Bancorpsouth 10-Q 2004 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
	x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission File Number: 1-12991

BancorpSouth, Inc.

(Exact name of registrant as specified in its charter)

Mississippi	64-0659571
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Mississippi Plaza, 201 South Spring Street, Tupelo,
Mississippi	38804
(Address of principal executive offices)	(Zip Code)

(662) 680-2000
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last year)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yesx Noo

As of November 3, 2004, the Registrant had outstanding 76,631,848 shares of common stock, par value $2.50 per share.

BANCORPSOUTH, INC.
CONTENTS

	Page
PART I. Financial Information
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets (Unaudited) September 30, 2004 and December 31, 2003		3
Consolidated Condensed Statements of Income (Unaudited) Three Months and Nine Months Ended September 30, 2004 and 2003		4
Consolidated Condensed Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2004 and 2003		5
Notes to Consolidated Condensed Financial Statements (Unaudited)		6
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		26
ITEM 4. Controls and Procedures		26
PART II. Other Information
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		27
ITEM 6. Exhibits		27
EX-31.1 SECTION 302 CERTIFICATION OF THE CEO
EX-31.2 SECTION 302 CERTIFICATION OF THE CFO
EX-32.1 SECTION 906 CERTIFICATION OF THE CEO
EX-32.2 SECTION 906 CERTIFICATION OF THE CFO

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Report 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 reference to a future period(s) or by the use of forward-looking terminology, such as “anticipate,” “believe,” “estimate,” “expect,” “foresee,” “may,” “might,” “will,” “intend,” “could,” “would” or “plan,” or future or conditional verb tenses, and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to BancorpSouth’s financial products and services, liquidity and liquidity strategies, asset quality, cost controls, noninterest revenue, noninterest expense, net interest margin, net interest revenue, mortgage servicing rights, life insurance premium revenue, mortgage loans, consumer loans, provision for credit losses, allowance for credit losses, deposits, indirect automobile sales financing, the lack of significant loan growth, future acquisitions, the effect of certain legal claims, the impact of federal and state regulatory requirements for capital, the impact of certain tax assessments, additional share repurchases under BancorpSouth’s April 2003 stock repurchase program, interest rate sensitivity, prepayment of BancorpSouth’s junior subordinated debt securities, off-balance sheet commitments and other arrangements to extend credit and BancorpSouth’s future growth and profitability. We caution you not to place undue reliance on the forward-looking statements contained in this Report, in that actual results could differ materially from those indicated in such forward-looking statements due to a variety of factors. These factors include, but are not limited to, changes in BancorpSouth’s operating or expansion strategy, changes in economic conditions, the ability to maintain asset and credit quality, prevailing interest rates and government fiscal and monetary policies, effectiveness of BancorpSouth’s interest rate hedging strategies, the ability of BancorpSouth’s borrowers to repay loans, changes in laws and regulations affecting financial institutions, the ability of BancorpSouth to identify and integrate acquisitions and investment opportunities, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, geographic concentrations of assets, availability of, costs associated with and timing for obtaining adequate sources of liquidity, competition from other financial services companies, the ability of BancorpSouth to repurchase its common stock on favorable terms, the ability of BancorpSouth to compete aggressively within its markets, the effect of pending or future legislation, possible adverse rulings, judgments, settlements and other outcomes of pending or threatened litigation, other factors generally understood to affect the financial condition or results of financial services companies and other factors detailed from time to time in BancorpSouth’s press releases and 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 of this Report.

2

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

BANCORPSOUTH, INC.

Consolidated Condensed Balance Sheets

	September 30,		December 31,
	2004		2003
	(Unaudited)		(1)
	(In thousands)
ASSETS
Cash and due from banks	$	304,389	$	369,699
Interest bearing deposits with other banks		35,090		9,327
Held-to-maturity securities, at amortized cost		1,384,061		1,091,991
Available-for-sale securities, at fair value		1,758,945		1,989,690
Federal funds sold and securities purchased under agreement to resell		7,180		67,293
Loans		6,543,720		6,267,257
Less: Unearned discount		30,751		34,190
Allowance for credit losses		90,100		92,112
Net loans		6,422,869		6,140,955
Loans held for sale		69,194		74,669
Premises and equipment, net		224,685		212,216
Goodwill		64,164		59,671
Other assets		337,573		289,524
TOTAL ASSETS	$	10,608,150	$	10,305,035
LIABILITIES
Deposits:
Demand: Noninterest bearing	$	1,343,698	$	1,286,607
Interest bearing		2,653,386		2,524,159
Savings		772,159		779,298
Other time		4,073,996		4,009,064
Total deposits		8,843,239		8,599,128
Federal funds purchased and securities sold under agreement to repurchase		496,647		437,014
Junior subordinated debt securities		128,866		128,866
Long-term debt		137,500		138,498
Other liabilities		126,756		132,623
TOTAL LIABILITIES		9,733,008		9,436,129
SHAREHOLDERS’ EQUITY
Common stock, $2.50 par value Authorized - 500,000,000 shares, Issued - 76,511,358 and 77,926,645 shares, respectively		191,278		194,817
Capital surplus		45,440		43,344
Accumulated other comprehensive income		6,724		14,298
Retained earnings		631,700		616,447
TOTAL SHAREHOLDERS’ EQUITY		875,142		868,906
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	10,608,150	$	10,305,035

(1) Derived from audited financial statements.

See accompanying notes to consolidated condensed financial statements.

3

BANCORPSOUTH, INC.

Consolidated Condensed Statements of Income
(Unaudited)

	Three months ended					Nine months ended
	September 30,					September 30,
	2004			2003		2004		2003
				(In thousands, except for per share amounts)
INTEREST REVENUE:
Loans	$	93,759		$	98,292	$	277,367	$	305,207
Deposits with other banks		102			67		518		251
Federal funds sold and securities purchased under agreement to resell		111			1,295		922		5,816
Held-to-maturity securities:
Taxable		12,020			10,258		34,922		36,489
Tax-exempt		1,693			1,941		5,183		6,236
Available-for-sale securities:
Taxable		14,691			15,160		45,688		38,319
Tax-exempt		1,613			1,903		5,022		5,992
Loans held for sale		517			896		1,752		2,378
Total interest revenue		124,506			129,812		371,374		400,688
INTEREST EXPENSE:
Deposits		35,198			35,260		103,031		115,093
Federal funds purchased and securities sold under agreement to repurchase		1,336			2,018		3,499		6,563
Other		5,014			4,726		14,720		14,011
Total interest expense		41,548			42,004		121,250		135,667
Net interest revenue		82,958			87,808		250,124		265,021
Provision for credit losses		3,530			4,664		12,381		17,658
Net interest revenue, after provision for credit losses		79,428			83,144		237,743		247,363
NONINTEREST REVENUE:
Mortgage lending		(672	)		10,323		9,552		16,811
Service charges		15,965			16,131		46,340		46,017
Life insurance premiums		397			760		1,437		2,598
Trust income		2,059			1,905		5,587		5,075
Security gains, net		146			60		822		13,796
Insurance commissions		14,366			11,946		42,056		26,647
Other		10,066			8,695		33,990		31,068
Total noninterest revenue		42,327			49,820		139,784		142,012
NONINTEREST EXPENSE:
Salaries and employee benefits		49,176			46,449		147,840		134,177
Occupancy, net of rental income		6,264			5,932		18,303		17,120
Equipment		5,390			6,063		16,486		17,842
Telecommunications		1,667			1,915		5,330		5,603
Other		22,483			22,192		67,057		63,025
Total noninterest expense		84,980			82,551		255,016		237,767
Income before income taxes		36,775			50,413		122,511		151,608
Income tax expense		9,187			16,539		36,484		49,345
Net income	$	27,588		$	33,874	$	86,027	$	102,263
Earnings per share: Basic	$	0.36		$	0.43	$	1.12	$	1.32
Diluted	$	0.36		$	0.43	$	1.11	$	1.31
Dividends declared per common share	$	0.18		$	0.16	$	0.54	$	0.48

See accompanying notes to consolidated condensed financial statements.

4

BANCORPSOUTH, INC.

Consolidated Condensed Statements of Cash Flows

(Unaudited)

	Nine months ended
	September 30,
	2004			2003
	(In thousands)
Net cash provided by operating activities	$	180,414		$	241,810
Investing activities:
Proceeds from calls and maturities of held-to-maturity securities		256,920			1,601,063
Proceeds from calls and maturities of available-for-sale securities		221,795			392,218
Proceeds from sales of held-to-maturity securities		1,851			10,113
Proceeds from sales of available-for-sale securities		489,953			738,167
Purchases of held-to-maturity securities		(554,200	)		(1,407,050	)
Purchases of available-for-sale securities		(503,267	)		(1,507,518	)
Net (increase) decrease in short-term investments		60,113			(364	)
Net (increase) decrease in loans		(288,613	)		92,446
Purchases of premises and equipment		(30,957	)		(21,650	)
Proceeds from sale of premises and equipment		802			5,367
Net cash paid for acquisitions		(4,009	)		(14,539	)
Other, net		(57,410	)		(14,751	)
Net cash used in investing activities		(407,022	)		(126,498	)
Financing activities:
Net increase in deposits		244,111			(124,496	)
Net increase in short-term debt and other liabilities		17,542			22,661
Repayment of long-term debt		(998	)		(937	)
Issuance of common stock		1,960			4,125
Purchase of common stock		(33,703	)		(19,638	)
Payment of cash dividends		(41,851	)		(37,333	)
Net cash provided by financing activities		187,061			(155,618	)
(Decrease) increase in cash and cash equivalents		(39,547	)		(40,306	)
Cash and cash equivalents at beginning of period		379,026			361,983
Cash and cash equivalents at end of period	$	339,479		$	321,677

See accompanying notes to consolidated condensed financial statements.

5

BANCORPSOUTH, INC.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

NOTE 1 – BASIS OF FINANCIAL STATEMENT PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with the accounting policies in effect as of December 31, 2003, as set forth in the annual consolidated financial statements of BancorpSouth, Inc. (the “Company”) as of such date. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated condensed financial statements have been included and all such adjustments were of a normal recurring nature. The results of operations for the three-month and nine-month periods ended September 30, 2004 are not necessarily indicative of the results to be expected for the full year. Certain 2003 amounts have been reclassified to conform with the 2004 presentation.

The consolidated condensed financial statements include the accounts of the Company, its wholly-owned subsidiaries, BancorpSouth Bank (the “Bank”) and Risk Advantage, Inc., and the Bank’s wholly-owned subsidiaries, Century Credit Life Insurance Company, Personal Finance Corporation, BancorpSouth Insurance Services, Inc., BancorpSouth Investment Services, Inc. and BancorpSouth Municipal Development Corporation. BancorpSouth Capital Trust I (the “Trust”), a business trust, was treated as a subsidiary of the Company for financial reporting purposes until the adoption of the transition guidance of Financial Accounting Standards Board Interpretation No. 46 (revised December 2003) (“FIN 46R”), “Consolidation of Variable Interest Entities,” for investment in special-purpose entities on December 31, 2003, at which time the Company deconsolidated the Trust from its financial statements. See “Note 6 – Junior Subordinated Debt Securities” to Consolidated Condensed Financial Statements.

Key employees and directors of the Company and its subsidiaries have been granted stock options under the Company’s stock incentive plans. The Company accounts for those plans under the recognition and measurement principles of Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” for the three months and nine months ended September 30, 2004 and 2003:

	Three months ended						Nine months ended
	September 30,						September 30,
	2004			2003			2004			2003
	(In thousands, except per share amounts)
Net income, as reported	$	27,588		$	33,874		$	86,027		$	102,263
Deduct: Stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(188	)		(175	)		(567	)		(494	)
Pro forma net income	$	27,400		$	33,699		$	85,460		$	101,769
Basic earnings per share:     As reported	$	0.36		$	0.43		$	1.12		$	1.32
Pro forma		0.36			0.43			1.11			1.31
Diluted earnings per share: As reported	$	0.36		$	0.43		$	1.11		$	1.31
Pro forma		0.36			0.43			1.10			1.30

6

NOTE 2 – LOANS

The composition of the loan portfolio by collateral type as of the dates indicated was as follows:

	September 30,				December 31,
	2004		2003		2003
	(In thousands)
Commercial and agricultural	$	774,987	$	702,229	$	743,286
Consumer and installment		436,798		591,831		533,755
Real estate mortgage:
1-4 Family		2,163,938		1,946,551		1,992,252
Other		2,892,332		2,739,300		2,746,463
Lease financing		255,125		286,090		227,918
Other		20,540		21,264		23,583
Total	$	6,543,720	$	6,287,265	$	6,267,257

The following table presents information concerning non-performing loans as of the dates indicated:

	September 30,				December 31,
	2004		2003		2003
	(In thousands)
Non-accrual loans	$	13,843	$	18,655	$	18,139
Loans 90 days or more past due		20,675		25,773		30,634
Restructured loans		2,164		1,870		2,659
Total non-performing loans	$	36,682	$	46,298	$	51,432

NOTE 3 – ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the changes in the allowance for credit losses for the periods indicated:

	Nine months ended
	September 30,						Year ended December 31,
	2004			2003			2003
	(In thousands)
Balance at beginning of period	$	92,112		$	87,875		$	87,875
Provision charged to expense		12,381			17,658			25,130
Recoveries		3,318			2,989			3,848
Loans charged off		(17,711	)		(18,017	)		(24,741	)
Balance at end of period	$	90,100		$	90,505		$	92,112

7

NOTE 4 – PER SHARE DATA

The computation of basic earnings per share is based on the weighted average number of common shares outstanding. The computation of diluted earnings per share is based on the weighted average number of common shares outstanding plus the shares resulting from the assumed exercise of all outstanding stock options using the treasury stock method.

The following tables provide a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods shown:

	Three months ended September 30,
	2004						2003
	Income		Shares		Per Share		Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
	(In thousands, except per share amounts)
Basic EPS
Income available to common shareholders	$	27,588		76,583	$	0.36	$	33,874		77,952	$	0.43
Effect of dilutive stock options		—		396				—		463
Diluted EPS
Income available to common shareholders plus assumed exercise	$	27,588		76,979	$	0.36	$	33,874		78,415	$	0.43

	Nine months ended September 30,
	2004						2003
	Income		Shares		Per Share		Income		Shares		Per Share
	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
	(In thousands, except per share amounts)
Basic EPS
Income available to common shareholders	$	86,027		77,104	$	1.12	$	102,263		77,646	$	1.32
Effect of dilutive stock options		—		411				—		449
Diluted EPS
Income available to common shareholders plus assumed exercise	$	86,027		77,515	$	1.11	$	102,263		78,095	$	1.31

8

NOTE 5 – COMPREHENSIVE INCOME

The following tables present the components of other comprehensive income and the related tax effects allocated to each component for the periods indicated:

	Three months ended September 30,
	2004									2003
	Before			Tax			Net			Before			Tax		Net
	tax			(expense)			of tax			tax			(expense)		of tax
	amount			benefit			amount			amount			benefit		amount
	(In thousands)
Unrealized gains on securities:
Unrealized (losses) gains arising during holding period	$	24,427		($	9,344	)	$	15,083		($	38,764	)	$	14,827	($	23,937	)
Less: Reclassification adjustment for net (gains) losses realized in net income		(135	)		52			(83	)		(20	)		8		(12	)
Other comprehensive (loss) income	$	24,292		($	9,292	)	$	15,000		($	38,784	)	$	14,835	($	23,949	)
Net income								27,588								33,874
Comprehensive income							$	42,588							$	9,925

	Nine months ended September 30,
	2004								2003
	Before			Tax		Net			Before			Tax		Net
	tax			(expense)		of tax			tax			(expense)		of tax
	amount			benefit		amount			amount			benefit		amount
	(In thousands)
Unrealized gains on securities:
Unrealized (losses) gains arising during holding period	($	11,515	)	$	4,404	($	7,111	)	($	22,670	)	$	8,671	($	13,999	)
Less: Reclassification adjustment for net (gains) losses realized in net income		(750	)		287		(463	)		(13,484	)		5,158		(8,326	)
Other comprehensive (loss) income	($	12,265	)	$	4,691	($	7,574	)	($	36,154	)	$	13,829	($	22,325	)
Net income							86,027								102,263
Comprehensive income						$	78,453							$	79,938

NOTE 6 – JUNIOR SUBORDINATED DEBT SECURITIES

On January 28, 2002, the Company issued $128,866,000 in 8.15% Junior Subordinated Debt Securities to BancorpSouth Capital Trust I (the “Trust”), a business trust. The Trust used the proceeds from the issuance of five million shares of 8.15% trust preferred securities, $25 face value per share, to acquire the 8.15% Junior Subordinated Debt Securities. Both the Junior Subordinated Debt Securities and the trust preferred securities mature on January 28, 2032 and are callable at the option of the Company after January 28, 2007. The net proceeds to the Company from the issuance of its Junior Subordinated Debt Securities to the Trust were used for general corporate purposes, including repurchase of shares of the Company’s outstanding common stock. Prior to December 31, 2003, the accounts of the Trust were included in the consolidated financial statements of the Company. Pursuant to the Company’s adoption of the transition guidance of FIN 46R for investments in special-purpose entities, the Company deconsolidated the Trust from its financial statements as of December 31, 2003.

9

NOTE 7 – GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended September 30, 2004 were as follows:

			General
	Community		Corporate
	Banking		and Other		Total
	(In thousands)
Balance as of December 31, 2003	$	33,284	$	26,387	$	59,671
Goodwill acquired during the period		—		4,493		4,493
Balance as of September 30, 2004	$	33,284	$	30,880	$	64,164

The following tables present information regarding the components of the Company’s identifiable intangible assets for the dates indicated:

	As of				As of
	September 30, 2004				December 31, 2003
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
	(In thousands)
Amortized intangible assets:
Core deposit intangibles	$	11,549	$	6,697	$	11,549	$	5,661
Customer relationship intangibles		22,257		4,696		21,702		2,438
Mortgage servicing rights		96,024		48,980		90,790		41,115
Non-solicitation intangibles		50		4		—		—
Total	$	129,880	$	60,377	$	124,041	$	49,214
Unamortized intangible assets:
Trade names	$	688	$	—	$	688	$	—
	Three months ended				Nine months ended
	September 30,				September 30,
	2004		2003		2004		2003
	(In thousands)
Aggregate Amortization Expense for:
Core deposit intangibles	$	338	$	364	$	1,036	$	1,105
Customer relationship intangibles		712		698		2,258		1,048
Mortgage servicing rights		2,413		3,020		7,865		8,917
Non-solicitation intangibles		4		—		4		—
Total	$	3,467	$	4,082	$	11,163	$	11,070

At September 30, 2004 and December 31, 2003, aggregate impairment for mortgage servicing rights was approximately $12,101,000 and approximately $17,209,000, respectively.

10

The following table presents information regarding estimated amortization expense on the Company’s amortizable identifiable intangible assets for the year ended December 31, 2004, and the succeeding four years:

			Customer		Non-
	Core Deposit		Relationship		Solicitation		Mortgage
	Intangibles		Intangibles		Intangibles		Servicing Rights		Total
Estimated Amortization Expense:	(In thousands)
For year ended December 31, 2004	$	1,372	$	2,954	$	10	$	10,200	$	14,536
For year ended December 31, 2005		1,280		2,585		25		8,100		11,990
For year ended December 31, 2006		1,197		2,227		15		6,500		9,939
For year ended December 31, 2007		1,113		1,926		—		5,200		8,239
For year ended December 31, 2008		851		1,701		—		4,200		6,752

NOTE 8 – PENSION AND OTHER POSTRETIREMENT BENEFITS

The following tables present the components of net periodic benefit cost for the periods indicated:

	Pension Benefits						Other Benefits
	Three months ended						Three months ended
	September 30,						September 30,
	2004			2003			2004		2003
	(In thousands)
Service cost	$	1,379		$	1,164		$	—	$	—
Interest cost		1,277			1,040			41		58
Expected return on assets		(1,323	)		(843	)		—		—
Amortization of unrecognized transition amount		4			5			—		—
Recognized prior service cost		29			79			198		198
Recognized net loss		389			225			—		—
Net periodic benefit cost	$	1,755		$	1,670		$	239	$	256

	Pension Benefits						Other Benefits
	Nine months ended						Nine months ended
	September 30,						September 30,
	2004			2003			2004		2003
	(In thousands)
Service cost	$	3,975		$	3,492		$	—		$	—
Interest cost		3,425			3,120			123			174
Expected return on assets		(3,571	)		(2,529	)		—			—
Amortization of unrecognized transition amount		14			15			—			—
Recognized prior service cost		187			237			594			594
Recognized net loss		851			675			—			—
Net periodic benefit cost	$	4,881		$	5,010		$	717		$	768

NOTE 9 – RECENT PRONOUNCEMENTS

No recently issued accounting pronouncements were adopted by the Company during the third quarter of 2004.

11

NOTE 10 – SEGMENT REPORTING

The Company’s principal activity is community banking, which includes providing a full range of deposit products, commercial loans and consumer loans. The general corporate and other operating segment below includes leasing, mortgage lending, trust services, credit card activities, insurance services, investment services and other activities not allocated to community banking.

Results of operations and selected financial information by operating segment for the three-month and nine-month periods ended September 30, 2004 and 2003 were as follows:

			General
	Community		Corporate
	Banking		and Other			Total
	(In thousands)
Three months ended September 30, 2004:
Results of Operations
Net interest revenue	$	75,727	$	7,231		$	82,958
Provision for credit losses		3,467		63			3,530
Net interest revenue after provision for credit losses		72,260		7,168			79,428
Noninterest revenue		24,307		18,020			42,327
Noninterest expense		54,298		30,682			84,980
Income before income taxes		42,269		(5,494	)		36,775
Income taxes		10,559		(1,372	)		9,187
Net income	$	31,710	$	(4,122	)	$	27,588
Selected Financial Information
Total assets (at end of period)	$	8,957,144	$	1,651,006		$	10,608,150
Depreciation & amortization		5,202		712			5,914
Three months ended September 30, 2003:
Results of Operations
Net interest revenue	$	75,761	$	12,047		$	87,808
Provision for credit losses		4,042		622			4,664
Net interest revenue after provision for credit losses		71,719		11,425			83,144
Noninterest revenue		24,001		25,819			49,820
Noninterest expense		54,122		28,429			82,551
Income before income taxes		41,598		8,815			50,413
Income taxes		13,647		2,892			16,539
Net income	$	27,951	$	5,923		$	33,874
Selected Financial Information
Total assets (at end of period)	$	9,371,689	$	813,858		$	10,185,547
Depreciation & amortization		5,931		503			6,434

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			General
	Community		Corporate
	Banking		and Other			Total
	(In thousands)
Nine months ended September 30, 2004:
Results of Operations
Net interest revenue	$	227,238	$	22,886		$	250,124
Provision for credit losses		11,222		1,159			12,381
Net interest revenue after provision for credit losses		216,016		21,727			237,743
Noninterest revenue		73,469		66,315			139,784
Noninterest expense		160,643		94,373			255,016
Income before income taxes		128,842		(6,331	)		122,511
Income taxes		38,369		(1,885	)		36,484
Net income	$	90,473	$	(4,446	)	$	86,027
Selected Financial Information
Total assets (at end of period)	$	8,957,144	$	1,651,006		$	10,608,150
Depreciation & amortization		15,596		2,084			17,680
Nine months ended September 30, 2003:
Results of Operations
Net interest revenue	$	226,792	$	38,229		$	265,021
Provision for credit losses		15,826		1,832			17,658
Net interest revenue after provision for credit losses		210,966		36,397			247,363
Noninterest revenue		83,693		58,319			142,012
Noninterest expense		157,939		79,828			237,767
Income before income taxes		136,720		14,888			151,608
Income taxes		44,499		4,846			49,345
Net income	$	92,221	$	10,042		$	102,263
Selected Financial Information
Total assets (at end of period)	$	9,371,689	$	813,858		$	10,185,547
Depreciation & amortization		17,994		1,440			19,434

NOTE 11 – COMMITMENTS AND CONTINGENT LIABILITIES

The State Tax Commission of the State of Mississippi completed its audit of the Bank’s state income tax return for the tax years 1998 through 2001 in the second quarter of 2004. As a result of this audit, on May 4, 2004, the State Tax Commission assessed the Bank additional taxes of approximately $6.2 million along with interest and penalties totaling approximately $3.7 million. Based on the advice of legal counsel, management believes that there is no substantial basis for the position taken by the Mississippi State Tax Commission and that the Company has meritorious defenses to dispute this assessment of additional taxes. The first step in the appeals process is to petition the Board of Review of the State Tax Commission for a hearing on the amount assessed. This hearing with the Board of Review took place at the beginning of the fourth quarter of 2004 but a decision has not been rendered. There can be no assurance that the Company will be successful in having the assessment reduced on appeal. The Company’s potential exposure with regard to this assessment will be the additional tax, interest and penalties assessed in May 2004 plus interest that will continue to accrue from May 2004 through the appeals process and legal costs associated with the appeal. Management does not believe that the outcome of this matter will have a material effect on the financial condition of the Company, although any significant additional assessment could materially adversely affect earnings in the period in which it is recorded.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

OVERVIEW

BancorpSouth, Inc. (the “Company”) is a regional financial holding company with approximately $10.6 billion in assets and is headquartered in Tupelo, Mississippi. BancorpSouth Bank (the “Bank”), the Company’s banking subsidiary, has commercial banking operations in Mississippi, Tennessee, Alabama, Arkansas, Texas and Louisiana. The Bank and its consumer finance, credit insurance, insurance agency and brokerage subsidiaries provide commercial banking, leasing, mortgage origination and servicing, insurance, brokerage and trust services to corporate customers, local governments, individuals and other financial institutions through an extensive network of branches and offices.

Management’s discussion and analysis provides a narrative discussion of the Company’s financial condition and results of operations of the Company. For a complete understanding of the following discussion, you should refer to the unaudited consolidated condensed financial statements for the three-month and nine-month periods ended September 30, 2004 and 2003 found in “Item 1. Financial Statements” of this report. This discussion and analysis is based on reported financial information and certain amounts for prior periods have been reclassified to conform with the current financial statement presentation. Additional information is provided to enhance comparability of financial information between periods and to provide a better understanding of the Company’s continuing operations.

As a financial holding company, the financial condition and operating results of the Company are heavily influenced by economic trends in the nation and its markets specifically. Most of the revenue of the Company is derived from its principal operating subsidiary, the Bank. The financial condition and operating results of the Bank are affected by the level and volatility of interest rates on loans, investment securities, deposits and other borrowed funds, and the impact of economic downturns on loan demand and creditworthiness of existing borrowers. The financial services industry is highly competitive and heavily regulated. The Company’s success depends on its ability to compete aggressively within its markets while maintaining sufficient asset quality and cost controls to generate net income.

The table below summarizes the Company’s net income, net income per share, return on average assets and return on average shareholders’ equity for the three months and nine months ended September 30, 2004 and 2003. Management believes these amounts and ratios are key indicators of the Company’s financial performance.

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	Three months ended
	September 30,
(Dollars in thousands, except per share amounts)	2004			2003			% Change
Net income	$	27,588		$	33,874			(18.56	)%
Net income per share: Basic	$	0.36		$	0.43			(16.28	)
Diluted	$	0.36		$	0.43			(16.28	)
Return on average assets (annualized)		1.04	%		1.31	%		(20.61	)
Return on average shareholders’ equity (annualized)		12.77	%		15.37	%		(16.92	)

	Nine months ended
	September 30,
(Dollars in thousands, except per share amounts)	2004			2003			% Change
Net income	$	86,027		$	102,263			(15.88	)%
Net income per share: Basic	$	1.12		$	1.32			(15.15	)
Diluted	$	1.11		$	1.31			(15.27	)
Return on average assets (annualized)		1.09	%		1.33	%		(18.05	)
Return on average shareholders’ equity (annualized)		13.19	%		16.25	%		(18.83	)

The decline in net income for the third quarter and first nine months of 2004 when compared to the same periods of 2003 is attributable to several factors. The Company’s primary source of revenue is the amount of net interest revenue earned by the Bank. Net interest revenue is the difference between interest earned on loans and investments and interest paid on deposits and other obligations. The Company’s net interest revenue has continued to be negatively impacted by the historically low interest rates of the current interest rate cycle as well as the absence of significant loan demand. The Company has been unable to completely offset the decline in asset yields with reduced funding costs in this low interest rate environment. Additionally, deposit growth and proceeds from maturing securities outpaced loan demand for the first nine months of 2004 leading the Company to invest the excess liquidity in various securities that traditionally provide lower yields than loans. Also, proceeds from the maturing securities during the period were reinvested at lower yields than the maturing securities were earning. These factors combined to reduce the Company’s net interest revenue to $82.96 million for the third quarter of 2004, a $4.85 million, or 5.52%, decrease from $87.81 million for the same period of 2003. In recent years, the Company has taken steps to diversify its revenue stream by increasing its noninterest revenue from mortgage lending activities, insurance agency activities, brokerage and securities activities, and other bank related fees. While these diversification efforts have been successful in certain areas, the decrease in revenue from our mortgage lending activities for the third quarter and first nine months of 2004 and the significant gains on securities sold in 2003 which did not recur in 2004 combined to reduce noninterest revenue for the third quarter and first nine months of 2004 to $42.33 million and $139.78 million, respectively, down from $49.82 million and $142.01 million for the third quarter and first nine months of 2003, respectively. Improved asset quality allowed the Company to reduce its provision for credit losses for the third quarter of 2004 to $3.53 million, a 24.31% decrease from $4.66 million for the third quarter of 2003. Noninterest expense totaled $84.98 million for the third quarter of 2004 compared to $82.55 million for the third quarter of 2003, an increase of $2.43 million, or 2.94%. For the first nine months of 2004 and 2003, noninterest expense totaled $255.02 million and $237.77 million, respectively, an increase of $17.25 million, or 7.25%. The increase in noninterest expense for the third quarter and first nine months of 2004 continues to be related to increased salaries, employee benefits and other expenses associated with the two insurance agencies acquired in the second and third quarters of 2003. The major components of net income are discussed in more detail in the various sections that follow.

Critical Accounting Policies

During the nine months ended September 30, 2004, there was no significant change in the Company’s critical accounting policies and no significant change in the application of critical accounting policies as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

15

RESULTS OF OPERATIONS

Net Interest Revenue

Net interest revenue is the difference between interest revenue earned on assets, such as loans, leases and securities, and interest expense paid on liabilities, such as deposits and borrowings, and continues to provide the Company with its principal source of revenue. Net interest revenue is affected by the general level of interest rates, changes in interest rates and by changes in the amount and composition of interest earning assets and interest bearing liabilities. The Company’s long-term objective is to manage those assets and liabilities to maximize net interest revenue, while balancing interest rate, credit, liquidity and capital risks. For purposes of the following discussion, revenue from tax-exempt loans and investment securities has been adjusted to a fully taxable equivalent basis, using an effective tax rate of 35%.

Net interest revenue was $85.27 million for the three months ended September 30, 2004, compared to $90.23 million for the same period in 2003, representing a decrease of $4.96 million, or 5.50%. For the first nine months of 2004 and 2003, net interest revenue was $257.18 million and $272.73 million, respectively, representing a decrease of $15.55 million, or 5.70%. The decline in net interest revenue for the third quarter and first nine months of 2004 primarily reflects the Company’s inability to reduce funding costs enough to offset falling asset yields.

Interest revenue decreased $5.42 million, or 4.10%, to $126.81 million for the three months ended September 30, 2004 from $132.23 million for the three months ended September 30, 2003. While average interest earning assets increased by $242.01 million, or 2.54%, to $9.75 billion for the third quarter of 2004 from $9.51 billion for the third quarter of 2003, this increase was more than offset by a decrease of 35 basis points in the yield of those assets to 5.17% for the third quarter of 2004 from 5.52% for the third quarter of 2003, resulting in a decrease in interest revenue. For the first nine months of 2004 and 2003, interest revenue was $378.43 million and $408.40 million, respectively, representing a decrease of $29.97 million, or 7.34%. Average interest earning assets increased $220.30 million, or 2.31%, from $9.53 billion for the nine months ended September 30, 2003 to $9.75 billion for the nine months ended September 30, 2004, while the average yield on those assets decreased 55 basis points to 5.18% for the nine months ended September 30, 2004 from 5.73% for the nine months ended September 30, 2003.

Interest expense decreased $0.45 million, or 1.09%, to $41.55 million for the three months ended September 30, 2004 from $42.00 million for the three months ended September 30, 2003. While average interest bearing liabilities increased $276.80 million, or 3.44%, to $8.31 billion for the third quarter of 2004 from $8.04 billion for the third quarter of 2003, this increase in the amount of interest bearing liabilities was somewhat offset by a decrease of 8 basis points in the average rate paid on those liabilities to 1.99% for the third quarter of 2004 from 2.07% for the third quarter of 2003. For the first nine months of 2004 and 2003, interest expense was $121.25 million and $135.67 million, respectively, representing a decrease of $14.42 million, or 10.63%. Average interest bearing liabilities decreased $163.33 million, or 2.01%, from $8.12 billion for the nine months ended September 30, 2003 to $8.29 billion for the nine months ended September 30, 2004, while the average rate paid on those liabilities decreased 28 basis points from 2.23% for the nine months ended September 30, 2003 to 1.95% for the nine months ended September 30, 2004.

The relative performance of the Company’s lending and deposit-raising functions is frequently measured by two calculations – net interest margin and net interest rate spread. Net interest margin is determined by dividing fully taxable equivalent net interest revenue by average earning assets. Net interest rate spread is the difference between the average fully taxable equivalent yield earned on interest earning assets and the average rate paid on interest bearing liabilities. Net interest margin is generally greater than the net interest rate spread because of the additional income earned on those assets funded by noninterest bearing liabilities.

Net interest margin for the third quarter of 2004 and 2003 was 3.48% and 3.76%, respectively, representing a decrease of 28 basis points. Net interest rate spread for the third quarter of 2004 was 3.18%, a decrease of 26 basis points from 3.44% for the same period of 2003. The decrease in net interest margin and net interest rate spread was primarily a result of the larger decline in the average rate earned on interest earning assets, from 5.52% for the third quarter of 2003 to 5.17% for the third quarter of 2004, than the decrease in the average rate paid on interest bearing liabilities from 2.07% for the third quarter of 2003 to 1.99% for the third quarter of 2004. For the first nine months of 2004 and 2003, net interest margin was 3.52% and 3.83%, respectively, representing a decrease of 31 basis

16

points. Net interest rate spread for the nine months ended September 30, 2004 was 3.23%, a decrease of 27 basis points from 3.50% for the same period of 2003. The decrease in net interest margin and net interest rate spread for the first nine months of 2004 from the first nine months of 2003 was primarily a result of the larger decline in the average rate earned on interest earning assets, from 5.73% for the nine months ended September 30, 2003 to 5.18% for the nine months ended September 30, 2004, than the decrease in the average rate paid on interest bearing liabilities from 2.23% for the nine months ended September 30, 2003 to 1.95% for the nine months ended September 30, 2004. The earning asset yield decrease for both the three months and nine months ended September 30, 2004 was a result of reduced loan activity and a lower yielding investment portfolio. While an increase in loans was noticed during the three months ended September 30, 2004, the absence of significant loan demand during the nine months ended September 30, 2004 was attributable to the economic environment in both the Company’s regional market and the national market. With decreased demand for loans, the Company invested in various securities that traditionally provide lower yields than loans, and because of the continued lower prevailing interest rates, proceeds from maturing securities were typically reinvested at lower yields than the maturing securities were earning.

Interest Rate Sensitivity

The interest rate sensitivity gap is the difference between the maturity or repricing opportunities of interest sensitive assets and interest sensitive liabilities for a given period of time. A prime objective of asset/liability management is to maximize net interest margin while maintaining a reasonable mix of interest sensitive assets and liabilities. The following table presents the Company’s interest rate sensitivity at September 30, 2004:

	Interest Rate Sensitivity - Maturing or Repricing Opportunities
				91 Days			Over 1
	0 to 90			to			Year to		Over
	Days			1 Year			5 Years		5 Years
	(In thousands)
Interest earning assets:
Interest bearing deposits with banks	$	35,090		$	—		$	—	$	—
Federal funds sold & securities purchased under agreement to resell		7,180			—			—		—
Held-to-maturity securities		145,363			119,200			732,345		387,153
Available-for-sale securities		92,616			151,442			1,019,903		494,984
Loans, net of unearned discount		3,488,428			1,157,856			1,791,816		74,869
Loans held for sale		69,194			—			—		—
Total interest earning assets		3,837,871			1,428,498			3,544,064		957,006
Interest bearing liabilities:
Interest bearing demand deposits & savings		2,982,290			443,255			—		—
Other time deposits		947,893			1,633,374			1,488,942		3,787
Federal funds purchased & securities sold under agreement to repurchase		496,647			—			—		—
Long-term debt and junior subordinated debt securities		399			6,235			55,506		204,226
Other		172			219			824		97
Total interest bearing liabilities		4,427,401			2,083,083			1,545,272		208,110
Interest rate sensitivity gap	($	589,530	)	($	654,585	)	$	1,998,792	$	748,896
Cumulative interest sensitivity gap	($	589,530	)	($	1,244,115	)	$	754,677	$	1,503,573

Provision for Credit Losses and Allowance for Credit Losses

The provision for credit losses is the annual cost of providing an allowance or reserve for estimated probable losses on loans. The Company employs a systematic methodology for determining its allowance for credit losses that

17

considers both qualitative and quantitative factors and requires that management make material estimates and assumptions that are particularly susceptible to significant change. Some of the quantitative factors considered by the Company include loan growth, changes in the size, characteristics and composition of the loan portfolio, net charge-offs, changes in nonperforming and past due loans, historical loan loss experience, delinquencies, management’s assessment of loan portfolio quality, the value of collateral and concentrations of loans to specific borrowers or industries. Some of the qualitative factors that the Company considers include existing general economic conditions and the existing risks of individual loans.

The allowance for credit losses is based principally upon the Company’s loan classification system, delinquencies and historic loss rates. The Company has a disciplined approach for assigning credit ratings and classifications to individual credits. Each credit is assigned a grade by the appropriate loan officer, which serves as a basis for the credit analysis of the entire portfolio. The assigned grade reflects the borrower’s creditworthiness, collateral values, cash flows and other factors. An independent loan review department is responsible for reviewing the credit rating and classification of individual credits and assessing trends in the portfolio, adherence to internal credit policies and procedures and other factors that may affect the overall adequacy of the allowance. The work of the loan review department is supplemented by governmental regulatory agencies during their periodic examinations of the Bank. This provides an additional independent level of review. The loss factors assigned to each classification are based upon the attributes of the loans typically assigned to each grade (such as loan to collateral values and borrower creditworthiness). Management periodically reviews the loss factors assigned in light of the general economic environment and overall condition of the loan portfolio and modifies the loss factors assigned to each classification as it deems appropriate. The overall allowance generally includes a component representing the results of other analyses intended to ensure that the allowance is adequate to cover other probable losses inherent in the portfolio. This component considers analyses of changes in credit risk resulting from the differing underwriting criteria in acquired loan portfolios, industry concentrations, changes in the mix of loans originated, overall credit criteria and other economic indicators.

The provision for credit losses and net charge-offs for the three months and nine months ended September 30, 2004 and 2003 are shown in the following table:

	Three months ended
	September 30,
	2004			2003			% Change
	(Dollars in thousands)
Provision for credit losses	$	3,530		$	4,664			(24.31)	%
Net charge-offs	$	3,967		$	5,369			(26.11)	%
Net charge-offs as a percentage of average loans (annualized)		0.25	%		0.34	%		(26.47)	%

	Nine months ended September 30,
	2004			2003			% Change
	(Dollars in thousands)
Provision for credit losses	$	12,381		$	17,658			(29.88	)%
Net charge-offs	$	14,393		$	15,028			(4.23	)%
Net charge-offs as a percentage of average loans (annualized)		0.30	%		0.32	%		(6.25	)%
Allowance for credit losses as a percentage of loans outstanding at period end		1.38	%		1.45	%		(4.83	)%

Net charge-offs decreased during the third quarter and first nine months of 2004 when compared to the same periods of 2003, reflecting the significant improvement in the credit quality of the Company’s loans at September 30, 2004. This improvement was further evidenced by the significant decrease in non-performing loans, down 20.77% when compared to non-performing loans at September 30, 2003. Also, improved credit quality was

18

reflected by the Company’s loan classification system at September 30, 2004. The Company’s exposure to losses from indirect automobile sales financing and certain higher risk consumer loans also continues to diminish as that portfolio of loans totaled $23.04 million at September 30, 2004, $59.17 million at December 31, 2003 and $67.87 million at September 30, 2003. The Company’s allowance for credit losses as a percentage of loans outstanding at September 30, 2004 was 1.38%, at December 31, 2003 was 1.48% and at September 30, 2003 was 1.45%.

The allocation of allowance by loan category is based, in part, on evaluations of specific loans’ past histories and on economic conditions within specific industries or geographical areas. Accordingly, because all of these conditions are subject to change, the allocation is not necessarily indicative of the breakdown of any future allowance or losses. The following table presents the allocation of the allowance for credit losses by loan category and the percentage of total loans for each category in the loan portfolio for the dates indicated:

	September 30,										December 31,
	2004					2003					2003
	Allowance					Allowance					Allowance
	for		% of			for		% of			for		% of
	Credit		Total			Credit		Total			Credit		Total
	Losses		Loans			Losses		Loans			Losses		Loans
	(Dollars in thousands)
Commercial and agricultural	$	10,126		11.84	%	$	11,386		11.17	%	$	12,116		11.86	%
Consumer and installment		8,328		6.68	%		11,147		9.41	%		10,311		8.52	%
Real estate mortgage		68,296		77.27	%		64,454		74.53	%		66,161		75.61	%
Lease financing		2,931		3.90	%		2,946		4.55	%		2,758		3.64	%
Other		419		0.31	%		572		0.34	%		766		0.37	%
Total	$	90,100		100.00	%	$	90,505		100.00	%	$	92,112		100.00	%

The following table provides an analysis of the allowance for credit losses for the periods indicated:

	Nine months ended
	September. 30,						Year ended December 31,
	2004			2003			2003
	(Dollars in thousands)
Balance, beginning of period	$	92,112		$	87,875		$	87,875
Loans charged off:
Commercial and agricultural		(6,148	)		(4,803	)		(7,681	)
Consumer and installment		(7,150	)		(9,115	)		(11,895	)
Real estate mortgage		(4,413	)		(3,745	)		(4,686	)
Lease financing		—			(354	)		(479	)
Total loans charged off		(17,711	)		(18,017	)		(24,741	)
Recoveries:
Commercial and agricultural		1,035			683			834
Consumer and installment		1,693			1,576			2,140
Real estate mortgage		582			724			865
Lease financing		8			6			9
Total recoveries		3,318			2,989			3,848
Net charge-offs		(14,393	)		(15,028	)		(20,893	)
Provision charged to operating expense		12,381			17,658			25,130
Balance, end of period	$	90,100		$	90,505		$	92,112
Average loans for period	$	6,340,868		$	6,302,564		$	6,276,805
Ratios:
Net charge-offs to average loans-annualized		0.30	%		0.32	%		0.33	%

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Noninterest Revenue

The components of noninterest revenue for the three months and nine months ended September 30, 2004 and 2003 and the percentage changes are shown in the following tables:

	Three months ended
	September 30,
	2004			2003		% Change
	(Dollars in thousands)
Mortgage lending	($	672	)	$	10,323		(106.51	)%
Service charges		15,965			16,131		(1.03	)
Life insurance premiums		397			760		(47.76	)
Trust income		2,059			1,905		8.08
Securities gains, net		146			60		143.33
Insurance commissions		14,366			11,946		20.26
Other		10,066			8,695		15.77
Total noninterest revenue	$	42,327		$	49,820		(15.04	)%

	Nine months ended
	September 30,
	2004		2003		% Change
	(Dollars in thousands)
Mortgage lending	$	9,552	$	16,811		(43.18)	%
Service charges		46,340		46,017		0.70
Life insurance premiums		1,437		2,598		(44.69	)
Trust income		5,587		5,075		10.09
Securities gains, net		822		13,796		(94.04	)
Insurance commissions		42,056		26,647		57.83
Other		33,990		31,068		9.41
Total noninterest revenue	$	139,784	$	142,012		(1.57)	%

The Company’s revenue from mortgage lending decreased 106.51% during the third quarter of 2004 when compared to the third quarter of 2003. Mortgage lending revenue decreased 43.18% when comparing the nine months ended September 30, 2004 and 2003. The Company’s revenue from mortgage lending typically fluctuates as interest rates change and is primarily attributable to two activities — origination of new mortgage loans and servicing mortgage loans. The Company’s normal practice is to generate mortgage loans, sell them in the secondary market and retain the mortgage servicing rights (“MSRs”) to the loans sold.

The mortgage origination process generates loan origination fees and net gains or losses from the sale of the mortgage loans originated, which is also referred to as secondary marketing. These activities produced revenue of $1.62 million and $5.05 million for the quarters ended September 30, 2004 and 2003, respectively. For the nine months ended September 30, 2004 and 2003, these activities produced revenue of $5.38 million and $16.08 million, respectively. Of the revenue from the origination process, the sale of mortgage loans resulted in net losses of $291,000 and $1.45 million for the third quarter and first nine months of 2004, respectively, while the sale of mortgage loans resulted in a net loss of $1.35 million and a net gain of $1.25 million for the third quarter and first nine months of 2003, respectively. Historically, origination volumes have varied as mortgage interest rates have changed. Rising mortgage interest rates have generally resulted in a decrease in the volume of originations, while falling mortgage interest rates have generally resulted in an increased volume of originations. The Company originated mortgage loans totaling $128.62 million during the third quarter of 2004, down 64.29% from $360.14 million for the third quarter of 2003. This decrease reflects the historically low mortgage loan interest rates during 2003 that resulted in record levels of mortgage loan originations for the Company in 2003.

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Revenue from the mortgage servicing process includes fees from the actual servicing of loans and the recognition of changes in the valuation of the Company’s MSRs. MSRs are carried as an asset at the lower of the capitalized amount, net of accumulated amortization, or fair value. MSRs are amortized in proportion to, and over the period of, the estimated net servicing income. This amortization is recognized as a reduction of servicing revenue. MSRs are also periodically evaluated for impairment based on the excess of the carrying amount of the mortgage servicing rights over their fair value. If temporary impairment exists, a valuation allowance is established for any excess of amortized cost over the current fair value through a charge to income. If the Company later determines that all or a portion of the temporary impairment no longer exists, a reduction of the valuation allowance may be recorded as an increase to servicing revenue.

The Company does not hedge the value of its MSRs and is susceptible to significant fluctuations in its value in changing interest rate environments. When mortgage interest rates decline, refinancing of home mortgages typically accelerates and the value of the Company’s MSRs typically declines as the expected lives of the underlying mortgages shorten. When mortgage interest rates are rising, refinancing of home mortgages typically decline and the value of the Company’s MSRs typically increases as the expected lives of the underlying mortgages lengthen. The servicing process generated a loss of $2.29 million and a gain of $4.17 million for the third quarter and first nine months of 2004, respectively, while the servicing process generated gains of $5.28 and $0.75 million for the third quarter and first nine months of 2003, respectively. The fluctuation in servicing revenue is primarily a result of changes in the valuation of capitalized MSRs. Changing mortgage interest rates during the periods resulted in impairment expense of $2.25 million for the third quarter of 2004, and a recovery of previously recorded impairment expense of $5.75 million for the third quarter of 2003.

Service charges on deposit accounts remained relatively static overall for the first nine months of 2004 when compared to the first nine months of 2003. Life insurance premium revenue decreased 47.76% for the third quarter of 2004 when compared to the third quarter of 2003 and decreased 44.69% for the first nine months of 2004 when compared to the same period in 2003 as a result of a reduced emphasis toward selling credit life insurance products. The Company expects this trend of declining life insurance premium revenue to continue. Trust income increased 8.08% for the third quarter of 2004 and 10.09% for the first nine months of 2004 compared to the same periods in 2003 as a result of increases in the value of assets under care (either managed or in custody).

Net securities gains of approximately $822,000 were reported in the first nine months of 2004 compared to net securities gains of $13.80 million for the first nine months of 2003. Net securities gains in the first nine months of 2003 were primarily from the sale of approximately $720 million in intermediate term securities pursuant to our efforts to manage the interest rate sensitivity of the Company’s assets and liabilities.

Insurance commissions grew 20.26% to $14.37 million for the third quarter of 2004 compared to the third quarter of 2003. Insurance commissions grew 57.83% to $42.06 million when comparing the first nine months of 2004 to the first nine months of 2003. The overall insurance commission growth is primarily a result of the acquisition of Wright and Percy Insurance in the second quarter of 2003 and the acquisition of Ramsey, Krug, Farrell & Lensing, Inc. in the third quarter of 2003. The acquisition of these two insurance agencies added approximately $23.25 million in property and casualty insurance commission revenue during the first nine months of 2004. The Company plans to continue to expand the products and services offered by its insurance agencies.

Other noninterest revenue for the third quarter and first nine months of 2004 included a gain of $289,000 and $2.79 million, respectively, from the sale of student loans originated by the Company compared to a $277,000 and $2.81 million gain for such sales in the third quarter and first nine months of 2003. Other noninterest revenue for the first nine months of 2004 included $3.15 million recorded in the first quarter in insurance proceeds as partial reimbursement for prior litigation settlements and related costs and expenses. Other noninterest revenue for the first nine months of 2004 also included losses totaling $1.58 million relating to certain high-risk consumer loans that were sold.

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Noninterest Expense

The components of noninterest expense for the three months and nine months ended September 30, 2004 and 2003 and the percentage changes are shown in the following tables:

	Three months ended
	September 30,
	2004		2003		% Change
	(Dollars in thousands)
Salaries and employee benefits	$	49,176	$	46,449		5.87	%
Occupancy, net of rental income		6,264		5,932		5.60
Equipment		5,390		6,063		(11.10	)
Telecommunications		1,667		1,915		(12.95	)
Other		22,483		22,192		1.31
Total noninterest expense	$	84,980	$	82,551		2.94	%

	Nine months ended
	September 30,
	2004		2003		% Change
	(Dollars in thousands)
Salaries and employee benefits	$	147,840	$	134,177		10.18	%
Occupancy, net of rental income		18,303		17,120		6.91
Equipment		16,486		17,842		(7.60	)
Telecommunications		5,330		5,603		(4.87	)
Other		67,057		63,025		6.40
Total noninterest expense	$	255,016	$	237,767		7.25	%

Salaries and employee benefits expense for the three months and nine months ended September 30, 2004 increased when compared to the same periods in 2003, primarily as a result of salaries, employee benefits and commissions of employees of the two insurance agencies acquired during 2003 and the hiring of employees to staff the banking locations added during 2003 and 2004. Occupancy expense also increased on a comparable three-month and nine-month period basis principally because of additional locations and facilities opened since September 30, 2003 and the two insurance agency acquisitions previously discussed. Equipment expense and telecommunications expense reflect decreases for the three-month and nine-month comparable periods as the Company continued to focus on controlling these expenses. Other noninterest expense for the three months and nine months ended September 30, 2004 increased when compared to the same periods in 2003. Increased marketing-related expenses and amortization of intangible assets continue to be the most notable causes of this increase.

Income Tax

Income tax expense was $9.19 million and $16.54 million for the third quarter of 2004 and 2003, respectively, representing a decrease of 44.45%. For the nine-month period ended September 30, 2004, income tax expense was $36.48 million, compared to $49.35 million for the same period in 2003, representing a decrease of 26.06%. The decrease in income tax expense in the third quarter and nine-month periods of 2004 when compared to the respective periods of 2003 is partially attributable to decreased before-tax income in 2004 when compared to 2003. Before-tax income decreased 27.05% for the third quarter of 2004 compared to the third quarter of 2003 while before-tax income decreased 19.19% for the nine-month period ended September 30, 2004 as compared to the same period in 2003. The other significant factor in the reduction in income tax expense in 2004 was the change in effective tax rates. The effective tax rates for the third quarter of 2004 and 2003 were 24.98% and 32.81%, respectively, while the effective tax rates for the nine-month periods ended September 30, 2004 and 2003 were 29.78% and 32.55%, respectively. The decrease in effective tax rates for 2004 when compared to 2003 is the result of the reversal of a previously recorded tax contingency of approximately $1.50 million in the third quarter of 2004 and the receipt of approximately $550,000 in state tax refunds in the third quarter of 2004. The previously recorded

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tax contingency was determined to be no longer probable due to the amount of time that has elapsed after being recorded and the state tax refund resulted from the filing of an amended return.

FINANCIAL CONDITION

Earning Assets

The percentage of earning assets to total assets measures the effectiveness of management’s efforts to invest available funds into the most efficient and profitable uses. Earning assets at September 30, 2004 were $9.77 billion, or 92.07% of total assets, compared with $9.47 billion, or 91.86% of total assets, at December 31, 2003.

The securities portfolio is used to make various term investments, to provide a source of liquidity and to serve as collateral to secure certain types of deposits. Held-to-maturity securities at September 30, 2004 were $1.38 billion, compared with $1.09 billion at December 31, 2003, a 26.75% increase. Available-for-sale securities were $1.76 billion at September 30, 2004, compared to $1.99 billion at December 31, 2003, a 11.60% decrease.

The Bank’s loan portfolio makes up the single largest component of the Company’s earning assets. The Bank’s lending activities include both commercial and consumer loans. Loan originations are derived from a number of sources, including direct solicitation by the Bank’s loan officers, real estate broker referrals, mortgage loan companies, current savers and borrowers, builders, attorneys, walk-in customers and, in some instances, other lenders. The Bank has established disciplined and systematic procedures for approving and monitoring loans that vary depending on the size and nature of the loan. Loans, net of unearned discount, totaled $6.51 billion at September 30, 2004, which represents a 4.49% increase from the December 31, 2003 total of $6.23 billion. Even though a greater increase in loans was evidenced in the third quarter when compared to the prior two quarters, management believes that the overall lack of significant loan growth is primarily attributable to the weak economic climate in both the Company’s regional and the national economies.

At September 30, 2004, the Company did not have any concentrations of loans in excess of 10% of total loans outstanding. Loan concentrations are considered to exist when there are amounts loaned to a multiple number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. The Company does, however, conduct business in a geographically concentrated area. Therefore, the ability of the Company’s borrowers to repay loans is to some extent dependent upon the economic conditions prevailing in the Company’s market areas.

In the normal course of business, management becomes aware of possible credit problems in which borrowers exhibit potential for the inability to comply with the contractual terms of their loans, but which do not meet the criteria for disclosure as potential problem loans because management does not have serious doubt as to the borrowers’ ability to comply with the loan terms. Historically, some of these loans are ultimately restructured or placed in non-accrual status.

Collateral for some of the Company’s loans is subject to fair value evaluations that fluctuate with market conditions and other external factors. In addition, while the Company has certain underwriting obligations related to such evaluations from a review standpoint, evaluations of some real property and other collateral are dependent upon third party independent appraisers employed either by the Company’s customers or as independent contractors of the Company.

The Company’s policy provides that loans, other than installment loans, are generally placed on non-accrual status if, in management’s opinion, payment in full of principal or interest is not expected, or when payment of principal or interest is more than 90 days past due, unless the loan is both well secured and in the process of collection. Non-performing loans were 0.56% of all loans outstanding at September 30, 2004 and 0.83% of all loans outstanding at December 31, 2003.

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Deposits and Other Interest Bearing Liabilities

Deposits originating within the communities served by the Bank continue to be the Company’s primary source of funding its earning assets. The Company has been able to effectively compete for deposits in its primary market areas, which has resulted in the increase in deposits from December 31, 2003. Deposits totaled $8.84 billion at September 30, 2004 as compared to $8.60 billion at December 31, 2003, representing a 2.84% increase. Noninterest bearing demand deposits increased by $57.09 million, or 4.44%, to $1.34 billion at September 30, 2004 from $1.29 billion at December 31, 2003, while interest bearing demand, savings and time deposits increased $187.02 million, or 2.56%, to $7.50 billion at September 30, 2004 from $7.31 billion at December 31, 2003.

Liquidity and Capital Resources

One of the Company’s goals is to provide adequate funds to meet changes in loan demand or any potential increase in the normal level of deposit withdrawals. This goal is accomplished primarily by generating cash from operating activities and maintaining sufficient short-term liquid assets. These sources, coupled with a stable deposit base and a strong reputation in the capital markets, allow the Company to fund earning assets and maintain the availability of funds. Management believes that the Company’s traditional sources of maturing loans and investment securities, sales of loans held for sale, cash from operating activities and a strong base of core deposits are adequate to meet the Company’s liquidity needs for normal operations.

To provide additional liquidity, the Company utilizes short-term financing through the purchase of federal funds and securities lending arrangements. Further, the Company maintains a borrowing relationship with the Federal Home Loan Bank which provides liquidity to fund term loans with borrowings of matched or longer maturities.

If the Company’s traditional sources of liquidity were constrained, the Company would be forced to pursue avenues of funding not typically used by the Company and the Company’s net interest margin could be impacted negatively. The Company does utilize, among other tools, maturity gap tables, interest rate shock scenarios and an active asset and liability management committee to analyze, manage and plan asset growth and to assist in managing the Company’s net interest margin and overall level of liquidity. The Company’s approach to providing adequate liquidity has been successful in the past and management does not anticipate any near- or long-term changes to its liquidity strategies.

Off-Balance Sheet Arrangements

In the ordinary course of business, the Company enters into various off-balance sheet commitments and other arrangements to extend credit that are not reflected in the consolidated condensed balance sheets of the Company. The business purpose of these off-balance sheet commitments is the routine extension of credit. While most of the commitments to extend credit are made at variable rates, included in these commitments are forward commitments to fund individual fixed-rate mortgage loans. These fixed-rate lending commitments expose the Company to risks associated with movements in interest rates. As a method to manage these risks, the Company also enters into forward commitments to sell individual fixed-rate mortgage loans. The Company also incurs the risk of deteriorating credit quality of borrowers to whom a commitment to extend credit has been made; however, no significant credit losses are expected from these commitments and arrangements.

Regulatory Requirements for Capital

The Company is required to comply with the risk-based capital guidelines established by the Board of Governors of the Federal Reserve System. These guidelines apply a variety of weighting factors that vary according to the level of risk associated with the assets. Capital is measured in two “Tiers”: Tier I consists of common shareholders’ equity and qualifying noncumulative perpetual preferred stock, less goodwill and certain other intangible assets; and Tier II consists of general allowance for losses on loans and leases, “hybrid” debt capital instruments and all or a portion of other subordinated capital debt, depending upon remaining term to maturity. Total capital is the sum of Tier I and Tier II capital. The Company’s Tier I capital and total capital, as a percentage of total risk-adjusted assets, was 12.91% and 14.17%, respectively, at September 30, 2004. Both ratios exceeded the required minimum

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levels for these ratios of 4% and 8%, respectively, at September 30, 2004. In addition, the Company’s Tier 1 leverage capital ratio (Tier I capital divided by total assets, less goodwill) was 8.60% at September 30, 2004, compared to the required minimum leverage capital ratio of 4%.

The Federal Deposit Insurance Corporation’s capital-based supervisory system for insured financial institutions categorizes the capital position for banks into five categories, ranging from well capitalized to critically undercapitalized. For a bank to classify as “well capitalized,” the Tier I risk-based capital, total risk-based capital and leverage capital ratios must be at least 6%, 10% and 5%, respectively. The Bank met the criteria for the “well capitalized” category at September 30, 2004.

There are various legal and regulatory limits on the extent to which the Bank may pay dividends or otherwise supply funds to the Company. In addition, federal and state regulatory agencies also have the authority to prevent a bank or bank holding company from paying a dividend or engaging in any other activity that, in the opinion of the agency, would constitute an unsafe or unsound practice. The Company does not expect these limitations to cause a material adverse effect with regard to its ability to meet its cash obligations.

Uses of Capital

The Company may pursue acquisition transactions of depository institutions and businesses closely related to banking which further the Company’s business strategies. The Company anticipates that consideration for any such transactions would be shares of the Company’s common stock, cash or a combination thereof. For example, in the third quarter of 2004, the Company announced pending mergers with Premier Bancorp, Inc. and Business Holding Corporation, the consideration for each of which will be a combination of shares of the Company’s common stock and cash if each merger is completed.

On April 23, 2003, the Company announced a stock repurchase program whereby the Company may acquire up to 3.9 million shares of its common stock. The shares may be purchased from time to time in the open market at prevailing market prices or in privately negotiated transactions during the period between May 1, 2003 and April 30, 2005. The extent and timing of any repurchases will depend on market conditions and other corporate considerations. Repurchased shares will be held as authorized but unissued shares. These authorized but unissued shares will be available for use in connection with the Company’s stock option plans, other compensation programs, other transactions or for other corporate purposes as determined by the Company’s Board of Directors. As of September 30, 2004, 2,005,108 shares had been repurchased under this repurchase plan. The Company will continue to evaluate additional share repurchases under this repurchase plan. The Company conducts its current stock repurchase program by using funds received in the ordinary course of business. The Company has not experienced, and does not expect to experience, a material adverse effect on its capital resources or liquidity in connection with its current stock repurchase program during the terms of the program. See Part II, Item 2 of this report (“Unregistered Sales of Equity Securities and Use of Proceeds”) for information about the Company’s repurchases during the three months ended September 30, 2004.

Under the stock repurchase plans approved in 2001 and 2002 and the current repurchase plan approved in 2003, the Company had repurchased as of September 30, 2004 approximately 10.3 million shares of its common stock, or 12.3% of its outstanding shares at March 5, 2001.

On January 28, 2002, the Company issued $128,866,000 in 8.15% Junior Subordinated Debt Securities to BancorpSouth Capital Trust I (the “Trust”), a business trust. The Trust used the proceeds from the issuance of 5.0 million shares of 8.15% trust preferred securities, $25 face value per share, to acquire the 8.15% Junior Subordinated Debt Securities. Both the Junior Subordinated Debt Securities and the trust preferred securities mature on January 28, 2032, and are callable at the option of the Company after January 28, 2007. The net proceeds to the Company from the issuance of its Junior Subordinated Debt Securities to the Trust were used for general corporate purposes, including the repurchase of shares of its outstanding common stock. Prior to December 31, 2003, the accounts of the Trust were included in the consolidated financial statements of the Company. Pursuant to the Company’s adoption of the transition guidance of FIN 46R, “Consolidation of Variable Interest Entities,” for investment in special-purpose entities, the Company deconsolidated the Trust from its financial statements as of December 31, 2003. The $125 million in trust preferred securities issued by the Trust qualify as Tier I capital under Federal Reserve Board guidelines. The Federal Reserve Board has issued a decision that deconsolidation of entities such as the Trust will not affect the qualification of the trust preferred securities as Tier I capital. The Company may prepay the Junior Subordinated Debt Securities, and in turn, the trust preferred

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securities, at a prepayment price of 100% of the principal amount of these securities within 90 days of a determination by the Federal Reserve Board that trust preferred securities will no longer qualify as Tier I capital.

Certain Litigation Contingencies

The Company and its subsidiaries are engaged in lines of business that are heavily regulated and involve a large volume of financial transactions with numerous customers through offices in six states. Although the Company and its subsidiaries have developed policies and procedures to minimize the impact of legal noncompliance and other disputes, litigation presents an ongoing risk.

During the past several years, a number of cases have been filed against some of the Company’s subsidiaries generally alleging that loans were originated or renewed at a time or in a way that improperly increased the charges paid by the borrower and/or that the borrowers were charged fees or sold insurance products without appropriate disclosures or that were unnecessary under the particular circumstances. These actions tend to seek large amounts of actual and punitive damages for claims arising out of transactions that involve relatively small amounts of money. The Company has settled the majority of these cases filed against it, and only one new case of this nature has been filed against the Company since 2002. As partial reimbursement for these settlements and related litigation costs and expenses, the Company executed an agreement with its insurance carrier’s companies, effective February 12, 2004, under which the Company received $3.15 million in insurance proceeds. This agreement resolves future coverage issues in favor of that carrier as to that carrier’s policies with the Company.

The Company intends to vigorously defend each of the lawsuits that remain pending, and believes that it has meritorious defenses in these cases. Based on the Company’s experience with similar cases, the Company does not believe that the pending lawsuits will have a material adverse effect on the Company’s consolidated financial position or results of operations. Litigation is, however, inherently uncertain, and the Company cannot make assurances that it will prevail in any of these actions, nor can it estimate with reasonable certainty the amount of damages that it might incur. Similar claims brought against other companies in the Company’s market areas have resulted in large awards of actual and punitive damages.

Additionally, the Company and its subsidiaries are defendants in various other lawsuits arising out of the normal course of business, including claims against entities to which the Company is a successor as a result of business combinations. In the opinion of management, the ultimate resolutions of this category of claims should not have a material adverse effect on the Company’s consolidated financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

During the three months ended September 30, 2004, there were no significant changes to the quantitative and qualitative disclosures about market risks presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

ITEM 4. CONTROLS AND PROCEDURES.

The Company, with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation and as of the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to information required to be disclosed in its reports that the Company files or submits to the Securities and Exchange Commission under the Securities Exchange Act of 1934. There have been no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II
OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The Company made the following purchases of its common stock during the quarter ended September 30, 2004:

					Total Number of		Maximum Number of
					Shares Purchased		Shares that May
	Total Number				as Part of Publicly		Yet Be Purchased
	of Shares		Average Price		Announced Plans		Under the Plans
Period	Purchased (1)		Paid per Share		or Programs (2)		or Programs
July 1 - July 31		68,400	$	21.09		68,400		2,200,892
August 1 - August 31		271,000		21.23		263,000		1,937,892
September 1 - September 30		43,000		22.78		43,000		1,894,892
Total		382,400

(1)	This includes 8,000 shares redeemed from an employee during the third quarter of 2004 upon vesting of restricted stock for tax withholding purposes.
(2)	On April 23, 2003, the Company announced a stock repurchase program pursuant to which the Company may purchase up to 3.9 million shares of its common stock prior to April 30, 2005. During the three months ended September 30, 2004, the Company terminated no repurchase plans or programs and no such plans or programs expired.

ITEM 6. EXHIBITS.

(3.1)	Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Registration No. 33-88274) filed on January 6, 1995, and incorporated herein by reference).
(3.2)	Amendment to Restated Articles of Incorporation of the Company (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (Registration No. 33-88274) filed on January 6, 1995, and incorporated herein by reference).
(3.3)	Amended and Restated Bylaws of the Company (filed as Exhibit 3(b) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (file No. 1-12991) and incorporated herein by reference).
(3.4)	Amendment to Amended and Restated Bylaws (filed as Exhibit 3(c) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 (file No. 1-12991) and incorporated herein by reference).
(4.1)	Specimen Common Stock Certificate (filed as Exhibit 4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (file number 0-10826) and incorporated herein by reference).
(4.2)	Rights Agreement, dated as of April 24, 1991, including as Exhibit A the forms of Rights Certificate and of Election to Purchase and as Exhibit B the summary of Rights to Purchase Common Shares (filed as Exhibit 1 to the Company’s registration statement on Form 8-A filed April 24, 1991 and incorporated herein by reference).
(4.3)	First Amendment to Rights Agreement, dated as of March 28, 2001 (filed as Exhibit 2 to the Company’s amended registration statement on Form 8-A/A filed March 28, 2001 and incorporated herein by reference).
(4.4)	Junior Subordinated Indenture (filed as Exhibit 4.8 to the Company’s Current Report on Form 8-K filed on January 28, 2002 and incorporated herein by reference).
(4.5)	Second Amended and Restated Trust Agreement of BancorpSouth Capital Trust I (filed as Exhibit 4.13 to the Company’s Current Report on Form 8-K filed on January 28, 2002 and incorporated herein by reference).

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(4.6)	Trust Preferred Securities Guarantee Agreement relating to BancorpSouth Capital Trust I (filed as Exhibit 4.25 to the Company’s Current Report on Form 8-K filed on January 28, 2002 and incorporated herein by reference).
(31.1)	Certification of the Chief Executive Officer of BancorpSouth, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Certification of the Chief Financial Officer of BancorpSouth, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32.1)	Certification of the Chief Executive Officer of BancorpSouth, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.2)	Certification of the Chief Financial Officer of BancorpSouth, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BancorpSouth, Inc.
	(Registrant)
DATE: November 8, 2004	/s/ L. Nash Allen, Jr.
	L. Nash Allen, Jr.
	Treasurer and
	Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit No.	Description
(3.1)	Restated Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-4 (Registration No. 33-88274) filed on January 6, 1995, and incorporated herein by reference).
(3.2)	Amendment to Restated Articles of Incorporation of the Company (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-4 (Registration No. 33-88274) filed on January 6, 1995, and incorporated herein by reference).
(3.3)	Amended and Restated Bylaws of the Company (filed as Exhibit 3(b) to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (file No. 1-12991) and incorporated herein by reference).
(3.4)	Amendment to Amended and Restated Bylaws (filed as Exhibit 3(c) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000 (file No. 1-12991) and incorporated herein by reference).
(4.1)	Specimen Common Stock Certificate (filed as Exhibit 4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (file number 0-10826) and incorporated herein by reference).
(4.2)	Rights Agreement, dated as of April 24, 1991, including as Exhibit A the forms of Rights Certificate and of Election to Purchase and as Exhibit B the summary of Rights to Purchase Common Shares (filed as Exhibit 1 to the Company’s registration statement on Form 8-A filed April 24, 1991 and incorporated herein by reference).
(4.3)	First Amendment to Rights Agreement, dated as of March 28, 2001 (filed as Exhibit 2 to the Company’s amended registration statement on Form 8-A/A filed March 28, 2001 and incorporated herein by reference).
(4.4)	Junior Subordinated Indenture (filed as Exhibit 4.8 to the Company’s Current Report on Form 8-K filed on January 28, 2002 and incorporated herein by reference).
(4.5)	Second Amended and Restated Trust Agreement of BancorpSouth Capital Trust I (filed as Exhibit 4.13 to the Company’s Current Report on Form 8-K filed on January 28, 2002 and incorporated herein by reference).
(4.6)	Trust Preferred Securities Guarantee Agreement relating to BancorpSouth Capital Trust I (filed as Exhibit 4.25 to the Company’s Current Report on Form 8-K filed on January 28, 2002 and incorporated herein by reference).
(31.1)	Certification of the Chief Executive Officer of BancorpSouth, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2)	Certification of the Chief Financial Officer of BancorpSouth, Inc. pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32.1)	Certification of the Chief Executive Officer of BancorpSouth, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(32.2)	Certification of the Chief Financial Officer of BancorpSouth, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.