TUPELO, Miss., July 17 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. today announced financial results for the second quarter ended June 30, 2008.
Highlights of the announcement include:
-- Growth of 14.0 percent in earnings per diluted share to $0.49 for the second quarter of 2008 from the second quarter of 2007.
-- Continued solid loan demand reflected in a 5.7 percent increase in loans for the second quarter of 2008 from the second quarter of 2007 and 2.7 percent growth sequentially from the first quarter of 2008.
-- Maintaining the Company's net interest margin at 3.79 percent for the second consecutive quarter, the highest level achieved in over five years.
-- An increase of 3.0 percent in net interest revenue for the second quarter of 2008 from the second quarter of 2007.
-- Strong credit quality, despite some deterioration in nonperforming loans and net charge-offs. Nonperforming loans at the end of the second quarter of 2008 totaled 0.49 percent of net loans and annualized net charge-offs for the second quarter of 2008 were 0.30 percent of average loans.
-- A 21.6 percent increase in noninterest revenue over the second quarter of 2007 to a record $73.3 million, including growth in insurance commission revenue of 21.5 percent compared to the second quarter of 2007, the second consecutive quarter of growth in insurance commission revenue in excess of 20 percent.
-- The declaration of a 4.8 percent increase in the Company's quarterly cash dividend to $0.22 per share, making 2008 the 25th consecutive year in which the dividend has been increased.
-- An 8.2 percent increase in shareholders' equity and a 1.4 percent increase in total assets at the end of the second quarter of 2008 from the end of the second quarter of 2007, driving BancorpSouth's capital to asset ratio to 9.21 percent from 8.63 percent.
Second Quarter 2008 Summary Results
BancorpSouth's net income for the second quarter of 2008 increased 11.8 percent to $40.1 million from $35.9 million for the second quarter of 2007. Net income per diluted share for the second quarter of 2008 increased 14.0 percent to $0.49 from $0.43 for the second quarter of 2007.
"We are pleased with BancorpSouth's financial performance for the second quarter of 2008," remarked Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth. "At a time when many peers within our markets and across the nation have struggled with growth, credit quality and liquidity issues, BancorpSouth's second quarter results are again differentiated by solid growth in loans, a relatively high net interest margin, growth in net interest revenue, strength in both credit quality and capital and ample sources of liquidity. In addition, our long-term strategy of diversifying our revenue through growth in noninterest revenue continues to achieve outstanding results, contributing to our ongoing progress in improving our operating efficiency.
"BancorpSouth is not immune to the challenges the banking industry has been experiencing, as reflected by the slight deterioration in our measures of credit quality during the second quarter of 2008. While the movement in these measures was more substantial compared to the unusual and unsustainably strong levels at the end of the second quarter of 2007, they remained well within the range of our historical experience.
"We attribute the continuing strength of our credit quality to our conservative lending and credit philosophy and the disciplined consistency with which we have implemented our policies throughout the economic cycle. In addition, because our technology infrastructure enhances centralized credit monitoring and control, we have purposefully decentralized much lending and other decision making authority to our local bank managers, improving the quality of the customer experience and our ability to understand the circumstances of each loan customer. As just one indication of the strong relationships created by this combination of sophisticated technology and high quality customer service, BancorpSouth was recently ranked 'Highest Customer Satisfaction with Retail Banking in the Southeast Region' by J.D. Power and Associates in its 2008 Retail Banking Satisfaction Study(SM)."
Net Interest Revenue
Interest revenue for the second quarter of 2008 decreased 13.2 percent, or $26.8 million, to $175.8 million from $202.6 million for the second quarter of 2007 and decreased 7.7 percent from $190.5 million for the first quarter of 2008. Interest expense decreased 31.3 percent, or $30.0 million, to $65.9 million for the second quarter of 2008 from $95.9 million for the second quarter of 2007 and decreased 18.0 percent from $80.4 million for the first quarter of 2008.
The average taxable equivalent yield on earning assets decreased to 6.01 percent for the second quarter of 2008 from 6.94 percent for the second quarter of 2007 and from 6.50 percent for the first quarter of 2008. The average rate paid on interest bearing liabilities was 2.64 percent for the second quarter of 2008, down from 3.86 percent for the second quarter of 2007 and 3.19 percent for the first quarter of 2008.
Net interest revenue increased 3.0 percent to $109.8 million for the second quarter of 2008 from $106.7 million for the second quarter of 2007 and decreased 0.2 percent from $110.1 million for the first quarter of 2008. Net interest margin was 3.79 percent for the second quarter of 2008, an increase from 3.69 percent for the second quarter of 2007 and even with 3.79 percent for the first quarter of 2008.
Patterson said, "We produced a comparable quarter increase in net interest revenue through the continuation of asset/liability management strategies that, in a declining interest rate environment, produced a larger decrease in both average interest rate paid and interest expense than in average taxable equivalent yield and interest revenue. A primary focus of these strategies has been to lower our interest expense by funding loan growth with the proceeds from maturing lower yielding investment securities, short-term borrowings from the Federal Home Loan Bank (FHLB) and the Federal Reserve and growth in demand deposits, which increased 3.2 percent at the end of the second quarter of 2008 from the same quarter in 2007.
"We have also lowered our interest expense by reducing our other time deposits over this period by 16.9 percent through more conservative pricing of public fund time deposits. This strategy has not affected our firm commitment to serving our core deposit customers, which contributed to a 1.8 percent increase in savings deposits at the end of the second quarter of 2008 from the end of the second quarter of 2007. In addition, we continue to have ample funding flexibility through our ability to price public fund time deposits more aggressively in the future and through further significant short-term borrowing capacity with the FHLB. As a result of our asset/liability management efforts, we maintained our net interest margin at 3.79 percent for each of the first and the second quarters of 2008, the highest level achieved since the first quarter of 2003."
Deposit and Loan Activity
Total assets at June 30, 2008 increased 1.4 percent to $13.4 billion from $13.2 billion at June 30, 2007. Total deposits declined 6.0 percent to $9.8 billion at June 30, 2008 from $10.4 billion at June 30, 2007. Loans and leases, net of unearned income, increased 5.7 percent to $9.5 billion at June 30, 2008 from $9.0 billion at June 30, 2007.
"We are encouraged by the strengthened loan demand indicated by our second quarter results," Patterson added. "While we produced moderate organic growth in loans and leases during the 12 month period ending June 30, 2008, a disproportionate amount of that growth occurred in the latest quarter, during which our loans increased at a double-digit annualized growth rate. As discussed above, the decline in total deposits was driven by a strategic decision to reduce interest expense through more competitive pricing of other time deposits, which more than offset growth in both demand deposits and savings deposits."
Provision for Credit Losses and Allowance for Credit Losses
For the second quarter of 2008, the provision for credit losses was $11.2 million compared with $7.8 million for the second quarter of 2007 and $10.8 million for the first quarter of 2008. Annualized net charge-offs were 0.30 percent of average loans and leases for the second quarter of 2008 compared with 0.14 percent for the second quarter of 2007 and 0.29 percent for the first quarter of 2008.
Non-performing loans and leases increased to $46.0 million, or 0.49 percent of loans and leases, at June 30, 2008 from $23.9 million, or 0.27 percent of loans and leases, at June 30, 2007 and from $38.7 million, or 0.42 percent of loans and leases, at March 31, 2008. The allowance for credit losses was 1.30 percent of loans and leases at June 30, 2008 compared with 1.22 percent of loans and leases at June 30, 2007 and 1.29 percent of loans and leases at March 31, 2008.
Patterson commented, "BancorpSouth's strong credit quality in a challenging economic environment is a continuing tribute to the performance of our loan review and credit personnel. It further reflects a conservative credit culture throughout the Company. As a result of this culture, at June 30, 2008 we had only nominal exposure to the credit issues affecting subprime residential mortgages and limited exposure to commercial real estate projects in the non-owner occupied residential market. Our current credit quality also reflects our steps to tighten real estate lending standards beginning in late 2006. While we expect that continuing weakness in the economic environment would affect the strength of our credit quality, we are well reserved against expected losses and intend to move decisively to address any emerging credit issues. We remain confident that the strength of BancorpSouth's credit quality will continue to differentiate our performance from our peers."
Noninterest Revenue
For the second quarter of 2008, noninterest revenue increased 21.6 percent to $73.3 million from $60.2 million for the second quarter of 2007 and increased 10.6 percent from $66.2 million for the first quarter of 2008. This growth reflected a 21.5 percent increase in insurance commission revenue for the second quarter of 2008 from the second quarter of 2007 and a 19.7 percent increase in credit and debit card fee revenue over the same period. In addition, the value of the mortgage servicing asset increased for the second quarter of 2008 by $4.9 million compared with an increase of $1.2 million for the second quarter of 2007, and BancorpSouth had a $2.6 million gain during the second quarter of 2008 from the sale of shares of MasterCard, Inc. common stock.
Patterson said, "We are very pleased with our second consecutive quarter of growth in insurance commission revenue in excess of 20 percent, which follows our third quarter 2007 acquisition of the Insurance Network of Jonesboro, Arkansas, and the acquisitions in the first quarter of 2008 of the Joe Max Green/Insurance Concepts Insurance Agency headquartered in Nacogdoches, Texas, and an insurance broker now operating as SMI Group in Springfield, Missouri. This expanding business, along with growth in our credit and debit card business and our mortgage origination business, contributed substantially to the increase in our noninterest revenue to 66.7 percent of net interest revenue for the second quarter of 2008, compared with 56.5 percent for the second quarter of 2007 and 60.2 percent for the first quarter of 2008.
"The strength of our noninterest revenue stream during a challenging period for the industry's traditional spread dependent businesses reflects our long-term strategic commitment to the expansion of our noninterest revenue products and services. In addition to mitigating the impact of interest rate volatility, the growth in these products and services has greatly enhanced our ability to provide superior customer service, enabling us to leverage our strong relationships with our existing customer base and bring new customers to BancorpSouth. We expect our ability to serve our customers' comprehensive financial needs will continue to differentiate BancorpSouth in our core markets, and we are confident of our prospects for growing these businesses further."
Noninterest Expense
Noninterest expense increased 5.8 percent to $112.1 million for the second quarter of 2008 from $105.9 million for the second quarter of 2007 and decreased 1.2 percent from $113.5 million for the first quarter of 2008. The comparable-quarter increase in noninterest expense is primarily attributable to the operation of the insurance agencies acquired in 2007 and 2008. In addition, BancorpSouth also incurred salaries, employee benefits and occupancy expense associated with the opening of new loan production offices and full-service branch bank offices during 2007 and the first six months of 2008.
Capital Management
At its April 23rd meeting, BancorpSouth's Board of Directors approved an increase in the Company's quarterly cash dividend to $0.22 per share from $0.21 per share, marking the 25th consecutive year in which the dividend has been increased.
BancorpSouth did not repurchase shares of its common stock during the second quarter of 2008. The Company will continue to evaluate additional share repurchase opportunities under a stock repurchase plan for the repurchase of up to three million shares that commenced on May 1, 2007 and that expires on April 30, 2009. BancorpSouth has repurchased approximately 12.0 million shares of its common stock since its original share repurchase program was initiated in 2001.
The expansion of BancorpSouth's capital to asset ratio to 9.21 percent at the end of the second quarter of 2008 from 8.63 percent at the end of the second quarter of 2007 reflects the Company's commitment to maintaining a sound and adequate capital position. This position also enhances BancorpSouth's ability to respond to opportunities of strategic value that are consistent with achieving the Company's long-term growth objectives. BancorpSouth's tangible equity to asset ratio increased to 7.12 percent at June 30, 2008 from 6.68 percent at June 30, 2007.
Summary
Patterson concluded, "We believe BancorpSouth has performed well through an extended period of economic uncertainty because our business model has been designed to accommodate the inevitability of economic cycles. It has been proven and refined through the economic cycles of the past 25 years. We expect BancorpSouth - as well as the entire financial services industry - will continue to be tested in the quarters ahead. As we again demonstrated with our second quarter operating and financial results, BancorpSouth remains well positioned to outperform our peer group through this phase of the current economic cycle and to gain additional market share, even as we steadily implement our long-term growth strategies. We are confident that neither the potential of these strategies to produce long-term growth in earnings and shareholder value nor the long-term market opportunities before us have been diminished."
Conference Call
BancorpSouth will conduct a conference call to discuss its second quarter 2008 results tomorrow, July 18, 2008, at 10:00 a.m. (Central Time). Investors may listen via the Internet by accessing BancorpSouth's website at http://www.bancorpsouth.com/ . A replay of the conference call will be available at BancorpSouth's website for at least two weeks following the call.
Forward-Looking Statements
Certain statements contained in this news release may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "estimate," "expect," "may," "might," "will," "would," "could" or "intend." These forward-looking statements include, without limitation, statements relating to the pricing of public fund time deposits, the impact of the economic environment on our credit quality, our ability to serve our customers' financial needs comprehensively, our prospects for growing our businesses, our performance during a period of economic uncertainty and repurchases under our common stock repurchase plan.
We caution you not to place undue reliance on the forward-looking statements contained in this news release in that actual results could differ materially from those indicated in such forward-looking statements because of a variety of factors. These factors may include, but are not limited to, changes in economic conditions and government fiscal and monetary policies, fluctuations in prevailing interest rates and the ability of BancorpSouth to manage its assets and liabilities to limit exposure to changing interest rates, the ability of BancorpSouth to increase noninterest revenue and expand noninterest revenue business, the ability of BancorpSouth to maintain credit quality, changes in laws and regulations affecting financial service companies in general, the ability of BancorpSouth to compete with other financial services companies, the ability of BancorpSouth to provide and market competitive services and products, changes in BancorpSouth's operating or expansion strategy, BancorpSouth's business model, geographic concentration of BancorpSouth's assets, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to repurchase its common stock on favorable terms, the ability of BancorpSouth to identify, close and effectively integrate potential acquisitions, the ability of BancorpSouth to expand geographically and enter growing markets, changes in consumer preferences, other factors generally understood to affect the financial results of financial services companies, and other factors described from time to time in
BancorpSouth's filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi, with approximately $13.4 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 290 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. BancorpSouth Bank also operates an insurance location in Illinois.
BancorpSouth, Inc. Selected Financial Data Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $109,843 $106,658 $219,913 $205,326 Provision for credit losses 11,237 7,843 22,048 9,198 Noninterest revenue 73,266 60,232 139,497 118,591 Noninterest expense 112,064 105,928 225,534 211,538 Income before income taxes 59,808 53,119 111,828 103,181 Income tax provision 19,683 17,238 36,558 33,723 Net income $40,125 $35,881 $75,270 $69,458 Earning per share: Basic $0.49 $0.44 $0.91 $0.86 Diluted $0.49 $0.43 $0.91 $0.86 Balance sheet data at June 30: Total assets $13,399,151 $13,209,093 Total earning assets 12,139,547 12,012,304 Loans and leases, net of unearned income 9,481,380 8,966,280 Allowance for credit losses 123,478 109,328 Total deposits 9,806,553 10,436,920 Common shareholders' equity 1,233,776 1,140,280 Book value per share 14.98 13.88 Average balance sheet data: Total assets $13,116,139 $12,955,586 $13,108,332 $12,627,776 Total earning assets 11,957,174 11,850,069 11,952,466 11,539,853 Loans and leases, net of unearned interest 9,369,676 8,875,403 9,291,485 8,514,807 Total deposits 9,871,935 10,471,566 9,981,139 10,255,177 Common shareholders' equity 1,226,570 1,122,820 1,213,013 1,089,428 Non-performing assets at June 30: Non-accrual loans and leases $17,710 $9,135 Loans and leases 90+ days past due 25,719 13,706 Restructured loans and leases 2,620 1,066 Other real estate owned 28,942 11,277 Net charge-offs as a percentage of average loans (annualized) 0.30% 0.14% 0.30% 0.11% Performance ratios (annualized): Return on average assets 1.23% 1.11% 1.15% 1.11% Return on common equity 13.16% 12.82% 12.48% 12.86% Net interest margin 3.79% 3.69% 3.79% 3.68% Average shares outstanding - basic 82,369,159 82,169,901 82,350,038 80,813,169 Average shares outstanding - diluted 82,565,722 82,534,762 82,549,761 81,213,583 BancorpSouth, Inc. Consolidated Balance Sheet (Unaudited) June 30, % 2008 2007 Change (Dollars in thousands) Assets Cash and due from banks $307,038 $301,899 1.70% Interest bearing deposits with other banks 15,531 13,143 18.17% Held-to-maturity securities, at amortized cost 1,447,806 1,785,468 (18.91%) Available-for-sale securities, at fair value 1,023,065 1,138,890 (10.17%) Federal funds sold and securities purchased under agreement to resell - 22,895 (100.00%) Loans and leases 9,529,978 9,012,362 5.74% Less: Unearned income 48,598 46,082 5.46% Allowance for credit losses 123,478 109,328 12.94% Net loans and leases 9,357,902 8,856,952 5.66% Loans held for sale 171,765 85,627 100.60% Premises and equipment, net 334,869 308,248 8.64% Accrued interest receivable 83,739 95,577 (12.39%) Goodwill 270,807 249,426 8.57% Other assets 386,629 350,968 10.16% Total Assets $13,399,151 $13,209,093 1.44% Liabilities Deposits: Demand: Noninterest bearing $1,737,356 $1,756,652 (1.10%) Interest bearing 3,364,873 3,185,461 5.63% Savings 740,207 727,106 1.80% Other time 3,964,117 4,767,701 (16.85%) Total deposits 9,806,553 10,436,920 (6.04%) Federal funds purchased and securities sold under agreement to repurchase 1,093,805 746,182 46.59% Short-term Federal Home Loan Bank borrowings and other short-term borrowings 643,427 400,000 60.86% Accrued interest payable 29,134 44,260 (34.18%) Junior subordinated debt securities 160,312 163,405 (1.89%) Long-term Federal Home Loan Bank borrowings 288,900 145,146 99.04% Other liabilities 143,244 132,900 7.78% Total Liabilities 12,165,375 12,068,813 0.80% Shareholders' Equity Common stock 205,945 205,426 0.25% Capital surplus 201,612 190,043 6.09% Accumulated other comprehensive income (loss) (9,232) (26,270) (64.86%) Retained earnings 835,451 771,081 8.35% Total Shareholders' Equity 1,233,776 1,140,280 8.20% Total Liabilities & Shareholders' Equity $13,399,151 $13,209,093 1.44% BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Quarter Ended Jun-08 Mar-08 Dec-07 Sep-07 Jun-07 INTEREST REVENUE: Loans and leases $147,289 $159,184 $171,068 $174,787 $169,717 Deposits with other banks 193 208 274 316 268 Federal funds sold and securities purchased under agreement to resell - 67 311 232 633 Held-to-maturity securities: Taxable 15,044 15,947 16,890 17,585 16,962 Tax-exempt 2,025 2,075 2,120 2,077 2,044 Available-for-sale securities: Taxable 8,531 9,564 10,227 10,554 10,839 Tax-exempt 1,260 1,204 941 960 1,010 Loans held for sale 1,420 2,210 1,751 1,454 1,082 Total interest revenue 175,762 190,459 203,582 207,965 202,555 INTEREST EXPENSE: Interest bearing demand deposits 12,938 17,257 19,765 22,189 21,992 Savings deposits 1,291 1,543 1,934 2,503 2,481 Other time deposits 39,778 46,860 52,551 55,728 55,459 Federal funds purchased and securities sold under agreement to repurchase 3,321 5,195 8,259 9,151 9,283 FHLB Borrowings 5,359 6,285 8,107 7,130 3,332 Other 3,232 3,249 3,309 3,348 3,350 Total interest expense 65,919 80,389 93,925 100,049 95,897 Net interest revenue 109,843 110,070 109,657 107,916 106,658 Provision for credit losses 11,237 10,811 7,771 5,727 7,843 Net interest revenue, after provision for credit losses 98,606 99,259 101,886 102,189 98,815 NONINTEREST REVENUE: Mortgage lending 9,507 1,543 (1,149) 100 5,484 Credit card, debit card and merchant fees 8,846 7,976 7,904 7,667 7,391 Service charges 17,093 15,839 18,125 17,281 17,677 Trust income 2,261 2,234 2,996 2,487 2,457 Security gains, net 199 78 97 7 10 Insurance commissions 21,462 24,668 16,181 17,542 17,665 Other 13,898 13,893 11,160 12,810 9,548 Total noninterest revenue 73,266 66,231 55,314 57,894 60,232 NONINTEREST EXPENSES: Salaries and employee benefits 68,121 70,175 64,594 63,269 63,851 Occupancy, net of rental income 9,716 9,483 8,967 8,959 8,709 Equipment 6,245 6,433 6,078 6,057 6,053 Other 27,982 27,379 30,530 28,066 27,315 Total noninterest expenses 112,064 113,470 110,169 106,351 105,928 Income before income taxes 59,808 52,020 47,031 53,732 53,119 Income tax expense 19,683 16,875 14,803 17,475 17,238 Net income $40,125 $35,145 $32,228 $36,257 $35,881 Net income per share: Basic $0.49 $0.43 $0.39 $0.44 $0.44 Diluted $0.49 $0.43 $0.39 $0.44 $0.43 Year To Date Jun-08 Jun-07 INTEREST REVENUE: Loans and leases $306,473 $322,958 Deposits with other banks 401 554 Federal funds sold and securities purchased under agreement to resell 67 3,144 Held-to-maturity securities: Taxable 30,991 33,667 Tax-exempt 4,100 4,059 Available-for-sale securities: Taxable 18,095 20,431 Tax-exempt 2,464 2,125 Loans held for sale 3,630 2,757 Total interest revenue 366,221 389,695 INTEREST EXPENSE: Interest bearing demand deposits 30,195 41,879 Savings deposits 2,834 4,864 Other time deposits 86,638 107,444 Federal funds purchased and securities sold under agreement to repurchase 8,516 17,107 FHLB Borrowings 11,644 6,633 Other 6,481 6,442 Total interest expense 146,308 184,369 Net interest revenue 219,913 205,326 Provision for credit losses 22,048 9,198 Net interest revenue, after provision for credit losses 197,865 196,128 NONINTEREST REVENUE: Mortgage lending 11,050 7,263 Credit card, debit card and merchant fees 16,822 14,265 Service charges 32,932 33,073 Trust income 4,495 4,671 Security gains, net 277 17 Insurance commissions 46,130 37,459 Other 27,791 21,843 Total noninterest revenue 139,497 118,591 NONINTEREST EXPENSES: Salaries and employee benefits 138,296 127,479 Occupancy, net of rental income 19,199 17,172 Equipment 12,678 12,079 Other 55,361 54,808 Total noninterest expenses 225,534 211,538 Income before income taxes 111,828 103,181 Income tax expense 36,558 33,723 Net income $75,270 $69,458 Net income per share: Basic $0.91 $0.86 Diluted $0.91 $0.86 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended June 30, 2008 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,523,668 $149,506 6.31% Held-to-maturity securities: Taxable 1,312,998 15,263 4.68% Tax-exempt 184,022 3,115 6.81% Available-for-sale securities: Taxable 804,875 8,532 4.26% Tax-exempt 111,113 1,938 7.01% Short-term investments 20,498 194 3.80% Total interest earning assets and revenue 11,957,174 178,548 6.01% Other assets 1,283,738 Less: allowance for credit losses (124,773) Total $13,116,139 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,418,678 $12,939 1.52% Savings 732,593 1,291 0.71% Other time 4,050,132 39,777 3.95% Short-term borrowings 1,390,189 6,013 1.74% Junior subordinated debt 160,312 3,060 7.68% Long-term debt 288,913 2,839 3.95% Total interest bearing liabilities and expense 10,040,817 65,919 2.64% Demand deposits - noninterest bearing 1,670,532 Other liabilities 178,220 Total liabilities 11,889,569 Shareholders' equity 1,226,570 Total $13,116,139 Net interest revenue $112,629 Net interest margin 3.79% Net interest rate spread 3.37% Interest bearing liabilities to interest earning assets 83.97% Net interest tax equivalent adjustment $2,786 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended June 30, 2007 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $8,949,661 $171,637 7.69% Held-to-maturity securities: Taxable 1,530,082 16,962 4.45% Tax-exempt 188,112 3,145 6.71% Available-for-sale securities: Taxable 1,034,219 10,838 4.20% Tax-exempt 84,133 1,554 7.41% Short-term investments 63,862 901 5.66% Total interest earning assets and revenue 11,850,069 205,037 6.94% Other assets 1,214,152 Less: allowance for credit losses (108,635) Total $12,955,586 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,241,430 $21,993 2.72% Savings 733,283 2,481 1.36% Other time 4,799,252 55,459 4.63% Short-term borrowings 867,995 10,455 4.83% Junior subordinated debt 163,405 3,342 8.20% Long-term debt 151,270 2,166 5.75% Total interest bearing liabilities and expense 9,956,635 95,896 3.86% Demand deposits - noninterest bearing 1,697,601 Other liabilities 178,530 Total liabilities 11,832,766 Shareholders' equity 1,122,820 Total $12,955,586 Net interest revenue $109,141 Net interest margin 3.69% Net interest rate spread 3.08% Interest bearing liabilities to interest earning assets 84.02% Net interest tax equivalent adjustment $2,482 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date June 30, 2008 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,440,229 $311,774 6.64% Held-to-maturity securities: Taxable 1,359,499 30,991 4.58% Tax-exempt 187,888 6,307 6.75% Available-for-sale securities: Taxable 834,621 18,095 4.36% Tax-exempt 106,885 3,791 7.13% Short-term investments 23,344 468 4.04% Total interest earning assets and revenue 11,952,466 371,426 6.25% Other assets 1,278,802 Less: allowance for credit losses (122,936) Total $13,108,332 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,451,922 $30,195 1.76% Savings 720,998 2,834 0.79% Other time 4,170,695 86,638 4.18% Short-term borrowings 1,318,695 15,028 2.29% Junior subordinated debt 160,312 6,244 7.83% Long-term debt 269,153 5,369 4.01% Total interest bearing liabilities and expense 10,091,775 146,308 2.92% Demand deposits - noninterest bearing 1,637,524 Other liabilities 166,020 Total liabilities 11,895,319 Shareholders' equity 1,213,013 Total $13,108,332 Net interest revenue $225,118 Net interest margin 3.79% Net interest rate spread 3.33% Interest bearing liabilities to interest earning assets 84.43% Net interest tax equivalent adjustment $5,205 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date June 30, 2007 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $8,604,184 $327,377 7.67% Held-to-maturity securities: Taxable 1,526,653 33,667 4.45% Tax-exempt 186,492 6,244 6.75% Available-for-sale securities: Taxable 999,464 20,430 4.12% Tax-exempt 88,596 3,270 7.44% Short-term investments 134,464 3,699 5.55% Total interest earning assets and revenue 11,539,853 394,687 6.90% Other assets 1,192,296 Less: allowance for credit losses (104,373) Total $12,627,776 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,186,340 $41,879 2.65% Savings 728,095 4,864 1.35% Other time 4,661,361 107,443 4.65% Short-term borrowings 815,275 19,548 4.84% Junior subordinated debt 157,356 6,423 8.23% Long-term debt 146,254 4,211 5.81% Total interest bearing liabilities and expense 9,694,681 184,368 3.84% Demand deposits - noninterest bearing 1,679,381 Other liabilities 164,286 Total liabilities 11,538,348 Shareholders' equity 1,089,428 Total $12,627,776 Net interest revenue $210,319 Net interest margin 3.68% Net interest rate spread 3.06% Interest bearing liabilities to interest earning assets 84.01% Net interest tax equivalent adjustment $4,992
