The honeymoon is over for Dan Rollins.

Rollins, in one of his first big appearances as chief executive of BancorpSouth (BXS) in Tupelo, Miss., fielded numerous questions Thursday about cost-cutting and capital deployment.

"I'm at 91 days, so I am past probation," Rollins said about halfway through a question-and-answer session at KBW's annual banking conference in Boston. Still, "I'm new and everybody wants to test me out to see what I'm thinking."

BancorpSouth hired Rollins in November to succeed Aubrey Patterson. He had previously served as the president and chief operating officer at Prosperity Bancshares (PB) in Houston.

The biggest topic involved the $13.4 billion-asset company's inflated efficiency ratio, which stood around 78% at March 31. One attendee blatantly chided management, declaring that there "is no essential reason for the high costs" at BancorpSouth.

"We're going to have a sequester," Rollins said, invoking the term for the across-the-board cost-cutting planned by the federal government.

"I don't think we need to argue about where the expense cuts are," he said, adding that BancorpSouth needs to cut more than the 2.5% reduction imminent in Washington.

He then offered a quick political commentary: "If we can find 2.5%, I bet other people can, too. No political agenda here. … We need to challenge where we're spending money."

BancorpSouth incurred $550 million in noninterest expenses last year, including $143 million during the fourth quarter. Rollins said during the conference that three factors contributed to its poor efficiency ratio: costs tied to foreclosed assets, lost revenue from the Durbin Amendment and overdraft changes, and hiring tied to loan reviews, auditing and compliance.

Still, Rollins emphasized the need to add revenue, which will require select hires in areas such as mortgage production and insurance.

"We're clearly not running at 100%," he conceded. "I don't know when we're going to be there but we can make significant progress in a relatively short period of time. … We need to make sure we're making smart decisions."

Along those lines, it is unlikely that BancorpSouth will pursue bulk loan sales to improve its credit quality, Rollins said. "At the pricing today, it just doesn't make sense to sell in bulk," he said. "We're seeing offers coming in at 30 to 40 cents on the dollar at a time when we're collecting in the 80s and 90s. The idea here is not to give away money."

Finally, Rollins fielded questions on capital management with a specific focus on increasing its quarterly dividend. "We're working on our stress test," said Rollins, who has already paid initial visits to the company's state regulator, the Federal Reserve Bank of St. Louis and the Federal Deposit Insurance Corp. The meetings were designed "to build relationships and let them see where I'm going. … They don't believe we have enough capital, but they don't think any bank has enough capital."

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