EXHIBIT 99.1 NEWS RELEASE [BANCORPSOUTH LOGO] CONTACT: L. Nash Allen, Jr. Gary C. Bonds Treasurer and Chief Financial Senior Vice President and Officer Controller 662/680-2330 662/680-2332 BANCORPSOUTH, INC. ANNOUNCES FINANCIAL RESULTS FOR THE THIRD QUARTER OF 2005 REPORTS SOLID GROWTH IN LOANS, DEPOSITS AND NET INTEREST REVENUE DESPITE KATRINA TUPELO, Miss., October 19, 2005 /PRNewswire-FirstCall via COMTEX/ -- BancorpSouth, Inc. (NYSE: BXS) today announced financial results for the third quarter and nine-months ended September 30, 2005. Highlights of the third quarter of 2005 included: - An 8.9 percent expansion in loans and leases, net of unearned interest, at the end of the third quarter of 2005 compared with the end of the third quarter of 2004. - Continued strong growth in demand deposits, which increased 13.7 percent at the end of the third quarter of 2005 from the end of the third quarter last year. - Growth in net interest revenue, which, on a comparable-quarter basis, increased 6.6% for the third quarter of 2005, 4.8% for the second quarter of 2005 and 4.4% for the first quarter of 2005. - The signing of a definitive agreement to acquire American State Bank Corporation, headquartered in Jonesboro, Arkansas, expanding BancorpSouth's presence in growing markets in northeast Arkansas. Impact of Hurricane Katrina on Third-Quarter Results For the third quarter, Hurricane Katrina reduced the Company's net income per diluted share by $0.10. Of this amount, $0.08 resulted from a $10.4 million pre-tax increase in the provision for credit losses, primarily as a result of the storm's impact on the Mississippi Gulf Coast region. In addition, $0.02 resulted from the $2.4 million impact of hurricane relief efforts, assistance for affected employees and lost non-interest revenue, a significant portion of which resulted from the Company's waiver of certain fees and service charges for people and businesses in the affected area. - MORE - Box 789 - Tupelo, MS 38802-0789 - (662) 680-2000 BANCORPSOUTH, INC. is a financial holding company. BXS Announces Third-Quarter Results Page 2 October 19, 2005 Including the impact of Hurricane Katrina, net income was $22.9 million, or $0.29 per diluted share, for the third quarter of 2005 compared with $27.6 million, or $0.36 per diluted share, for the third quarter of 2004. Excluding the impact of Hurricane Katrina, net income for the third quarter of 2005 would have been $30.8 million and net income per diluted share for the third quarter of 2005 would have been $0.39. BancorpSouth's third quarter 2005 financial results also reflected the reversal of previous impairment of the Company's mortgage servicing asset ("MSA") totaling $2.8 million, which increased net income by $0.02 per diluted share. For the third quarter of 2004, impairment of the MSA totaled $2.2 million, which decreased net income by $0.02 per diluted share. In addition, our comparable quarter financial results reflect an unusually low effective tax rate for the third quarter of 2004, due to the reversal of merger related income tax contingencies and a state income tax refund. Compared to the effective tax rate for the third quarter of this year, the lower effective tax rate for the third quarter last year resulted in increased net income for the period of $0.02 per diluted share. Excluding the impact of changes in the value of the MSA, Hurricane Katrina and the change in effective tax rate, earnings for the third quarter of 2005 would have been $0.37 per diluted share, compared with $0.36 for the third quarter of 2004. Please see pages 14 and 15 of this press release for reconciliation of GAAP and non-GAAP results. "Given the very substantial impact of Hurricane Katrina on our markets, employees and customers, BancorpSouth performed well during the third quarter," remarked Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth. "We have specifically identified a $0.10 per diluted share impact from the hurricane, related to our provision for credit losses, additional expenses for hurricane relief and assistance and foregone noninterest revenue from people directly affected by the hurricane. We have not been able to quantify the impact of the hurricane, and the resulting dramatic rise in fuel prices and shortages, on our overall business, although we believe there was some impact on our loan volume and on our insurance business." Net Interest Revenue Interest revenue for the third quarter of 2005 grew 13.9 percent, or $17.3 million, to $141.8 million from $124.5 million for the third quarter of 2004 and 4.2 percent from $136.0 million for the second quarter of 2005. Interest expense increased 28.4 percent, or $11.8 million, to $53.3 million for the third quarter of 2005 from $41.5 million for the third quarter last year and 10.4 percent from $48.3 million for the second quarter of 2005. The average taxable equivalent yield on earning assets increased to 5.74 percent for the third quarter of 2005 from 5.17 percent for the third quarter of 2004 and 5.63 percent for the second quarter of 2005. The average rate paid on interest bearing liabilities was 2.54 percent for the third quarter of 2005, compared with 1.99 percent for the third quarter of 2004 and 2.34 percent for the second quarter of 2005. - MORE - BXS Announces Third-Quarter Results Page 3 October 19, 2005 Net interest revenue increased 6.6 percent to $88.4 million for the third quarter of 2005 from $83.0 million for the third quarter of 2004 and 0.8 percent from $87.7 million for the second quarter of 2005. Net interest margin was 3.61 percent for the third quarter of 2005 compared with 3.48 percent for the third quarter of 2004 and 3.66 percent for the second quarter of 2005. "We are pleased to have produced a second consecutive quarter of accelerated growth in net interest revenue," said Patterson. "As in the first half of 2005, this growth reflects our efforts to optimize our asset/liability mix, primarily by funding significant loan volume through lower cost demand deposits and maturing lower rate investments. The expansion of our net interest margin through this strategy from the third quarter last year demonstrates that rising interest rates have enhanced our options for managing interest-rate risk. The slight decline in net interest margin from the second quarter of 2005 is also evidence of the margin pressure inherent in being moderately liability sensitive in a rising interest rate environment, a position consistent with our focus on the retail and small to mid sized business markets. We will continue to manage our asset/liability structure to achieve long-term growth in net interest revenue, while minimizing the impact of interest rate volatility." Deposit and Loan Activity Total assets at September 30, 2005, increased 4.3 percent to $11.1 billion from $10.6 billion at September 30, 2004. Total deposits grew 4.3 percent to $9.2 billion at September 30, 2005, from $8.8 billion at September 30, 2004. Loans and leases, net of unearned interest, increased 8.9 percent to $7.1 billion at September 30, 2005, from $6.5 billion at September 30, 2004. Patterson continued, "We produced solid loan growth for the third quarter, the sixth consecutive quarterly increase, although the rate of growth reflected rising interest rates and increased concern about the strength of the economy in the face Hurricanes Katrina and Rita and surging energy costs. We have continued to generate the majority of our loan growth in faster growing urban areas within our established markets, while also benefiting from our December 2004 acquisitions that built our presence in Brentwood, Tennessee, and Baton Rouge, Louisiana. Our less urban markets have continued to serve as critical sources of lower cost funds, accounting for a substantial portion of the 22.3 percent growth in noninterest bearing demand deposits at the end of the third quarter of 2005 from the same time in 2004, as well as the 9.4% increase in interest bearing demand deposits. Total time deposits fell 3.5 percent at the end of the third quarter of 2005 from the end of the third quarter of 2004, reflecting our strategy of funding loan growth through lower cost demand deposits and maturing investments rather than higher cost liabilities." Provision for Credit Losses and Allowance for Credit Losses The provision for credit losses for the third quarter of 2005 increased to $14.7 million from $3.5 million for the third quarter of 2004 and $3.0 million for the second quarter of 2005. As noted earlier, $10.4 million of the third quarter of 2005 provision related to the impact of Hurricane Katrina. Annualized net charge-offs were 0.27 percent of average loans and leases for the third quarter of 2005 compared with 0.25 percent for the third quarter of 2004 and 0.26 percent for the second quarter of 2005. - MORE - BXS Announces Third-Quarter Results Page 4 October 19, 2005 Non-performing loans and leases fell 34.9 percent to $23.9 million, or 0.34 percent of loans and leases, at September 30, 2005, from $36.7 million, or 0.56 percent of loans and leases, at September 30, 2004, while increasing 0.6 percent from $23.7 million, or 0.34 percent of loans and leases, at June 30, 2005. The allowance for credit losses increased to 1.43 percent of loans and leases at September 30, 2005, from 1.38 percent of loans and leases at September 30, 2004 and 1.29 percent of loans and leases at June 30, 2005. Patterson added, "Although the impact of Hurricane Katrina on our third quarter results is somewhat less than projected in our October 3rd press release, $0.10 per diluted share versus $0.115 per diluted share, it is important to note that we will continue to assess the impact of the hurricane on our operations and on our customers. In addition, because of extending customer loan payment dates in the wake of the hurricane as part of our hurricane relief efforts, none of the loans associated with the hurricane-related increase in our provision of credit losses are included in non-performing loans and leases at the end of the third quarter. The aggregate impact of the storm on our financial condition and results of operations may not be known for some time and must be measured by the extent of the damage to our properties, the extent of damage to the properties of our customers, including property pledged to the bank as collateral, uncertainty regarding the final settlement of insurance claims, the impact of government and other forms of assistance, and the uncertainty regarding the expected rate of economic recovery in the region affected by Hurricane Katrina." Noninterest Revenue Noninterest revenue increased 13.8 percent to $48.2 million for the third quarter of 2005 compared with $42.3 million for the third quarter of 2004, primarily due, as discussed above, to the positive $2.8 million impact from the recovery of a previously recorded impairment of the MSA for the third quarter of 2005 compared with the negative $2.2 million impact from impairment to the MSA for the third quarter of 2004. Excluding these items, noninterest revenue increased 1.9 percent for the third quarter of 2005 from the third quarter of 2004. Patterson commented, "We believe the impact of Hurricane Katrina is primarily responsible for the reduced growth in noninterest revenue, excluding MSA changes, for the third quarter, which is significantly below the growth in noninterest revenues, excluding MSA changes, for the first nine months of 2005 compared with the same period in 2004. In addition, we experienced a slowing in our overall insurance business in the last month of the quarter, especially in the hurricane affected areas." Noninterest Expense Noninterest expense increased 5.3 percent to $89.5 million for the third quarter of 2005 from $85.0 million for the third quarter of 2004 and declined 1.2 percent from $90.6 million for the second quarter of 2005. The comparable-quarter growth in noninterest expense for the third quarter primarily reflected the additional salaries and employee benefits expense from operating the Brentwood, Tennessee, and Baton Rouge, Louisiana, banks that were acquired in December - MORE - BXS Announces Third-Quarter Results Page 5 October 19, 2005 2004, increased occupancy costs related to the opening of new offices and expenses discussed above related to Hurricane Katrina. Capital Management BancorpSouth repurchased 97,400 shares of its common stock during the third quarter of 2005 under a new stock repurchase plan authorized in April 2005 for the repurchase of up to 3 million shares. Combined with the shares repurchased under earlier plans, BancorpSouth had repurchased approximately 10.7 million shares of its common stock as of September 30, 2005, or approximately 13 percent of the shares outstanding when the original share repurchase program was initiated in 2001. BancorpSouth will continue to evaluate additional share repurchases under the April 2005 plan, which authorizes these repurchases during a two-year period expiring April 30, 2007. Summary Patterson concluded, "In the quarters ahead, we have little doubt that our results will continue to be affected because of the devastation wrought by Hurricane Katrina to one of our strongest markets. However, we are equally optimistic the fundamental strengths that have supported the successful growth of our Company - our strong financial position, high credit quality, conservative lending and investment strategies, and the deep involvement of our veteran employees in their local communities - will now support our integral involvement in the recovery and renewal of the Gulf Coast. Because these fundamental strengths remain the hallmark characteristics of BancorpSouth, we remain confident that Hurricane Katrina, despite its short-term impact, has not significantly affected our ability to produce long-term profitable growth and increased shareholder value. Furthermore, the Gulf Coast itself has the potential for long-term positive economic growth as reinvestment and community development are expected to be strong stimuli." Conference Call BancorpSouth will conduct a conference call to discuss its third quarter results today, October 19, 2005, 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 may include, without limitation, statements relating to interest rate volatility, the impact of Hurricane - MORE - BXS Announces Third-Quarter Results Page 6 October 19, 2005 Katrina, adjusted earnings, the ability of BancorpSouth to obtain additional reliable information in areas affected by Hurricane Katrina, the amount and timing of general aid to areas affected by Hurricane Katrina, the final settlement of insurance claims in areas affected by Hurricane Katrina, noninterest revenue, asset/liability mix, loan demand, loan quality, loan volume, loan and deposit growth, insurance business, allowance for credit losses, net interest revenue, the economic and operating environment, common stock repurchase plan, long-term growth prospects and future growth and profitability. 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 due to a variety of factors. These factors may include, but are not limited to, the rate of economic recovery in the region affected by Hurricane Katrina, changes in economic conditions and government fiscal and monetary policies, fluctuations in prevailing interest rates and the ability of BancorpSouth to manage its assets and liabilities to limit exposure to changing interest rates, the ability of BancorpSouth to increase noninterest revenue and expand noninterest revenue business, the ability of BancorpSouth to fund growth with lower cost liabilities, the ability of BancorpSouth to maintain credit quality, the ability of BancorpSouth to effectively integrate acquisitions, changes in laws and regulations affecting financial service companies in general, possible adverse rulings, judgments, settlements and other outcomes of pending litigation, 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, the ability of BancorpSouth to diversify revenue, geographic concentration of BancorpSouth's assets, availability of and costs associated with obtaining adequate and timely sources of liquidity, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to repurchase its common stock on favorable terms, the ability of BancorpSouth to leverage opportunities, the ability of BancorpSouth to identify and close potential acquisitions, the ability of BancorpSouth to expand geographically and enter fast-growing markets, changes in consumer preferences, other factors generally understood to affect the financial results of financial services companies, and other factors described from time to time in BancorpSouth's filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made. BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi with approximately $11.1 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 250 commercial banking, insurance, trust and broker/dealer locations in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Texas. - MORE - BANCORPSOUTH, INC. SELECTED FINANCIAL DATA Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------- 2005 2004 2005 2004 ------------ ----------- ----------- ----------- (Dollars in thousands, except per share amounts) EARNINGS SUMMARY: Net interest revenue $ 88,441 $ 82,958 $ 263,288 $ 250,124 Provision for credit losses 14,725 3,530 22,492 12,381 Noninterest revenue 48,163 42,327 145,105 139,784 Noninterest expense 89,513 84,980 269,777 255,016 ------------ ----------- ----------- ----------- Income before income taxes 32,366 36,775 116,124 122,511 Income tax provision 9,507 9,187 35,730 36,484 ------------ ----------- ----------- ----------- Net income $ 22,859 $ 27,588 $ 80,394 $ 86,027 ============ =========== =========== =========== Earning per share: Basic $ 0.29 $ 0.36 $ 1.03 $ 1.12 ============ =========== =========== =========== Diluted $ 0.29 $ 0.36 $ 1.02 $ 1.11 ============ =========== =========== =========== BALANCE SHEET DATA AT SEPTEMBER 30: Total assets $11,065,258 $10,608,150 Total earning assets 10,093,364 9,767,438 Loans and leases, net of unearned interest 7,091,063 6,512,969 Allowance for credit losses 101,067 90,100 Total deposits 9,221,267 8,843,239 Common shareholders' equity 940,878 875,142 Book value per share 12.02 11.44 AVERAGE BALANCE SHEET DATA: Total assets $ 10,892,408 $10,582,191 $10,853,207 $10,550,174 Total earning assets 9,964,477 9,751,609 9,925,937 9,752,694 Loans and leases, net of unearned interest 7,070,963 6,460,163 6,979,161 6,340,868 Total deposits 9,045,611 8,825,726 9,034,266 8,804,805 Common shareholders' equity 934,915 859,514 926,098 871,192 NON-PERFORMING ASSETS AT SEPTEMBER 30: Non-accrual loans and leases $ 8,103 $ 13,843 Loans and leases 90+ days past due 13,539 20,675 Restructured loans and leases 2,240 2,164 Other real estate owned 15,357 19,413 Net charge-offs as a percentage of average loans (annualized) 0.27% 0.25% 0.25% 0.30% PERFORMANCE RATIOS (ANNUALIZED) Return on average assets 0.83% 1.04% 0.99% 1.09% Return on common equity 9.70% 12.77% 11.61% 13.19% Net interest margin 3.61% 3.48% 3.64% 3.52% Average shares outstanding - basic 78,223,549 76,582,689 78,216,092 77,104,518 Average shares outstanding - diluted 78,570,139 76,978,834 78,559,901 77,515,403 BANCORPSOUTH, INC. CONSOLIDATED BALANCE SHEET (UNAUDITED) September 30, -------------------------- % 2005 2004 Change ------------------------------------ (In thousands) Assets Cash and due from banks $ 370,403 $ 304,389 21.69% Interest bearing deposits with other banks 15,431 35,090 (56.02%) Held-to-maturity securities, at amortized cost 1,255,874 1,384,061 (9.26%) Available-for-sale securities, at fair value 1,455,856 1,758,945 (17.23%) Trading securities, at fair value 1,983 - N/A Federal funds sold and securities purchased under agreement to resell 194,186 7,180 N/A Loans and leases 7,122,212 6,543,720 8.84% Less: Unearned interest (31,149) (30,751) 1.29% Allowance for credit losses (101,067) (90,100) 12.17% ------------ ------------ Net loans and leases 6,989,996 6,422,869 8.83% Loans held for sale 78,970 69,194 14.13% Premises and equipment, net 240,141 224,685 6.88% Accrued interest receivable 71,046 67,849 4.71% Goodwill 109,239 64,164 70.25% Other assets 282,133 269,724 4.60% ------------ ------------ Total Assets $ 11,065,258 $ 10,608,150 4.31% ============ ============ Liabilities Deposits: Demand: Noninterest bearing $ 1,643,309 $ 1,343,698 22.30% Interest bearing 2,902,527 2,653,386 9.39% Savings 711,909 772,159 (7.80%) Other time 3,963,522 4,073,996 (2.71%) ------------ ------------ Total deposits 9,221,267 8,843,239 4.27% Federal funds purchased and securities sold under agreement to repurchase 499,552 496,647 0.58% Accrued interest payable 25,821 19,330 33.58% Junior subordinated debt securities 138,145 128,866 7.20% Long-term debt 137,594 137,500 0.07% Other liabilities 102,001 107,426 (5.05%) ------------ ------------ Total Liabilities 10,124,380 9,733,008 4.02% Shareholders' Equity Common stock 195,685 191,278 2.30% Capital surplus 84,456 45,440 85.86% Accumulated other comprehensive income (loss) (10,313) 6,724 N/A Retained earnings 671,050 631,700 6.23% ------------ ------------ Total Shareholders' Equity 940,878 875,142 7.51% ------------ ------------ Total Liabilities & Shareholders' Equity $ 11,065,258 $ 10,608,150 4.31% ============ ============ BANCORPSOUTH, INC. Consolidated Condensed Statements of Income (dollars in thousands, except per share data) (Unaudited) Quarter Ended Year To Date -------------------------------------------------- ---------------------- Sep 2005 Jun 2005 Mar 2005 Dec 2004 Sep 2004 Sep 2005 Sep 2004 --------- --------- --------- -------- -------- ---------- --------- INTEREST REVENUE: Loans and leases $ 115,800 $ 109,874 $ 103,805 $ 96,666 $ 93,759 $ 329,479 $ 277,367 Deposits with other banks 166 139 111 135 102 417 518 Federal funds sold and securities purchased under agreement to resell 1,061 197 391 272 111 1,649 922 Held-to-maturity securities: Taxable 9,160 9,452 9,766 10,812 12,020 28,377 34,922 Tax-exempt 1,667 1,557 1,598 1,621 1,693 4,822 5,183 Available-for-sale securities: Taxable 11,761 12,765 13,745 14,516 14,691 38,271 45,688 Tax-exempt 1,481 1,491 1,677 1,584 1,613 4,649 5,022 Loans held for sale 686 571 1,018 649 517 2,275 1,752 --------- --------- --------- -------- -------- ---------- --------- Total interest revenue 141,782 136,046 132,111 126,255 124,506 409,939 371,374 --------- --------- --------- -------- -------- ---------- --------- INTEREST EXPENSE: Deposits 44,790 40,432 37,905 36,103 35,198 123,127 103,031 Fed funds purchased and securities sold under agreement to repurchase 3,692 2,590 2,161 1,726 1,336 8,443 3,499 Other 4,859 5,307 4,916 4,758 5,014 15,081 14,720 --------- --------- --------- -------- -------- ---------- --------- Total interest expense 53,341 48,329 44,982 42,587 41,548 146,651 121,250 --------- --------- --------- -------- -------- ---------- --------- Net interest revenue 88,441 87,717 87,129 83,668 82,958 263,288 250,124 Provision for credit losses 14,725 2,980 4,787 5,104 3,530 22,492 12,381 --------- --------- --------- -------- -------- ---------- --------- Net interest revenue, after provision for credit losses 73,716 84,737 82,342 78,564 79,428 240,796 237,743 --------- --------- --------- -------- -------- ---------- --------- NONINTEREST REVENUE: Mortgage lending 4,207 (2,453) 5,628 2,041 (672) 7,382 9,552 Service charges 15,860 16,411 14,726 15,533 15,965 46,997 46,340 Trust income 2,161 2,004 1,889 2,111 2,059 6,054 5,587 Security gains, net 20 371 70 (1,484) 146 461 822 Insurance commissions 14,830 14,425 15,932 14,282 14,366 45,187 42,056 Other 11,085 12,264 15,674 11,253 10,463 39,024 35,427 --------- --------- --------- -------- -------- ---------- --------- Total noninterest revenue 48,163 43,022 53,919 43,736 42,327 145,105 139,784 --------- --------- --------- -------- -------- ---------- --------- NONINTEREST EXPENSES: Salaries and employee benefits 52,173 52,578 53,240 50,852 49,176 157,992 147,840 Occupancy, net of rental income 6,751 6,841 6,412 6,649 6,264 20,004 18,303 Equipment 5,501 5,637 5,449 5,329 5,390 16,588 16,486 Other 25,088 25,519 24,587 25,098 24,150 75,193 72,387 --------- --------- --------- -------- -------- ---------- --------- Total noninterest expenses 89,513 90,575 89,688 87,928 84,980 269,777 255,016 --------- --------- --------- -------- -------- ---------- --------- Income before income taxes 32,366 37,184 46,573 34,372 36,775 116,124 122,511 Income tax expense 9,507 11,394 14,829 9,778 9,187 35,730 36,484 --------- --------- --------- -------- -------- ---------- --------- Net income $ 22,859 $ 25,790 $ 31,744 $ 24,594 $ 27,588 $ 80,394 $ 86,027 ========= ========= ========= ======== ======== ========== ========= Net income per share: Basic $ 0.29 $ 0.33 $ 0.41 $ 0.32 $ 0.36 $ 1.03 $ 1.12 ========= ========= ========= ======== ======== ========== ========= Diluted $ 0.29 $ 0.33 $ 0.40 $ 0.32 $ 0.36 $ 1.02 $ 1.11 ========= ========= ========= ======== ======== ========== ========= BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2005 ---------------------------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------------ --------- ------ ASSETS Loans, loans held for sale, and leases net of unearned interest $ 7,134,292 $ 117,099 6.51% Held-to-maturity securities: Taxable 1,055,292 9,160 3.44% Tax-exempt 143,832 2,565 7.08% Available-for-sale securities: Taxable 1,371,425 11,761 3.40% Tax-exempt 127,041 2,278 7.12% Short-term investments 132,595 1,228 3.67% ----------- --------- Total interest earning assets and revenue 9,964,477 144,091 5.74% Other assets 1,023,258 Less: allowance for credit losses (95,327) ------------ Total $ 10,892,408 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $ 2,843,192 $ 10,673 1.49% Savings 718,875 1,458 0.80% Other time 3,978,600 32,659 3.26% Short-term borrowings 519,901 3,757 2.87% Junior subordinated debt 138,145 2,781 7.99% Long-term debt 137,716 2,013 5.80% ------------ --------- Total interest bearing liabilities and expense 8,336,429 53,341 2.54% Demand deposits - noninterest bearing 1,504,944 Other liabilities 116,120 ------------ Total liabilities 9,957,493 Shareholders' equity 934,915 ------------ Total $ 10,892,408 ============ --------- Net interest revenue $ 90,750 ========= Net interest margin 3.61% Net interest rate spread 3.20% Interest bearing liabilities to interest earning assets 83.66% Net interest tax equivalent adjustment $ 2,309 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2004 ---------------------------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------------ --------- ------ ASSETS Loans, loans held for sale, and leases net of unearned interest $ 6,509,800 $ 94,804 5.79% Held-to-maturity securities: Taxable 1,301,470 12,020 3.67% Tax-exempt 144,936 2,604 7.15% Available-for-sale securities: Taxable 1,616,975 14,691 3.61% Tax-exempt 145,919 2,482 6.77% Short-term investments 32,509 213 2.61% ------------ --------- Total interest earning assets and revenue 9,751,609 126,814 5.17% Other assets 921,768 Less: allowance for credit losses (91,186) ------------ Total $ 10,582,191 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $ 2,661,627 $ 6,171 0.92% Savings 780,567 1,479 0.75% Other time 4,078,551 27,549 2.69% Short-term borrowings 524,659 1,670 1.27% Junior subordinated debt 128,866 2,626 8.11% Long-term debt 137,614 2,054 5.94% ------------ --------- Total interest bearing liabilities and expense 8,311,884 41,548 1.99% Demand deposits - noninterest bearing 1,304,983 Other liabilities 105,810 ------------ Total liabilities 9,722,677 Shareholders' equity 859,514 ------------ Total $ 10,582,191 ============ --------- Net interest revenue $ 85,266 ========= Net interest margin 3.48% Net interest rate spread 3.18% Interest bearing liabilities to interest earning assets 85.24% Net interest tax equivalent adjustment $ 2,308 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year To Date September 30, 2005 ---------------------------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------------ --------- ------ ASSETS Loans, loans held for sale, and leases net of unearned interest $ 7,049,618 $ 333,488 6.32% Held-to-maturity securities: Taxable 1,073,473 28,378 3.53% Tax-exempt 139,909 7,418 7.09% Available-for-sale securities: Taxable 1,449,220 38,271 3.53% Tax-exempt 132,451 7,153 7.22% Short-term investments 81,266 2,065 3.40% ------------ --------- Total interest earning assets and revenue 9,925,937 416,773 5.61% Other assets 1,020,612 Less: allowance for credit losses (93,342) ------------ Total $ 10,853,207 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $ 2,835,907 $ 27,250 1.28% Savings 744,098 4,516 0.81% Other time 3,988,451 91,361 3.06% Short-term borrowings 500,855 9,164 2.45% Junior subordinated debt 138,145 8,307 8.04% Long-term debt 138,087 6,053 5.86% ------------ --------- Total interest bearing liabilities and expense 8,345,543 146,651 2.35% Demand deposits - noninterest bearing 1,465,810 Other liabilities 115,756 ------------ Total liabilities 9,927,109 Shareholders' equity 926,098 ------------ Total $ 10,853,207 ============ --------- Net interest revenue $ 270,122 ========= Net interest margin 3.64% Net interest rate spread 3.26% Interest bearing liabilities to interest earning assets 84.08% Net interest tax equivalent adjustment $ 6,834 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year To Date September 30, 2004 ---------------------------------- Average Yield/ (Taxable equivalent basis) Balance Interest Rate ------------ --------- ------ ASSETS Loans, loans held for sale, and leases net of unearned interest $ 6,400,120 $ 280,687 5.86% Held-to-maturity securities: Taxable 1,214,775 34,923 3.84% Tax-exempt 147,506 7,972 7.22% Available-for-sale securities: Taxable 1,692,356 45,684 3.61% Tax-exempt 154,596 7,726 6.68% Short-term investments 143,341 1,441 1.34% ------------ --------- Total interest earning assets and revenue 9,752,694 378,433 5.18% Other assets 889,244 Less: allowance for credit losses (91,764) ------------ Total $ 10,550,174 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $ 2,677,259 $ 17,629 0.88% Savings 784,894 4,194 0.71% Other time 4,067,648 81,208 2.67% Short-term borrowings 489,379 4,167 1.14% Junior subordinated debt 128,866 7,877 8.16% Long-term debt 137,949 6,175 5.98% ------------ --------- Total interest bearing liabilities and expense 8,285,995 121,250 1.95% Demand deposits - noninterest bearing 1,275,004 Other liabilities 117,983 ------------ Total liabilities 9,678,982 Shareholders' equity 871,192 ------------ Total $ 10,550,174 ============ --------- Net interest revenue $ 257,183 ========= Net interest margin 3.52% Net interest rate spread 3.23% Interest bearing liabilities to interest earning assets 84.96% Net interest tax equivalent adjustment $ 7,059 BancorpSouth, Inc. Reconciliation of Adjusted Earnings and Adjusted Earnings Per Diluted Share to Earnings and Earnings Per Diluted Share (Unaudited) (In thousands, except per share amounts) Three-Months Ended September 30, --------------------------- 2005 2004 ----------- ----------- Earnings - GAAP basis (a) $ 22,859 $ 27,588 Impact on earnings related to Hurricane Katrina 7,903 - ----------- ----------- Adjusted earnings (b) $ 30,762 $ 27,588 =========== =========== Earnings per diluted share - GAAP basis $ 0.29 $ 0.36 =========== =========== Adjusted earnings per diluted share (b) $ 0.39 $ 0.36 =========== =========== Diluted shares used in computing per share amounts: Earnings per share 78,570,139 76,978,834 Adjusted earnings per share 78,570,139 76,978,834 - ----------- (a) GAAP is the acronym for generally accepted accounting principles. (b) BancorpSouth, Inc. believes its calculation of adjusted earnings per diluted share provides a better measure of the Company's ongoing performance and provides better comparability to prior periods because it excludes the impact on earnings related to Hurricane Katrina. Adjusted earnings per diluted share should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it are significant components in understanding and assessing financial performance. Because adjusted earnings per diluted share is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measure of other companies. BancorpSouth, Inc. Reconciliation of Adjusted Earnings and Adjusted Earnings Per Diluted Share to Earnings and Earnings Per Diluted Share (Unaudited) (In thousands, except per share amounts) Three-Months Ended September 30, ------------------------------ 2005 2004 ------------ ------------ Earnings - GAAP basis (a) $ 22,859 $ 27,588 Mortgage servicing asset expense (recovery), net of tax (1,724) 1,387 Impact on earnings related to Hurricane Katrina, net of tax 7,903 - Impact of effective tax rate change - (1,614) ------------ ------------ Adjusted earnings (b) $ 29,038 $ 27,361 ============ ============ Earnings per diluted share - GAAP basis $ 0.29 $ 0.36 ============ ============ Adjusted earnings per diluted share (b) $ 0.37 $ 0.36 ============ ============ Diluted shares used in computing per share amounts: Earnings per share 78,570,139 76,978,834 Adjusted earnings per share 78,570,139 76,978,834 - -------- (a) GAAP is the acronym for generally accepted accounting principles. (b) BancorpSouth, Inc. believes its calculation of adjusted earnings per diluted share provides a better measure of the Company's ongoing performance and provides better comparability to prior periods because it excludes a volatile non-cash item, the impact on earnings related to Hurricane Katrina and the impact of the effective tax rate change. Adjusted earnings per diluted share should not be considered as a measure of financial performance under accounting principles generally accepted in the United States, and the items excluded from it are significant components in understanding and assessing financial performance. Because adjusted earnings per diluted share is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, it may not be comparable as presented to other similarly titled measures of other companies.