BancorpSouth Reports Third Quarter 2006 Earnings per Diluted Share of $0.38, Up 31.0% From $0.29 for Third Quarter 2005

TUPELO, Miss., Oct. 19 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. today announced financial results for the third quarter and nine months ended September 30, 2006.

Highlights of the third quarter of 2006 included: - Growth in earnings per diluted share to $0.38 for the third quarter of 2006, an increase of 31.0 percent from $0.29 for the third quarter of 2005. - A 9.6 percent increase in loans and leases, net of unearned interest, compared to the third quarter of 2005. - An increase in the net interest margin for the third quarter to 3.66 percent from 3.61 percent for the third quarter of 2005, representing the seventh consecutive comparable quarter expansion. - A reduction in annualized net charge-offs to 0.07 percent of average loans for the third quarter from 0.27 percent for the third quarter of 2005 and 0.18 percent for the second quarter of 2006. - An increase of 18.4 percent in insurance commission revenues, marking the third consecutive quarter of growth since the hurricane-affected third and fourth quarters of 2005. - Further geographic expansion, with the opening of a full-service bank office in Destin, Florida during the third quarter, which marks the Company's entry into Florida, the seventh state in which it conducts operations. In addition, after the quarter's end, BancorpSouth expanded its insurance operations to a fourth state with the opening of an office in Mobile, Alabama, and the bank announced the opening of a loan production office in Lafayette, Louisiana. Third Quarter 2006 Summary Results

BancorpSouth's net income increased 34.0 percent for the third quarter of 2006 to $30.6 million from $22.9 million for the third quarter of 2005. Net income per diluted share for the third quarter of 2006 increased 31.0 percent to $0.38 from $0.29 for the third quarter of 2005.

The Company's earnings growth for the third quarter of 2006 when compared with the third quarter of 2005 included a net pre-tax negative impact of $4.3 million related to changes in value of the Company's mortgage servicing asset. In addition, the Company's earnings for the third quarter of 2005 included a pre-tax negative impact of $12.8 million related to Hurricane Katrina.

Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, remarked, "BancorpSouth achieved solid results for the third quarter of 2006. We produced our strongest rates of growth in our loan portfolio and in insurance commission revenues since the third quarter of 2005, when our results began to be affected by Hurricane Katrina. Credit quality remained very sound during the latest quarter, with a continued low level of net charge-offs. We generated a comparable quarter increase in net interest margin in spite of a difficult interest rate environment. We are also pleased to be continuing our geographic expansion strategy by entering attractive growth markets with new services both within our existing footprint and in our new Florida market."

Net Interest Revenue

Interest revenue for the third quarter of 2006 increased 23.6 percent, or $33.5 million, to $175.2 million from $141.8 million for the third quarter of 2005 and increased 4.7 percent from $167.4 million for the second quarter of 2006. Interest expense increased 47.8 percent, or $25.5 million, to $78.8 million for the third quarter of 2006 from $53.3 million for the third quarter of 2005 and 12.4 percent from $70.2 million for the second quarter of 2006.

The average taxable equivalent yield on earning assets increased to 6.58 percent for the third quarter of 2006 from 5.74 percent for the third quarter of 2005 and 6.39 percent for the second quarter of 2006. The average rate paid on interest bearing liabilities was 3.49 percent for the third quarter of 2006, compared with 2.54 percent for the third quarter of 2005 and 3.17 percent for the second quarter of 2006.

Net interest revenue increased 9.0 percent to $96.4 million for the third quarter of 2006 from $88.4 million for the third quarter of 2005 and declined 0.8 percent from $97.2 million for the second quarter of 2006. Net interest margin was 3.66 percent for the third quarter of 2006 compared with 3.61 percent for the third quarter of 2005 and 3.75 percent for the second quarter of 2006.

Patterson continued, "The growth in our net interest revenue and net interest margin for the third quarter of 2006 versus the comparable prior-year period reflected the beneficial impact of the same conservative asset/liability management strategies that have produced improvement in our net interest margin for the previous six comparable quarter periods. With longer-term interest rates moderating during the third quarter compared with the second quarter of 2006, increased pressure on asset yields limited our ability to match the rise in average rate paid on interest bearing liabilities. As a result, we experienced a slight sequential quarter decline in net interest revenue and net interest margin for the third quarter from the second quarter of 2006. We will continue to adjust our asset/liability strategies to manage the impact of changing interest rates within the framework of our established asset/liability management guidelines."

Deposit and Loan Activity

Total assets at September 30, 2006 increased 7.2 percent to $11.9 billion from $11.1 billion at September 30, 2005. Total deposits grew 2.9 percent to $9.5 billion at September 30, 2006 from $9.2 billion at September 30, 2005. Loans and leases, net of unearned interest, increased 9.6 percent to $7.8 billion at September 30, 2006 from $7.1 billion at September 30, 2005.

"We were pleased with our loan growth rate for the quarter," said Patterson. "It is the highest quarterly rate we've achieved since the second quarter last year. Loan demand on the Mississippi Gulf Coast is growing but remains relatively low. Loan demand in most of our more urban markets, especially those into which we have expanded in recent years, has continued to increase, reflecting a growing economy. The impact of higher interest rates since the third quarter of 2005 was evident in our deposit mix for the latest quarter. Although noninterest bearing demand deposits increased 6.7% for the quarter, interest bearing demand deposits declined 4.4% as consumers sought higher yields. This transition was partially responsible for the 6.2% increase in savings and other time deposits for the recent quarter compared with the third quarter of 2005."

Provision for Credit Losses and Allowance for Credit Losses

For the third quarter of 2006, the provision for credit losses was $2.5 million, a decline of 82.8 percent compared with $14.7 million for the third quarter of 2005, and 29.6 percent from $3.6 million for the second quarter of 2006. For the third quarter of 2005, $10.4 million of the provision for credit losses were related to the impact of Hurricane Katrina. Annualized actual net charge-offs were 0.07 percent of average loans and leases for the third quarter of 2006 compared with 0.27 percent for the third quarter of 2005 and 0.18 percent for the second quarter of 2006.

Non-performing loans and leases increased 5.1 percent nominally to $25.1 million, or 0.32 percent of loans and leases, at September 30, 2006, from $23.9 million, or 0.34 percent of loans and leases, at September 30, 2005, and 2.9 percent from $24.4 million, or 0.32 percent of loans and leases, at June 30, 2006. The allowance for credit losses was 1.25 percent of loans and leases at September 30, 2006, compared with 1.43 percent of loans and leases at September 30, 2005, and 1.27 percent of loans and leases at June 30, 2006.

Patterson commented, "Credit quality remains a key operating metric for BancorpSouth, and we are pleased with the continuing improvements we have achieved. With annualized charge-offs for the quarter at a rate of less than one-tenth of one percent, our allowance for credit losses remained a double- digit multiple of our rate of annualized charge-offs for the quarter and the year to date."

Noninterest Revenue

Noninterest revenue increased 2.2 percent to $49.2 million for the third quarter of 2006 from $48.2 million for the third quarter of 2005. As previously noted, these results include the impact of a $4.3 million net decline in mortgage revenue related to changes in the value of BancorpSouth's mortgage servicing asset for the third quarter of 2006 compared with the third quarter of 2005. Excluding this decline, noninterest revenue expanded 11.4 percent for the third quarter of 2006 compared with the third quarter of 2005.

"We achieved record quarterly insurance commission revenues for the third quarter of 2006, as our organic growth increased these revenues by 18.4% compared with the third quarter of 2005," said Patterson. "We are continuing to experience significant growth related to the aftermath of Hurricane Katrina in our Mississippi insurance operations, which are headquartered in Gulfport, as well as in our Louisiana insurance operations, which are headquartered in Baton Rouge. Through the opening of our new insurance operation in Mobile, Alabama we believe we have positioned BancorpSouth to participate in a more meaningful way in the long-term growth opportunities inherent in the rebuilding of the Gulf Coast."

Noninterest Expense

Noninterest expense increased 10.2 percent to $98.7 million for the third quarter of 2006 from $89.5 million for the third quarter of 2005 and increased 0.3 percent from $98.3 million for the second quarter of 2006. The growth in noninterest expense primarily resulted from additional salaries, employee benefits and occupancy expense associated with the acquisition of American State Bank Corporation and the opening of seven new loan production offices and seven new full-service branch bank offices since the end of the third quarter last year.

Capital Management

BancorpSouth did not repurchase any of its common stock during the third quarter of 2006. Previously, the Company has repurchased 735,500 shares under the stock repurchase plan authorized in April 2005 for the repurchase of up to three million shares. Combined with the shares repurchased under earlier plans, BancorpSouth has repurchased approximately 11.3 million shares of its common stock as of the end of the third quarter of 2006, or approximately 13.4 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, "BancorpSouth's operating and financial performance for the third quarter and first nine months of 2006 demonstrates the continuing potential we have for further long-term profitable growth. Through a consistent expansion strategy, we are well positioned in attractive growth markets in our core six-state franchise, and in Florida we have just established our initial presence in one of the fastest growing states in the country. In addition to the normal growth we anticipate our broad mid-South market to generate in an expanding economy, the rebuilding of the Gulf Coast region represents a long-term growth opportunity for BancorpSouth of unprecedented scale for our organization. With the many significant opportunities before us, we believe it is more important than ever to adhere to our conservative operating philosophies and our customer-centric service culture that have driven our history of growth in earnings and shareholder value."

Conference Call

BancorpSouth will conduct a conference call to discuss its second quarter results tomorrow, October 20, 2006, 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 the ability of the mid-South market to generate growth in an expanding economy, the importance of adhering to our conservative operating philosophies and our customer focused service culture, growth opportunities for our financial services as the Gulf Coast rebuilds, repurchases under our common stock repurchase plan, our role in rebuilding and contributing to growth of the Gulf Coast and our ability to participate in long-term growth opportunities in the Mississippi Gulf Coast area.

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 maintain credit quality, changes in laws and regulations affecting financial service companies in general, the ability of BancorpSouth to compete with other financial services companies, the ability of BancorpSouth to provide and market competitive services and products, changes in BancorpSouth's operating or expansion strategy, geographic concentration of BancorpSouth's assets, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to repurchase its common stock on favorable terms, the ability of BancorpSouth to identify, close and effectively integrate potential acquisitions, the ability of BancorpSouth to expand geographically and enter 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 $11.9 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 282 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Tennessee and Texas.

BancorpSouth, Inc. Selected Financial Data Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $96,398 $88,441 $289,548 $263,288 Provision for credit losses 2,526 14,725 2,252 22,492 Noninterest revenue 49,234 48,163 155,604 145,105 Noninterest expense 98,661 89,513 293,013 269,777 Income before income taxes 44,445 32,366 149,887 116,124 Income tax provision 13,818 9,507 46,016 35,730 Net income $30,627 $22,859 $103,871 $80,394 Earning per share: Basic $0.39 $0.29 $1.31 $1.03 Diluted $0.38 $0.29 $1.31 $1.02 Balance sheet data at September 30: Total assets $11,859,942 $11,065,258 Total earning assets 10,747,814 10,093,364 Loans and leases, net of unearned income 7,773,682 7,091,063 Allowance for credit losses 97,391 101,067 Total deposits 9,492,374 9,221,267 Common shareholders' equity 1,031,359 940,878 Book value per share 13.03 12.02 Average balance sheet data: Total assets $11,810,572 $10,892,408 $11,778,913 $10,853,207 Total earning assets 10,719,354 9,964,477 10,692,252 9,925,937 Loans and leases, net of unearned income 7,668,909 7,070,963 7,506,656 6,979,161 Total deposits 9,447,788 9,045,611 9,579,602 9,034,266 Common shareholders' equity 1,017,859 934,915 995,576 926,098 Non-performing assets at September 30: Non-accrual loans and leases $6,289 $8,103 Loans and leases 90+ days past due 16,859 13,539 Restructured loans and leases 1,952 2,240 Other real estate owned 11,808 15,357 Net charge-offs as a percentage of average loans (annualized) 0.07% 0.27% 0.11% 0.25% Performance ratios (annualized): Return on average assets 1.03% 0.83% 1.18% 0.99% Return on common equity 11.94% 9.70% 13.95% 11.61% Net interest margin 3.66% 3.61% 3.71% 3.64% Average shares outstanding - basic 79,104,471 78,223,549 79,154,443 78,216,092 Average shares outstanding - diluted 79,577,609 78,570,139 79,552,314 78,559,901 BancorpSouth, Inc. Consolidated Balance Sheet (Unaudited) September 30, % 2006 2005 Change (Dollars in thousands) Assets Cash and due from banks $377,005 $370,403 1.78% Interest bearing deposits with other banks 7,231 15,431 (53.14%) Held-to-maturity securities, at amortized cost 1,684,483 1,255,874 34.13% Available-for-sale securities, at fair value 1,184,976 1,455,856 (18.61%) Trading securities, at fair value - 1,983 N/A Federal funds sold and securities purchased under agreement to resell 20,851 194,186 (89.26%) Loans and leases 7,819,408 7,122,212 9.79% Less: Unearned income (45,726) (31,149) 46.80% Allowance for credit losses (97,391) (101,067) (3.64%) Net loans and leases 7,676,291 6,989,996 9.82% Loans held for sale 76,590 78,970 (3.01%) Premises and equipment, net 281,349 240,141 17.16% Accrued interest receivable 92,099 71,046 29.63% Goodwill 143,700 109,239 31.55% Other assets 315,367 282,133 11.78% Total Assets $11,859,942 $11,065,258 7.18% Liabilities Deposits: Demand: Noninterest bearing $1,753,566 $1,643,309 6.71% Interest bearing 2,775,033 2,902,527 (4.39%) Savings 728,168 711,909 2.28% Other time 4,235,607 3,963,522 6.86% Total deposits 9,492,374 9,221,267 2.94% Federal funds purchased and securities sold under agreement to repurchase 715,108 499,552 43.15% Other short-term borrowings 200,000 - N/A Accrued interest payable 37,349 25,821 44.65% Junior subordinated debt securities 144,847 138,145 4.85% Long-term debt 136,096 137,594 (1.09%) Other liabilities 102,809 102,001 0.79% Total Liabilities 10,828,583 10,124,380 6.96% Shareholders' Equity Common stock 197,828 195,685 1.10% Capital surplus 112,644 84,456 33.38% Accumulated other comprehensive income (loss) (13,879) (10,313) 34.58% Retained earnings 734,766 671,050 9.49% Total Shareholders' Equity 1,031,359 940,878 9.62% Total Liabilities & Shareholders' Equity $11,859,942 $11,065,258 7.18% BancorpSouth, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Quarter Ended Sept 2006 Jun 2006 Mar 2006 INTEREST REVENUE: Loans and leases $143,712 $134,569 $127,200 Deposits with other banks 295 176 141 Federal funds sold and securities purchased under agreement to resell 609 976 2,846 Held-to-maturity securities: Taxable 16,107 16,048 14,323 Tax-exempt 2,017 2,077 1,887 Available-for-sale securities: Taxable 10,405 11,389 10,904 Tax-exempt 1,215 1,276 1,363 Loans held for sale 878 871 1,238 Total interest revenue 175,238 167,382 159,902 INTEREST EXPENSE: Deposits 62,964 57,430 53,133 Federal funds purchased and securities sold under agreement to repurchase 8,498 6,549 5,902 Other 7,378 6,182 4,938 Total interest expense 78,840 70,161 63,973 Net interest revenue 96,398 97,221 95,929 Provision for credit losses 2,526 3,586 (3,860) Net interest revenue, after provision for credit losses 93,872 93,635 99,789 NONINTEREST REVENUE: Mortgage lending 41 3,720 3,176 Service charges 17,354 17,489 15,450 Trust income 2,344 2,325 2,016 Security gains, net 9 17 10 Insurance commissions 17,556 16,411 17,445 Other 11,930 13,638 14,673 Total noninterest revenue 49,234 53,600 52,770 NONINTEREST EXPENSES: Salaries and employee benefits 58,453 58,376 57,573 Occupancy, net of rental income 8,598 7,759 7,442 Equipment 5,896 5,822 5,763 Other 25,714 26,387 25,230 Total noninterest expenses 98,661 98,344 96,008 Income before income taxes 44,445 48,891 56,551 Income tax expense 13,818 13,392 18,806 Net income $30,627 $35,499 $37,745 Net income per share: Basic $0.39 $0.45 $0.48 Diluted $0.38 $0.45 $0.47 BancorpSouth, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Dec 2005 Sept 2005 INTEREST REVENUE: Loans and leases $121,243 $115,800 Deposits with other banks 177 166 Federal funds sold and securities purchased under agreement to resell 3,052 1,061 Held-to-maturity securities: Taxable 10,461 9,160 Tax-exempt 1,696 1,667 Available-for-sale securities: Taxable 11,048 11,761 Tax-exempt 1,400 1,481 Loans held for sale 920 686 Total interest revenue 149,997 141,782 INTEREST EXPENSE: Deposits 47,970 44,790 Federal funds purchased and securities sold under agreement to repurchase 4,896 3,692 Other 4,861 4,859 Total interest expense 57,727 53,341 Net interest revenue 92,270 88,441 Provision for credit losses 1,975 14,725 Net interest revenue, after provision for credit losses 90,295 73,716 NONINTEREST REVENUE: Mortgage lending 2,191 4,207 Service charges 15,852 15,860 Trust income 2,412 2,161 Security gains, net 11 20 Insurance commissions 14,411 14,830 Other 18,831 11,085 Total noninterest revenue 53,708 48,163 NONINTEREST EXPENSES: Salaries and employee benefits 53,959 52,173 Occupancy, net of rental income 7,133 6,751 Equipment 5,592 5,501 Other 25,642 25,088 Total noninterest expenses 92,326 89,513 Income before income taxes 51,677 32,366 Income tax expense 16,871 9,507 Net income $34,806 $22,859 Net income per share: Basic $0.44 $0.29 Diluted $0.44 $0.29 BancorpSouth, Inc. Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Year To Date Sept 2006 Sept 2005 INTEREST REVENUE: Loans and leases $405,481 $329,479 Deposits with other banks 612 417 Federal funds sold and securities purchased under agreement to resell 4,431 1,649 Held-to-maturity securities: Taxable 46,478 28,377 Tax-exempt 5,981 4,822 Available-for-sale securities: Taxable 32,698 38,271 Tax-exempt 3,854 4,649 Loans held for sale 2,987 2,275 Total interest revenue 502,522 409,939 INTEREST EXPENSE: Deposits 173,527 123,127 Federal funds purchased and securities sold under agreement to repurchase 20,949 8,443 Other 18,498 15,081 Total interest expense 212,974 146,651 Net interest revenue 289,548 263,288 Provision for credit losses 2,252 22,492 Net interest revenue, after provision for credit losses 287,296 240,796 NONINTEREST REVENUE: Mortgage lending 6,937 7,382 Service charges 50,293 46,997 Trust income 6,685 6,054 Security gains, net 36 461 Insurance commissions 51,412 45,187 Other 40,241 39,024 Total noninterest revenue 155,604 145,105 NONINTEREST EXPENSES: Salaries and employee benefits 174,402 157,992 Occupancy, net of rental income 23,799 20,004 Equipment 17,481 16,588 Other 77,331 75,193 Total noninterest expenses 293,013 269,777 Income before income taxes 149,887 116,124 Income tax expense 46,016 35,730 Net income $103,871 $80,394 Net income per share: Basic $1.31 $1.03 Diluted $1.31 $1.02 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended September 30, 2006 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,723,076 $145,396 7.47% Held-to-maturity securities: Taxable 1,521,496 16,107 4.20% Tax-exempt 185,576 3,103 6.63% Available-for-sale securities: Taxable 1,124,841 10,406 3.67% Tax-exempt 102,493 1,869 7.24% Short-term investments 61,872 904 5.79% Total interest earning assets and revenue 10,719,354 177,785 6.58% Other assets 1,189,529 Less: allowance for credit losses (98,311) Total $11,810,572 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,771,419 $15,514 2.22% Savings 741,102 2,089 1.12% Other time 4,236,396 45,361 4.25% Short-term borrowings 922,735 10,920 4.70% Junior subordinated debt 144,847 2,968 8.13% Long-term debt 136,229 1,988 5.79% Total interest bearing liabilities and expense 8,952,728 78,840 3.49% Demand deposits - noninterest bearing 1,698,871 Other liabilities 141,114 Total liabilities 10,792,713 Shareholders' equity 1,017,859 Total $11,810,572 Net interest revenue $98,945 Net interest margin 3.66% Net interest rate spread 3.09% Interest bearing liabilities to interest earning assets 83.52% Net interest tax equivalent adjustment $2,547 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 income $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) Year to Date September 30, 2006 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $7,569,732 $410,681 7.25% Held-to-maturity securities: Taxable 1,512,148 46,478 4.11% Tax-exempt 183,591 9,202 6.70% Available-for-sale securities: Taxable 1,174,969 32,698 3.72% Tax-exempt 109,511 5,930 7.24% Short-term investments 142,301 5,042 4.74% Total interest earning assets and revenue 10,692,252 510,031 6.38% Other assets 1,185,114 Less: allowance for credit losses (98,453) Total $11,778,913 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $2,926,723 $43,916 2.01% Savings 752,693 5,826 1.03% Other time 4,184,075 123,784 3.96% Short-term borrowings 768,293 24,638 4.29% Junior subordinated debt 144,847 8,826 8.15% Long-term debt 136,605 5,984 5.86% Total interest bearing liabilities and expense 8,913,236 212,974 3.20% Demand deposits - noninterest bearing 1,716,111 Other liabilities 153,990 Total liabilities 10,783,337 Shareholders' equity 995,576 Total $11,778,913 Net interest revenue $297,057 Net interest margin 3.71% Net interest rate spread 3.18% Interest bearing liabilities to interest earning assets 83.36% Net interest tax equivalent adjustment $7,509 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 income $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