PROXY STATEMENT/PROSPECTUS

MERGER PROPOSED – YOUR VOTE IS VERY IMPORTANT

     The Boards of Directors of BancorpSouth, Inc. and Business Holding Corporation have approved a merger agreement to merge our two companies. If Business Holding Corporation shareholders vote to approve the merger agreement and the merger is completed, Business Holding Corporation will merge with and into BancorpSouth, Business Holding Corporation’s subsidiary bank, The Business Bank, will merge with and into BancorpSouth Bank, a subsidiary of BancorpSouth, and Business Holding Corporation shareholders, other than Business Holding Corporation shareholders who properly exercise their rights to dissent from the merger, will have the opportunity to elect to receive in exchange for each share of Business Holding Corporation common stock they own 1.14175 shares of BancorpSouth common stock, a cash payment of $26.00 or a combination of cash and shares of BancorpSouth common stock. If you hold more than one share of Business Holding Corporation common stock, you may elect a combination of stock and cash consideration. In the merger, the percentage of shares of Business Holding Corporation common stock that will be exchangeable into the right to receive shares of BancorpSouth common stock ranges between 51% and 60%. In order to ensure that the merger qualifies as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended, and as a result of the range limitation for stock consideration, regardless of your election, you may receive a combination of cash and shares of BancorpSouth common stock that is different than what you may have elected, depending on the elections made by other Business Holding Corporation shareholders.

     The number of shares of BancorpSouth common stock that Business Holding Corporation shareholders may receive in the merger is not fixed. The dollar value of the stock consideration that Business Holding Corporation shareholders may receive will also change depending on fluctuations in the market price of BancorpSouth common stock and will not be known at the time Business Holding Corporation’s shareholders vote on the merger. The following table shows the closing price per share of BancorpSouth common stock reported on the New York Stock Exchange on September 16, 2004, the last trading day before we announced the merger, and on November 17, 2004, the last practicable trading day before the distribution of this Proxy Statement/Prospectus. This table also shows the implied value of the stock consideration proposed for each share of Business Holding Corporation common stock, which we calculated by multiplying the closing price of BancorpSouth common stock on those dates by 1.14175, the exchange ratio. You should obtain current market quotations for the shares of BancorpSouth common stock from a newspaper, the Internet or your broker. BancorpSouth common stock is listed on the New York Stock Exchange under the symbol “BXS.”

     This Proxy Statement/Prospectus provides you with detailed information about the proposed merger between BancorpSouth and Business Holding Corporation. This document also contains information about BancorpSouth and Business Holding Corporation. We encourage you to carefully read and consider this Proxy Statement/Prospectus in its entirety. You can obtain additional information about BancorpSouth from documents that it has filed with the Securities and Exchange Commission. For information on how to obtain copies of these documents, you should refer to the section of this document entitled “WHERE YOU CAN FIND MORE INFORMATION,” which begins on page 87.

     You should carefully consider the risk factors described beginning on page 15 of this Proxy Statement/Prospectus.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of BancorpSouth common stock to be issued under this Proxy Statement/Prospectus or determined if this Proxy Statement/Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

     Shares of BancorpSouth common stock are not savings or deposit accounts or other obligations of any bank or savings association, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The date of this Proxy Statement/Prospectus is November 19, 2004,

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 21, 2004

TO THE SHAREHOLDERS OF BUSINESS HOLDING CORPORATION:

     This serves as notice to you that a special meeting of shareholders of Business Holding Corporation will be held on December 21, 2004 at 9:00 a.m., Central Time, at the main office of The Business Bank, 6100 Corporate Boulevard, Baton Rouge, Louisiana 70808, for the purpose of considering and voting upon the approval of the Agreement and Plan of Merger, dated as of September 17, 2004, between Business Holding Corporation and BancorpSouth, Inc., which provides for the merger of Business Holding Corporation with and into BancorpSouth as more fully described in the attached Proxy Statement/Prospectus.

     Only holders of record of Business Holding Corporation common stock at the close of business on November 18, 2004 are entitled to notice of and to vote at the special meeting or any adjournments or postponements of the special meeting. Each share of Business Holding Corporation is entitled to one vote. Approval of the merger agreement requires approval by a vote of at least two-thirds of the voting power present in person or by proxy at the special meeting.

     The Board of Directors of Business Holding Corporation recommends that Business Holding Corporation shareholders vote “For” approval of the merger agreement.

     Business Holding Corporation shareholders, other than Business Holding Corporation shareholders who properly exercise their rights to dissent from the merger, will have the opportunity to elect to receive in exchange for each share of Business Holding Corporation common stock they own 1.14175 shares of BancorpSouth common stock, with cash to be paid in lieu of any remaining fractional share interest, or a cash payment of $26.00 or a combination of cash and shares of BancorpSouth common stock, if the merger agreement is approved and the merger is completed. Holders of more than one share of Business Holding Corporation common stock may elect a combination of stock and cash consideration. Dissenting shareholders who comply with the procedural requirements of the Business Corporation Law of Louisiana will be entitled to receive the fair cash value of their shares if the merger is effected upon approval by less than 80% of Business Holding Corporation’s total voting power. A copy of Section 131 of the Business Corporation Law of Louisiana containing the procedural requirements to exercise dissenters’ rights is attached as Annex B to the accompanying Proxy Statement/Prospectus. In addition, please see the section entitled “THE MERGER – Shareholders Dissenters’ Rights” in the accompanying Proxy Statement/Prospectus for a discussion of the procedures to be followed in asserting these dissenters’ rights.

     Please mark, sign, date and return the enclosed proxy card promptly, whether or not you plan to attend the special meeting. All Business Holding Corporation shareholders are invited to attend the special meeting. To ensure your representation at the special meeting, please complete and promptly mail the enclosed proxy card in the enclosed postage paid business reply envelope to Business Holding Corporation. This will not prevent you from voting in person, but will help to secure a quorum and avoid added solicitation costs. If you do not vote your proxy, the effect will be the same as a vote against the merger agreement. You may revoke your proxy at any time before it is voted.

     Please also fill out the enclosed election form and letter of transmittal according to their instructions and promptly mail the election form and the letter of transmittal, along with all of your Business Holding Corporation stock certificates. The election form is the document provided to you to select the amount of stock and/or cash consideration you wish to receive in connection with the proposed merger. Please review the Proxy Statement/Prospectus accompanying this notice for more complete information regarding the proposed merger and the special meeting.

November 19, 2004

ADDITIONAL INFORMATION

     This Proxy Statement/Prospectus incorporates important business and financial information about BancorpSouth from documents that are not included in or delivered with this Proxy Statement/Prospectus. See “WHERE YOU CAN FIND MORE INFORMATION” beginning on page 87. This information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference in this Proxy Statement/Prospectus by requesting them in writing or by telephone from BancorpSouth at the following address:

BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, Mississippi 38804
(662) 680-2000
Attention: Cathy S. Freeman, Secretary

     In order to receive timely delivery of requested documents in advance of Business Holding Corporation’s special meeting of shareholders, your request should be received no later than December 14, 2004.

     You also may obtain these documents at the Securities and Exchange Commission’s Internet world wide web site, http://www.sec.gov, and at BancorpSouth’s Internet world wide web site, http://www.bancorpsouth.com, by selecting “Investor Relations” and then selecting “SEC Filings.” We have included the web addresses of the SEC and BancorpSouth as inactive textual references only. Except as specifically incorporated by reference into this Proxy Statement/Prospectus, information on those web sites is not part of this Proxy Statement/Prospectus.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS
ABOUT THE MERGER

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Business Holding Corporation
6100 Corporate Boulevard, #100
Baton Rouge, Louisiana 70808
Attention: Charles E. Roemer, III, President and CEO
Or Paula J. Laird, Executive Vice President
Phone Number: (225) 768-1140

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SUMMARY

     This summary highlights selected information from this Proxy Statement/Prospectus. It does not contain all of the information that is important to you. You should carefully read this entire Proxy Statement/Prospectus and the documents to which it refers you in order to understand fully the merger and to obtain a more complete description of the companies and the legal terms of the merger. For information on how to obtain copies of documents referred to in this Proxy Statement/Prospectus, you should read the section entitled “WHERE YOU CAN FIND MORE INFORMATION.” Each item in this summary includes a page reference that directs you to a more complete description in this Proxy Statement/Prospectus of the topic discussed.

The Companies (Pages 55, 56)

BANCORPSOUTH, INC.
One Mississippi Plaza
Tupelo, Mississippi 38804
(662) 680-2000

     BancorpSouth (NYSE: BXS) is incorporated in Mississippi and is a financial holding company under the Bank Holding Company Act of 1956. BancorpSouth conducts its operations through its bank subsidiary, BancorpSouth Bank, and its banking-related subsidiaries. BancorpSouth Bank conducts a commercial banking, trust, insurance and investment services business through 247 locations and 233 ATMs in Arkansas, Alabama, Louisiana, Mississippi, Tennessee and Texas. As of September 30, 2004, BancorpSouth had total assets of approximately $10.6 billion, deposits of approximately $8.8 billion and shareholders’ equity of approximately $875.1 million.

BUSINESS HOLDING CORPORATION
6100 Corporate Boulevard, #100
Baton Rouge, Louisiana 70808
(225) 768-1141

     Business Holding Corporation is incorporated in Louisiana and is a registered bank holding company under the Bank Holding Company Act of 1956. It is based in Baton Rouge, Louisiana and conducts its operations through its subsidiary bank, The Business Bank. Business Holding Corporation’s subsidiary conducts commercial banking and insurance business through its office in Baton Rouge, Louisiana. As of September 30, 2004, Business Holding Corporation had total assets of approximately $169.2 million, deposits of approximately $122.8 million and shareholders’ equity of approximately $16.4 million.

The Merger (Page 27)

     BancorpSouth and Business Holding Corporation entered into a merger agreement whereby Business Holding Corporation will merge with and into BancorpSouth, subject to shareholder and regulatory approval and other conditions. The merger agreement is attached to this Proxy Statement/Prospectus as Annex A. You should read it carefully. Subject to shareholder and regulatory approval, BancorpSouth and Business Holding Corporation hope to complete the merger during the fourth quarter of 2004.

What Business Holding Corporation Shareholders Will Receive in the Merger (Page 43)

     Business Holding Corporation shareholders, other than Business Holding Corporation shareholders who properly exercise their rights to dissent from the merger, will have the opportunity to elect to receive in exchange for each share of Business Holding Corporation common stock they own 1.14175 shares of BancorpSouth common stock (which is referred to as the “exchange ratio”), with cash to be paid in lieu of any remaining fractional share interest, or a cash payment of $26.00 or a combination of cash and shares of BancorpSouth common stock, if the merger is completed. If you hold more than one share of Business Holding Corporation common stock, you may elect a combination of stock and cash consideration. The exchange ratio is fixed and will not be adjusted to reflect any change in the market price of BancorpSouth common stock. Regardless of your election, you may receive a combination of cash and shares of BancorpSouth common stock that is different than what you may have elected, depending on the elections made by other Business Holding Corporation shareholders and certain tax-related adjustments, if necessary.

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     BancorpSouth will not issue any fractional shares of BancorpSouth common stock. Instead, a Business Holding Corporation shareholder who receives any shares of BancorpSouth common stock as consideration in the merger will receive cash equal to $22.772 times the fraction of a share of BancorpSouth common stock to which the shareholder otherwise would be entitled.

     If the merger is completed, each outstanding and unexercised option to purchase shares of Business Holding Corporation common stock will no longer represent a right to acquire shares of Business Holding Corporation common stock and will be replaced promptly following the merger by an option to purchase shares of BancorpSouth common stock. The number of shares underlying each new option, as well as the exercise price, will be adjusted based on the exchange ratio.

     At the effective time of the merger, persons who are BancorpSouth shareholders immediately prior to the merger would own approximately 99.0% of the outstanding shares of common stock of the combined company and persons who are Business Holding Corporation shareholders immediately prior to the merger would own approximately 1.0% of the outstanding shares of common stock of the combined company.

BancorpSouth’s Stock Price Will Fluctuate (Pages 43, 54)

     BancorpSouth expects the market price of its common stock to fluctuate as a result of market factors beyond its control before and after the merger. Because the exchange ratio is fixed and the market price of BancorpSouth common stock may fluctuate, the value of the shares of BancorpSouth common stock that Business Holding Corporation shareholders may receive in the merger might increase or decrease prior to completion of the merger. BancorpSouth cannot assure Business Holding Corporation shareholders that the market price of BancorpSouth common stock will not decrease before or after completion of the merger. The following table shows the closing price per share of BancorpSouth common stock reported on the New York Stock Exchange on September 16, 2004, the last trading day before we announced the merger, and on November 17, 2004, the last practicable trading day before the distribution of this Proxy Statement/Prospectus. This table also shows the implied value of the merger consideration proposed for each share of Business Holding Corporation common stock, which we calculated by multiplying the closing price of BancorpSouth common stock on those dates by 1.14175, the exchange ratio. You should obtain current market quotations for the shares of BancorpSouth common stock from a newspaper, the Internet or your broker. BancorpSouth common stock is listed on the New York Stock Exchange under the symbol “BXS.”

Special Meeting (Page 24)

     A special meeting of the shareholders of Business Holding Corporation will be held at the following time and place:

December 21, 2004
9:00 a.m. (Central Time)
The Business Bank
6100 Corporate Boulevard, #100
Baton Rouge, Louisiana 70808

     At the special meeting, shareholders of Business Holding Corporation will be asked to approve the merger agreement between Business Holding Corporation and BancorpSouth.

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The Board of Directors of Business Holding Corporation Recommends that its Shareholders Approve the Merger Agreement (Page 28)

     The Board of Directors of Business Holding Corporation believes that the merger between Business Holding Corporation and BancorpSouth is in the best interests of Business Holding Corporation shareholders, and recommends that Business Holding Corporation shareholders vote “FOR” the proposal to approve the merger agreement. This belief is based on a number of factors described in this Proxy Statement/Prospectus.

Vote Required to Complete the Merger (Page 25)

     Under Louisiana law, the merger agreement must be approved by shareholders of Business Holding Corporation by a vote of at least two-thirds of the voting power present in person or by proxy at the special meeting. Business Holding Corporation expects that its executive officers and directors will vote all of their shares of Business Holding Corporation common stock in favor of the merger agreement.

     The following chart describes the Business Holding Corporation shareholder vote required to approve the merger agreement, assuming that all Business Holding Corporation shareholders are present at the special meeting in person or by proxy:

Record Date; Voting Power (Page 25)

     You can vote at the special meeting of Business Holding Corporation shareholders if you owned Business Holding Corporation common stock as of the close of business on November 18, 2004, the record date set by Business Holding Corporation’s Board of Directors. Each share of Business Holding Corporation common stock is entitled to one vote. On November 18, 2004, there were 1,310,491 shares of Business Holding Corporation common stock outstanding and entitled to vote on the merger agreement.

Background of the Merger (Page 27)

     Business Holding Corporation engaged National Capital, L.L.C. to act as its exclusive financial advisor to provide investment banking and financial advisory services in relation to the evaluation, structure and possible negotiation of a potential business combination. After reviewing the information delivered by Business Holding Corporation and considering its own strategic plans, on May 14, 2004, BancorpSouth’s management submitted a proposal for a merger with Business Holding Corporation. After considering the resulting proposals and terminating discussions with another potential merger candidate, the management of Business Holding Corporation elected to enter into exclusive negotiations with BancorpSouth. The parties and their representatives began negotiation of a merger agreement on August 23, 2004 and continued to negotiate the terms of the merger agreement until September 13, 2004.

     On August 25, 2004, BancorpSouth’s Board of Directors approved the merger agreement. On September 15, 2004, following presentations from its legal and financial advisors, Business Holding Corporation’s Board of

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Directors unanimously approved the merger agreement. The merger agreement was executed by the parties as of September 17, 2004.

Why BancorpSouth and Business Holding Corporation are Seeking to Merge (Page 28)

     The merger will combine the strengths of BancorpSouth and Business Holding Corporation and their subsidiary banks. Joining with BancorpSouth will allow Business Holding Corporation to provide more sophisticated banking services to it current and prospective customers. Business Holding Corporation has experienced remarkable acceptance in this Baton Rouge market but, to continue to meet its customers’ expectations and expanding needs, management and the Board of Directors of Business Holding Corporation believe they must join with a complete financial services company that offers expanded resources and technological capabilities. They believe that this partnership will enhance the ability to serve the complete needs of Business Holding Corporation’s customers and provide a real opportunity for both companies. In contrast, BancorpSouth will have the opportunity to enter the Baton Rouge banking market with a staff of seasoned Louisiana bankers already in place. This outstanding commercial bank will expand BancorpSouth’s Louisiana banking family, which currently includes 13 banking locations in Shreveport, Bossier City, Monroe, West Monroe, Rayville and Ruston, with more than $418 million in deposits as of September 30, 2004.

Opinion of Financial Advisor to Business Holding Corporation (Page 30)

     National Capital has delivered to the Board of Directors of Business Holding Corporation its written opinion, dated October 4, 2004, that, based upon and subject to the various considerations set forth in its opinion, the consideration to be paid to the shareholders of Business Holding Corporation under the merger agreement is fair from a financial point of view as of such date. In requesting National Capital’s advice and opinion, no instructions were given and no limitations were imposed by Business Holding Corporation’s Board of Directors upon National Capital with respect to rendering its opinion.

     The full text of the opinion of National Capital, dated October 4, 2004, which describes the assumptions made, matters considered and extent of review undertaken, is attached as Annex C to this Proxy Statement/Prospectus. Business Holding Corporation shareholders should read this opinion in its entirety.

Management and Board of Directors of BancorpSouth Following the Merger (Page 53)

     The officers and directors of each of BancorpSouth and BancorpSouth Bank immediately prior to the effective time of the merger will continue to be the officers and directors of BancorpSouth and BancorpSouth Bank, respectively, following the merger. Certain of the executive officers of Business Holding Corporation will be retained by BancorpSouth and may serve as officers of BancorpSouth Bank but will not serve as executive officers of BancorpSouth.

Federal Income Tax Consequences (Page 35)

     Your U.S. federal income tax consequences will depend primarily on whether you exchange your shares of Business Holding Corporation common stock solely for BancorpSouth common stock, solely for cash or for a combination of BancorpSouth common stock and cash. If you exchange your shares of Business Holding Corporation common stock solely for BancorpSouth common stock, you should not recognize any gain or loss (except with respect to the cash you receive instead of a fractional share) for U.S. federal income tax purposes. If you exchange your shares of Business Holding Corporation common stock solely for cash, you should recognize gain or loss on the exchange. If you exchange your shares of Business Holding Corporation common stock for a combination of BancorpSouth common stock and cash, you should recognize a gain, but not any loss, on the exchange to the extent of the lesser of cash received or gain realized in the exchange. The actual U.S. federal income tax consequences to you of electing to receive cash, BancorpSouth common stock or a combination of both will not be ascertainable at the time you make your election because we will not know at that time if, or to what extent, the allocation and proration procedures will apply.

     This tax treatment may not apply to all shareholders of Business Holding Corporation. Determining the actual tax consequences of the merger to you can be complicated. You should consult your own tax advisor for a full understanding of the merger’s tax consequences that are particular to you.

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     BancorpSouth and Business Holding Corporation will not be obligated to complete the merger unless they each receive an opinion from their respective legal counsel, dated the closing date, that the merger will be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that BancorpSouth and Business Holding Corporation will each be a party to that reorganization. If such opinions are rendered, the U.S. federal income tax treatment of the merger should be as described above. The opinions of the parties’ respective counsel, however, do not bind the Internal Revenue Service and do not preclude the IRS or the courts from adopting a contrary position.

Accounting Treatment (Page 35)

     BancorpSouth will account for the merger under the purchase method of accounting for business combinations under United States generally accepted accounting principles.

Interests of Business Holding Corporation Management and Directors in the Merger (Page 41)

     Executive officers and directors of Business Holding Corporation will be issued shares of BancorpSouth common stock in the merger on the same basis as other shareholders of Business Holding Corporation. The following chart shows the number of shares of BancorpSouth common stock that may be issued to affiliates of Business Holding Corporation in the merger (including shares reserved for issuance upon exercise of stock options):

     Mr. Charles E. Roemer, III, President and Chief Executive Officer of The Business Bank, is a party to an employment agreement with The Business Bank which provides for the payment of severance in an amount equal to two times his present annual base salary upon a change of control or within three years after a change in control of The Business Bank if his employment is terminated without cause or upon the happening of certain enumerated events. It is anticipated that the merger would constitute a change of control for purposes of this employment agreement.

     Ms. Paula J. Laird, Executive Vice President of The Business Bank, agreed to terminate her employment agreement with Business Holding Corporation and enter into a new employment agreement with BancorpSouth Bank in exchange for a payment in an amount equal to approximately three times her present annual base salary. Mr. Larry Denison, Executive Vice President of The Business Bank, agreed to terminate his employment agreement with Business Holding Corporation and enter into a new employment agreement with BancorpSouth Bank in exchange for a payment in an amount equal to approximately three times his present annual base salary.

     Frank Miller, a director of Busines Holding Corporation, owns options to purchase 500 shares of Business Holding Corporation common stock that will become fully vested exercisable options to purchase shares of BancorpSouth common stock as a result of the merger.

Business Holding Corporation Shareholders May Dissent from the Merger (Page 39)

     Louisiana law permits Business Holding Corporation shareholders to dissent from the merger and to receive the fair value of their shares of Business Holding Corporation common stock in cash. To dissent, a Business Holding Corporation shareholder must follow certain procedures, including filing certain notices with Business Holding Corporation and voting his or her shares against the merger agreement. The shares of Business Holding Corporation common stock held by a dissenter will not be exchanged for stock consideration or cash consideration in the merger and a dissenter’s only right will be to receive the appraised fair value of his or her shares of Business Holding Corporation common stock in cash. A copy of the Louisiana statutes describing these dissenters’ rights and

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the procedures for exercising them is attached as Annex B to this Proxy Statement/Prospectus. Business Holding Corporation shareholders who perfect their dissenters’ rights and receive cash in exchange for their shares of Business Holding Corporation common stock may recognize gain or loss for U.S. federal income tax purposes.

We Must Obtain Regulatory Approvals to Complete the Merger (Page 35)

     We cannot complete the merger unless we obtain the approval of the Federal Deposit Insurance Corporation. The U.S. Department of Justice has input into the FDIC’s approval process. Once the FDIC has approved the merger, federal law requires that we wait up to 30 calendar days to complete the merger in order to give the Department of Justice the opportunity to review and object to the merger. BancorpSouth expects to obtain approval of the merger from the FDIC on December 11, 2004 and expects the waiting period to expire on December 26, 2004.

     In addition, the merger is subject to the approval of the Mississippi Department of Banking and Consumer Finance and the Louisiana Office of Financial Institutions. BancorpSouth and Business Holding Corporation have filed all of the required notices and applications, as appropriate, with these state regulatory authorities, and approval of the merger is expected to be received prior to approval of the merger agreement by the shareholders of Business Holding Corporation.

     We also intend to make all required filings with the Securities and Exchange Commission under the Securities Act of 1933 and the Securities Exchange Act of 1934 relating to the merger.

     While we believe that we will obtain the remaining regulatory approvals in a timely manner, we cannot be certain if or when we will obtain them.

Conditions to Complete the Merger (Page 51)

     The completion of the merger depends on a number of conditions being met, including the following:

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     In cases where the law permits, a party to the merger agreement could elect to waive a condition that has not been satisfied and complete the merger although the party is entitled not to complete the merger. We cannot be certain whether or when any of these conditions will be satisfied (or waived, where permissible) or that the merger will be completed.

Termination of the Merger Agreement (Page 52)

     The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after approval of the merger by Business Holding Corporation shareholders, as set forth in the merger agreement, including by mutual consent of BancorpSouth and Business Holding Corporation. In addition, the merger agreement may generally be terminated by either party if:

     BancorpSouth may terminate the merger agreement if Business Holding Corporation’s Board of Directors has withdrawn, modified or changed, in a manner adverse to BancorpSouth, its approval and recommendation of the merger agreement, or if Business Holding Corporation enters into a letter of intent or agreement related or with respect to any tender or exchange offer, proposal for a merger, consolidation or other business combination involving Business Holding Corporation or any offer to acquire all or a substantial portion of the assets of Business Holding Corporation.

     Generally, a party can only terminate the merger agreement in one of these situations if that party is not in violation of the merger agreement or if its violations of the merger agreement are not the cause of the event permitting termination.

Comparative Per Share Market Price Information (Page 54)

     Shares of BancorpSouth common stock are listed on the New York Stock Exchange under the symbol “BXS.” On September 16, 2004, the last full trading day prior to the public announcement of the merger, the closing sales price of BancorpSouth common stock was $23.15 per share. On November 17, 2004, the last practicable trading day before the distribution of this Proxy Statement/Prospectus, the closing sales price of BancorpSouth common stock was $24.70 per share. Of course, the market price of BancorpSouth common stock is expected to fluctuate prior to and after completion of the merger, while the exchange ratio is fixed. You should obtain current market quotations for the shares of BancorpSouth common stock from a newspaper, the Internet or your broker.

     There is no established public trading market for shares of Business Holding Corporation common stock, which is inactively traded in private transactions. Therefore, reliable information is not available about the prices at which shares of Business Holding Corporation common stock have been bought and sold.

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RISK FACTORS

     The merger involves a number of risks. In addition to the risks described below, the combined companies will continue to be subject to the risks described in the documents that BancorpSouth has filed with the Securities and Exchange Commission that are incorporated by reference into this Proxy Statement/Prospectus, including without limitation, BancorpSouth’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003. If any of the risks described below or in the documents incorporated by reference into this Proxy Statement/Prospectus actually occur, the business, financial condition, results of operations or cash flows of the combined companies could be materially adversely affected. The risks below should be considered along with the other information included or incorporated by reference into this Proxy Statement/Prospectus.

You May Not Receive the Form of Merger Consideration that You Elect.

     The merger agreement contains provisions that are generally designed to ensure that between 51% and 60% of the outstanding shares of Business Holding Corporation common stock are exchanged for shares of BancorpSouth common stock and the other 40% to 49% of the shares are exchanged for cash consideration, subject to a tax-related adjustment. If elections are made by Business Holding Corporation shareholders that would otherwise result in more than 60% or less than 51% of such shares being converted into BancorpSouth common stock, either those electing to receive all or a portion of their consideration in cash or those electing to receive all or a portion of their consideration in shares of BancorpSouth common stock will have the consideration of the type they selected reduced by a pro rata amount and will receive a portion of their consideration in the form that they did not elect to receive. Accordingly, there is a risk that you will not receive a portion of the merger consideration in the form that you elect, which could result in, among other things, tax consequences that differ from those that would have resulted had you received the form of consideration you elected (including the recognition of gain for federal income tax purposes with respect to the cash received). If you do not make an election, you will be deemed to have made an election to receive the merger consideration in such form of cash and/or shares of BancorpSouth common stock as BancorpSouth shall determine.

Because the Market Price of BancorpSouth Common Stock Will Fluctuate, You Cannot Be Sure of the Value of the Stock Consideration You May Receive.

     Upon completion of the merger, each share of Business Holding Corporation common stock will be converted into merger consideration consisting of shares of BancorpSouth common stock and/or cash pursuant to the terms of the merger agreement. The implied value of the stock consideration that you may receive will be based on the number of shares of Business Holding Corporation common stock you own and the market price of BancorpSouth common stock. This market price of BancorpSouth common stock may increase or decrease before or after completion of the merger and, therefore, the implied value of the stock consideration may vary from the implied value of the stock consideration on the date we announced the merger, the date that this Proxy Statement/Prospectus was mailed to Business Holding Corporation shareholders and the date of the special meeting of the Business Holding Corporation shareholders. The market price of the stock consideration may be more or less than the cash consideration upon completion of the merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations. Many of these factors are beyond our control.

     Accordingly, at the time of the Business Holding Corporation special meeting, you will not necessarily know or be able to calculate the exact value of the stock consideration you would receive upon completion of the merger.

We May Fail to Achieve the Anticipated Benefits of the Merger.

     BancorpSouth and Business Holding Corporation have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the merger.

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The Market Price of Shares of BancorpSouth Common Stock after the Merger May Be Affected by Factors Different from those Affecting Shares of Business Holding Corporation or BancorpSouth Currently.

     The businesses of BancorpSouth and Business Holding Corporation differ in some respects and, accordingly, the results of operations of the combined company and the market price of the combined company’s shares of common stock may be affected by factors different from those currently affecting the independent results of operations of each of BancorpSouth and Business Holding Corporation. For a discussion of the businesses of BancorpSouth and Business Holding Corporation and of certain factors to consider in connection with those businesses, see “INFORMATION ABOUT BANCORPSOUTH” and “INFORMATION ABOUT BUSINESS HOLDING CORPORATION” beginning on pages 55 and 56, respectively.

The Executive Officers and Directors of Business Holding Corporation Have Interests Different from Typical Business Holding Corporation Shareholders.

     The executive officers and directors of Business Holding Corporation have certain interests in the merger and participate in certain arrangements that are different from, or are in addition to, those of Business Holding Corporation shareholders generally. See “THE MERGER – Interests of Certain Persons in the Merger.” As a result, these executive officers and directors could be more likely to approve the merger agreement than if they did not hold these interests.

Former Shareholders of Business Holding Corporation Will be Limited in their Ability to Influence BancorpSouth’s Actions and Decisions Following the Merger.

     Following the merger, former shareholders of Business Holding Corporation will hold less than 1.1% of the outstanding shares of BancorpSouth common stock. As a result, former Business Holding Corporation shareholders will have only limited ability to influence BancorpSouth’s business. Former Business Holding Corporation shareholders will not have separate approval rights with respect to any actions or decisions of BancorpSouth or have separate representation on BancorpSouth’s Board of Directors.

The Merger May Result in a Loss of Current Business Holding Corporation Employees.

     Despite BancorpSouth’s efforts to retain quality employees, BancorpSouth might lose some of Business Holding Corporation’s current employees following the merger. Current Business Holding Corporation employees may not want to work for a larger, publicly-traded company instead of a smaller, privately-held company or may not want to assume different duties, positions and compensation that BancorpSouth offers to the Business Holding Corporation employees. Competitors may recruit employees prior to the merger and during the integration process after the merger. As a result, current employees of Business Holding Corporation could leave with little or no prior notice. BancorpSouth cannot assure you that the combined companies will be able to attract, retain and integrate employees following the merger.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF BANCORPSOUTH

     The following table sets forth certain financial information with respect to BancorpSouth which is derived from the audited and unaudited financial statements of BancorpSouth. The results of operations for the nine months ended September 30, 2004 are not necessarily indicative of the results of operations for the full year or any other interim period. BancorpSouth management prepared the unaudited information on the same basis as it prepared BancorpSouth’s audited consolidated financial statements. In the opinion of BancorpSouth management, this information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with BancorpSouth’s consolidated financial statements and related notes included in BancorpSouth’s Annual Report on Form 10-K for the year ended December 31, 2003, and BancorpSouth’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, which are incorporated by reference in this document and from which this information is derived. See “WHERE YOU CAN FIND MORE INFORMATION” beginning on page 87.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF BANCORPSOUTH

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF BUSINESS HOLDING
CORPORATION

     The following table sets forth certain financial information with respect to Business Holding Corporation which is derived from the audited and unaudited financial statements of Business Holding Corporation. The results of operations for the nine months ended September 30, 2004 are not necessarily indicative of the results of operations for the full year or any other interim period. Business Holding Corporation management prepared the unaudited information on the same basis as it prepared Business Holding Corporation’s audited consolidated financial statements. In the opinion of Business Holding Corporation management, this information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of this data for those dates. You should read this information in conjunction with Business Holding Corporation’s consolidated financial statements and related notes and other financial information attached to this Proxy Statement/Prospectus as Annex D.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF BUSINESS HOLDING CORPORATION

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

     The following table sets forth for BancorpSouth common stock and Business Holding Corporation common stock certain historical, pro forma and pro forma-equivalent per share financial information. The pro forma and pro forma-equivalent per share information gives effect to the merger as if the merger had been effective on the dates presented, in the case of the book value data, and as if the merger had become effective on January 1, 2003, in the case of the income from continuing operations and cash dividends paid data for the twelve months ended December 31, 2003, and as if the merger had become effective on January 1, 2004, in the case of the income from continuing operations and cash dividends paid data for the nine months ended September 30, 2004. The pro forma data in the tables represents a current estimate based on available information of the combined company’s results of operations and is based on the the conversion ratio of 1.14175 shares of BancorpSouth common stock for each share of Business Holding Corporation common stock, assuming that 60% of the outstanding common stock of Business Holding Corporation is converted into BancorpSouth common stock with no regard given to the effects of shares of Business Holding Corporation common stock that are exchanged for cash, as if these shares were outstanding for each period presented. The pro forma financial adjustments record the assets and liabilities of Business Holding Corporation at their estimated fair values and are subject to adjustment as additional information becomes available and as additional analyses are performed. The information in the following table is based on, and should be read together with, the historical financial information that BancorpSouth has presented in filings with the Securities and Exchange Commission and the historical financial information that Business Holding Corporation has included as Annex D to this Proxy Statement/Prospectus. See “WHERE YOU CAN FIND MORE INFORMATION” beginning on page 87.

     The pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the impact of possible revenue enhancements, expense efficiencies, asset dispositions and share repurchases, among other factors, that may result as a consequence of the merger and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during these periods. Upon completion of the merger, the operating results of Business Holding Corporation will be reflected in the consolidated financial statements of BancorpSouth on a prospective basis.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

     This Proxy Statement/Prospectus contains certain forward-looking statements about the financial condition, results of operations and business of BancorpSouth and Business Holding Corporation and about the combined companies following the merger. These statements concern the cost savings, revenue enhancements and other advantages the companies expect to obtain from the merger, the anticipated impact of the merger on BancorpSouth’s financial performance, tax consequences and accounting treatment of the merger, receipt of regulatory approvals, market prices of BancorpSouth common stock and earnings estimates for the combined company. These statements appear in several sections of this Proxy Statement/Prospectus, including “SUMMARY” and “THE MERGER – Reasons for the Merger.” Also, the forward-looking statements generally include any of the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “should,” “will” or “plans” or similar expressions.

     Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of BancorpSouth and Business Holding Corporation, and of the combined companies, may differ materially from those expressed in these forward-looking statements. Many of the factors that could influence or determine actual results are unpredictable and not within the control of BancorpSouth or Business Holding Corporation. In addition, neither BancorpSouth nor Business Holding Corporation intends to, nor are they obligated to, update these forward-looking statements after this Proxy Statement/Prospectus is distributed, even if new information, future events or other circumstances have made them incorrect or misleading as of any future date. For all of these statements, BancorpSouth claims the protection of the safe harbor for forward-looking statements provided in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

     Factors that may cause actual results to differ materially from those contemplated by these forward-looking statements include, among others, the following possibilities:

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THE SPECIAL MEETING

General

     This Proxy Statement/Prospectus is first being mailed, on or about November 19, 2004, to all persons who were Business Holding Corporation shareholders on November 18, 2004.

     Along with this Proxy Statement/Prospectus, Business Holding Corporation shareholders are being provided with a Notice of Special Meeting, election form, transmittal letter and form of proxy card for use at the special meeting of Business Holding Corporation shareholders and at any adjournments or postponements of that meeting.

     At the Business Holding Corporation special meeting, Business Holding Corporation shareholders will consider and vote upon a proposal to approve an Agreement and Plan of Merger, dated as of September 17, 2004, between Business Holding Corporation and BancorpSouth, which provides for the merger of Business Holding Corporation with and into BancorpSouth.

     The special meeting of Business Holding Corporation shareholders will be held at the following time and place:

December 21, 2004
9:00 a.m. (Central Time)
The Business Bank
6100 Corporate Boulevard, #100
Baton Rouge, Louisiana 70808

Proxies

     We encourage Business Holding Corporation shareholders to promptly vote their proxies by completing, signing, dating and returning the enclosed proxy card solicited by Business Holding Corporation’s Board of Directors whether or not they are able to attend the Business Holding Corporation special meeting in person.

     A Business Holding Corporation shareholder may revoke any proxy given in connection with this solicitation by:

     Revocation of proxy by written notice or execution of a new proxy bearing a later date should be submitted to:

Business Holding Corporation
6100 Corporate Boulevard, #100
Baton Rouge, Louisiana 70808
Attention: Paula J. Laird, Executive Vice President and COO

     For a notice of revocation or later proxy to be valid, however, Business Holding Corporation must receive it prior to the vote of Business Holding Corporation shareholders at the Business Holding Corporation special meeting. Business Holding Corporation will vote all shares of Business Holding Corporation common stock represented by valid proxies received through this solicitation and not revoked before they are exercised in the manner described above.

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     Business Holding Corporation is currently unaware of any other matters that may be presented for action at the Business Holding Corporation special meeting. If other matters do properly come before the Business Holding Corporation special meeting, then shares of Business Holding Corporation common stock represented by proxies will be voted (or not voted) by the persons named in the proxies in their discretion.

     Please do not forward your Business Holding Corporation stock certificates, election form and letter of transmittal with your proxy card. Stock certificates, election forms and letters of transmittal should be returned to the exchange agent in accordance with the instructions contained in the election form.

Solicitation of Proxies

     BancorpSouth will bear the costs of printing and mailing this Proxy Statement/Prospectus and the costs of filing BancorpSouth’s registration statement on Form S-4 with the Securities and Exchange Commission.

     If necessary, Business Holding Corporation may use several of its regular employees, who will not be specially compensated, to solicit proxies from Business Holding Corporation shareholders, either personally or by telephone, facsimile or mail.

Record Date and Voting Rights

     Business Holding Corporation’s Board of Directors has fixed November 18, 2004 as the record date for the determination of Business Holding Corporation shareholders entitled to receive notice of and to vote at Business Holding Corporation’s special meeting of shareholders. Accordingly, only Business Holding Corporation shareholders of record at the close of business on November 18, 2004 will be entitled to notice of and to vote at the Business Holding Corporation special meeting. At the close of business on Business Holding Corporation’s record date, there were 1,310,491 shares of Business Holding Corporation common stock entitled to vote at the Business Holding Corporation special meeting held by approximately 294 holders of record, and the executive officers and directors of Business Holding Corporation beneficially owned 17.50% of the outstanding shares of Business Holding Corporation common stock (including currently exercisable options).

     The presence, in person or by proxy, of the holders of a majority of the total voting power of Business Holding Corporation is necessary to constitute a quorum at the special meeting. Each share of Business Holding Corporation common stock outstanding on Business Holding Corporation’s record date entitles its holder to one vote as to the approval of the merger agreement or any other proposal that may properly come before Business Holding Corporation’s special meeting.

     For purposes of determining the presence or absence of a quorum for the transaction of business, Business Holding Corporation will count shares of Business Holding Corporation common stock present in person at the special meeting but not voting as present at the special meeting. Abstentions and broker non-votes will also be counted as present at the Business Holding Corporation special meeting for purposes of determining whether a quorum exists.

     Under the Business Corporation Law of Louisiana, the merger agreement must be approved by shareholders of Business Holding Corporation by a vote of at least two-thirds of the voting power present in person or by proxy at the special meeting. Because approval of the merger agreement requires the affirmative vote of the holders of two-thirds of the voting power present, an abstention or a broker non-vote will have the same effect as a vote “against” approval of the merger agreement. Accordingly, Business Holding Corporation’s Board of Directors urges Business Holding Corporation shareholders to complete, date and sign the accompanying proxy card and return it promptly in the enclosed postage paid business reply envelope.

Recommendation of Board of Directors

     Business Holding Corporation’s Board of Directors has unanimously approved the merger agreement. Business Holding Corporation’s Board of Directors believes that the merger is in the best interests of Business Holding Corporation and Business Holding Corporation shareholders and recommends that Business Holding Corporation shareholders vote “FOR” approval of the merger agreement. The conclusion of Business Holding Corporation’s Board of Directors with respect to the merger is based on a number of factors, as described in this

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Proxy Statement/Prospectus. See “THE MERGER – Reasons for the Merger; Recommendation of the Board of Directors.”

Shareholders Dissenters’ Rights

     Shareholders of Business Holding Corporation who do not wish to accept BancorpSouth common stock in the merger will be entitled under the Business Corporation Law of Louisiana to receive the fair value of their shares. This right to dissent is subject to a number of restrictions and technical requirements. Generally, in order to exercise dissenters’ rights, you must:

     Any Business Holding Corporation shareholder who wishes to exercise dissenters’ rights, or who wishes to preserve his or her right to do so, should carefully review Section 131 of the Business Corporation Law of Louisiana, a copy of which is attached as Annex B to this Proxy Statement/Prospectus, and the section entitled “THE MERGER – Shareholders Dissenters’ Rights.”

Certain Matters Relating to Proxy Materials

     The rules regarding delivery of proxy statements may be satisfied by delivering a single proxy statement to an address shared by two or more shareholders. This method of delivery is referred to as “householding” and can result in meaningful cost savings. In order to take advantage of this opportunity, we may deliver only one proxy statement to certain multiple shareholders who share an address, unless we have received contrary instructions from one or more of the shareholders. We undertake to deliver promptly upon request a separate copy of the proxy statement, as requested, to a shareholder at a shared address to which a single copy of these documents was delivered. If you hold Business Holding Corporation common stock as a registered shareholder and prefer to receive separate copies of a proxy statement, please call (225) 768-1100 or send a written request to:

Business Holding Corporation
6100 Corporate Boulevard, #100
Baton Rouge, Louisiana 70808
Attention: Paula J. Laird, Executive Vice President and COO

     If your Business Holding Corporation common stock is held through a broker or bank and you prefer to receive separate copies of a proxy statement, please contact such broker or bank.

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THE MERGER

     The discussion in this Proxy Statement/Prospectus of the merger of Business Holding Corporation into BancorpSouth does not purport to be complete and is qualified by reference to the full text of the merger agreement and the other annexes attached to, and incorporated by reference into, this Proxy Statement/Prospectus.

Description of the Merger

     If the merger is completed, Business Holding Corporation will merge with and into BancorpSouth and Business Holding Corporation’s subsidiary bank will merge with and into BancorpSouth Bank, a subsidiary of BancorpSouth. Business Holding Corporation shareholders, other than Business Holding Corporation shareholders who properly exercise their rights to dissent from the merger, will have the opportunity to elect to receive in exchange for each share of Business Holding Corporation common stock they own 1.14175 shares of BancorpSouth common stock, a cash payment of $26.00 or a combination of cash and shares of BancorpSouth common stock. Holders of more than one share of Business Holding Corporation common stock may elect a combination of stock and cash consideration. In the merger, between 51% and 60% of the outstanding shares of Business Holding Corporation common stock shall be exchanged for BancorpSouth common stock. In order to ensure that the merger qualifies as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, and as a result of the range limitation for stock consideration, regardless of your election, you may receive a combination of cash and shares of BancorpSouth common stock that is different than what you may have elected, depending on the elections made by other Business Holding Corporation shareholders. See “THE MERGER AGREEMENT – Cash or Stock Election.”

     BancorpSouth will not issue any fractional shares of BancorpSouth common stock. Instead, a Business Holding Corporation shareholder who receives any shares of BancorpSouth common stock as consideration in the merger will receive cash equal to $22.772 times the fraction of a share of BancorpSouth common stock to which the shareholder otherwise would be entitled.

     Louisiana law permits Business Holding Corporation shareholders to dissent from the merger and to receive the fair value of their shares of Business Holding Corporation common stock in cash. To dissent, a Business Holding Corporation shareholder must follow certain procedures, including filing certain notices with Business Holding Corporation and voting his or her shares against the merger agreement. The shares of Business Holding Corporation common stock held by a dissenter will not be exchanged for stock consideration or cash consideration in the merger and a dissenter’s only right will be to receive the appraised fair value of his or her shares of Business Holding Corporation common stock in cash. For a discussion of the procedures that dissenting shareholders must follow to properly exercise their rights, please see “THE MERGER – Shareholders Dissenters’ Rights.”

Background of the Merger

     The management of Business Holding Corporation periodically has explored, assessed and discussed with the Business Holding Corporation Board of Directors, strategic options potentially available to Business Holding Corporation. These strategic discussions have included the possibility of business combinations involving Business Holding Corporation and other financial institutions, particularly in view of the increasing competition and continuing consolidation in the financial services industry, as well as maximizing its performance as an independent company.

     In early 2004, the Board of Directors of Business Holding Corporation authorized its management to pursue potential alternatives for a strategic business combination, including the authority to contact financial institutions that may have an interest in a business combination. Accordingly, management of Business Holding Corporation contacted, and supplied information to, a number of financial institutions known to have an interest in the Baton Rouge area. After reviewing the information delivered by Business Holding Corporation and considering its own strategic plans, BancorpSouth’s management submitted a proposal for a merger with Business Holding Corporation on May 14, 2004. This proposal offered terms substantially identical to the terms of the final merger agreement. Further, after an extensive interview process, on May 17, 2004, Business Holding Corporation engaged National Capital to act as its financial advisor to provide investment banking and financial advisory services in relation to the evaluation, structure and possible negotiation of a potential business combination.

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     After receiving the proposal from BancorpSouth, Business Holding Corporation received in late May 2004 a proposal from Firstrust Corporation of New Orleans, Louisiana for consideration of $27 cash per share and/or the equivalent value in shares of Firstrust Corporation common stock, with at least a majority of the consideration to be paid in Firstrust Corporation common stock. Thereafter, representatives of Business Holding Corporation engaged in intensive negotiations with Firstrust Corporation in an attempt to resolve what the Board of Directors of Business Holding Corporation perceived as two major defects in the Firstrust Corporation proposal: (i) the lack of liquidity of shares of Firstrust Corporation common stock, which are privately held and for which no public trading market exists, compared to the relative liquidity of shares of BancorpSouth common stock on the New York Stock Exchange; and (ii) Firstrust Corporation’s insistence on a valuation of shares of its common stock at an arbitrary 2.5 times book value, compared to the market valuation of shares of BancorpSouth common stock. After several weeks of discussions and negotiations, in the latter part of July 2004, the Business Holding Corporation Board of Directors concluded that these defects could not be overcome to its satisfaction and terminated discussions with Firstrust Corporation. The Board of Directors then directed management to renew contact with BancorpSouth and pursue discussions with it.

     Between August 17 and 19, 2004, representatives of BancorpSouth and Business Holding Corporation and their respective legal counsel and accountants met in Baton Rouge, Louisiana to conduct a due diligence review. The parties and their representatives began negotiation of a merger agreement on August 23, 2004 and continued to negotiate the terms of the merger agreement until September 13, 2004.

     On August 25, 2004, BancorpSouth’s Board of Directors met in a special meeting to consider the proposed merger between Business Holding Corporation and BancorpSouth and the terms of the proposed merger agreement. The Board of Directors discussed the merger with its legal counsel, accountants and management. After further discussion among the directors, the merger agreement was approved by BancorpSouth’s Board of Directors.

     On September 14, 2004, Business Holding Corporation’s Board of Directors met in a special meeting to consider the proposed merger and the terms of the proposed merger agreement. Special counsel for Business Holding Corporation described in detail the proposed merger agreement and related documents to the Board of Directors and expressed his opinion that the proposed merger agreement fell into an acceptable range of what is customary for such transactions. A representative of National Capital, Business Holding Corporation’s financial advisor, made a presentation of the financial terms of the merger, advised the Board of Directors that in its opinion the financial terms were fair to Business Holding Corporation and its shareholders from a financial point of view and further advised the Board of Directors that it was prepared to furnish a written fairness opinion for inclusion in the materials sent to shareholders in connection with the Business Holding Corporation special meeting of shareholders called to vote upon the merger agreement. Following these presentations and discussions among the directors, the merger agreement was approved by Business Holding Corporation’s Board of Directors.

     The merger agreement was executed by the parties as of September 17, 2004.

Reasons for the Merger; Recommendation of the Board of Directors

     The merger will combine the strengths of BancorpSouth and Business Holding Corporation and their subsidiary banks. Joining with BancorpSouth will allow Business Holding Corporation to provide more sophisticated banking services to its current and prospective customers. Business Holding Corporation has experienced remarkable acceptance in this Baton Rouge market but, to continue to meet its customers’ expectations and expanding needs, management and the Board of Directors of Business Holding Corporation believe they must join with a complete financial services company that offers expanded resources and technological capabilities. They believe that this partnership will enhance the ability to serve the complete needs of Business Holding Corporation’s customers and provide a real opportunity for both companies. In contrast, BancorpSouth will have the opportunity to enter the Baton Rouge banking market with a staff of seasoned Louisiana bankers already in place. This outstanding commercial bank will expand BancorpSouth’s Louisiana banking family, which currently includes 13 banking locations in Shreveport, Bossier City, Monroe, West Monroe, Rayville and Ruston, with more than $468 million in deposits as of September 30, 2004.

     Business Holding Corporation’s Board of Directors deliberated and approved the merger agreement at a Board meeting held on September 14, 2004. In reaching its determination to approve the merger agreement, Business Holding Corporation’s Board of Directors consulted with Business Holding Corporation’s management

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and legal advisors and considered a number of factors. The following is a discussion of information and factors that are not intended to be exhaustive, but which includes the material factors considered by Business Holding Corporation’s Board of Directors. In the course of its deliberations with respect to the merger, Business Holding Corporation’s Board of Directors discussed the anticipated impact of the merger on Business Holding Corporation, Business Holding Corporation’s shareholders and various other constituencies.

     Business Holding Corporation’s Board of Directors did not identify any material disadvantages expected to result from the merger during these discussions. In reaching its determination to approve and recommend the merger agreement, Business Holding Corporation’s Board of Directors did not assign any relative or specific weights to the factors considered in reaching such determination, and individual members of Business Holding Corporation’s Board of Directors may have given differing weights to different factors.

     The following includes the material factors that were considered by Business Holding Corporation’s Board of Directors:

     Based on a thorough evaluation of these factors, Business Holding Corporation’s Board of Directors believes the merger is in the best interests of Business Holding Corporation and Business Holding Corporation

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shareholders. Business Holding Corporation’s Board of Directors recommends that Business Holding Corporation shareholders vote “For” approval of the merger agreement.

Opinion of Financial Advisor to Business Holding Corporation

     Business Holding Corporation retained National Capital to act as its financial advisor in connection with the merger and related matters. As part of its engagement, National Capital agreed to render an opinion with respect to the fairness, from a financial point of view, to the holders of Business Holding Corporation common stock, of the merger consideration.

     National Capital is an investment banking and financial services firm located in Baton Rouge, Louisiana. As part of its investment banking business, National Capital engages in the review of the fairness of bank acquisition transactions from a financial perspective and in the valuation of banks and other businesses and their securities in connection with mergers, acquisitions and other transactions. Neither National Capital nor any of its affiliates has nor has had during the past two years a material relationship with Business Holding Corporation and its affiliates or BancorpSouth and its affiliates. National Capital assisted in the organization of Business Holding Corporation and, after considering several financial advisors to serve in connection with the merger, Business Holding Corporation’s Board of Directors unanimously selected National Capital to serve as its financial advisor based upon National Capital’s familiarity with Business Holding Corporation and the regional community banking industry, as well as National Capital’s knowledge of the banking industry as a whole. No instructions were given or limitations imposed by Business Holding Corporation’s Board of Directors upon National Capital regarding the scope of its investigation or the procedures it followed in rendering its opinion.

     On September 15, 2003, National Capital rendered an oral opinion to the Board of Directors of Business Holding Corporation that the consideration to be received by the holders of Business Holding Corporation common stock under the merger agreement is fair to Business Holding Corporation shareholders from a financial point of view. National Capital provided a written fairness opinion as of October 4, 2004. National Capital has been paid a fee of $5,000 for rendering this opinion.

     The full text of National Capital’s written opinion to the Business Holding Corporation Board of Directors, dated as of October 4, 2004, which sets forth the assumptions made, matters considered and extent of review by National Capital, is attached as Annex C to this Proxy Statement/Prospectus and is incorporated herein by reference. You should read the fairness opinion carefully and in its entirety. The following summary of National Capital’s opinion is qualified in its entirety by reference to the full text of the opinion. National Capital’s opinion is directed to the Business Holding Corporation Board of Directors and does not constitute a recommendation to any shareholder of Business Holding Corporation as to how a shareholder should vote with regard to the merger agreement at the Business Holding Corporation special meeting described in this Proxy Statement/Prospectus. The opinion addresses only the financial fairness of the consideration to be received by the holders of Business Holding Corporation common stock. The opinion does not address the relative merits of the merger or any alternatives to the merger, the underlying decision of the Business Holding Corporation Board of Directors to approve the merger agreement or proceed with or effect the merger, or any other aspect of the merger.

     In connection with the fairness opinion, National Capital:

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     National Capital did not independently verify the foregoing information and relied on such information as being complete and accurate in all material respects. National Capital did not make an independent evaluation or appraisal of the assets of Business Holding Corporation or BancorpSouth. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to summary description. Accordingly, notwithstanding the separate factors summarized below, National Capital believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all analyses and factors, could create an incomplete view of the evaluation process underlying its opinion.

     In performing its analyses, National Capital made numerous assumptions with respect to industry performance, business and economic conditions and other matters, many of which are beyond Business Holding Corporation’s and BancorpSouth’s control. The analyses performed by National Capital are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. No company or transaction considered as a comparison in the analyses is identical to Business Holding Corporation, BancorpSouth or the merger. Accordingly, an analysis of the results of such comparisons is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and operating characteristics of companies and other factors that could affect the value of the companies involved in such comparisons. In addition, the analyses do not purport to be appraisals or reflect the process by which or the prices at which businesses actually may be sold or the prices at which any securities may trade at the present time or at any time in the future.

Review and Analysis of BancorpSouth Common Stock and the Transaction and Transaction Ratios

     National Capital did not determine the amount of consideration to be paid in the merger. The merger agreement calls for each share of Business Holding Corporation to be exchanged for 1.14175 shares of BancorpSouth common stock, a cash payment of $26.00 or a combination of cash and shares of BancorpSouth common stock. Based on a $22.77 per share market value of BancorpSouth common stock that was calculated using the average closing price for the last ten trading days ending September 16, 2004, the value received by the shareholders of Business Holding Corporation would be $26.00 per share. That price would result in transaction ratios as of September 30, 2004 equal to 2.45 times stated and tangible book, 32.97 times earnings for the last twelve months and 21.5% of total assets. Business Holding Corporation does not have a public market for trading shares for comparison but the value to be received is well in excess of current book value and the current return on equity. Business Holding Corporation has never paid a dividend on its shares of common stock but BancorpSouth has historically paid quarterly dividends on its shares of common stock. Based on the third quarter of 2004 quarterly dividend rate of $0.18 per share of BancorpSouth common stock paid to BancorpSouth shareholders and the exchange ratio, Business Holding Corporation shareholders would receive a quarterly dividend equivalent to $0.021 per share of Business Holding Corporation common stock.

Analysis of the Present Value of Future Cash Flow for an Independent Business Holding Corporation

     National Capital projected the present value of future cash flows for a Business Holding Corporation shareholder on a stand alone basis through 2009 assuming annual asset growth of 10% and a continuation of the present dividend policy. The sum of the present value of the annual dividend cash flows and the terminal market value of Business Holding Corporation was calculated using discount rates from 10% to 15%, the estimated required

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rate of return expected by an investor, resulting in a present value ranging from $19.26 to $25.14 per share of Business Holding Corporation common stock.

Analysis of Comparable Transactions

     National Capital reviewed the proposed merger as of September 7, 2004 for the purpose of comparing the merger with other announced whole bank and bank holding company transactions. National Capital reviewed the prices paid in 29 U.S. transactions that were announced between July 1, 2003 and September 7, 2004 involving selling financial institutions headquartered in the states of Louisiana, Texas, Mississippi, Arkansas and Alabama with total assets between $50 and $500 million. The tables below include information regarding these transactions. For this peer group: the average and median announced deal price to book value was 1.88 and 1.76 times, respectively; the average and median price to tangible book was 1.92 and 1.90 times, respectively; the average and median price to earnings was 28.85 and 23.65 times, respectively; and the average and median price to assets was 17.5% and 18.1%, respectively. The merger value for the merger of Business Holding Corporation with and into BancorpSouth ranks above the average and median of the comparable transactions.

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     Therefore, based on these analyses, it is the opinion of National Capital that the consideration to be received by the Business Holding Corporation shareholders is fair from a financial point of view.

Regulatory Approval

     Completion of the merger is conditioned on, among other things, the receipt of approvals by the Federal Deposit Insurance Corporation, the Mississippi Department of Banking and Consumer Finance and the Louisiana

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Office of Financial Institutions. BancorpSouth expects the Board of Governors of the Federal Reserve System to waive its notification filing requirements with respect to the merger.

     As a Mississippi state non-member bank, BancorpSouth Bank must file an application with the FDIC for approval of the merger under Sections 18(c) and 18(d) of the Federal Deposit Insurance Act. The FDIC may disapprove the application if it finds that the merger tends to create or result in a monopoly, substantially lessens competition or would be in restraint of trade. BancorpSouth Bank filed this application with the FDIC on October 27, 2004. Following approval of the application by the FDIC, the United States Department of Justice has up to 30 calendar days to submit any adverse comments relating to competitive factors resulting from the merger. BancorpSouth expects to obtain approval of the merger from the FDIC on December 11, 2004, and expects the waiting period to expire on December 26, 2004.

     BancorpSouth notified the Mississippi Department of Banking and Consumer Finance on October 27, 2004 of the pending merger of Business Holding Corporation’s bank subsidiary into BancorpSouth Bank and submitted the necessary documents and applicable fees required for its approval. Approval of this bank merger by the Mississippi Department of Banking and Consumer Finance is expected to be received prior to approval of the merger agreement by Business Holding Corporation shareholders. Also, in connection with this merger, Business Holding Corporation and BancorpSouth filed with the Commissioner of the Louisiana Office of Financial Institutions on October 27, 2004 a notice of the pending merger, provided a copy of all applications filed with any federal agency in connection with the merger and paid a fee as prescribed by regulation of the Commissioner. Approval of the merger by the Commissioner of the Louisiana Office of Financial Institutions is expected to be received on or about November 29, 2004.

Accounting Treatment

     The merger will be accounted for as a “purchase,” as that term is used under GAAP, for accounting and financial reporting purposes. Business Holding Corporation will be treated as the acquired corporation for accounting and financial reporting purposes. Business Holding Corporation’s assets, liabilities and other items will be adjusted to their estimated fair value on the closing date of the merger and combined with the historical book values of the assets and liabilities of BancorpSouth. Applicable income tax effects of these adjustments will be included as a component of the combined company’s deferred tax asset or liability. The difference between the estimated fair value of the assets (including separately identifiable intangible assets, such as core deposit intangibles), liabilities and other items (adjusted as discussed above) and the purchase price will be recorded as goodwill. Financial statements of BancorpSouth issued after the merger will reflect the values and will not be restated retroactively to reflect the historical financial position or results of operations of Business Holding Corporation.

Material United States Federal Income Tax Consequences

     The following discussion summarizes the material anticipated United States federal income tax consequences of the merger to Business Holding Corporation shareholders who hold their shares of Business Holding Corporation common stock as capital assets. This discussion does not address the tax consequences of transactions effectuated prior or subsequent to, or concurrently with, the merger (whether or not such transactions are undertaken in connection with the merger). In addition, this discussion does not address all of the federal income tax consequences that may be important to each taxpayer in light of its particular circumstances, nor does this discussion address the federal income tax consequences that may be applicable to taxpayers subject to special treatment under the Internal Revenue Code, such as:

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     No information is provided in this document or the tax opinions referred to below with respect to the tax consequences, if any, of the merger under applicable foreign, state, local and other tax laws. This discussion and the tax opinions are based upon the provisions of the Internal Revenue Code, applicable Treasury regulations, administrative rulings and judicial decisions, all as in effect as of the date of this Proxy Statement/Prospectus. There can be no assurance that future legislative, administrative or judicial changes or interpretations, which changes could apply retroactively, will not affect the accuracy of this discussion or the statements or conclusions set forth in the tax opinions referred to below.

     In connection with the filing of the registration statement of which this Proxy Statement/Prospectus is a part, BancorpSouth has received an opinion of Waller Lansden Dortch & Davis, PLLC, and Business Holding Corporation has received an opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., that, as of the respective dates of such opinions, if certain factual circumstances exist, the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that BancorpSouth and Business Holding Corporation will each be a party to that reorganization. The parties will not be required to consummate the merger unless they receive additional opinions of their respective counsel, dated the closing date of the merger, confirming that the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that BancorpSouth and Business Holding Corporation will each be a party to that reorganization.

     The opinions of the parties’ respective counsel regarding the merger have relied, and the opinions regarding the merger as of the closing date will each rely, on the following:

     In addition, the opinions of the parties’ respective counsel have assumed, and such counsel’s ability to provide the opinions at the closing of the merger will depend on, the absence of changes to the anticipated facts or changes in law between the date of this Proxy Statement/Prospectus and the closing date. If any of those representations, covenants or assumptions is inaccurate, the parties’ respective counsel may not be able to provide one or more of the required opinions to be delivered at the closing of the merger and/or the tax consequences of the merger could differ from those described in the opinions that counsel have delivered.

     The opinions of the parties’ respective counsel do not bind the Internal Revenue Service and do not preclude the IRS or the courts from adopting a contrary position. BancorpSouth and Business Holding Corporation do not intend to obtain a ruling from the IRS on the tax consequences of the merger. If the IRS were to assert successfully that the merger is not a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, then each Business Holding Corporation shareholder would be required to recognize gain or loss equal to the difference between (i) the sum of the fair market value of the BancorpSouth common stock and the amount of cash received in the exchange and (ii) the shareholder’s adjusted tax basis in the Business Holding Corporation common stock surrendered for such consideration. Such gain or loss would be a capital gain or loss, provided that such shares of Business Holding Corporation common stock were held as capital assets by the shareholder at the effective time of the merger. Such capital gain or loss recognized would be long-term capital gain or loss if the Business Holding Corporation shareholder’s holding period for the Business Holding Corporation common stock was more than one

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year. In such event, a Business Holding Corporation shareholder’s total initial tax basis in the BancorpSouth common stock received would be equal to its fair market value at the effective time of the merger, and the shareholder’s holding period for the BancorpSouth common stock would begin on the day after the merger.

     Assuming that the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, neither BancorpSouth nor Business Holding Corporation will recognize any gain or loss as a result of the merger. The federal income tax consequences of the merger qualifying as a reorganization to a particular Business Holding Corporation shareholder will vary depending primarily on whether the shareholder exchanges his or her Business Holding Corporation common stock solely for BancorpSouth common stock (except for cash received instead of a fractional share of BancorpSouth common stock), solely for cash or for a combination of BancorpSouth common stock and cash. At the time that a Business Holding Corporation shareholder makes an election as to the form of consideration to be received in the merger and at the time of the vote on the merger, such shareholder will not know the extent to which the shareholder’s elected form of merger consideration will be given effect. Regardless of whether a Business Holding Corporation shareholder elects to receive BancorpSouth common stock, cash or a combination of BancorpSouth common stock and cash, the federal income tax consequences to the shareholder will depend on the actual merger consideration received by the shareholder.

Business Holding Corporation Shareholders Receiving Only BancorpSouth Common Stock

     No gain or loss will be recognized by a holder of Business Holding Corporation common stock as a result of the surrender of shares of Business Holding Corporation common stock solely in exchange for shares of BancorpSouth common stock pursuant to the merger (except with respect to cash received instead of fractional shares of BancorpSouth common stock, as discussed below). The aggregate tax basis of the shares of BancorpSouth common stock received in the merger (including any fractional shares of BancorpSouth common stock deemed received) will be the same as the aggregate tax basis of the shares of Business Holding Corporation common stock surrendered in exchange for the BancorpSouth common stock. The holding period of the shares of BancorpSouth common stock received (including any fractional shares of BancorpSouth common stock deemed received) will include the holding period of shares of Business Holding Corporation common stock surrendered in exchange for the BancorpSouth common stock, provided that such shares of Business Holding Corporation common stock were held as capital assets of the shareholder at the effective time of the merger.

Business Holding Corporation Shareholders Receiving Only Cash

     A holder of Business Holding Corporation common stock that does not receive any shares of BancorpSouth common stock pursuant to the merger (and is not treated as constructively owning, after the merger, BancorpSouth common stock held by certain family members and entities affiliated with the holder under the Internal Revenue Code) will generally recognize gain or loss equal to the difference between the amount of cash received and the holder’s adjusted tax basis in the shares of Business Holding Corporation common stock exchanged in the merger. Such gain or loss will be a capital gain or loss, provided that such shares of Business Holding Corporation common stock were held as capital assets by the shareholder at the effective time of the merger. Such capital gain or loss will be a long-term capital gain or loss to the extent that, at the effective time of the merger, the holder has a holding period in such Business Holding Corporation common stock of more than one year. The Internal Revenue Code contains limitations on the extent to which a taxpayer may deduct capital losses from ordinary income.

Business Holding Corporation Shareholders Receiving Both Cash and BancorpSouth Common Stock

     If a holder of Business Holding Corporation common stock receives both BancorpSouth common stock and cash (other than cash in lieu of a fractional interest in BancorpSouth common stock) in the merger, that holder will recognize gain, if any, equal to the lesser of:

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     Any recognized gain could be taxed as a capital gain or a dividend. Such gain will generally be capital gain (provided that such shares of Business Holding Corporation common stock were held as capital assets by the shareholder at the effective time of the merger), unless the holder’s exchange of Business Holding Corporation common stock for cash and BancorpSouth common stock “has the effect of the distribution of a dividend” after giving effect to the constructive ownership rules of the Internal Revenue Code, in which case such gain might be treated as ordinary income. Any capital gain recognized generally will be long-term capital gain to the extent that, at the effective time of the merger, the holder has a holding period in the Business Holding Corporation common stock exchanged in the merger of more than one year. Because the determination of whether a cash payment will be treated as having the effect of a dividend depends primarily upon the facts and circumstances of each Business Holding Corporation shareholder, Business Holding Corporation shareholders are urged to consult their own tax advisors regarding the tax treatment of any cash received in the merger.

     The aggregate tax basis of the shares of BancorpSouth common stock received in the merger (including any fractional shares of BancorpSouth common stock deemed received) will be the same as the aggregate tax basis of the shares of Business Holding Corporation common stock surrendered in the merger, increased by the amount of gain recognized in the exchange (whether characterized as capital gain or a dividend, but excluding any gain recognized with respect to any cash received instead of a fractional share of BancorpSouth common stock) and reduced by the amount of cash received in the exchange (excluding any cash received instead of a fractional share of BancorpSouth common stock). The holding period of the shares of BancorpSouth common stock received (including any fractional share of BancorpSouth common stock deemed received) will include the holding period of shares of Business Holding Corporation common stock surrendered in exchange for the BancorpSouth common stock, provided that such shares of Business Holding Corporation common stock were held as capital assets of the shareholder at the effective time of the merger. A Business Holding Corporation shareholder who receives a combination of BancorpSouth common stock and cash in exchange for his or her Business Holding Corporation common stock will not be permitted to recognize any loss for federal income tax purposes.

     A Business Holding Corporation shareholder’s federal income tax consequences will also depend on whether his or her shares of Business Holding Corporation common stock were purchased at different times at different prices. If they were, the Business Holding Corporation shareholder could realize gain with respect to some of the shares of Business Holding Corporation common stock and loss with respect to other shares. Such Business Holding Corporation shareholder would have to recognize such gain to the extent such shareholder receives cash with respect to those shares of Business Holding Corporation common stock in which the shareholder’s adjusted tax basis is less than the amount of cash plus the fair market value at the effective time of the merger of the BancorpSouth common stock received, but could not recognize loss with respect to those shares of Business Holding Corporation common stock in which the Business Holding Corporation shareholder’s adjusted tax basis is greater than the amount of cash plus the fair market value at the effective time of the merger of the BancorpSouth common stock received. Any disallowed loss would be included in the adjusted basis of the BancorpSouth common stock. Such a Business Holding Corporation shareholder is urged to consult his or her own tax advisor respecting the tax consequences of the merger to that shareholder.

Cash Instead of Fractional Shares of BancorpSouth Common Stock

     Holders of Business Holding Corporation common stock who receive cash instead of a fractional share of BancorpSouth common stock will be treated as having received the fractional share in the merger and then as having the fractional share redeemed by BancorpSouth in exchange for the cash actually distributed instead of the fractional share, with such redemption qualifying as an exchange under Section 302 of the Internal Revenue Code. Accordingly, such holders will generally recognize gain or loss equal to the difference between the tax basis of the holder’s Business Holding Corporation common stock allocable to that fractional share and the amount of cash received. The gain or loss generally will be capital gain or loss and long-term capital gain or loss if the Business Holding Corporation common stock exchanged has been held for more than one year.

Backup Withholding

     A holder of Business Holding Corporation common stock may be subject, under certain circumstances, to backup withholding at a rate of 28% with respect to the amount of cash, if any, received in the merger, including cash received instead of fractional shares of BancorpSouth common stock, unless the holder provides proof of an applicable exemption satisfactory to BancorpSouth and the exchange agent or furnishes its correct taxpayer

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identification number, and otherwise complies with applicable requirements of the backup withholding rules. Any amount withheld under the backup withholding rules is not additional tax and may be refunded or credited against the holder’s federal income tax liability, so long as the required information is furnished to the IRS.

     The preceding summary does not purport to be a complete analysis or discussion of all potential tax effects relevant to the merger. Accordingly, Business Holding Corporation shareholders are urged to consult their own tax advisors as to the specific tax consequences to them of the merger, including tax return reporting requirements, the applicability and effect of federal, state, local, foreign and other tax laws and the effect of any proposed changes in the tax laws.

Shareholders Dissenters’ Rights

     Each record holder of Business Holding Corporation common stock will be entitled to dissenters’ rights as a result of the merger pursuant to Section 131 of the Business Corporation Law of Louisiana; provided, however, that such holders will not have dissenters’ rights if the merger agreement is approved by at least 80% of the total voting power of Business Holding Corporation. If you have a beneficial interest in shares of Business Holding Corporation common stock that are held of record in the name of another person, such as a broker or nominee, you must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect whatever dissenters’ rights you may have, or you must submit to Business Holding Corporation the record shareholder’s written consent to the dissent not later than the time you assert dissenters’ rights and must do so with respect to all shares that you beneficially own.

     The following discussion is not a complete statement of the law pertaining to dissenters’ rights under the Business Corporation Law of Louisiana. If you wish to exercise such dissenters’ rights, or wish to preserve your right to do so, you should review Section 131 of the Business Corporation Law of Louisiana, a copy of which is attached as Annex B to this Proxy Statement/Prospectus, and the following discussion carefully.

     The availability of dissenters’ rights is conditioned upon full compliance with a complicated procedure set forth in the Business Corporation Law of Louisiana. Failure to timely and properly comply with the procedures specified will result in the complete loss of dissenters’ rights. Accordingly, if you wish to dissent from the merger and receive the value of your Business Holding Corporation common stock in cash, you should consult with your own legal counsel.

     Your vote against the merger agreement will not be deemed to satisfy all of the notice requirements under the Business Corporation Law of Louisiana with respect to appraisal rights.

Procedure for the Exercise of Dissenters’ Rights

     In order to be eligible to exercise the right to dissent, you must:

     Moreover, in order for you to be eligible to exercise dissenters’ rights, the merger agreement must be approved by less than 80% of the total voting power of Business Holding Corporation.

     If the merger agreement is approved at the Business Holding Corporation special meeting by less than 80% of the total voting power of Business Holding Corporation and the merger is effected, Business Holding Corporation must promptly deliver written notice to all dissenting Business Holding Corporation shareholders who satisfied the requirements referred to above. If you are sent a written notice from Business Holding Corporation, you must, within 20 days after the mailing of such notice to you, file with Business Holding Corporation a demand in writing for the fair cash value of your shares as of the day before the special meeting of Business Holding Corporation. In such demand, you must state the fair cash value demanded for the shares and a post office address for you to which Business Holding Corporation may reply. You must also deposit in escrow in a chartered bank or trust company

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located in East Baton Rouge Parish, Louisiana the certificates representing your shares, duly endorsed and transferred to Business Holding Corporation upon the sole condition that such stock certificates shall be delivered to Business Holding Corporation upon payment of the appropriate value of the shares. You shall deliver to Business Holding Corporation, along with your demand, the written acknowledgment of such bank or trust company that it holds your stock certificates. You may withdraw your demand at any time before Business Holding Corporation gives notice of disagreement, as described below.

     If you demand payment for the value of your shares, you shall cease to have any of the rights of a shareholder of Business Holding Corporation, except the rights set forth in Section 131 of the Business Corporation Law of Louisiana. You may withdraw such a demand at any time before Business Holding Corporation gives notice of disagreement. After such notice of disagreement is given, your withdrawal will require the written consent of Business Holding Corporation.

     If you neither demand payment nor deposit your stock certificates as described above, you will not be entitled to payment for your shares of Business Holding Corporation common stock as a dissenting shareholder but will still be entitled to merger consideration in accordance with the terms of the merger agreement as discussed in the section entitled “THE MERGER AGREEMENT – Election Procedures; Surrender of Stock Certificates.”

BancorpSouth’s Payment or Offer of Payment

     If the merger is consummated and BancorpSouth as the surviving corporation disagrees with the value demanded by you or does not agree that a payment is due to you, within 20 days after receipt of your demand and acknowledgment, BancorpSouth shall notify you in writing of such disagreement and shall state the value BancorpSouth will agree to pay. Otherwise, BancorpSouth as the surviving corporation will be liable for, and shall pay to you, the value you demanded for your shares.

     Within 60 days after receipt of written notice of BancorpSouth’s disagreement, you may file suit against BancorpSouth as the surviving corporation in the district court of East Baton Rouge Parish, Louisiana, asking the court to fix and decree the fair cash value of your shares as of the day before the special meeting of Business Holding Corporation. Pursuant to Section 131 of the Business Corporation Law of Louisiana, the court shall determine whether any payment is due and, if so, the corresponding fair cash value. Any other dissenting shareholder entitled to file such a suit may, within such 60-day period, intervene as a plaintiff in a suit filed by another dissenting shareholder. The costs of the proceeding shall be taxed against the shareholder who instituted such suit, unless BancorpSouth as the surviving corporation deposited in the registry of the court the amount BancorpSouth offered to pay for such shares and the amount the court ultimately awarded the dissenting shareholder was greater than the amount deposited by BancorpSouth, exclusive of interest and costs.

     A Business Holding Corporation shareholder who, within 60 days after receipt of written notice of BancorpSouth’s disagreement, fails to bring a suit or intervene in a suit by another dissenting shareholder will be bound either by BancorpSouth’s statement that no payment is due or by BancorpSouth’s valuation of the shares.

Interests of Certain Persons in the Merger

     Certain members of management of Business Holding Corporation and Business Holding Corporation’s Board of Directors may be deemed to have interests in the merger that are in addition to their interests as Business Holding Corporation shareholders generally. Business Holding Corporation’s Board of Directors was aware of these interests and considered them, among other matters, in approving the merger agreement.

     Mr. Charles E. Roemer, III, President and Chief Executive Officer of The Business Bank, is a party to an employment agreement with The Business Bank which provides for the payment of severance in an amount equal to two times his present annual base salary upon a change of control or within three years after a change in control of The Business Bank if his employment is terminated without cause or upon the happening of certain enumerated events. It is anticipated that the merger would constitute a change of control for purposes of this employment agreement.

     Ms. Paula J. Laird, Executive Vice President of The Business Bank, agreed to terminate her employment agreement with Business Holding Corporation and enter into a new employment agreement with BancorpSouth

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Bank in exchange for a payment in an amount equal to approximately three times her present annual base salary. Mr. Larry Denison, Executive Vice President of The Business Bank, agreed to terminate his employment agreement with Business Holding Corporation and enter into a new employment agreement with BancorpSouth Bank in exchange for a payment in an amount equal to approximately three times his present annual base salary.

     Frank Miller, a director of Busines Holding Corporation, owns options to purchase 500 shares of Business Holding Corporation common stock that will become fully vested exercisable options to purchase shares of BancorpSouth common stock as a result of the merger.

     Executive officers and directors of Business Holding Corporation will receive shares of BancorpSouth common stock in the merger on the same basis as other Business Holding Corporation shareholders. The following chart shows the number of shares of BancorpSouth common stock that may be issued to executive officers, directors and holders of more than 5% of Business Holding Corporation common stock in the merger:

     Officers and directors of Business Holding Corporation have certain interests under the merger agreement regarding indemnification following the merger. See “THE MERGER AGREEMENT – Indemnification.”

Comparison of Rights of Shareholders

     At the effective time of the merger, Business Holding Corporation shareholders who receive shares of BancorpSouth common stock will automatically become BancorpSouth shareholders. BancorpSouth is a Mississippi corporation governed by provisions of the Mississippi Business Corporation Act and BancorpSouth’s restated articles of incorporation, as amended, and amended and restated bylaws, as amended. Business Holding Corporation is a Louisiana corporation governed by provisions of the Business Corporation Law of Louisiana, and Business Holding Corporation’s articles of incorporation and bylaws. See “COMPARISON OF RIGHTS OF SHAREHOLDERS.”

Restrictions on Resales by Affiliates

     The shares of BancorpSouth common stock issuable to Business Holding Corporation shareholders upon completion of the merger have been registered under the Securities Act of 1933. These shares may be traded freely without restriction by those shareholders who are not deemed to be “affiliates” of Business Holding Corporation or BancorpSouth, as that term is defined in SEC rules under the Securities Act. An “affiliate” of a company generally includes its executive officers and directors and holders of 10% or more of the company’s voting stock.

     Shares of BancorpSouth common stock received by those Business Holding Corporation shareholders who are deemed to be affiliates of Business Holding Corporation at the time of the Business Holding Corporation special meeting may be resold without registration under the Securities Act only as permitted by Rule 145 under the Securities Act. Under Rule 145, during the one-year period following completion of the merger, affiliates of Business Holding Corporation may resell shares of BancorpSouth common stock received by them in the merger subject to limitations on the number of shares that may be sold during any three-month period and the manner in which the shares may be sold, including the use of a broker and non-solicitation of a buyer. Affiliates of Business Holding Corporation at the time of the Business Holding Corporation special meeting who are not affiliates of BancorpSouth may resell their shares of BancorpSouth common stock acquired in connection with the merger without registration under the Securities Act after one year following completion of the merger so long as BancorpSouth maintains current public information and after two years following completion of the merger without any restrictions under Rule 145.

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     Business Holding Corporation has agreed in the merger agreement to use its reasonable best efforts to cause each person who is an affiliate of Business Holding Corporation, for purposes of Rule 145 under the Securities Act, to deliver to BancorpSouth a written agreement intended to ensure compliance with the Securities Act.

Source of Funds for Cash Portion of Merger Consideration

     BancorpSouth intends to pay the cash portion of the merger consideration to the Business Holding Corporation shareholders from funds available to BancorpSouth at closing. BancorpSouth currently intends these funds to be comprised of available cash that will be distributed from BancorpSouth Bank to BancorpSouth in accordance with a previously declared dividend.

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THE MERGER AGREEMENT

     The following summary of certain terms and provisions of the merger agreement is qualified in its entirety by reference to the merger agreement, which is incorporated into this Proxy Statement/Prospectus by reference and, with the exception of exhibits and schedules to the merger agreement, is attached as Annex A to this Proxy Statement/Prospectus.

Terms of the Merger

     Upon completion of the merger, Business Holding Corporation will merge with and into BancorpSouth, the separate corporate existence of Business Holding Corporation will cease and BancorpSouth will be the surviving corporation. BancorpSouth will continue to exist as a Mississippi corporation. In addition, Business Holding Corporation’s wholly-owned subsidiary, The Business Bank, will merge with and into BancorpSouth Bank, a Mississippi state banking corporation and a wholly-owned subsidiary of BancorpSouth, and BancorpSouth Bank will be the surviving bank. BancorpSouth Bank will continue its existence under the laws of Mississippi. Subject to the satisfaction or waiver of certain conditions set forth in the merger agreement, the merger will become effective upon the filing of a certificate of merger in the offices of the Secretary of State of the State of Louisiana and the offices of the Secretary of State of the State of Mississippi in accordance with the Business Corporation Law of Louisiana and the Mississippi Business Corporation Act of 1987. See “THE MERGER AGREEMENT – Conditions to the Merger.”

     The merger will have the effects set forth in Section 79-4-11.07 of the Mississippi Business Corporation Act, Section 81-5-85 of the Mississippi Banking Act, Section 12.115 of the Business Corporation Law of Louisiana and Section 6.355 of the Louisiana Banking Law.

     BancorpSouth’s restated articles of incorporation, as amended, and amended and restated bylaws, as amended, as in effect upon completion of the merger will be those of the surviving corporation, and BancorpSouth Bank’s articles of incorporation and bylaws as in effect upon completion of the merger will be those of the surviving bank.

     At the effective time of the merger, automatically by virtue of the merger and without any action on the part of any party or shareholder, each share of Business Holding Corporation common stock outstanding immediately prior to the effective time (other than dissenting shares and shares held by Business Holding Corporation and BancorpSouth) will become and be converted into the right to receive, at the election of the holder of such share and subject to tax-related adjustments, either: