NOTE 2 - LOANS AND LEASES

The Company's loan and lease portfolio is disaggregated into the following segments: commercial and industrial; real estate; credit card; and all other loans and leases. The real estate segment is further disaggregated into the following classes: consumer mortgage; home equity; agricultural; commercial and industrial-owner occupied; construction, acquisition and development; and commercial real estate. A summary of gross loans and leases by segment and class as of the dates indicated follows:

	June 30,				December 31,
	2012		2011		2011
	(In thousands)

Commercial and industrial	$	1,507,382	$	1,540,048	$	1,484,967
Real estate
Consumer mortgages		1,904,420		1,971,499		1,945,190
Home equity		496,245		531,787		514,362
Agricultural		251,975		255,310		239,487
Commercial and industrial-owner occupied		1,288,887		1,366,734		1,301,575
Construction, acquisition and development		835,022		1,060,675		908,362
Commercial real estate		1,748,748		1,764,648		1,754,022
Credit cards		101,085		101,955		106,281
All other		637,878		663,223		657,012
Total	$	8,771,642	$	9,255,879	$	8,911,258

The following table shows the Company's loans and leases, net of unearned income, as of June 30, 2012 by segment, class and geographical location:

	Alabama and Florida Panhandle		Arkansas*		Mississippi*		Missouri		Greater Memphis Area		Tennessee*		Texas and Louisiana		Other		Total
	(In thousands)

Commercial and industrial	$	57,950	$	191,231	$	340,454	$	56,176	$	17,036	$	83,517	$	248,738	$	502,576	$	1,497,678
Real estate
Consumer mortgages		104,590		266,625		748,850		44,442		83,380		161,013		448,735		46,785		1,904,420
Home equity		59,969		38,511		168,552		24,417		66,302		74,942		61,547		2,005		496,245
Agricultural		6,632		81,867		68,990		3,439		9,497		14,043		62,527		4,980		251,975
Commercial and industrial-owner occupied		116,744		159,231		454,193		81,542		90,680		89,351		250,432		46,714		1,288,887
Construction, acquisition and development		95,278		60,747		251,977		44,756		91,437		88,684		174,818		27,325		835,022
Commercial real estate		190,195		346,586		360,704		204,377		115,061		101,883		377,008		52,934		1,748,748
Credit cards		-		-		-		-		-		-		-		101,085		101,085
All other		30,890		86,350		190,620		6,852		56,187		49,481		95,729		92,226		608,335
Total	$	662,248	$	1,231,148	$	2,584,340	$	466,001	$	529,580	$	662,914	$	1,719,534	$	876,630	$	8,732,395

* Excludes the Greater Memphis Area.

The Company's loan concentrations which exceed 10% of total loans are reflected in the preceding tables. A substantial portion of construction, acquisition and development loans are secured by real estate in markets in which the Company is located. The Company's general loan policy prohibits the use of interest reserves on loans originated after March 2010. Certain of the construction, acquisition and development loans were structured with interest-only terms. A portion of the consumer mortgage and commercial real estate portfolios originated through the permanent financing of construction, acquisition and development loans. The prolonged economic downturn has negatively impacted many borrowers' and guarantors' ability to make payments under the terms of the loans as their liquidity has been depleted. Accordingly, the ultimate collectability of a substantial portion of these loans and the recovery of a substantial portion of the carrying amount of other real estate owned are susceptible to changes in real estate values in the corresponding market areas. Continued economic distress could negatively impact additional borrowers' and guarantors' ability to repay their debt which would make more of the Company's loans collateral dependent.

The following tables provide details regarding the aging of the Company's loan and lease portfolio, net of unearned income, by segment and class at June 30, 2012 and December 31, 2011:

	June 30, 2012
													90+ Days
	30-59 Days		60-89 Days		90+ Days		Total				Total		Past Due still
	Past Due		Past Due		Past Due		Past Due		Current		Outstanding		Accruing
	(In thousands)

Commercial and industrial	$	5,516	$	782	$	5,697	$	11,995	$	1,485,683	$	1,497,678	$	-
Real estate
Consumer mortgages		12,472		3,849		15,421		31,742		1,872,678		1,904,420		1,141
Home equity		1,268		547		157		1,972		494,273		496,245		-
Agricultural		1,162		952		4,209		6,323		245,652		251,975		-
Commercial and industrial-owner occupied		2,888		1,609		7,209		11,706		1,277,181		1,288,887		-
Construction, acquisition and development		7,449		1,012		17,319		25,780		809,242		835,022		-
Commercial real estate		1,549		3,305		8,592		13,446		1,735,302		1,748,748		-
Credit cards		420		286		564		1,270		99,815		101,085		324
All other		2,597		289		440		3,326		605,009		608,335		167
Total	$	35,321	$	12,631	$	59,608	$	107,560	$	8,624,835	$	8,732,395	$	1,632

	December 31, 2011
													90+ Days
	30-59 Days		60-89 Days		90+ Days		Total				Total		Past Due still
	Past Due		Past Due		Past Due		Past Due		Current		Outstanding		Accruing
	(In thousands)

Commercial and industrial	$	5,571	$	4,209	$	4,193	$	13,973	$	1,459,755	$	1,473,728	$	12
Real estate
Consumer mortgages		15,740		6,485		14,569		36,794		1,908,396		1,945,190		2,974
Home equity		1,837		265		594		2,696		511,666		514,362		-
Agricultural		666		54		719		1,439		238,048		239,487		-
Commercial and industrial-owner occupied		2,199		844		12,977		16,020		1,285,555		1,301,575		-
Construction, acquisition and development		4,826		4,955		33,584		43,365		864,997		908,362		-
Commercial real estate		3,778		2,702		9,397		15,877		1,738,145		1,754,022		-
Credit cards		595		303		697		1,595		104,686		106,281		299
All other		2,124		390		1,579		4,093		623,211		627,304		149
Total	$	37,336	$	20,207	$	78,309	$	135,852	$	8,734,459	$	8,870,311	$	3,434

The Company utilizes an internal loan classification system to grade loans according to certain credit quality indicators. These credit quality indicators include, but are not limited to, recent credit performance, delinquency, liquidity, cash flows, debt coverage ratios, collateral type and loan-to-value ratio. The Company's internal loan classification system is compatible with classifications used by the Federal Deposit Insurance Corporation, as well as other regulatory agencies. Loans may be classified as follows:

Pass: Loans which are performing as agreed with few or no signs of weakness. These loans show sufficient cash flow, capital and collateral to repay the loan as agreed. Borrowers for these loans include well capitalized public corporations.

Special Mention: Loans where potential weaknesses have developed which could cause a more serious problem if not corrected.

Substandard: Loans where well-defined weaknesses exist that require corrective action to prevent further deterioration.

Doubtful: Loans having all the characteristics of Substandard and which have deteriorated to a point where collection and liquidation in full is highly questionable.

Loss: Loans that are considered uncollectible or with limited possible recovery.

Impaired: Loans for which it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement and for which a specific impairment reserve has been considered.

The following tables provide details of the Company's loan and lease portfolio, net of unearned income, by segment, class and internally assigned grade at June 30, 2012 and December 31, 2011:

	June 30, 2012
	Pass		Special Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,426,787	$	12,480	$	46,512	$	959	$	34	$	10,906	$	1,497,678
Real estate
Consumer mortgage		1,720,260		29,254		132,775		4,748		302		17,081		1,904,420
Home equity		472,291		3,476		17,759		908		243		1,568		496,245
Agricultural		225,886		2,989		15,687		20		-		7,393		251,975
Commercial and industrial-owner occupied		1,158,082		25,740		83,048		276		28		21,713		1,288,887
Construction, acquisition and development		607,942		26,947		99,471		589		20		100,053		835,022
Commercial real estate		1,515,262		48,217		144,301		71		199		40,698		1,748,748
Credit Cards		101,085		-		-		-		-		-		101,085
All other		572,073		18,060		16,425		803		9		965		608,335
Total	$	7,799,668	$	167,163	$	555,978	$	8,374	$	835	$	200,377	$	8,732,395

	December 31, 2011
	Pass		Special Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,415,731	$	4,947	$	43,549	$	1,263	$	405	$	7,833	$	1,473,728
Real estate
Consumer mortgage		1,742,593		17,914		148,267		4,434		189		31,793		1,945,190
Home equity		492,235		2,775		17,050		1,134		493		675		514,362
Agricultural		213,280		3,795		19,296		20		-		3,096		239,487
Commercial and industrial-owner occupied		1,167,220		18,280		90,778		496		-		24,801		1,301,575
Construction, acquisition and development		619,497		23,429		136,412		845		-		128,179		908,362
Commercial real estate		1,501,196		37,409		179,295		-		-		36,122		1,754,022
Credit Cards		105,867		41		175		188		10		-		106,281
All other		587,970		16,104		20,263		470		73		2,424		627,304
Total	$	7,845,589	$	124,694	$	655,085	$	8,850	$	1,170	$	234,923	$	8,870,311

The following tables provide details regarding impaired loans and leases, net of unearned income, by segment and class at June 30, 2012 and December 31, 2011:

	June 30, 2012
							Average Recorded Investment				Interest Income Recognized
	Recorded Investment in Impaired Loans		Unpaid Principal Balance of Impaired Loans		Related Allowance for Credit Losses		Three months ended June 30, 2012		Six months ended June 30, 2012		Three months ended June 30, 2012		Six months ended June 30, 2012
	(In thousands)
With no related allowance:
Commercial and industrial	$	2,527	$	2,882	$	-	$	2,366	$	2,916	$	2	$	11
Real estate
Consumer mortgage		9,206		11,260		-		12,784		12,981		17		39
Home equity		868		1,011		-		869		790		2		2
Agricultural		6,192		7,606		-		4,548		3,075		3		7
Commercial and industrial-owner occupied		13,028		17,697		-		11,139		10,289		26		51
Construction, acquisition and development		56,319		75,149		-		60,735		60,576		73		160
Commercial		22,330		33,569		-		18,708		17,415		27		65
All other		706		1,019		-		711		750		1		3
Total	$	111,176	$	150,193	$	-	$	111,860	$	108,792	$	151	$	338

With an allowance:
Commercial and industrial	$	8,379	$	8,877	$	5,575	$	8,078	$	5,931	$	10	$	19
Real estate
Consumer mortgage		7,875		8,657		2,002		12,623		15,046		30		72
Home equity		700		700		168		703		481		3		3
Agricultural		1,201		1,207		378		1,264		1,373		3		3
Commercial and industrial-owner occupied		8,685		10,726		1,019		12,385		14,360		16		34
Construction, acquisition and development		43,734		58,264		10,641		47,429		54,153		101		226
Commercial		18,368		20,749		3,924		14,718		16,567		60		96
All other		259		330		232		265		296		1		2
Total	$	89,201	$	109,510	$	23,939	$	97,465	$	108,207	$	224	$	455

Total:
Commercial and industrial	$	10,906	$	11,759	$	5,575	$	10,444	$	8,847	$	12	$	30
Real estate
Consumer mortgage		17,081		19,917		2,002		25,407		28,027		47		111
Home equity		1,568		1,711		168		1,572		1,271		5		5
Agricultural		7,393		8,813		378		5,812		4,448		6		10
Commercial and industrial-owner occupied		21,713		28,423		1,019		23,524		24,649		42		85
Construction, acquisition and development		100,053		133,413		10,641		108,164		114,729		174		386
Commercial		40,698		54,318		3,924		33,426		33,982		87		161
All other		965		1,349		232		976		1,046		2		5
Total	$	200,377	$	259,703	$	23,939	$	209,325	$	216,999	$	375	$	793

	December 31, 2011
			Unpaid
	Recorded		Principal		Related
	Investment		Balance of		Allowance		Average		Interest
	in Impaired		Impaired		for Credit		Recorded		Income
	Loans		Loans		Losses		Investment		Recognized
	(In thousands)
With no related allowance:
Commercial and industrial	$	4,874	$	6,854	$	-	$	3,879	$	78
Real estate
Consumer mortgage		16,883		19,538		-		19,628		397
Home equity		627		771		-		541		1
Agricultural		1,549		2,676		-		2,502		20
Commercial and industrial-owner occupied		6,973		9,191		-		11,598		185
Construction, acquisition and development		69,843		89,782		-		107,596		941
Commercial real estate		15,184		24,198		-		20,702		311
All other		1,284		1,668		-		1,169		67
Total	$	117,217	$	154,678	$	-	$	167,615	$	2,000

With an allowance:
Commercial and industrial	$	2,959	$	3,301	$	4,071	$	3,558	$	49
Real estate
Consumer mortgage		14,910		16,224		4,386		14,960		323
Home equity		48		276		48		504		3
Agricultural		1,547		1,547		380		3,164		18
Commercial and industrial-owner occupied		17,828		21,085		3,601		10,329		146
Construction, acquisition and development		58,336		67,426		21,581		80,957		1,651
Commercial real estate		20,938		21,422		5,324		27,210		851
All other		1,140		1,140		317		1,307		8
Total	$	117,706	$	132,421	$	39,708	$	141,989	$	3,049

Total:
Commercial and industrial	$	7,833	$	10,155	$	4,071	$	7,437	$	127
Real estate
Consumer mortgage		31,793		35,762		4,386		34,588		720
Home equity		675		1,047		48		1,045		4
Agricultural		3,096		4,223		380		5,666		38
Commercial and industrial-owner occupied		24,801		30,276		3,601		21,927		331
Construction, acquisition and development		128,179		157,208		21,581		188,553		2,592
Commercial real estate		36,122		45,620		5,324		47,912		1,162
All other		2,424		2,808		317		2,476		75
Total	$	234,923	$	287,099	$	39,708	$	309,604	$	5,049

The following tables provide details regarding impaired real estate construction, acquisition and development loans and leases, net of unearned income, by collateral type at June 30, 2012 and December 31, 2011:

	June 30, 2012
			Unpaid				Average Recorded Investment				Interest Income Recognized
	Recorded		Principal		Related		Three months		Six months		Three months		Six months
	Investment		Balance of		Allowance		ended		ended		ended		ended
	in Impaired		Impaired		for Credit		June 30,		June 30,		June 30,		June 30,
	Loans		Loans		Losses		2012		2012		2012		2012
	(In thousands)
With no related allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		8,577		12,623		-		8,616		7,660		7		21
Recreation and all other loans		359		532		-		362		365		1		3
Commercial construction		3,035		3,629		-		3,163		2,342		9		17
Commercial acquisition and development		14,324		19,560		-		12,666		12,756		14		33
Residential acquisition and development		30,024		38,805		-		35,928		37,453		42		86
Total	$	56,319	$	75,149	$	-	$	60,735	$	60,576	$	73	$	160

With an allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		6,002		7,545		1,219		3,440		4,495		6		14
Recreation and all other loans		-		-		-		-		-		-		-
Commercial construction		1,131		1,434		980		930		1,662		4		5
Commercial acquisition and development		6,076		6,387		1,122		11,804		11,075		21		40
Residential acquisition and development		30,525		42,898		7,320		31,255		36,921		70		167
Total	$	43,734	$	58,264	$	10,641	$	47,429	$	54,153	$	101	$	226

Total:
Multi-family construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		14,579		20,168		1,219		12,056		12,155		13		35
Recreation and all other loans		359		532		-		362		365		1		3
Commercial construction		4,166		5,063		980		4,093		4,004		13		22
Commercial acquisition and development		20,400		25,947		1,122		24,470		23,831		35		73
Residential acquisition and development		60,549		81,703		7,320		67,183		74,374		112		253
Total	$	100,053	$	133,413	$	10,641	$	108,164	$	114,729	$	174	$	386

	December 31, 2011
			Unpaid
	Recorded		Principal		Related
	Investment		Balance of		Allowance		Average		Interest
	in Impaired		Impaired		for Credit		Recorded		Income
	Loans		Loans		Losses		Investment		Recognized
	(In thousands)
With no related allowance:
Multi-family construction	$	1,067	$	2,259	$	-	$	5,474	$	18
One-to-four family construction		7,931		9,313		-		9,269		94
Recreation and all other loans		372		545		-		491		9
Commercial construction		633		917		-		9,663		83
Commercial acquisition and development		17,130		19,855		-		20,640		99
Residential acquisition and development		42,710		56,893		-		62,059		638
Total	$	69,843	$	89,782	$	-	$	107,596	$	941

With an allowance:
Multi-family construction	$	-	$	-	$	-	$	571	$	-
One-to-four family construction		5,313		6,083		1,589		5,334		108
Recreation and all other loans		-		-		-		271		2
Commercial construction		4,387		5,128		886		7,289		126
Commercial acquisition and development		5,091		7,728		1,418		12,965		429
Residential acquisition and development		43,545		48,487		17,688		54,527		986
Total	$	58,336	$	67,426	$	21,581	$	80,957	$	1,651

Total:
Multi-family construction	$	1,067	$	2,259	$	-	$	6,045	$	18
One-to-four family construction		13,244		15,396		1,589		14,603		202
Recreation and all other loans		372		545		-		762		11
Commercial construction		5,020		6,045		886		16,952		209
Commercial acquisition and development		22,221		27,583		1,418		33,605		528
Residential acquisition and development		86,255		105,380		17,688		116,586		1,624
Total	$	128,179	$	157,208	$	21,581	$	188,553	$	2,592

Loans considered impaired under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 310, Receivables ("FASB ASC 310"), are loans for which, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company's recorded investment in loans considered impaired at June 30, 2012 and December 31, 2011 was $200.4 million and $234.9 million, respectively. At June 30, 2012 and December 31, 2011, $89.2 million and $117.7 million, respectively, of those impaired loans had a valuation allowance of $23.9 million and $39.7 million, respectively. The remaining balance of impaired loans of $111.2 million and $117.2 million at June 30, 2012 and December 31, 2011, respectively, were charged down to fair value, less estimated selling costs which approximated net realizable value. Therefore, such loans did not have an associated valuation allowance. Impaired loans that were characterized as troubled debt restructurings ("TDRs") totaled $59.3 million and $58.0 million at June 30, 2012 and December 31, 2011, respectively. The average recorded investment in impaired loans was $209.3 million and $217.0 million for the three months and six months ended June 30, 2012, respectively, and $309.6 million for the year ended December 31, 2011.

Non-performing loans and leases ("NPLs") consist of non-accrual loans and leases, loans and leases 90 days or more past due and still accruing, and loans and leases that have been restructured because of the borrower's weakened financial condition. The following table presents information concerning NPLs as of the dates indicated:

	June 30,				December 31,
	2012		2011		2011
	(In thousands)

Non-accrual loans and leases	$	240,246	$	331,076	$	276,798
Loans and leases 90 days or more past due, still accruing		1,632		3,980		3,434
Restructured loans and leases still accruing		25,071		44,786		42,018
Total non-performing loans and leases	$	266,949	$	379,842	$	322,250

The Bank's policy for all loan classifications provides that loans and leases are generally placed in non-accrual status if, in management's opinion, payment in full of principal or interest is not expected or payment of principal or interest is more than 90 days past due, unless such loan or lease is both well-secured and in the process of collection. At June 30, 2012, the Company's geographic NPL distribution was concentrated primarily in its Alabama, Texas, Louisiana and Tennessee markets, including the greater Memphis, Tennessee area, a portion of which is in northwest Mississippi and Arkansas. The following table presents the Company's nonaccrual loans and leases by segment and class as of the dates indicated:

	June 30,				December 31,
	2012		2011		2011
	(In thousands)

Commercial and industrial	$	13,156	$	9,337	$	12,260
Real estate
Consumer mortgages		35,660		34,174		47,878
Home equity		2,995		1,232		2,036
Agricultural		8,390		8,526		4,179
Commercial and industrial-owner occupied		26,957		26,387		33,112
Construction, acquisition and development		104,283		200,434		133,110
Commercial real estate		44,359		48,571		40,616
Credit cards		364		546		594
All other		4,082		1,869		3,013
Total	$	240,246	$	331,076	$	276,798

In the normal course of business, management will sometimes grant concessions, which would not otherwise be considered, to borrowers that are experiencing financial difficulty. Loans identified as meeting the criteria set out in FASB ASC 310 are identified as TDRs. The concessions granted most frequently for TDRs involve reductions or delays in required payments of principal and interest for a specified period, the rescheduling of payments in accordance with a bankruptcy plan or the charge-off of a portion of the loan. In most cases, the conditions of the credit also warrant nonaccrual status, even after the restructure occurs. Other conditions that warrant a loan being considered a TDR include reductions in interest rates to below market rates due to bankruptcy plans or by the bank in an attempt to assist the borrower in working through liquidity problems. As part of the credit approval process, the restructured loans are evaluated for adequate collateral protection in determining the appropriate accrual status at the time of restructure. TDRs recorded as nonaccrual loans may be returned to accrual status in years after the restructure if there has been at least a six-month period of sustained repayment performance by the borrower under the restructured loan terms and the interest rate at the time of restructure was at or above market for a comparable loan. During the second quarter and first six months of 2012, the most common concessions that were granted involved rescheduling payments of principal and interest over a longer amortization period, granting a period of reduced principal payment or interest only payment for a limited time period, or the rescheduling of payments in accordance with a bankruptcy plan.

The following tables summarize the financial effect of TDRs for the periods indicated:

	Three months ended June 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial		2	$	658	$	656
Real estate
Consumer mortgages		8		2,750		2,162
Agricultural		1		446		457
Commercial and industrial-owner occupied		9		3,837		3,254
Construction, acquisition and development		21		13,421		13,343
Commercial real estate		2		3,744		3,740
Total		43	$	24,856	$	23,612

	Six months ended June 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial		7	$	1,668	$	1,330
Real estate
Consumer mortgages		21		6,016		5,373
Agricultural		2		853		861
Commercial and industrial-owner occupied		17		5,965		5,371
Construction, acquisition and development		32		20,701		20,299
Commercial		8		6,924		6,912
All other		5		639		637
Total		92	$	42,766	$	40,783

	Year ended December 31, 2011
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial		7	$	3,142	$	2,374
Real estate
Consumer mortgages		35		6,901		6,424
Agricultural		4		2,650		1,479
Commercial and industrial-owner occupied		29		13,330		11,740
Construction, acquisition and development		30		23,863		19,228
Commercial real estate		24		16,121		15,046
All other		7		2,957		2,406
Total		136	$	68,964	$	58,697

The following tables summarize TDRs within the previous 12 months for which there was a payment default during the period indicated (i.e., 30 days or more past due at any given time during the period indicated):

	Three months ended June 30, 2012
	Number of Contracts		Recorded Investment
	(Dollars in thousands)
Real estate
Consumer mortgages		4	$	850
Commercial and industrial-owner occupied		2		248
Construction, acquisition and development		10		4,248
Commercial real estate		1		1,011
Total		17	$	6,357

	Six months ended June 30, 2012
	Number of Contracts		Recorded Investment
	(Dollars in thousands)
Commercial and industrial		1	$	129
Real estate
Consumer mortgages		10		1,368
Agricultural		1		170
Commercial and industrial-owner occupied		5		1,610
Construction, acquisition and development		10		4,248
Commercial		3		2,525
Total		30	$	10,050

	Year ended December 31, 2011
	Number of Contracts		Recorded Investment
	(Dollars in thousands)
Commercial and industrial		4	$	1,506
Real estate
Consumer mortgages		4		1,563
Agricultural		3		1,382
Commercial and industrial-owner occupied		6		1,683
Construction, acquisition and development		13		3,622
Commercial real estate		3		2,946
All other		1		302
Total		34	$	13,004