BancorpSouth posted lower earnings from the first quarter after adjusting for lower valuations in its mortgage servicing rights, the company said Monday.

Net income fell 10% from a quarter earlier, to $20.6 million, after the Tupelo, Miss., company recorded a $3.8 million pretax valuation adjustment for its mortgage servicing rights. BancorpSouth partially offset that adjustment with a $4 million decrease in its loan-loss provision compared to the first quarter. The company also unloaded $26.2 million in foreclosed assets during the second quarter.

Earnings rose 61% from a year earlier.

"Total OREO dispositions for the quarter represent the highest level achieved during this credit cycle and are reflective of the success of our disposition efforts Aubrey Patterson, BancorpSouth's chairman and chief executive, said in a press release. "Our second quarter results reflect meaningful profitability improvement, achieved through consistent and successful efforts to improve asset quality as well as continued strong performance from our noninterest lines of business."

Patterson said the company's noninterest-bearing lines of business contributed almost 40% of total revenue, largely through mortgage servicing and insurance commissions. During the second quarter, the company said it would buy assets from The Securance Group to expand its insurance operations in Alabama. Still, noninterest revenue fell down 8% from the first quarter and 11% from a year earlier, to $66.5 million.

BancorpSouth is "well capitalized" at June 30, with a Tier 1 risk-based capital ratio 13.4% and total risk-based capital ratio of 14.7%.

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