Filed Pursuant to Rule 424(b)(2)

Registration Statement No. 333-161213

 

SUBJECT TO COMPLETION, DATED JANUARY 17, 2012

 

PRELIMINARY PROSPECTUS SUPPLEMENT

(To Prospectus dated August 10, 2009)

 

$100,000,000

 

 

Common Stock

 

We are offering          shares of our common stock, par value $2.50 per share.

 

Our common stock is listed on the New York Stock Exchange, or NYSE, under the symbol “BXS.” The last reported sale price of our common stock on January 13, 2012 was $12.32 per share.

 

 

Investing in our common stock involves risks. See “Risk Factors” beginning on page S-10 of this prospectus supplement and the “Risk Factors” section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which are incorporated by reference into this prospectus supplement.

 

 

 

The underwriters may also purchase up to an additional $15.0 million of common stock from us at the public offering price less the underwriting discount within 30 days after the date of this prospectus supplement to cover over-allotments, if any.

 

Shares of our common stock are not savings accounts, deposits or obligations of any of our bank or non-bank subsidiaries and are not insured or guaranteed by the Federal Deposit Insurance Corporation, or FDIC, the Deposit Insurance Fund or any other governmental agency or instrumentality.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

 

 

The shares of our common stock will be ready for delivery on or about January   , 2012.

 

 

 

 

 

The date of this prospectus supplement is January   , 2012.

 

TABLE OF CONTENTS

 

 

 

 

 

We are responsible for the information contained and incorporated by reference in this prospectus supplement and the accompanying prospectus and in any related free writing prospectus we prepare or authorize. We have not, and the underwriters have not, authorized anyone to give you any other information, and neither we nor the underwriters take responsibility for any other information that others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell, or a solicitation of an offer to purchase, shares of our common stock in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.

 

This prospectus supplement is a supplement to the accompanying prospectus. This prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the SEC utilizing a shelf registration process. Under this shelf registration process, we may sell from time to time any combination of securities described in the accompanying prospectus in one or more offerings such as this offering. The accompanying prospectus provides you with a general description of the securities we may offer. This prospectus supplement provides you with specific information about our common stock we are selling in this offering. Both this prospectus supplement and the accompanying prospectus include important information about us and other information you should know before investing. This prospectus supplement also adds to, updates and changes information contained in the accompanying prospectus. To the extent the information in this prospectus supplement is different from that in the accompanying prospectus, you should rely on the information in this prospectus supplement. You should read both this prospectus supplement and the accompanying prospectus, together with the additional information described in the section entitled “Where You Can Find More Information” of this prospectus supplement, before investing in our common stock.

 

Unless otherwise stated or the context otherwise requires, all references in this prospectus supplement to “BancorpSouth, Inc.,” “the Company,” “we,” “our,” “us” and similar terms refer to BancorpSouth, Inc. and its consolidated subsidiaries, all references to “the Bank” refer to BancorpSouth Bank, our wholly owned subsidiary.

 

You should not consider any information in this prospectus supplement or the accompanying prospectus to be investment, legal or tax advice. You should consult your own counsel, accountants and other advisers for legal, tax, business, financial and related advice regarding the purchase of shares of our common stock.

 

Certain statements contained or incorporated by reference in this prospectus supplement and accompanying prospectus are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities and Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “estimate,” “continue,” “should,” “could,” “would” and other comparable terms. These forward-looking statements are based on the current plans, assumptions and expectations of our management and are subject to a number of risks and uncertainties, including those set forth below, which could significantly affect our current plans and expectations and future financial condition and results.

 

While it is not possible to identify all these factors, we continue to face many risks and uncertainties that could cause actual results to differ from those forward-looking statements, including:

 

 

 

We caution you that the factors listed above, as well as the risk factors included or incorporated by reference in this prospectus supplement, may not be exhaustive. We operate in a continually changing business environment, and new risks emerge from time to time. We cannot predict such new risks, nor can we assess the impact, if any, of such new risks on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied by any forward-looking statements.

 

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date on which the statements were made and are expressly qualified in their entirety by the cautionary statements included in this prospectus supplement. We undertake no obligation to publicly update or revise forward-looking statements, which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this prospectus supplement.

 

We file annual, quarterly and current reports, proxy statements, information statements and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov and on our corporate website at www.bancorpsouthonline.com. The information on our corporate website is not part of this prospectus supplement, the accompanying prospectus or any free writing prospectuses or other offering materials. You can also inspect our reports, proxy statements and other information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

 

We “incorporate by reference” into this prospectus supplement information we file with the SEC, which means:

 

 

We are incorporating by reference into this prospectus supplement the following documents:

 

 

We also incorporate by reference any future filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus supplement and until the termination of this offering (other than documents or information deemed furnished and not filed in accordance with SEC rules).

 

Any statement contained in this prospectus supplement or in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will be deemed to be modified or superseded for purposes of this prospectus supplement to the extent that a statement contained in this prospectus supplement or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus supplement modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus supplement.

 

We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus. Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference into such documents. You can obtain copies of the documents incorporated by reference in this prospectus supplement, at no cost, by writing or calling us at the following address:

 

BancorpSouth, Inc.

One Mississippi Plaza

Tupelo, Mississippi 38804

Attention: Corporate Secretary

(662) 680-2000

 

PROSPECTUS SUPPLEMENT SUMMARY

(1)		Net of unearned income.
(2)		Excludes the Greater Memphis area.
(3)		Includes all other geographic regions and lines of business not managed by geographic region.

		Nine Months Ended September 30, 2011																Year Ended December 31, 2010
		Community				Insurance				General								Community				Insurance				General
		Banking				Agencies				Corporate				Total				Banking				Agencies				Corporate				Total
		(Unaudited, dollars in thousands)
Net interest revenue(1)		$	306,635			$	258			$	20,531			$	327,424			$	411,936			$	561			$	28,645			$	441,142
Noninterest income			99,845				67,436				38,229				205,510				114,736				82,327				67,081				264,144
Noninterest expense			257,683				56,095				83,999				397,777				308,299				70,830				107,904				487,033
Net income (loss)			26,293				6,960				(8,987	)			24,266				17,920				7,272				(2,250	)			22,942

(1)		Before provision for credit losses.

		Three Months Ended								Year Ended
		December 31,								December 31,
		2011				2010				2011				2010
		(Unaudited, dollars in thousands, except per share amounts)
EARNINGS SUMMARY:
Net interest revenue		$	107,489			$	110,253			$	434,913			$	441,142
Provision for credit losses			19,250				43,293				130,081				204,016
Noninterest revenue			65,335				73,974				270,845				264,144
Noninterest expense			135,856				123,447				533,633				487,033
Income before income taxes			17,718				17,487				42,044				14,237
Income tax provision (benefit)			4,415				1,641				4,475				(8,705	)
Net income		$	13,303			$	15,846			$	37,569			$	22,942
Earning per share: Basic		$	0.16			$	0.19			$	0.45			$	0.28
Diluted		$	0.16			$	0.19			$	0.45			$	0.27
BALANCE SHEET DATA AT DECEMBER 31:
Total assets										$	12,995,851			$	13,615,010
Total earning assets											11,770,950				12,458,055
Loans and leases, net of unearned income											8,870,311				9,333,107
Allowance for credit losses											195,118				196,913
Total deposits											10,955,189				11,490,021
Common shareholders’ equity											1,262,912				1,222,244
Book value per share											15.13				14.64
AVERAGE BALANCE SHEET DATA:
Total assets		$	13,046,779			$	13,559,038			$	13,280,047			$	13,304,836
Total earning assets			11,918,358				12,510,705				12,143,391				12,223,933
Loans and leases, net of unearned interest			8,954,229				9,418,687				9,159,431				9,621,529
Total deposits			11,017,231				11,292,903				11,251,406				11,107,445
Common shareholders’ equity			1,268,905				1,225,514				1,240,768				1,241,321
NON-PERFORMING ASSETS AT DECEMBER 31:
Non-accrual loans and leases										$	276,798			$	347,499
Loans and leases 90+ days past due, still accruing											3,434				8,500
Restructured loans and leases, still accruing											42,018				38,376
Other real estate owned											173,805				133,412
Total non-performing assets										$	496,055			$	527,787
Net charge-offs as a percentage of average loans (annualized)			1.06	%			2.19	%			1.44	%			1.90	%

		Three Months Ended								Year Ended
		December 31,								December 31,
		2011				2010				2011				2010
		(Unaudited, dollars in thousands, except per share amounts)
PERFORMANCE RATIOS (ANNUALIZED):
Return on average assets			0.40	%			0.46	%			0.28	%			0.17	%
Return on common equity			4.16	%			5.13	%			3.03	%			1.85	%
Total common equity to total assets			9.72	%			8.98	%			9.72	%			8.98	%
Net interest margin			3.69	%			3.59	%			3.69	%			3.70	%
SHARE DATA:
Average shares outstanding — Basic			83,488,102				83,435,268				83,486,296				83,425,183
Average shares outstanding — Diluted			83,503,611				83,471,420				83,509,759				83,515,040
Cash dividends per share		$	0.01			$	0.22			$	0.14			$	0.88
CAPITAL RATIOS:
Tier I capital ratio											11.77	%			10.61	%
Total risk-based capital ratio											13.03	%			11.87	%
Tier I leverage ratio											8.85	%			8.07	%

 

THE OFFERING

Common Stock Offered		$100.0 million
Over-allotment Option		The underwriters may purchase up to $15.0 million of common stock within 30 days after the date of this prospectus supplement to cover over-allotments, if any, at the public offering price less the underwriting discount.
Common Stock Outstanding after this Offering		shares of our common stock(1)
Public Offering Price		$           per share of common stock.
Use of Proceeds		We estimate that the net proceeds from the sale of our common stock in this offering, after deducting the underwriting discount and estimated offering expenses payable by us, will be $94.8 million ($109.0 million if the underwriters exercise their over-allotment option in full).
		We intend to use the net proceeds from this offering for general corporate purposes, including to maintain certain capital levels and liquidity at the holding company, potentially provide equity capital to the Bank, fund growth either organically or through acquisition of other financial institutions, insurance agencies or other businesses that are closely aligned to our operations, and fund investments in our subsidiaries.
Dividend Policy		We have historically paid cash dividends on shares of our common stock on a quarterly basis. The payment of future cash dividends on our common stock is at the discretion of our board of directors and subject to a number of factors including our financial condition as well as certain regulatory requirements and approval of our regulators. See “Risk Factors — Risks Related to Our Common Stock and the Offering — Our ability to declare and pay dividends is limited.”
Listing		Our common stock is listed on NYSE under the symbol “BXS.”
Risk Factors		You should carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page S-10 of this prospectus supplement and the risk factors set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which are incorporated by reference in this prospectus supplement, before making any decision to invest in our common stock.

(1)		The number of shares of our common stock outstanding immediately after the closing of this offering is based on 83,483,796 shares outstanding as of January 13, 2012, excluding 5,299,635 shares reserved for future issuances under our Long-Term Equity Incentive Plan, 1995 Non-Qualified Stock Option Plan for Non-Employee Directors, as amended and restated, Director Stock Plan, as amended and restated, and 1998 Stock Option Plan.

 

SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION

		At or for the Nine Months
		Ended September 30,								At or for the Year Ended December 31,
		2011				2010				2010				2009				2008				2007				2006
		(Unaudited)								(Derived from audited financial statements)
		(Dollars in thousands, except per share amounts)
INCOME STATEMENT DATA:
Net interest revenue		$	327,424			$	330,889			$	441,142			$	444,899			$	440,836			$	422,899			$	385,799
Provision for credit losses			110,831				160,723				204,016				117,324				56,176				22,696				8,577
Noninterest revenue			205,510				190,170				264,144				275,276				245,607				232,151				207,017
Noninterest expense			397,777				363,586				487,033				490,017				455,913				428,410				394,077
Income (loss) before income taxes			24,326				(3,250	)			14,237				112,834				174,354				203,944				190,162
Income tax provision (benefit)			60				(10,346	)			(8,705	)			30,105				53,943				66,001				64,968
Net income		$	24,266			$	7,096			$	22,942			$	82,729			$	120,411			$	137,943			$	125,194
BALANCE SHEET DATA:
Total assets		$	13,198,518			$	13,583,016			$	13,615,010			$	13,167,867			$	13,480,218			$	13,189,841			$	12,040,521
Investment securities			2,481,555				2,273,765				2,709,081				1,993,594				2,316,380				2,627,110				2,765,419
Loans and leases, net of unearned income			9,055,905				9,514,929				9,333,107				9,775,136				9,691,277				9,179,684				7,871,471
Allowance for credit losses			199,686				205,081				196,913				176,043				132,793				115,197				98,834
Goodwill and other intangibles			288,723				290,669				289,720				293,629				297,130				281,433				166,159
Total deposits			11,063,233				11,196,864				11,490,021				10,677,702				9,711,872				10,064,099				9,710,578
Noninterest bearing deposits			2,198,535				1,967,635				2,060,145				1,901,663				1,735,130				1,670,198				1,817,223
Common shareholders’ equity			1,266,753				1,235,705				1,222,244				1,276,296				1,240,260				1,196,626				1,026,585

		At or for the Nine Months
		Ended September 30,								At or for the Year Ended December 31,
		2011				2010				2010				2009				2008				2007				2006
		(Unaudited)								(Derived from audited financial statements)
		(Dollars in thousands, except per share amounts)
PER SHARE DATA:
Basic earnings per share		$	0.29			$	0.09			$	0.28			$	0.99			$	1.46			$	1.69			$	1.58
Diluted earnings per share			0.29				0.08				0.27				0.99				1.45				1.69				1.57
Book value per share			15.17				14.80				14.64				15.29				14.92				14.54				12.98
Tangible book value per share			11.71				11.32				11.17				11.78				11.35				11.12				10.88
Cash dividends per share			0.13				0.66				0.88				0.88				0.87				0.83				0.79
Average shares outstanding, diluted			83,511,808				83,529,579				83,515,040				83,430,505				82,793,663				81,844,343				79,542,734
PERFORMANCE RATIOS:
Return on average assets(1)			0.24	%			0.07	%			0.17	%			0.63	%			0.91	%			1.07	%			1.06	%
Return on shareholders’ equity(1)			2.63	%			0.76	%			1.85	%			6.59	%			9.84	%			12.31	%			12.52	%
Net interest margin			3.69	%			3.74	%			3.70	%			3.77	%			3.75	%			3.68	%			3.70	%
Efficiency ratio(2)			74.64	%			69.78	%			69.05	%			68.04	%			66.42	%			65.40	%			66.48	%
Noninterest income to operating revenues			38.56	%			36.50	%			37.45	%			38.22	%			35.78	%			35.44	%			34.92	%
Total shareholders’ equity to total assets			9.60	%			9.10	%			8.98	%			9.69	%			9.20	%			9.07	%			8.53	%
Tangible common equity to tangible assets			7.58	%			7.11	%			7.00	%			7.63	%			7.15	%			7.09	%			7.25	%
ASSET QUALITY DATA:
Non-accrual loans and leases		$	314,479			$	347,181			$	347,499			$	144,013			$	28,168			$	9,789			$	6,603
Loans and leases 90+ days past due, still accruing			7,354				9,910				8,500				36,301				33,373				18,671				15,282
Restructured loans and leases, still accruing			40,966				52,325				38,376				6,161				2,472				721				1,571
Other real estate owned			162,686				82,647				133,412				59,265				46,317				24,281				10,463
Total non-performing assets(4)			525,485				492,063				527,787				245,740				110,330				53,462				33,919
Allowance for credit losses to net loans and leases			2.21	%			2.16	%			2.11	%			1.80	%			1.37	%			1.25	%			1.26	%
Allowance for credit losses to non-performing loans and leases(3)			55.04	%			50.09	%			49.93	%			94.41	%			207.45	%			394.76	%			421.36	%
Non-performing loans and leases to net loans and leases(3)			4.01	%			4.30	%			4.23	%			1.91	%			0.66	%			0.32	%			0.30	%
Non-performing assets to net loans and leases(4)			5.80	%			5.17	%			5.65	%			2.51	%			1.14	%			0.58	%			0.43	%
Net charge-offs as a percentage of average loans(1)			1.56	%			1.81	%			1.90	%			0.76	%			0.40	%			0.14	%			0.15	%
CAPITAL RATIOS:
Tier I leverage ratio			8.66	%			8.26	%			8.07	%			8.95	%			8.65	%			8.13	%			8.73	%
Tier I capital ratio			11.36	%			10.56	%			10.61	%			11.17	%			10.79	%			10.63	%			12.34	%
Total risk-based capital ratio			12.62	%			11.82	%			11.87	%			12.42	%			12.04	%			11.81	%			13.55	%

(1)		Annualized.
(2)		Efficiency ratio is defined as noninterest expense divided by the sum of net interest income plus noninterest income.
(3)		Non-performing loans include nonaccrual loans and leases, loans and leases 90+ past due, still accruing, and restructured loans and leases, still accruing.
(4)		Non-performing assets include non-performing loans and other real estate owned.

 

GAAP RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

	•	“Tangible book value per share” is defined as total shareholders’ equity, less goodwill and other intangible assets, divided by total common shares outstanding. Management believes this measure is important to investors who are interested in changes from period to period in book value per share exclusive of changes in intangible assets.
	•	“Tangible common equity to tangible assets” is defined as total common equity, less goodwill and other identifiable intangible assets, divided by the difference of total assets less goodwill and other identifiable intangible assets. Management believes this measure is important to investors who are interested in evaluating the adequacy of our capital levels.
	•	“Efficiency ratio” is defined as noninterest expense divided by the sum of net interest income and noninterest income. Management believes this measure is important to investors who are interested in comparing the performance of our core business operations, as it represents an approximate measure of the cost required by the Company to generate a dollar of revenue.

		At or for the Nine Months
		Ended September 30,								At or for the Year Ended December 31,
		2011				2010				2010				2009				2008				2007				2006
		(Unaudited)								(Derived from audited financial statements)
		(Dollars in thousands, except per share data)
TANGIBLE COMMON EQUITY:
Total common shareholders’ equity		$	1,266,753			$	1,235,705			$	1,222,244			$	1,276,296			$	1,240,260			$	1,196,626			$	1,026,585
Less:
Goodwill			271,297				270,097				270,097				270,097				268,966				254,889				143,718
Other identifiable intangible assets			17,426				20,572				19,623				23,532				28,164				26,544				22,441
Total tangible common equity		$	978,030			$	945,036			$	932,524			$	982,667			$	943,130			$	915,193			$	860,426
Total shares outstanding			83,488,963				83,481,737				83,481,737				83,450,296				83,105,100				82,299,297				79,109,573
Tangible book value per share		$	11.71			$	11.32			$	11.17			$	11.78			$	11.35			$	11.12			$	10.88
TANGIBLE ASSETS:
Total assets		$	13,198,518			$	13,583,016			$	13,615,010			$	13,167,867			$	13,480,218			$	13,189,841			$	12,040,521
Less:
Goodwill			271,297				270,097				270,097				270,097				268,966				254,889				143,718
Other identifiable intangible assets			17,426				20,572				19,623				23,532				28,164				26,544				22,441
Total tangible assets		$	12,909,795			$	13,292,347			$	13,325,290			$	12,874,238			$	13,183,088			$	12,908,408			$	11,874,362
Tangible common equity to tangible assets			7.58	%			7.11	%			7.00	%			7.63	%			7.15	%			7.09	%			7.25	%
EFFICIENCY RATIO:
Noninterest expense		$	397,777			$	363,586			$	487,033			$	490,017			$	455,913			$	428,410			$	394,077
Net interest income			327,424				330,889				441,142				444,899				440,836				422,899				385,799
Non-interest income			205,510				190,170				264,144				275,276				245,607				232,151				207,017
Efficiency ratio			74.64	%			69.78	%			69.05	%			68.04	%			66.42	%			65.40	%			66.48	%

 

Investing in our common stock involves substantial risk. You should carefully consider each of the following risks and the other information contained or incorporated by reference in this prospectus supplement before deciding to purchase shares of our common stock. If any of these risks actually occur, our business, financial condition, results of operations and prospects could be adversely affected, the trading price of our common stock could decline, perhaps significantly, or you could lose part or all of your investment.

 

Risks Related to Our Business

 

Our financial performance may be adversely affected by conditions in the financial markets and economic conditions generally.

 

Our financial performance generally, and in particular the ability of borrowers to pay interest on and repay principal of outstanding loans and the value of collateral securing those loans, is highly dependent upon the business environment in the markets where we operate and in the United States as a whole. A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity or investor or business confidence, limitations on the availability or increases in the cost of credit and capital, increases in inflation or interest rates, natural disasters or a combination of these or other factors.

 

Since mid-2007, the financial services industry and the securities markets generally have been materially and adversely affected by significant declines in the values of nearly all asset classes and by a serious lack of liquidity. The global markets have been characterized by substantially increased volatility and an overall loss of investor confidence. Market conditions have led to the failure or merger of a number of prominent financial institutions. Financial institution failures or near-failures have resulted in further losses as a consequence of defaults on securities issued by them and defaults under contracts entered into with such entities as counterparties. Furthermore, declining asset values, defaults on mortgages and consumer loans, and the lack of market and investor confidence, as well as other factors, have all combined to increase credit default swap spreads and to cause rating agencies to lower credit ratings. Despite recent stabilization in asset prices, economic performance and significant declines in Federal Reserve borrowing rates, there remains a risk of continued asset and economic deterioration, which may increase the cost and decrease the availability of liquidity. Additionally, some banks and other lenders have suffered significant losses and they have become reluctant to lend, even on a secured basis, because of capital limitations, potentially increased risks of default and the impact of declining asset values on collateral. The foregoing has significantly weakened the strength and liquidity of some financial institutions worldwide.

 

It is possible that the business environment in the United States will continue to deteriorate for the foreseeable future. There can be no assurance that these conditions will improve in the near term. Such conditions could adversely affect the credit quality of our loans, our results of operations and our financial condition.

 

The recent downgrade of the U.S. government’s sovereign credit rating, any related rating agency action in the future, the ongoing debt crisis in Europe and the downgrade of the sovereign credit ratings for several European nations could negatively impact our business, financial condition and results of operations.

 

On November 21, 2011, a Congressional committee that was formed to achieve $1.2 trillion in deficit reduction measures announced that it had failed to achieve its stated purpose by the deadline imposed by Congress’ August agreement to raise the U.S. government’s debt ceiling. Standard & Poor’s Rating Services, which had downgraded the U.S. government’s AAA sovereign credit rating to AA+ with a negative outlook in August 2011, affirmed its AA+ rating following the announcement. Moody’s Investors Services, which changed its U.S. government rating outlook to negative on August 2, 2011, also reaffirmed its rating following the Congressional committee’s announcement. On November 22, 2011, Fitch Ratings stated that the failure of the committee to reach an agreement would likely cause it to change its outlook on U.S. government debt to

negative. Further, on November 28, 2011, Fitch stated that a downgrade of the U.S. sovereign credit rating would occur without a credible plan in place by 2013 to reduce the U.S. government deficit. The impact of any additional downgrades to the U.S. government’s sovereign credit rating by any of these rating agencies, as well as the perceived creditworthiness of U.S. government-related obligations, is inherently unpredictable and could adversely affect the U.S. and global financial markets and economic conditions and have a material adverse effect on our business, financial condition and results of operation.

 

In addition, certain European nations continue to experience varying degrees of financial stress. Despite various assistance packages, worries about European financial institutions and sovereign finances persist. On January 13, 2012, Standard & Poor’s downgraded the credit ratings of France, Italy and seven other European nations in part as a result of the failure of leaders to address systemic stresses in the Eurozone. Market concerns over the direct and indirect exposure of European banks and insurers to these European Union nations and each other have resulted in a widening of credit spreads and increased costs of funding for some European financial institutions. Risks related to the European economic crisis have had, and are likely to continue to have, a negative impact on global economic activity and the financial markets. As these conditions persist, our financial condition and results of operations could be materially adversely affected.

 

Our current provision and allowance for credit losses may not be adequate to cover actual credit losses.

 

We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses. The determination of the appropriate level of the provision for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Continuing deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the amount reserved in the allowance for credit losses. In addition, bank regulatory agencies periodically review our provision and the total allowance for credit losses and may require an increase in the allowance for credit losses or future provisions for credit losses, based on judgments different than those of management. Any increases in the provision or allowance for credit losses will result in a decrease in our net income and, potentially, capital, and may have a material adverse effect on our financial condition and results of operations. In addition, we reported a material weakness in internal control over financial reporting designed to ensure proper accounting for our allowance for credit losses. If we cannot properly remediate this material weakness our allowance for credit loss may not be accurate which may have an adverse impact on our the accuracy of our reported financial results. See “Risk Factors — Risks Related to Our Business — We reported a material weakness in our internal control over financial reporting; our internal controls might not continue to be effective.”

 

We make and hold in our portfolio a significant number of real estate construction, acquisition and development loans, which are based upon estimates of costs and values associated with the completed project and which pose more credit risk than other types of loans typically made by financial institutions.

 

At September 30, 2011, we had a balance of $976.7 million in real estate construction, acquisition and development loans, representing 10.7% of our total loan portfolio. These real estate construction, acquisition and development loans have certain risks that are not present in other types of loans. The primary credit risks associated with real estate construction, acquisition and development loans are underwriting, project risks and market risks. Project risks include cost overruns, borrower credit risk, project completion risk, general contractor credit risk and environmental and other hazard risks. Market risks are risks associated with the sale of the completed residential and commercial units. They include affordability risk, which means the risk that borrowers cannot obtain affordable financing, product design risk, and risks posed by competing projects. Real estate construction, acquisition and development loans also involve additional risks because funds are advanced upon the security of the project, which is of uncertain value prior to its completion, and costs may exceed realizable values in declining real estate markets. Because of the uncertainties inherent in estimating construction costs and the realizable market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to evaluate accurately the total funds required to complete a

project and the related loan-to-value ratio. As a result, real estate construction, acquisition and development loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property, rather than the ability of the borrower or guarantor to repay principal and interest. If our appraisal of the value of the completed project proves to be overstated or market values or rental rates decline, we may have inadequate security for the repayment of the loan upon completion of construction of the project. If we are forced to foreclose on a project prior to or at completion due to a default, there can be no assurance that we will be able to recover all of the unpaid balance and accrued interest on the loan as well as related foreclosure and holding costs. In addition, we may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time while we attempt to dispose of it. The adverse effects of the foregoing matters upon our real estate construction, acquisition and development portfolio could necessitate a further increase in non-performing loans related to this portfolio and these non-performing loans may result in a material level of charge-offs, which may have a material adverse effect on our financial condition and results of operations. At September 30, 2011, non-accrual real estate construction, acquisition and development loans totaled $171.6 million.

 

Due to the downturn in the housing market, demand for construction, acquisition and development loans has been declining, a trend that management expects to continue. The decline in this portfolio presents an additional challenge to maintaining and growing our earning assets.

 

We may become involved in legal or administrative proceedings filed by or against us.

 

The nature of our business ordinarily results in a certain amount of claims, litigation, investigations and legal and administrative investigations and proceedings. Although we have developed policies and procedures to minimize the impact of legal noncompliance and other disputes, and endeavored to provide reasonable insurance coverage, litigation and regulatory actions present an ongoing risk.

 

We cannot predict with certainty the cost of defense, the cost of prosecution or the ultimate outcome of litigation and other proceedings filed by or against us, our directors, management or employees, including remedies or damage awards. On at least a quarterly basis, we assess our liabilities and contingencies in connection with outstanding legal proceedings as well as certain threatened claims (which are not considered incidental to the ordinary conduct of our business) utilizing the latest and most reliable information available. For matters where a loss is not probable or the amount of the loss cannot be estimated, no accrual is established. For matters where it is probable we will incur a loss and the amount can be reasonably estimated, we establish an accrual for the loss. Once established, the accrual is adjusted periodically to reflect any relevant developments. The actual cost of any outstanding legal proceedings or threatened claims, however, may turn out to be substantially higher than the amount accrued. Further, our insurance will not cover all such litigation, other proceedings or claims, or the costs of defense. While the final outcome of any legal proceedings is inherently uncertain, based on the information available, advice of counsel and available insurance coverage, management believes that the litigation-related expense we have accrued is adequate and that any incremental liability arising from our legal proceedings and threatened claims, including the matters described below, and those otherwise arising in the ordinary course of business, will not have a material adverse effect on our consolidated financial condition or results of operations.

 

On May 12, 2010, the Company and our Chief Executive Officer, President and Chief Financial Officer were named in a purported class action lawsuit filed in the U.S. District Court for the Middle District of Tennessee on behalf of certain purchasers of our common stock. On September 17, 2010, an Executive Vice President of the Company was added as a party to the lawsuit. The amended complaint alleges that the defendants issued materially false and misleading statements regarding our business and financial results. The plaintiff seeks class certification, an unspecified amount of damages and awards of costs and attorneys’ fees and other relief.

 

Separately, on August 16, 2011, a shareholder filed a putative derivative action purportedly on behalf of the Company in the Circuit Court of Lee County, Mississippi, against certain current and past executive officers and the members of our board of directors. The plaintiff in this shareholder derivative lawsuit asserts that the individual defendants violated their fiduciary duties based upon substantially the same facts as alleged

in the purported class action lawsuit described above. The plaintiff is seeking to recover damages in an unspecified amount and equitable and/or injunctive relief.

 

In November 2010, we were informed that the Atlanta Regional Office of the SEC had issued an Order of Investigation concerning the Company. This investigation is ongoing and is primarily focused on our recording and reporting of our unaudited financial statements, including the allowance and provision for credit losses, and our internal controls and our communications with the independent auditors prior to the filing of our Annual Report on Form 10-K for the year ended December 31, 2009. In connection with its investigation, the SEC has issued subpoenas for documents and testimony. We are cooperating fully with the SEC.

 

On May 18, 2010, the Bank was named as a defendant in a purported class action lawsuit filed by two Arkansas customers of the Bank in the U.S. District Court for the Northern District of Florida. The suit challenges the manner in which overdraft fees were charged and the policies related to posting order of debit card and ATM transactions. The suit also makes a claim under Arkansas’ consumer protection statute.

 

See “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Certain Litigation Contingencies” of our Quarterly Report on Form 10-Q for the period ended September 30, 2011, which is incorporated by reference in this prospectus supplement.

 

We may elect or be compelled to seek additional capital in the future, but that capital may not be available on favorable terms when it is needed.

 

We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. In addition, we may elect to raise additional capital to support our business or to finance any acquisitions or we may otherwise elect or be required to raise additional capital. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets, economic conditions and a number of other factors, many of which are outside our control, and on our financial performance. Accordingly, we cannot provide assurance of our ability to raise additional capital if needed or to be able to do so on terms acceptable to us. If we cannot raise additional capital on favorable terms when needed, it may have a material adverse effect on our financial condition and results of operations.

 

Liquidity risk could impair our ability to fund operations and jeopardize our financial condition.

 

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and other sources could have a substantial negative effect on the liquidity of the Bank and/or the Company. Our access to funding sources in amounts adequate to finance our activities or the terms of which are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy in general. A decrease in the level of our business activity as a result of a downturn in the markets in which our loans are concentrated could detrimentally impact our access to liquidity sources. Our ability to borrow could also be impaired by factors that are not specific to us, such as a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry in light of the recent turmoil faced by banking organizations and the continued deterioration in credit markets.

 

We reported a material weakness in our internal control over financial reporting; our internal controls might not continue to be effective.

 

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2010 reported a material weakness in our internal control over financial reporting designed to ensure proper accounting for allowance for credit losses, as described in our Annual Report on Form 10-K for the years ended December 31, 2010 and December 31, 2009. During the fourth quarter of 2011, our management concluded that the control deficiency in our credit grading process related to the determination of the allowance for credit losses has been remediated. We cannot provide any assurance, however, that our internal controls will continue to be effective.

Our operations are subject to extensive governmental regulation and supervision.

 

The Company has elected to be a financial holding company pursuant to the Gramm-Leach-Bliley Act of 1999 and the Bank Holding Company Act of 1956 and the Bank is a Mississippi state banking corporation. Both are subject to extensive governmental regulation, supervision, legislation and control. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not security holders. These laws and regulations limit the manner in which we operate, including the amount of loans we can originate, interest we can charge on loans and fees we can charge for certain services. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Most recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, was enacted, implementing sweeping reforms to the financial services industry. It is possible that there will be continued changes to the banking and financial institutions regulatory regimes in the future. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways. Such changes could subject us to additional costs, limit the types of financial services and products we may offer and/or increase the ability of non-banks to offer competing financial services and products, among other things. We cannot predict the extent to which the government and governmental organizations may change any of these laws or controls. We also cannot predict how such changes would adversely affect our business and prospects.

 

The Dodd-Frank Act and related rules and regulations may adversely affect our business, financial condition and results of operations.

 

The Dodd-Frank Act contains a variety of far-reaching changes and reforms for the financial services industry and directs federal regulatory agencies to study the effects of, and issue implementing regulations for, these reforms. Many of the provisions of the Dodd-Frank Act could have a direct effect on our performance and, in some cases, impact our ability to conduct business. Examples of these provisions include, but are not limited to:

 

 

Many of these provisions have already been the subject of proposed and final rules by the FDIC and Federal Reserve. Many other provisions, however, remain subject to regulatory rulemaking and implementation, the effects of which are not yet known. The provisions of the Dodd-Frank Act and any rules adopted to implement those provisions as well as any additional legislative or regulatory changes may impact the profitability of our

business activities, may require that we change certain of our business practices, may materially affect our business model or affect retention of key personnel, may require us to raise additional capital and could expose us to additional costs (including increased compliance costs). These and other changes may also require us to invest significant management attention and resources to make any necessary changes and may adversely affect our ability to conduct our business as previously conducted or our financial condition and results of operations.

 

We obtain a significant portion of our noninterest revenue through service charges on core deposit accounts, and regulations impacting service charges could reduce our fee income.

 

A significant portion of our noninterest revenue is derived from service charge income. The largest component of this service charge income is overdraft-related fees. Management anticipates that changes in banking regulations, and in particular the Federal Reserve’s rules pertaining to certain overdraft payments on consumer accounts and the FDIC’s Overdraft Payment Programs and Consumer Protection Final Overdraft Payment Supervisory Guidance, will have an adverse impact on our service charge income. As a result of these changes as well as other factors, our service charge revenue decreased by approximately $4.0 million in 2011. Additionally, changes in customer behavior as well as increased competition from other financial institutions may result in declines in deposit accounts or in overdraft frequency resulting in a decline in service charge income. A reduction in deposit account fee income could have a material adverse effect on our earnings.

 

Because of the geographic concentration of our assets, our business is highly susceptible to local economic conditions.

 

Our business is primarily concentrated in selected markets in Mississippi, Tennessee, Alabama, Arkansas, Texas, Louisiana, Florida, Missouri and Illinois. As a result of this geographic concentration, our financial condition and results of operations depend largely upon economic conditions in these market areas. Deterioration in economic conditions in the markets we serve could result in one or more of the following: an increase in loan delinquencies; an increase in problem assets and foreclosures; a decrease in the demand for our products and services; and a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with problem loans and collateral coverage.

 

We may be adversely affected by the soundness of other financial institutions.

 

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when the collateral we hold cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure owed to us. Any such losses could have a material adverse affect on our financial condition and results of operations.

 

Changes in interest rates could have an adverse impact on our results of operations and financial condition.

 

Our earnings and financial condition are dependent to a large degree upon net interest income, which is the difference or spread between interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings and other interest-bearing liabilities. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities may fluctuate. This can cause decreases in our spread and can adversely affect our earnings and financial condition.

 

Interest rates are highly sensitive to many factors including:

 

 

 

The Bank originates residential mortgage loans for sale and for our portfolio. The origination of residential mortgage loans is highly dependent on the local real estate market and the level of interest rates. Increasing interest rates tend to reduce the origination of loans for sale and fee income, which we report as gain on sale of loans. Decreasing interest rates generally result in increased prepayments of loans and mortgage-backed securities, as borrowers refinance their debt in order to reduce their borrowing cost. This typically leads to reinvestment at lower rates than the loans or securities were paying. Changes in market interest rates could also reduce the value of our financial assets. Our financial condition and results of operations could be adversely affected if we are unsuccessful in managing the effects of changes in interest rates.

 

Monetary policies and economic factors may limit our ability to attract deposits or make loans.

 

The monetary policies of federal regulatory authorities, particularly the Federal Reserve, and economic conditions in our service area and the United States generally, affect our ability to attract deposits and extend loans. We cannot predict either the nature or timing of any changes in these monetary policies and economic conditions, including the Federal Reserve’s interest rate policies, or their impact on our financial performance. The banking business is subject to various material business risks, which have become more acute during the current environment of economic slowdown and recession. In the current economic environment, foreclosures have increased and such conditions could also lead to a potential decline in deposits and demand for loans.

 

Volatility in capital and credit markets could adversely affect our business.

 

The capital and credit markets have been experiencing volatility and disruption for several years. In some cases, the markets have produced downward pressure on stock prices and credit availability for certain issuers without regard to those issuers’ underlying financial strength. If market disruption and volatility continue or worsen, there can be no assurance that we will not experience an adverse effect, which may be material, on our ability to access capital and on our business, financial condition and results of operations.

 

Reputational risk may impact our results.

 

Our ability to originate and maintain accounts is highly dependent upon customer and other external perceptions of our business practices and/or our financial health. Adverse perceptions regarding our business practices and/or our financial health could damage our reputation in both the customer and funding markets, leading to difficulties in generating and maintaining accounts as well as in financing them. Adverse developments with respect to the customer or other external perceptions regarding the practices of our competitors, or our industry as a whole, may also adversely impact our reputation. While we carefully monitor internal and external developments for areas of potential reputational risk and have established governance structures to assist in evaluating such risks in our business practices and decisions, adverse reputational impacts on third parties with whom we have important relationships may also adversely impact our reputation. Adverse impacts on our reputation, or the reputation of our industry, may also result in greater regulatory and/or legislative scrutiny, which may lead to laws, regulations or regulatory actions that may change or constrain the manner in which we engage with our customers and the products we offer. Adverse reputational impacts or events may also increase our litigation risk.

 

Hurricanes or other adverse weather events could negatively affect local economies where we maintain branch offices or cause disruption or damage to our branch office locations, which could have an adverse effect on our business or results of operations.

 

We have operations in Mississippi, Alabama, Louisiana, Texas and Florida, which include areas susceptible to hurricanes or tropical storms. Such weather conditions can disrupt our operations, result in damage to our branch office locations or negatively affect the local economies in which we operate. We cannot predict whether or to what extent damage caused by future hurricanes, tropical storms or other adverse weather events will affect our operations or the economies in our market areas, but such weather conditions could result in a

decline in loan originations and an increase in the risk of delinquencies, foreclosures or loan losses. Our business or results of operations may be adversely affected by these and other negative effects of devastating hurricanes or storms.

 

We could be required to write down goodwill and other intangible assets.

 

When we acquire a business, a portion of the purchase price of the acquisition is generally allocated to goodwill and other identifiable intangible assets. The amount of the purchase price that is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. At September 30, 2011, our goodwill and other identifiable intangible assets were $288.7 million. Under current accounting standards, if we determine goodwill or intangible assets are impaired, we are required to write down the carrying value of these assets. We conduct a review at least annually to determine whether goodwill is impaired. We completed such an impairment analysis for all of our reporting segments during the third quarter of 2011 and concluded that no impairment charge was necessary for the nine months ended September 30, 2011. We cannot provide assurance, however, that we will not be required to take an impairment charge in the future. Any impairment charge would have an adverse effect on our shareholders’ equity and financial results and could cause a decline in our stock price.

 

Diversification in types of financial services may adversely affect our financial performance.

 

As part of our business strategy, we may further diversify our lines of business into areas that are not traditionally associated with the banking business. As a result, we would need to manage the development of new business lines in which we have not previously participated. Each new business line would require the investment of additional capital and the significant involvement of our senior management to develop and integrate the service subsidiaries with our traditional banking operations. We can offer no assurances that we will be able to develop and integrate new services without adversely affecting our financial performance.

 

We compete with other financial holding companies, bank holding companies, banks, insurance and financial services companies.

 

The banking, insurance and financial services businesses are extremely competitive in our service areas in Mississippi, Tennessee, Alabama, Arkansas, Texas, Louisiana, Florida, Missouri and Illinois. We compete, and will continue to compete, with well-established banks, credit unions, insurance agencies and other financial institutions, some of which have significantly greater resources and lending limits. Some of our competitors provide certain services that we do not provide.

 

We face risks in connection with completed or potential acquisitions.

 

Historically, we have grown through the acquisition of other financial institutions as well as the development of de novo offices. If appropriate opportunities present themselves, we intend to pursue additional acquisitions in the future that we believe are strategic, including possible FDIC-assisted transactions. There can be no assurance that we will be able to identify, negotiate or finance potential acquisitions successfully or integrate such acquisitions with our current business.

 

Upon completion of an acquisition, we are faced with the challenges of integrating the operations, services, products, personnel and systems of acquired companies into our business, which may divert management’s attention from ongoing business operations. We cannot assure you that we will be successful in effectively integrating any acquisition into the operations of our business. Moreover, there can be no assurance that the anticipated benefits of any acquisition will be realized.

 

The success of our acquisitions is dependent on the continued employment of key employees. If acquired businesses do not meet projected revenue targets, or if certain key employees were to leave, we could conclude that the value of the businesses has decreased and that the related goodwill has been impaired. If we were to conclude that goodwill has been impaired, it would result in an impairment of goodwill charge to us, which would adversely affect our results of operations.

Our growth strategy includes risks that could have an adverse effect on financial performance.

 

An element of our growth strategy is the acquisition of additional banks (which might include the acquisition of bank assets and liabilities in FDIC-assisted transactions), bank holding companies, financial holding companies, insurance agencies and/or other businesses related to the financial services industry that may complement our organizational structure in order to achieve greater economies of scale. We cannot assure you that appropriate growth opportunities will continue to exist, that we will be able to acquire banks, insurance agencies, bank holding companies and/or financial holding companies that satisfy our criteria or that any such acquisitions will be on terms favorable to us. Further, our growth strategy requires that we continue to hire qualified personnel, while concurrently expanding our managerial and operational infrastructure. We cannot assure you that we will be able to hire and retain qualified personnel or that we will be able to successfully expand our infrastructure to accommodate future acquisitions or growth. As a result of these factors, we may not realize the expected economic benefits associated with our acquisitions. This could have a material adverse effect on our financial performance.

 

We may experience interruptions or breaches in our information system security.

 

We rely heavily on communications and information systems to conduct our business. Any failure, interruption or breach in security of these systems could result in failures or disruptions in our customer relationship management, general ledger, deposit, loan and other systems. While we have policies and procedures designed to prevent or limit the effect of the failure, interruption or security breach of these information systems, there can be no assurance that any such failures, interruptions or security breaches will not occur or, if they do occur, that they will be adequately addressed. The occurrence of any failures, interruptions or security breaches of these information systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny, or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

 

We may be adversely affected by the failure of certain third party vendors to perform.

 

We rely upon certain third party vendors to provide products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to the risk that these vendors might not perform in accordance with applicable contractual arrangements or service level agreements. We maintain a system of policies and procedures designed to monitor vendor risks. While we believe these policies and procedures help to mitigate risk, the failure of an external vendor to perform in accordance with applicable contractual arrangements or service level agreements could be disruptive to our operations, which could have a material adverse effect on our financial condition and results of operations.

 

Risks Relating to Our Common Stock and the Offering

 

Our ability to declare and pay dividends is limited.

 

There can be no assurance of whether or when we may pay dividends on the common stock in the future. Future dividends, if any, will be declared and paid at the discretion of our board of directors and will depend on a number of factors. Historically, our principal source of funds used to pay cash dividends on our common equity has been dividends received from the Bank. Although the Bank’s asset quality, earnings performance, liquidity and capital requirements will be taken into account before any future dividends our common stock are declared or paid by the Company, our board of directors will also consider our liquidity and capital requirements and our board of directors could determine to declare and pay dividends without relying on dividend payments from the Bank.

 

Federal and state banking laws and regulations and state corporate laws restrict the amount of dividends we may declare and pay. For example, under guidance issued by the Federal Reserve Board, as a bank holding company, we are required to consult with the Federal Reserve before declaring dividends and are to consider eliminating, deferring or reducing dividends if (i) our net income available to shareholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends, (ii) our prospective rate of earnings retention is not consistent with our capital needs and overall current and

prospective financial condition, or (iii) we will not meet, or are in danger of not meeting, our minimum regulatory capital adequacy ratios.

 

In addition, we need the approval of the Federal Reserve and the Bank needs the approval of the FDIC before paying cash dividends. Further, the Bank’s board of directors has approved a resolution requested by the FDIC and the Mississippi Department of Banking and Consumer Finance such that the declaration and payment of dividends will be limited to the Bank’s current net operating income and conditioned upon the prior written consent of the regulators and maintenance of minimum capital ratios. Finally, our board of directors has approved a resolution requested by the Federal Reserve such that we need the prior approval of the Federal Reserve before making any declaration or payment of dividends on any of our capital stock.

 

Issuing additional shares of our common stock to acquire other banks, bank holding companies, financial holding companies and/or insurance agencies may result in dilution for existing shareholders and may adversely affect the market price of our stock.

 

In connection with our growth strategy, we have issued, and may issue in the future, shares of our common stock to acquire additional banks, bank holding companies, financial holding companies, insurance agencies and/or other businesses related to the financial services industry that may compliment our organizational structure. Resales of substantial amounts of common stock in the public market and the potential of such sales could adversely affect the prevailing market price of our common stock and impair our ability to raise additional capital through the sale of equity securities. We usually must pay an acquisition premium above the fair market value of acquired assets for the acquisition of banks, bank holding companies, financial holding companies and insurance agencies. Paying this acquisition premium, in addition to the dilutive effect of issuing additional shares, may also adversely affect the prevailing market price of our common stock.

 

The market price of our common stock may decline after this offering.

 

We are currently offering for sale      shares of our common stock (      shares of common stock if the underwriters exercise their over-allotment option in full). The possibility that substantial amounts of shares of our common stock may be sold in the public market may cause prevailing market prices for our common stock to decrease. Additionally, because stock prices generally fluctuate over time, there is no assurance that purchasers of common stock in this offering will be able to sell shares after the offering at a price equal to or greater than the actual purchase price. Broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low. Purchasers should consider these factors in determining whether to purchase shares of common stock and the timing of any sale of shares of common stock.

 

The price of our common stock may fluctuate significantly, which may make it difficult for you to resell shares of our common stock owned by you at times or at prices you find attractive.

 

Our stock price may fluctuate significantly as a result of a variety of factors, many of which are beyond our control. The market for our common stock historically has experienced and may continue to experience significant price and volume fluctuations similar to those experienced by the broader stock market in recent years. Generally, the fluctuations experienced by the broader stock market have affected the market prices of securities issued by many companies for reasons unrelated to their operating performance and may adversely affect the price of our common stock. In addition, our announcements of our quarterly or annual financial results, changes in general conditions in the economy or the financial markets and other developments affecting us, our affiliates or our competitors could cause the market price of our common stock to fluctuate substantially.

 

We expect that the market price of our common stock will continue to fluctuate and there can be no assurances about the levels of market prices for our common stock or that it will trade at prices at or above the price offered hereby.

We will have broad discretion in how we use the proceeds of this offering, and we may not use these proceeds effectively, which could adversely affect our results of operations and cause our common stock price offered hereby to decline.

 

We will have considerable discretion in the application of the net proceeds of this offering. Our management has broad discretion over how these proceeds are used and could spend the proceeds in ways with which you may not agree. We may not invest the proceeds of this offering effectively or in a manner that yields a favorable or any return, which could result in further operating losses that could have a material and adverse effect on our business or cause the market price of our common stock to decline.

 

Anti-takeover provisions may discourage a change of our control.

 

Our governing documents and certain agreements to which we are a party contain provisions that make a change-in-control difficult to accomplish, and may discourage a potential acquirer. These include a classified or “staggered” board of directors, change-in-control agreements with members of management and supermajority voting requirements. These anti-takeover provisions may have an adverse effect on the market for our common stock.

 

Securities that we issue, including our common stock, are not FDIC insured.

 

Securities that we issue, including our common stock, are not savings or deposit accounts or other obligations of any bank and are not insured by the FDIC or any other governmental agency or instrumentality or any private insurer and are subject to investment risk, including the possible loss of your investment.

 

We may issue debt or equity securities or securities convertible into equity securities, any of which may be senior to our common stock as to distributions and in liquidation, which could negatively affect the value of our common stock.

 

In the future, we may attempt to increase our capital resources by entering into debt or debt-like financing that is unsecured or secured by all or up to all of our assets, or by issuing additional debt or equity securities, which could include issuances of secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, preferred stock or securities convertible into or exchangeable for equity securities. In the event of our liquidation, our lenders and holders of our debt and preferred securities would receive a distribution of our available assets before distributions to the holders of our common stock. Because any decision to incur debt or issue securities in our future offerings will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings and debt financings. Further, market conditions could require us to accept less favorable terms for the issuance of our securities in the future.

 

Our shares of common stock are listed and traded on NYSE under the symbol “BXS.” As of January 13, 2012, there were 83,483,796 shares outstanding, held by 8,544 shareholders of record. The table below sets forth, for the quarters indicated, the range of sales prices of our common stock on NYSE, and the cash dividends declared per share of common stock. On January 13, 2012, the last reported sale price of our common stock on NYSE was $12.32 per share.

 

 

Future dividends, if any, will be declared and paid at the discretion of our board of directors and will depend on a number of factors. We derive our income primarily from dividends received from owning the Bank’s common stock. Federal and state law and regulations, as well as a resolution approved by the Bank’s board of directors at the request of the FDIC and the Mississippi Department of Banking and Consumer Finance and a resolution approved by our board of directors at the request of the Federal Reserve, limit the Bank’s and our ability to declare and pay dividends. See “Risk Factors — Risks Related to Our Common Stock and the Offering — Our ability to declare and pay dividends is limited.”

 

We expect to receive $94.8 million (or $109.0 million if the underwriters exercise their over-allotment option in full) in net proceeds from the sale of the common stock in this offering, after deducting the underwriting discount and estimated offering expenses payable by us. We intend to use the net proceeds from the sale of the common stock in this offering for general corporate purposes, including to maintain certain capital levels and liquidity at the holding company, potentially provide equity capital to the Bank, fund growth either organically or through acquisition of other financial institutions, insurance agencies or other businesses that are closely aligned to our operations, and fund investments in our subsidiaries. Pending the application of the net proceeds, we expect to invest the net proceeds from this offering temporarily in short-term obligations.

 

The table below sets forth our consolidated capitalization as of September 30, 2011:

 

 

The information is only a summary and should be read together with the financial information incorporated by reference in this prospectus supplement and the accompanying prospectus.

 

 

 

 

Subject to the terms and conditions stated in the underwriting agreement with Morgan Stanley & Co. LLC and Stifel, Nicolaus & Company, Incorporated, as the representatives of the underwriters named below, each underwriter named below has severally agreed to purchase from us the respective number of shares of our common stock set forth opposite its name in the following table:

 

 

The underwriting agreement provides that the underwriters’ obligations are several, which means that each underwriter is required to purchase a specific number of shares of our common stock, but it is not responsible for the commitment of any other underwriter. The underwriting agreement provides that the underwriters’ several obligations to purchase the common stock depend on the satisfaction of the conditions contained in the underwriting agreement, including:

 

 

Subject to these conditions, the underwriters are committed to purchase and pay for all shares of common stock offered by this prospectus supplement, if any such shares of common stock are purchased. The underwriters are not, however, obligated to purchase or pay for the shares of common stock covered by the underwriters’ over-allotment option described below, unless and until they exercise this option.

 

The common stock is being offered by the several underwriters, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of certain legal matters by counsel for the underwriters and other conditions. The underwriters reserve the right to withdraw, cancel or modify this offering and to reject orders in whole or in part.

 

Offering Price

 

We have been advised that the underwriters propose to offer our common stock to the public at the offering price set forth on the cover of this prospectus supplement and to certain selected dealers at this price, less a concession not in excess of $      per share. The underwriters may allow, and any selected dealers may reallow, a concession not to exceed $      per share to certain brokers and dealers. After the common stock is released for sale to the public, the offering price and other selling terms may from time to time be changed by the underwriters.

 

Electronic Prospectus Delivery

 

A prospectus supplement in electronic format may be made available on the web sites maintained by one or more of the underwriters. In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses electronically. Morgan Stanley & Co. LLC and Stifel, Nicolaus & Company, Incorporated, as representatives for the several underwriters, may agree to allocate a number of shares of our common stock to underwriters for sale to their online brokerage account holders. The representatives will allocate shares of our common stock to underwriters that may make Internet distributions on the same basis as other allocations. Other than this prospectus supplement in electronic format, the information on any of these

web sites and any other information contained on a web site maintained by an underwriter or syndicate member is not part of this prospectus supplement.

 

Over-Allotment Option

 

We have granted to the underwriters a 30-day over-allotment option, from the date of the pricing of the offering, to purchase up to an aggregate of           shares of our common stock at the public offering price, less the underwriting discount set forth on the cover page of this prospectus supplement.

 

Underwriting Discounts and Offering Expenses

 

The table below shows the per share and total underwriting discount that we will pay to the underwriters. These amounts are shown reflecting the full exercise of the underwriters’ over-allotment option.

 

 

We estimate that our share of the total offering expenses, excluding underwriting discounts, will be approximately $250,000.

 

New York Stock Exchange Listing

 

The shares of our common stock are listed and traded on the New York Stock Exchange under the symbol “BXS.”

 

Lock-Up Agreements

 

We, our executive officers and our directors have agreed that for a period of 90 days from the date of this prospectus supplement, neither we nor any of our executive officers or directors will, without the prior written consent of Morgan Stanley & Co. LLC and Stifel, Nicolaus & Company, Incorporated, as the representatives on behalf of the underwriters, subject to certain exceptions, sell, offer to sell or otherwise dispose of or hedge any common stock or any securities convertible into or exercisable or exchangeable for our common stock. Morgan Stanley & Co. LLC and Stifel, Nicolaus & Company, Incorporated, in their sole discretion may release the securities subject to these lock-up agreements at any time without notice.

 

Indemnity

 

We have agreed to indemnify the underwriters and persons who control the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

 

Stabilization

 

In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, covering transactions, and penalty bids in accordance with Regulation M under the Exchange Act, as follows:

 

 

 

These stabilizing transactions, covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the market price of our common stock may be higher than the price that might otherwise exist in the open market. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the market price of our common stock. These transactions may be effected on the NYSE or otherwise and, if commenced, may be discontinued at any time.

 

Other Considerations

 

It is expected that delivery of the common stock will be made against payment therefore on or about the date specified on the cover page of this prospectus supplement. Under Rule 15c6-1 promulgated under the Exchange Act, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise.

 

Certain of the underwriters and their affiliates have in the past provided, and may in the future from time to time provide, investment banking and other financing and banking services to us, for which they have in the past received, and may in the future receive, customary fees and reimbursement for their expenses.

 

 

The validity of the common stock offered by this prospectus supplement will be passed upon for us by Riley, Caldwell, Cork & Alvis, P.A., Tupelo, Mississippi. Certain legal matters will be passed upon for the underwriters by DLA Piper LLP (US), Washington, D.C.

 

 

The consolidated financial statements of BancorpSouth, Inc. as of December 31, 2010 and 2009, and for each of the years in the three-year period ended December 31, 2010 and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2010 have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of such firm as experts in accounting and auditing.

 

The audit report on the effectiveness of internal control over financial reporting as of December 31, 2010 expresses an opinion that BancorpSouth, Inc. did not maintain effective control over financial reporting as of December 31, 2010 because of the effect of a material weakness related to the determination of the allowance for credit losses on the achievement of the objectives of the control criteria.

PROSPECTUS

 

 

Common Stock

Preferred Stock

Debt Securities

Warrants

Depositary Shares

Rights

Purchase Contracts

Units

 

 

 

 

We may offer from time to time, in one or more series, the following:

 

 

We will provide the specific prices and terms of these securities in one or more prospectus supplements at the time of an offering. You should read this prospectus and the accompanying prospectus supplement carefully before you make your investment decision.

 

We may offer and sell these securities directly to you through agents or through underwriters and dealers. If agents, underwriters or dealers are used to sell the securities, we will identify them and describe their compensation in a prospectus supplement.

 

Our common stock is listed on the New York Stock Exchange under the symbol “BXS.”

 

 

 

 

This prospectus may not be used to sell securities unless accompanied by a prospectus supplement.

 

Investing in these securities involves risks. You should carefully review the discussion under the heading “RISK FACTORS” on page 5 regarding information included and incorporated by reference in this prospectus and the applicable prospectus supplement.

 

The securities are not savings accounts, deposits or other obligations of any bank or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

 

 

 

The date of this prospectus is August 10, 2009

 

TABLE OF CONTENTS

 

 

You should rely only on the information contained or incorporated by reference in this prospectus, the applicable prospectus supplement, and any related free writing prospectus. We have not authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell, or a solicitation of an offer to purchase, these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any other documents incorporated by reference is accurate only as of the date on the front cover of the applicable document.

 

References in this prospectus to “we,” “us” and “our” refer to BancorpSouth, Inc., a financial holding company incorporated in Mississippi, unless the context otherwise requires.

 

This prospectus is part of an automatic shelf registration statement that we filed with the Securities and Exchange Commission, or SEC, as a “well-known seasoned issuer” as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act. Under this process, we may, over time, sell any combination of the securities described in this prospectus in one or more offerings. This prospectus provides you with a general description of the securities that we may offer. As allowed by SEC rules, this prospectus does not contain all the information you can find in the registration statement or the exhibits to the registration statement. Each time we offer to sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement and/or a free writing prospectus may also add to, update or change other information contained in this prospectus. You should read both the prospectus and any prospectus supplement together with the additional information described under the heading “WHERE YOU CAN FIND MORE INFORMATION.”

 

We file annual, quarterly and current reports, proxy statements, information statements and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov and on our corporate website at www.bancorpsouthonline.com. The information on our corporate website is not part of this prospectus or any accompanying prospectus supplements, free writing prospectuses or other offering materials. You can also inspect our reports, proxy statements and other information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

 

We “incorporate by reference” into this prospectus information we file with the SEC, which means:

 

 

We are incorporating by reference the following documents:

 

 

Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

You can obtain copies of the documents incorporated by reference in this prospectus, at no cost, by writing or calling us at the following address:

 

BancorpSouth, Inc.

One Mississippi Plaza

Tupelo, Mississippi 38804

Attention: Corporate Secretary

(662) 680-2000

 

We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference in the prospectus but not delivered with the prospectus. Exhibits to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference into such documents.

 

Certain information included or incorporated by reference in this prospectus may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “continue,” “should,” “could,” “would” and other comparable terms. These forward-looking statements are based on the current plans and expectations of our management and are subject to a number of risks and uncertainties, including those set forth below, which could significantly affect our current plans and expectations and future financial condition and results.

 

While it is not possible to identify all these factors, we continue to face many risks and uncertainties that could cause actual results to differ from those forward-looking statements, including:

 

 

 

We caution you that the factors listed above, as well as the risk factors included or incorporated by reference in this prospectus or any prospectus supplement, may not be exhaustive. We operate in a continually changing business environment, and new risks emerge from time to time. We cannot predict such new risks, nor can we assess the impact, if any, of such new risks on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied by any forward-looking statements.

 

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this prospectus and are expressly qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligation to publicly update or revise forward-looking statements, which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws. Shareholders and investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this prospectus.

 

Potential investors are urged to read and consider the risk factors relating to an investment in our securities incorporated by reference herein from Part I, Item 1A of our most recent annual report on Form 10-K (together with any material changes thereto contained in subsequently filed quarterly reports on Form 10-Q). Before making an investment decision, you should carefully consider these risks as well as other information we include or incorporate by reference in this prospectus or any prospectus supplement. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also affect our business operations.

 

BancorpSouth, Inc. is incorporated in Mississippi and is a financial holding company under the Bank Holding Company Act of 1956. We are based in Tupelo, Mississippi and conduct our operations through our bank subsidiary, BancorpSouth Bank, and various banking-related subsidiaries. BancorpSouth Bank conducts commercial banking, trust, insurance and investment services businesses.

 

Except as may be otherwise set forth in the applicable prospectus supplement accompanying this prospectus, the net proceeds from the sale of the securities will be used for general corporate purposes, including without limitation:

 

 

Pending any such use, we may temporarily invest the net proceeds in short-term marketable securities.

 

The following table sets forth our consolidated ratios of earnings to combined fixed charges for the periods indicated:

 

 

For purposes of computing the ratio of earnings to fixed charges, earnings represents net income plus applicable income taxes and fixed charges less capitalized interest. During the periods set forth above, we did not have any preferred securities outstanding and, therefore, did not pay any preferred stock dividends.

 

This prospectus contains summary descriptions of the following securities that we may offer and sell from time to time:

 

 

The descriptions of the terms of these securities below are not meant to be complete but set forth some of the general terms and provisions of securities that we may offer. The particular terms of securities offered and the extent, if any, to which the general terms set forth below do not apply to those securities will be described in the related prospectus supplement. If the information contained in the prospectus supplement differs from the description below, you should rely on the information in the prospectus supplement. The descriptions below are qualified in their entirety by reference to our restated articles of incorporation, as amended, and amended and restated bylaws, as amended.

 

We may issue securities in book-entry form through one or more depositaries, such as The Depository Trust Company, named in the applicable prospectus supplement. Each sale of a security in book-entry form will settle in immediately available funds through the applicable depositary, unless otherwise stated. We will issue the securities only in registered form, without coupons, although we may issue the securities in bearer form if so specified in the applicable prospectus supplement. If any securities are to be listed on a securities exchange, the applicable prospectus supplement will so indicate.

 

General

 

The description of our capital stock below is based on our restated articles of incorporation, our amended and restated bylaws and applicable provisions of Mississippi law. We have summarized certain portions of our restated articles of incorporation and amended and restated bylaws below. The summary is not complete. You

should refer to the applicable provisions of our restated articles of incorporation and amended and restated bylaws, which are incorporated by reference into the registration statement of which this prospectus forms a part, and to the Mississippi Business Corporation Act, for the provisions that are important to you.

 

Common Stock

 

We may issue shares of our common stock from time to time. Our restated articles of incorporation authorize us to issue up to 500 million shares of our common stock, $2.50 par value per share. As of August 6, 2009, we had 83,411,036 shares of common stock outstanding.

 

Holders of outstanding shares of our common stock are entitled to receive such dividends, if any, as may be declared by our board of directors, in its discretion, out of funds legally available therefor.

 

Holders of our common stock are entitled to one vote per share on all matters to be voted on by our shareholders, including the election of directors, and do not have cumulative voting rights.

 

Under the Mississippi Business Corporation Act, an affirmative vote of the majority of the shareholders present at a meeting is sufficient in order to take most shareholder actions. Certain extraordinary actions require greater percentages of affirmative shareholder votes, including an increase, without a recommendation by our board of directors of such increase, in the maximum number of members of our board of directors or an amendment or repeal of the anti-takeover provision described below.

 

In the event of our liquidation, the holders of our common stock are entitled to receive pro rata any assets distributed to shareholders with respect to their shares, after payment of all debts and payments to holders of our preferred stock, if any.

 

Holders of our common stock have no right to subscribe to additional shares of capital stock that we may issue. All outstanding shares of common stock are, and the shares of common stock issued upon any conversion or exchange of any debt securities or preferred stock providing for such conversion or exchange will be, fully paid and nonassessable.

 

Our common stock is listed on the New York Stock Exchange under the symbol “BXS.” The transfer agent and registrar for our common stock is Registrar and Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016.

 

Preferred Stock

 

We may issue shares of our preferred stock from time to time. Our restated articles of incorporation authorize us to issue up to 500 million shares of preferred stock, par value $2.50 per share. As of the date of this prospectus, there are no shares of preferred stock outstanding. Shares of preferred stock are issuable in such class or series as determined by our board of directors, who have the authority to determine the relative rights and preferences of each such series without further action by shareholders. A series of preferred stock issued pursuant to this prospectus might have features that could: