BancorpSouth : Announces Fourth Quarter and Annual 2016 Financial Results; Declares Quarterly Dividend

Contact:

William L. Prater Will Fisackerly

Senior Executive Vice President and Senior Vice President and

Chief Financial Officer Director of Corporate Finance

662/680-2536 662/680-2475

TUPELO, MS, January 25, 2017/PRNewswire -- BancorpSouth, Inc. (NYSE: BXS) today announced financial results for the quarter and year ended December 31, 2016.

• Net income of $132.7 million, or $1.41 per diluted share.

• Generated net loan growth of $439.2 million, or 4.2 percent.

• Reported total deposit growth of $357.0 million, or 3.2 percent.

• Reached settlement with the Consumer Financial Protection Bureau and U.S. Department of Justice regarding their joint investigation into the Company's fair lending practices; incurred related pre-tax charge of $13.8 million.

• Net operating income - excluding MSR - of $141.4 million, or $1.50 per diluted share.

• Total operating expense declined $5.1 million compared to 2015.

• Repurchased 988,060 shares of outstanding common stock at a weighted average price of

  $23.40 per share.

  Highlights for the fourth quarter of 2016 included:

• Net income of $37.7 million, or $0.40 per diluted share.

• Generated net loan growth of $153.2 million, or 5.7 percent on an annualized basis.

• Reported total deposit growth of $98.1 million, or 3.4 percent on an annualized basis.

- MORE -

Box 789 • Tupelo, MS 38802-0789 • (662) 680-2000

• Earnings benefitted from a positive pre-tax mortgage servicing rights ("MSR") valuation adjustment of $11.2 million.

• Net operating income - excluding MSR - of $30.7 million, or $0.33 per diluted share.

• Credit quality remained stable; recorded provision for credit losses of $1.0 million for the quarter.

• Repurchased 436,541 shares of outstanding common stock at a weighted average price of

  $22.91 per share.

• Acquired certain assets of Gonzales, Louisiana based Waguespack & Associates Insurance, Inc. ("Waguespack"), which is expected to produce annual insurance commission revenues of approximately $3 million.

The Company reported net income of $37.7 million, or $0.40 per diluted share, for the fourth quarter of 2016 compared with net income of $21.2 million, or $0.22 per diluted share, for the fourth quarter of 2015 and net income of $37.8 million, or $0.40 per diluted share, for the third quarter of 2016. Additionally, the Company reported net income of $132.7 million, or $1.41 per diluted share, for the year ended December 31, 2016 compared to $127.5 million, or $1.33 per diluted share, for the year ended December 31, 2015.

The Company reported net operating income - excluding MSR - of $30.7 million, or $0.33 per diluted share, for the fourth quarter of 2016 compared to $29.6 million, or $0.31 per diluted share, for the fourth quarter of 2015 and $36.7 million, or $0.39 per diluted share, for the third quarter of 2016. Additionally, the Company reported net operating income - excluding MSR - of $141.4 million, or $1.50 per diluted share, for the year ended December 31, 2016 compared to

$138.4 million, or $1.44 per diluted share, for the year ended December 31, 2015. Net operating income - excluding MSR - is a non-GAAP financial measure used by management to assess the core operating performance of the Company. This measure excludes items such as securities gains and losses, MSR valuation adjustments, restructuring charges, merger related expenses, industry related legal settlements, and other one-time charges. A full reconciliation of this measure is provided in the supplemental schedules of this news release.

At its regular quarterly meeting today, the Board of Directors of the Company declared a quarterly cash dividend of $0.125 per common share. The dividend is payable April 3, 2017 to shareholders of record at the close of business on March 15, 2017.

"Earnings for the quarter benefitted from the positive MSR valuation adjustment of $11.2 million as a result of the rising interest rate environment," remarked Dan Rollins, BancorpSouth Chairman and Chief Executive Officer. "Otherwise, while seasonal headwinds in several of our non-interest product offerings prevented sequential quarter improvement in certain of our operating metrics, we continue to grow our Company. We reported net loan growth of $153.2 million, or 5.7 percent annualized, while total deposits grew $98.1 million, or 3.4 percent annualized. Credit quality continues to remain stable as well, reflected by our provision for

BXS Announces Fourth Quarter 2016 Financial Results Page 3

January 25, 2017

credit losses for the quarter of $1.0 million. Finally, we continue to focus on controlling costs. Total operating expenses declined by over $5 million in 2016 compared to 2015."

"Additionally, we continue to look for opportunities to deploy capital in a manner that enhances shareholder value. I'm excited about the opportunity presented by our transaction with the Waguespack team as we look to continue to expand our agency footprint and grow insurance commission revenue. This team is expected to add annual revenues of approximately $3 million to our book of business. Finally, we were able to continue to execute on our share repurchase program as we repurchased 436,541 shares during the quarter at a weighted average price of

$22.91 per share."

Net interest revenue was $115.4 million for the fourth quarter of 2016, an increase of 3.7 percent from $111.2 million for the fourth quarter of 2015 and an increase of 0.7 percent from $114.6 million for the third quarter of 2016. The fully taxable equivalent net interest margin was 3.46 percent for the fourth quarter of 2016 compared to 3.58 percent for the fourth quarter of 2015 and 3.51 percent for the third quarter of 2016. Yields on loans and leases were 4.18 percent for the fourth quarter of 2016 compared with 4.15 percent for the fourth quarter of 2015 and 4.20 percent for the third quarter of 2016, while yields on total interest earning assets were 3.70 percent for the fourth quarter of 2016 compared with 3.79 percent for the fourth quarter of 2015 and 3.74 percent for the third quarter of 2016. The average cost of deposits was 0.23 percent for the fourth quarter of 2016 compared to 0.21 percent for the fourth quarter of 2015 and 0.22 percent for the third quarter of 2016.

Total assets were $14.7 billion at December 31, 2016 compared with $13.8 billion at December 31, 2015. Loans and leases, net of unearned income, were $10.8 billion at December 31, 2016 compared with $10.4 billion at December 31, 2015.

Total deposits were $11.7 billion at December 31, 2016 compared with $11.3 billion at December 31, 2015. Time deposits decreased $12.2 million, or 0.7 percent, at December 31, 2016 compared to December 31, 2015. Over the same time period, interest bearing demand deposits increased $30.7 million, or 0.6 percent while noninterest bearing demand deposits increased $219.0 million, or 7.2 percent, and savings deposits increased $119.5 million, or 8.3 percent.

Earnings for the quarter reflect a provision for credit losses of $1.0 million, compared to no recorded provision for the fourth quarter of 2015 and no recorded provision for the third quarter of 2016. Total non-performing assets ("NPAs") were $109.7 million, or 1.01 percent of net loans and leases, at December 31, 2016 compared with $109.7 million, or 1.06 percent of net loans and leases, at December 31, 2015, and $102.3 million, or 0.96 percent of net loans and leases, at September 30, 2016.

Net charge-offs for the fourth quarter of 2016 were $3.2 million, compared with net charge-offs of $6.6 million for the fourth quarter of 2015 and net charge-offs of $1.0 million for the third quarter of 2016. Gross charge-offs were $5.7 million for the fourth quarter of 2016, compared with $9.5 million for the fourth quarter of 2015 and $3.8 million for the third quarter of 2016. Gross recoveries of previously charged-off loans were $2.5 million for the fourth quarter of 2016, compared with $3.0 million for the fourth quarter of 2015 and $2.7 million for the third quarter of 2016. Annualized net charge-offs were 0.12 percent of average loans and leases for the fourth quarter of 2016, compared with annualized net charge-offs of 0.25 percent for the fourth quarter of 2015 and annualized net charge-offs of 0.04 percent for the third quarter of 2016.

Non-performing loans ("NPLs") were $101.8 million, or 0.94 percent of net loans and leases, at December 31, 2016, compared with $94.9 million, or 0.92 percent of net loans and leases, at December 31, 2015, and $90.9 million, or 0.85 percent of net loans and leases, at September 30, 2016. The allowance for credit losses was $123.7 million, or 1.14 percent of net loans and leases, at December 31, 2016, compared with $126.5 million, or 1.22 percent of net loans and leases, at December 31, 2015 and $125.9 million, or 1.18 percent of net loans and leases, at September 30, 2016.

NPLs at December 31, 2016 consisted primarily of $71.8 million of nonaccrual loans, compared with $70.7 million of nonaccrual loans at September 30, 2016. NPLs at December 31, 2016 also included $4.0 million of loans 90 days or more past due and still accruing, compared with $2.3 million of such loans at September 30, 2016, and included restructured loans still accruing of

$26.0 million at December 31, 2016, compared with $17.9 million of such loans at September 30, 2016. Early stage past due loans, representing loans 30-89 days past due, totaled $27.8 million at December 31, 2016 compared to $46.7 million at September 30, 2016. Other real estate owned decreased $3.6 million to $7.8 million during the fourth quarter of 2016 from $11.4 million at September 30, 2016.

Noninterest revenue was $73.0 million for the fourth quarter of 2016, compared with $67.4 million for the fourth quarter of 2015 and $70.9 million for the third quarter of 2016. These results included a positive MSR valuation adjustment of $11.2 million for the fourth quarter of 2016 compared with a positive MSR valuation adjustment of $2.9 million for the fourth quarter of 2015 and a positive MSR valuation adjustment of $1.8 million for the third quarter of 2016. Valuation adjustments in the MSR asset are driven primarily by fluctuations in interest rates period over period.

Excluding the MSR valuation adjustments, mortgage banking revenue was $6.6 million for the fourth quarter of 2016, compared with $7.7 million for the fourth quarter of 2015 and $10.5 million for the third quarter of 2016. Mortgage origination volume for the fourth quarter of 2016 was $395.9 million, compared with $310.0 million for the fourth quarter of 2015 and $478.2 million for the third quarter of 2016.