Tupelo, Miss. (

TheStreet

) -- Shares of

BancorpSouth

(BXS) - Get Report

sank Friday after the lender fell far short of Wall Street expectations with its second-quarter results as its credit costs worsened.

The stock fell almost 16% to $14.05 in recent trades. Volume of 2.7 million was more than five times the issue's trailing three-month daily average of around 570,000. The session-low of $13.74 was a new 52-week low.

After Thursday's closing bell, BancorpSouth reported a second-quarter loss of $12.6 million, or 15 cents a share. The average estimate of analysts polled by

Thomson Reuters

was for a profit of 23 cents a share.

The bank recorded a $62.4 million provision for credit losses in the latest quarter, along with an $8.2 million write-down of its mortgage servicing rights.

In comparison, BancorpSouth had earned $8.4 million, or 10 cents a share, in the first quarter, when the provision for credit losses was $43.5 million. In last year's second quarter, the bank earned $33.9 million, or 41 cents a share, along with a provision of $17.6 million.

Net charge-offs -- loan losses less recoveries -- totaled $50.5 million during the second quarter, increasing from $30.6 million the previous quarter and $13.4 million a year earlier. The company's annualized ratio of net charge-offs to average loans was 2.08%, and BancorpSouth's loan loss reserves kept pace, covering 2.08% of total loans.

As of June 30, BancorpSouth had total assets of $13.4 billion. The company reported its nonperforming assets in a conservative manner, including nonaccrual loans, restructured loans, accruing loans past due 90 days or more and repossessed real estate. These totaled $369.8 million, or 2.76% of total assets, as of June 30, rising from a nonperforming assets ratio of 2.23% in March and 1.12% a year earlier.

To put BancorpSouth's decline in asset quality into perspective, the second-quarter net charge-off ratio of 2.08%, was considerably lower than the national aggregate charge-off ratio of 2.84% for the first quarter, reported by the Federal Deposit Insurance Corp. It was also lower than the net charge-off ratios for the five largest U.S. banks.

Four of these, including

Citigroup

(C) - Get Report

,

Bank of America

(BAC) - Get Report

,

JPMorgan Chase

(JPM) - Get Report

and

Wells Fargo

(WFC) - Get Report

had built up sufficient reserve coverage over the past three years to allow them to significantly boost second-quarter earnings by

releasing loan loss reserves

.

Despite the downturn in credit quality in "Alabama and the Nashville and the greater Memphis, Tennessee areas," BancorpSouth CEO Aubrey Patterson said the company was "encouraged that other areas of our business have remained relatively stable despite continued weakness in the economy.

--

Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.