,411 ======== ======== Earning per share: Basic $1.25 $1.46 ===== ===== Diluted $1.25 $1.45 ===== ===== Balance sheet data at December 31: Total assets $13,200,584 $13,480,218 Total earning assets 11,946,229 12,210,439 Loans and leases, net of unearned income 9,781,589 9,691,277 Allowance for credit losses 154,884 132,793 Total deposits 10,677,702 9,711,872 Common shareholders' equity 1,297,876 1,240,260 Book value per share 15.55 14.92 Average balance sheet data: Total assets $13,206,438 $13,200,801 Total earning assets 12,078,985 12,037,141 Loans and leases, net of unearned interest 9,735,128 9,429,963 Total deposits 10,155,730 9,803,999 Common shareholders' equity 1,257,438 1,224,280 Non-performing assets at December 31: Non-accrual loans and leases $102,674 $28,168 Loans and leases 90+ days past due, still accruing 36,301 33,373 Restructured loans and leases, still accruing 6,161 2,472 Other real estate owned 63,766 46,317 ------ ------ Total non-performing assets 208,902 110,330 Net charge-offs as a percentage of average loans (annualized) 0.69% 0.40% Performance ratios (annualized): Return on average assets 0.79% 0.91% Return on common equity 8.30% 9.84% Total shareholders' equity to total assets 9.83% 9.20% Tangible shareholders' equity to tangible assets 7.78% 7.15% Net interest margin 3.77% 3.75% Average shares outstanding - basic 83,295,461 82,589,400 Average shares outstanding - diluted 83,430,505 82,793,663 Cash dividends per share $0.88 $0.87 Tier I capital 11.56% (1) 10.79% Total Capital 12.81% (1) 12.04% Tier I leverage capital 9.11% (1) 8.65% (1) Estimated as of earnings release date BancorpSouth, Inc. Consolidated Balance Sheets (Unaudited) Dec-09 Sep-09 Jun-09 ------ ------ ------ (Dollars in thousands) Assets ------ Cash and due from banks $222,741 $189,103 $236,327 Interest bearing deposits with other banks 15,704 43,067 28,836 Held-to-maturity securities, at amortized cost 1,032,822 1,180,716 1,204,618 Available-for- sale securities, at fair value 960,772 958,158 969,207 Federal funds sold and securities purchased under agreement to resell 75,000 75,000 - Loans and leases 9,829,439 9,803,235 9,806,735 Less: Unearned income 47,850 45,291 45,335 Allowance for credit losses 154,884 144,791 138,747 ------- ------- ------- Net loans and leases 9,626,705 9,613,153 9,622,653 Loans held for sale 80,343 80,053 94,736 Premises and equipment, net 343,877 346,931 348,661 Accrued interest receivable 69,257 74,589 71,349 Goodwill 270,097 270,097 270,097 Other assets 503,266 441,006 451,335 ------- ------- ------- Total Assets $13,200,584 $13,271,873 $13,297,819 =========== =========== =========== Liabilities ----------- Deposits: Demand: Noninterest bearing $1,901,663 $1,769,432 $1,773,418 Interest bearing 4,323,646 4,055,395 3,960,008 Savings 725,192 712,446 718,302 Other time 3,727,201 3,759,761 3,705,819 --------- --------- --------- Total deposits 10,677,702 10,297,034 10,157,547 Federal funds purchased and securities sold under agreement to repurchase 539,870 816,374 755,609 Short-term Federal Home Loan Bank borrowings and other short- term borrowing 203,500 200,000 475,000 Accrued interest payable 19,588 24,243 24,084 Junior subordinated debt securities 160,312 160,312 160,312 Long-term Federal Home Loan Bank borrowings 112,771 286,281 286,292 Other liabilities 188,965 201,411 164,028 ------- ------- ------- Total Liabilities 11,902,708 11,985,655 12,022,872 Shareholders' Equity ------------- Common stock 208,626 208,615 208,391 Capital surplus 222,547 222,135 220,859 Accumulated other comprehensive income (loss) (8,409) (18,568) (25,162) Retained earnings 875,112 874,036 870,859 ------- ------- ------- Total Shareholders' Equity 1,297,876 1,286,218 1,274,947 --------- --------- --------- Total Liabilities & Shareholders' Equity $13,200,584 $13,271,873 $13,297,819 =========== =========== =========== Mar-09 Dec-08 ------ ------ (Dollars in thousands) Assets ------ Cash and due from banks $242,180 $291,055 Interest bearing deposits with other banks 34,230 13,542 Held-to-maturity securities, at amortized cost 1,330,810 1,333,521 Available-for-sale securities, at fair value 993,529 982,859 Federal funds sold and securities purchased under agreement to resell - - Loans and leases 9,759,787 9,740,867 Less: Unearned income 46,964 49,590 Allowance for credit losses 134,632 132,793 ------- ------- Net loans and leases 9,578,191 9,558,484 Loans held for sale 168,769 189,242 Premises and equipment, net 348,734 351,204 Accrued interest receivable 77,503 79,183 Goodwill 269,062 268,966 Other assets 415,356 412,162 ------- ------- Total Assets $13,458,364 $13,480,218 =========== =========== Liabilities ----------- Deposits: Demand: Noninterest bearing $1,820,807 $1,735,130 Interest bearing 4,005,620 3,904,307 Savings 719,676 678,326 Other time 3,545,871 3,394,109 --------- --------- Total deposits 10,091,974 9,711,872 Federal funds purchased and securities sold under agreement to repurchase 1,256,649 1,205,366 Short-term Federal Home Loan Bank borrowings and other short-term borrowing 210,000 691,510 Accrued interest payable 22,841 20,755 Junior subordinated debt securities 160,312 160,312 Long-term Federal Home Loan Bank borrowings 286,302 286,312 Other liabilities 174,627 163,831 ------- ------- Total Liabilities 12,202,705 12,239,958 Shareholders' Equity -------------------- Common stock 207,811 207,763 Capital surplus 216,138 215,255 Accumulated other comprehensive income (loss) (23,620) (26,896) Retained earnings 855,330 844,138 ------- ------- Total Shareholders' Equity 1,255,659 1,240,260 --------- --------- Total Liabilities & Shareholders' Equity $13,458,364 $13,480,218 =========== =========== BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Quarter Ended ------------- Dec-09 Sep-09 Jun-09 ------ ------ ------ INTEREST REVENUE: Loans and leases $129,693 $129,455 $129,263 Deposits with other banks 19 20 22 Federal funds sold and securities purchased under agreement to resell 43 27 3 Held-to-maturity securities: Taxable 10,128 11,690 12,108 Tax-exempt 2,393 2,193 2,155 Available-for-sale securities: Taxable 8,675 8,592 8,721 Tax-exempt 875 812 826 Loans held for sale 777 698 1,215 --- --- ----- Total interest revenue 152,603 153,487 154,313 ------- ------- ------- INTEREST EXPENSE: Interest bearing demand 9,023 9,038 9,738 Savings 900 937 927 Other time 23,445 25,534 26,496 Federal funds purchased and securities sold under agreement to repurchase 305 331 421 FHLB borrowings 3,012 2,877 2,885 Junior subordinated debt 2,863 2,884 2,928 Other 101 150 (22) --- --- --- Total interest expense 39,649 41,751 43,373 ------ ------ ------ Net interest revenue 112,954 111,736 110,940 Provision for credit losses 34,659 22,514 17,594 ------ ------ ------ Net interest revenue, after provision for credit losses 78,295 89,222 93,346 ------ ------ ------ NONINTEREST REVENUE: Mortgage lending 8,602 2,012 13,959 Credit card, debit card and merchant fees 7,883 8,902 9,111 Service charges 18,689 19,049 18,371 Trust income 3,014 2,435 2,040 Security gains (losses), net (102) - 42 Insurance commissions 17,583 20,134 20,575 Other 8,836 9,943 16,380 ----- ----- ------ Total noninterest revenue 64,505 62,475 80,478 ------ ------ ------ NONINTEREST EXPENSES: Salaries and employee benefits 66,926 70,353 70,092 Occupancy, net of rental income 10,897 10,720 10,492 Equipment 5,578 5,853 5,855 Deposit insurance assessments 3,786 3,402 9,358 Other 29,425 32,344 28,209 ------ ------ ------ Total noninterest expenses 116,612 122,672 124,006 ------- ------- ------- Income before income taxes 26,188 29,025 49,818 Income tax expense 6,754 7,494 15,951 ----- ----- ------ Net income $19,434 $21,531 $33,867 ======= ======= ======= Net income per share: Basic $0.23 $0.26 $0.41 ===== ===== ===== Diluted $0.23 $0.26 $0.41 ===== ===== ===== Quarter Ended ------------- Mar-09 Dec-08 ------ ------ INTEREST REVENUE: Loans and leases $129,209 $139,099 Deposits with other banks 70 111 Federal funds sold and securities purchased under agreement to resell 1 3 Held-to-maturity securities: Taxable 13,031 13,625 Tax-exempt 2,111 2,053 Available-for-sale securities: Taxable 9,038 8,693 Tax-exempt 883 867 Loans held for sale 1,275 2,117 ----- ----- Total interest revenue 155,618 166,568 ------- ------- INTEREST EXPENSE: Interest bearing demand 12,248 15,924 Savings 936 1,080 Other time 25,833 28,293 Federal funds purchased and securities sold under agreement to repurchase 572 2,175 FHLB borrowings 2,823 4,537 Junior subordinated debt 2,955 3,162 Other 375 76 --- --- Total interest expense 45,742 55,247 ------ ------ Net interest revenue 109,876 111,321 Provision for credit losses 14,945 17,822 ------ ------ Net interest revenue, after provision for credit losses 94,931 93,499 ------ ------ NONINTEREST REVENUE: Mortgage lending 7,652 (12,174) Credit card, debit card and merchant fees 8,348 8,409 Service charges 16,755 19,295 Trust income 2,209 2,328 Security gains (losses), net 5 (6,226) Insurance commissions 22,645 18,752 Other 10,204 9,701 ------ ----- Total noninterest revenue 67,818 40,085 ------ ------ NONINTEREST EXPENSES: Salaries and employee benefits 71,363 64,395 Occupancy, net of rental income 9,999 10,307 Equipment 6,222 6,319 Deposit insurance assessments 3,126 1,444 Other 29,268 29,263 ------ ------ Total noninterest expenses 119,978 111,728 ------- ------- Income before income taxes 42,771 21,856 Income tax expense 13,294 5,060 ------ ----- Net income $29,477 $16,796 ======= ======= Net income per share: Basic $0.35 $0.20 ===== ===== Diluted $0.35 $0.20 ===== ===== Year To Date ------------ Dec-09 Dec-08 ------ ------ INTEREST REVENUE: Loans and leases $517,620 $589,965 Deposits with other banks 131 684 Federal funds sold and securities purchased under agreement to resell 74 288 Held-to-maturity securities: Taxable 46,957 58,679 Tax-exempt 8,852 8,112 Available-for-sale securities: Taxable 35,026 35,813 Tax-exempt 3,396 4,205 Loans held for sale 3,965 7,667 ----- ----- Total interest revenue 616,021 705,413 ------- ------- INTEREST EXPENSE: Interest bearing demand 40,047 60,333 Savings 3,700 5,280 Other time 101,308 148,591 Federal funds purchased and securities sold under agreement to repurchase 1,629 14,999 FHLB borrowings 11,597 22,458 Junior subordinated debt 11,630 12,469 Other 604 447 --- --- Total interest expense 170,515 264,577 ------- ------- Net interest revenue 445,506 440,836 Provision for credit losses 89,712 56,176 ------ ------ Net interest revenue, after provision for credit losses 355,794 384,660 ------- ------- NONINTEREST REVENUE: Mortgage lending 32,225 2,146 Credit card, debit card and merchant fees 34,244 33,743 Service charges 72,864 77,091 Trust income 9,698 9,330 Security gains (losses), net (55) (5,849) Insurance commissions 80,937 86,661 Other 45,363 42,485 ------ ------ Total noninterest revenue 275,276 245,607 ------- ------- NONINTEREST EXPENSES: Salaries and employee benefits 278,734 271,556 Occupancy, net of rental income 42,108 39,846 Equipment 23,508 25,211 Deposit insurance assessments 19,672 2,852 Other 119,246 116,448 ------- ------- Total noninterest expenses 483,268 455,913 ------- ------- Income before income taxes 147,802 174,354 Income tax expense 43,493 53,943 ------ ------ Net income $104,309 $120,411 ======== ======== Net income per share: Basic $1.25 $1.46 ===== ===== Diluted $1.25 $1.45 ===== ===== BancorpSouth, Inc. Selected Loan Data (Dollars in thousands) (Unaudited) Quarter Ended ------------- Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 ------ ------ ------ ------ ------ LOAN AND LEASE PORTFOLIO: Commercial and industrial $1,467,144 $1,442,344 $1,441,718 $1,390,042 $1,417,499 Real estate Consumer mortgages 2,017,067 2,046,433 2,054,666 2,037,439 2,096,568 Home equity 550,085 540,875 532,337 519,528 511,480 Agri- cultural 262,069 254,647 242,034 238,466 234,024 Commercial and industrial- owner occupied 1,449,554 1,432,859 1,394,852 1,455,422 1,465,027 Construction, acquisition and develop- ment 1,465,381 1,533,622 1,652,052 1,692,526 1,689,719 Com- mercial 1,806,766 1,770,066 1,719,044 1,660,211 1,568,956 Credit cards 108,086 103,208 101,844 98,450 93,650 All other 655,437 633,890 622,853 620,739 614,354 ------- ------- ------- ------- ------- Total loans $9,781,589 $9,757,944 $9,761,400 $9,712,823 $9,691,277 ---------- ---------- ---------- ---------- ---------- ALLOWANCE FOR CREDIT LOSSES: Balance, beginning of period $144,791 $138,746 $134,632 $132,793 $129,147 Loans and leases charged off: Commercial and industrial (2,829) (3,913) (1,070) (1,147) (1,003) Real estate Consumer mortgages (2,298) (2,669) (4,877) (4,073) (3,582) Home equity (1,835) (1,278) (1,106) (1,153) (596) Agricultural (401) (407) (3) (37) (350) Commercial and industrial- owner occupied (753) (1,795) (649) (836) (511) Construction, acquisition and development(14,888) (3,160) (4,335) (4,377) (6,208) Commercial (568) (2,135) (321) (560) (611) Credit cards (1,118) (1,204) (1,290) (1,158) (953) All other (954) (938) (815) (810) (953) ---- ---- ---- ---- ---- Total loans charged off (25,644) (17,499) (14,466) (14,151) (14,767) ------- ------- ------- ------- ------- Recoveries: Commercial and industrial 194 320 68 179 279 Real estate Consumer mortgages 209 132 263 220 174 Home equity 76 28 2 3 1 Agricultural - - - 2 - Commercial and industrial- owner occupied 10 31 248 8 54 Construction, acquisition and development 7 31 4 86 97 Commercial 25 108 - 56 23 Credit cards 216 123 140 138 99 All other 341 257 261 353 290 --- --- --- --- --- Total Recov- eries 1,078 1,030 986 1,045 1,017 ----- ----- --- ----- ----- Net charge- offs (24,566) (16,469) (13,480) (13,106) (13,750) Provision charged to operating expense 34,659 22,514 17,594 14,945 17,822 Other, net - - - - (426) --- --- --- --- ---- Balance, end of period $154,884 $144,791 $138,746 $134,632 $132,793 -------- -------- -------- -------- -------- Average loans for period $9,753,163 $9,750,159 $9,740,916 $9,695,475 $9,604,142 ========== ========== ========== ========== ========== Ratios: Net charge- offs to average loans (annualized) 1.01% 0.68% 0.55% 0.54% 0.57% ==== ==== ==== ==== ==== BancorpSouth, Inc. Selected Loan Data (Dollars in thousands) (Unaudited) Quarter Ended ------------- Dec-09 Sep-09 Jun-09 ------ ------ ------ NON-PERFORMING ASSETS NON-PERFORMING LOANS AND LEASES: Nonaccrual Loans and Leases Commercial and industrial $5,117 $7,048 $7,364 Real estate Consumer mortgages 20,731 12,433 9,946 Home equity 1,642 1,879 596 Agricultural 1,136 2,647 970 Commercial and industrial- owner occupied 7,039 5,044 2,631 Construction, acquisition and development 52,184 39,989 21,742 Commercial 13,124 12,228 1,023 Credit cards 1,044 850 816 All other 657 614 454 --- --- --- Total nonaccrual loans and leases 102,674 82,732 45,542 ------- ------ ------ Loans and Leases 90+ Days Past Due, Still Accruing: Commercial and industrial 1,797 1,062 1,919 Real estate Consumer mortgages 9,905 14,189 9,961 Home equity 810 707 1,651 Agricultural 1,015 289 3,292 Commercial and industrial- owner occupied 4,511 1,342 4,253 Construction, acquisition and development 13,482 1,477 18,648 Commercial 2,558 305 2,351 Credit cards 355 373 476 All other 1,868 955 1,315 ----- --- ----- Total loans and leases 90+ past due, still accruing 36,301 20,699 43,866 ------ ------ ------ Restructured Loans and Leases, Still Accruing 6,161 8,205 8,264 ----- ----- ----- Total non-performing loans and leases 145,136 111,636 97,672 ------- ------- ------ OTHER REAL ESTATE OWNED: 63,766 62,072 51,477 ------ ------ ------ Total Non-performing Assets $208,902 $173,708 $149,149 ======== ======== ======== Credit Quality Ratios: Provision for credit losses to average loans and 1.42% 0.92% 0.72% leases (annualized) Allowance for credit losses to net loans and leases 1.58% 1.48% 1.42% Allowance for credit losses to non-performing assets 74.14% 83.35% 93.03% Allowance for credit losses to non-performing loans and leases 106.72% 129.70% 142.05% Non-performing loans and leases to net loans and leases 1.48% 1.14% 1.00% Non-performing assets to net loans and leases 2.14% 1.77% 1.53% Quarter Ended ------------- Mar-09 Dec-08 ------ ------ NON-PERFORMING ASSETS NON-PERFORMING LOANS AND LEASES: Nonaccrual Loans and Leases Commercial and industrial $5,523 $7,378 Real estate Consumer mortgages 8,398 4,599 Home equity 100 143 Agricultural 673 440 Commercial and industrial-owner occupied 4,153 1,768 Construction, acquisition and development 17,984 12,393 Commercial 925 432 Credit cards 939 952 All other 241 63 --- --- Total nonaccrual loans and leases 38,936 28,168 ------ ------ Loans and Leases 90+ Days Past Due, Still Accruing: Commercial and industrial 1,489 715 Real estate Consumer mortgages 7,110 13,371 Home equity 1,375 796 Agricultural 421 409 Commercial and industrial-owner occupied 2,982 2,761 Construction, acquisition and development 11,372 12,481 Commercial 1,021 1,013 Credit cards 391 463 All other 1,138 1,364 ----- ----- Total loans and leases 90+ past due, still accruing 27,299 33,373 ------ ------ Restructured Loans and Leases, Still Accruing 7,581 2,472 ----- ----- Total non-performing loans and leases 73,816 64,013 ------ ------ OTHER REAL ESTATE OWNED: 47,450 46,317 ------ ------ Total Non-performing Assets $121,266 $110,330 ======== ======== Credit Quality Ratios: Provision for credit losses to average loans and 0.62% 0.74% leases (annualized) Allowance for credit losses to net loans and leases 1.39% 1.37% Allowance for credit losses to non- performing assets 111.02% 120.36% Allowance for credit losses to non- performing loans and leases 182.39% 207.45% Non-performing loans and leases to net loans and leases 0.76% 0.66% Non-performing assets to net loans and leases 1.25% 1.14% BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2009 ----------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,823,240 $131,277 5.30% Held-to-maturity securities: Taxable 878,452 10,239 4.62% Tax-exempt 209,242 3,682 6.98% Available-for-sale securities: Taxable 892,191 8,676 3.86% Tax-exempt 72,903 1,344 7.31% Short-term investments 92,651 61 0.26% ------ --- Total interest earning assets and revenue 11,968,679 155,279 5.15% Other assets 1,269,229 Less: allowance for credit losses (161,712) -------- Total $13,076,196 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $4,155,330 $9,023 0.86% Savings 717,630 900 0.50% Other time 3,748,894 23,445 2.48% Short-term borrowings 713,972 405 0.23% Junior subordinated debt 160,312 2,865 7.09% Long-term debt 303,301 3,011 3.94% ------- ----- Total interest bearing liabilities and expense 9,799,439 39,649 1.61% Demand deposits - noninterest bearing 1,826,763 Other liabilities 175,734 ------- Total liabilities 11,801,936 Shareholders' equity 1,274,260 --------- Total $13,076,196 =========== Net interest revenue $115,630 ======== Net interest margin 3.83% Net interest rate spread 3.54% Interest bearing liabilities to interest earning assets 81.88% Net interest tax equivalent adjustment $2,676 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2009 ------------------ Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,808,427 $130,957 5.30% Held-to-maturity securities: Taxable 998,773 11,799 4.69% Tax-exempt 199,360 3,373 6.71% Available-for-sale securities: Taxable 889,278 8,591 3.83% Tax-exempt 69,737 1,251 7.12% Short-term investments 62,334 47 0.30% ------ --- Total interest earning assets and revenue 12,027,909 156,020 5.15% Other assets 1,285,360 Less: allowance for credit losses (146,212) -------- Total $13,167,057 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $4,010,281 $9,038 0.89% Savings 716,155 936 0.52% Other time 3,726,754 25,535 2.72% Short-term borrowings 1,071,144 544 0.20% Junior subordinated debt 160,312 2,884 7.14% Long-term debt 286,285 2,814 3.90% ------- ----- Total interest bearing liabilities and expense 9,970,931 41,751 1.66% Demand deposits - noninterest bearing 1,747,021 Other liabilities 184,006 ------- Total liabilities 11,901,958 Shareholders' equity 1,265,099 --------- Total $13,167,057 =========== Net interest revenue $114,269 ======== Net interest margin 3.77% Net interest rate spread 3.49% Interest bearing liabilities to interest earning assets 82.90% Net interest tax equivalent adjustment $2,533 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended June 30, 2009 ------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,896,890 $131,313 5.32% Held-to-maturity securities: Taxable 1,040,896 12,218 4.71% Tax-exempt 186,473 3,316 7.13% Available-for-sale securities: Taxable 919,217 8,721 3.81% Tax-exempt 69,960 1,270 7.28% Short-term investments 21,727 25 0.47% ------ --- Total interest earning assets and revenue 12,135,163 156,863 5.18% Other assets 1,270,193 Less: allowance for credit losses (144,570) -------- Total $13,260,786 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,948,759 $9,738 0.99% Savings 719,281 928 0.52% Other time 3,634,336 26,496 2.92% Short-term borrowings 1,340,244 470 0.14% Junior subordinated debt 160,312 2,928 7.33% Long-term debt 286,294 2,813 3.94% ------- ----- Total interest bearing liabilities and expense 10,089,226 43,373 1.72% Demand deposits - noninterest bearing 1,756,861 Other liabilities 163,749 ------- Total liabilities 12,009,836 Shareholders' equity 1,250,950 --------- Total $13,260,786 =========== Net interest revenue $113,490 ======== Net interest margin 3.75% Net interest rate spread 3.46% Interest bearing liabilities to interest earning assets 83.14% Net interest tax equivalent adjustment $2,550 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended March 31, 2009 -------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,873,692 $131,339 5.39% Held-to-maturity securities: Taxable 1,146,772 13,141 4.65% Tax-exempt 182,051 3,247 7.23% Available-for-sale securities: Taxable 891,699 9,038 4.11% Tax-exempt 73,814 1,358 7.46% Short-term investments 19,123 71 1.51% ------ --- Total interest earning assets and revenue 12,187,151 158,194 5.26% Other assets 1,277,538 Less: allowance for credit losses (139,811) -------- Total $13,324,878 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $4,090,821 $12,248 1.21% Savings 697,639 936 0.54% Other time 3,419,180 25,833 3.06% Short-term borrowings 1,588,229 959 0.24% Junior subordinated debt 160,312 2,955 7.48% Long-term debt 286,306 2,811 3.98% ------- ----- Total interest bearing liabilities and expense 10,242,487 45,742 1.81% Demand deposits - noninterest bearing 1,700,792 Other liabilities 142,628 ------- Total liabilities 12,085,907 Shareholders' equity 1,238,971 --------- Total $13,324,878 =========== Net interest revenue $112,452 ======== Net interest margin 3.74% Net interest rate spread 3.45% Interest bearing liabilities to interest earning assets 84.04% Net interest tax equivalent adjustment $2,576 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2008 ----------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------- -------- ---- ASSETS Loans, loans held for sale, and leases net of unearned income $9,773,683 $142,039 5.78% Held-to-maturity securities: Taxable 1,193,555 13,734 4.58% Tax-exempt 180,695 3,159 6.96% Available-for-sale securities: Taxable 868,913 8,693 3.98% Tax-exempt 73,476 1,335 7.23% Short-term investments 19,338 114 2.34% ------ --- Total interest earning assets and revenue 12,109,660 169,074 5.55% Other assets 1,304,386 Less: allowance for credit losses (134,453) -------- Total $13,279,593 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,811,782 $15,924 1.66% Savings 684,068 1,080 0.63% Other time 3,400,071 28,293 3.31% Short-term borrowings 1,828,010 3,951 0.86% Junior subordinated debt 160,312 3,161 7.84% Long-term debt 287,990 2,838 3.92% ------- ----- Total interest bearing liabilities and expense 10,172,233 55,247 2.16% Demand deposits - noninterest bearing 1,702,400 Other liabilities 165,462 ------- Total liabilities 12,040,095 Shareholders' equity 1,239,498 --------- Total $13,279,593 =========== Net interest revenue $113,827 ======== Net interest margin 3.74% Net interest rate spread 3.39% Interest bearing liabilities to interest earning assets 84.00% Net interest tax equivalent adjustment $2,506 BancorpSouth, Inc. Reconciliation of Tangible assets and Tangible Shareholders' Equity to Total Assets and Total Shareholders' Equity (Dollars in thousands) (Unaudited) December 31, ------------ 2009 2008 ---- ---- Tangible Assets (a): Total assets $13,200,584 $13,480,218 Less: Goodwill 270,097 268,966 Identifiable intangible assets 23,533 28,165 ------ ------ Total tangible assets $12,906,954 $13,183,087 Tangible Shareholders' Equity(a): Total shareholders' equity $1,297,876 $1,240,260 Less: Goodwill 270,097 268,966 Identifiable intangible assets 23,533 28,165 ------ ------ Total tangible shareholders' equity $1,004,246 $943,129 Tangible shareholders' equity to tangible assets 7.78% 7.15% BancorpSouth, Inc. utilizes tangible assets and (a) tangible shareholders' equity measures when evaluating the performance of the Company. Tangible shareholders' equity is defined by the Company as total shareholders' equity less goodwill and identifiable assets. Tangible assets are defined by the Company as total assets less goodwill and identifiable assets. The Company believes the ratio of tangible equity to tangible assets to be an important measure of financial strength of the Company. DATASOURCE: BancorpSouth, Inc. CONTACT: William L. Prater, Treasurer and Chief Financial Officer, +1-662-680-2000; Gary C. Bonds, Senior Vice President and Principal Accounting Officer, +1-662-680-2332, both of BancorpSouth Web Site: http://www.bancorpsouth.com/

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