(13) INCOME TAXES

Total income taxes for the years ended December 31, 2011, 2010 and 2009 were allocated as follows:

	2011			2010			2009
	(In thousands)
Income tax expense (benefit)	$	4,475		$	(8,705	)	$	30,105
Shareholders' equity for other comprehensive income		7,600			(3,763	)		11,469
Shareholders' equity for stock option plans		(7	)		(44	)		(500	)
Total	$	12,068		$	(12,512	)	$	41,074

The components of income tax expense (benefit) attributable to operations were as follows for the years ended December 31, 2011, 2010 and 2009:

	2011			2010			2009
Current:	(In thousands)
Federal	$	5,643		$	8,865		$	35,936
State		5,400			(1,520	)		3,527
Deferred:
Federal		(1,626	)		(13,848	)		(8,302	)
State		(4,942	)		(2,202	)		(1,056	)
Total	$	4,475		$	(8,705	)	$	30,105

Income tax expense (benefit) differed from the amount computed by applying the U.S. federal income tax rate of 35% to income before income taxes resulting from the following:

	2011			2010			2009
	(In thousands)
Tax expense at statutory rates	$	14,715		$	4,983		$	39,492
Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax benefit		266			(2,419	)		1,606
Tax-exempt interest revenue		(7,881	)		(6,605	)		(6,105	)
Tax-exempt earnings on life insurance		(2,647	)		(2,659	)		(2,970	)
Deductible dividends paid on 401(k) plan		(331	)		(1,972	)		(1,875	)
Other, net		353			(33	)		(43	)
Total	$	4,475		$	(8,705	)	$	30,105

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 were as follows:

	2011				2010*
Deferred tax assets:	(In thousands)
Loans, principally due to allowance for credit losses	$	73,911		$	75,514
Other real estate owned		10,429			5,681
Mark to market - securities		4,165			4,216
Accrued liabilities, principally due to compensation arrangements and vacation accruals		10,681			9,353
Other		312			1,760
State tax credits (net of federal benefit)		1,040			-
Unrecognized pension expense		26,428			17,262
Total gross deferred tax assets		126,966			113,786
Less: valuation allowance		-			-
Deferred tax assets	$	126,966		$	113,786
Deferred tax liabilities:
Lease transactions	$	37,509		$	32,809
Employment benefits		26,991			29,514
Premises and equipment, principally due to differences in depreciation		27,221			24,033
Mortgage servicing rights		11,405			14,785
Intangible assets		10,336			10,080
Investments, principally due to interest income recognition		147			4,069
Deferred loan points		2,656			2,821
Other assets, principally due to expense recognition		525			1,233
Unrealized net losses on available-for-sale securities		25,064			8,297
Total gross deferred tax liabilities		141,854			127,641
Net deferred tax liabilities	$	(14,888	)	$	(13,855	)
*Certain 2010 amounts have been reclassified to conform with the 2011 presentation.

The Company has a deferred state tax asset of $1.0 million resulting from state tax credit carryforwards. These carryforwards expire between 2017 and 2018.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will

realize the benefits of these deductible differences existing at December 31, 2011.

The following table presents the activity in unrecognized tax benefits for 2011, 2010 and 2009:

	2011			2010		2009
	(In thousands)
Unrecognized tax benefit, January 1	$	355		$	355	$	355
Gross increases - tax positions in prior period		873			-		-
Gross decreases - tax positions in prior period		(355	)		-		-
Gross increases - tax positions in current period		229			-		-
Settlements		-			-		-
Lapse of statute of limitations		-			-		-
Unrecognized tax benefit, December 31	$	1,102		$	355	$	355

The balance of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1.1 million at December 31, 2011 and approximately $355,000 at both December 31, 2010 and 2009.

The Company recognizes accrued interest related to unrecognized tax benefits and penalties as a component of other noninterest expense. The Company accrued interest related to the uncertain tax benefits noted above of approximately $26,000 during 2011 and $28,000 during both 2010 and 2009, and in total, as of December 31, 2011 and 2010, had recognized a liability for interest of approximately $231,000 and $191,000, respectively.

Management does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company is subject to taxation in the United States and various states and local jurisdictions. The Company files a consolidated United States federal return. Based on the laws of the applicable state where the Company conducts business operations, the Company and its applicable subsidiaries either file a consolidated, combined or separate return. The tax years that remain open for examination for the Company's major jurisdictions of the United States - Mississippi, Arkansas, Tennessee, Alabama, Louisiana and Missouri - are 2008, 2009 and 2010. With few exceptions, the Company is no longer subject to United States federal, states or local examinations by tax authorities for years before 2008. Currently, there are disputed tax positions taken in previously filed tax returns with certain states, including positions regarding the allocation of income and expenses. The Company continues to evaluate these positions and intends to contest the proposed adjustments made by these tax authorities. The Company does not anticipate that the ultimate resolution of these examinations will result in a material impact on the financial position or results of operations of the Company.