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:

	March 31,				December 31,
	2013		2012		2012
	(In thousands)

Commercial and industrial	$	1,488,374	$	1,452,492	$	1,484,788
Real estate
Consumer mortgages		1,871,312		1,937,997		1,873,875
Home equity		482,398		501,331		486,074
Agricultural		249,467		256,683		256,196
Commercial and industrial-owner occupied		1,334,974		1,287,542		1,333,103
Construction, acquisition and development		728,092		858,110		735,808
Commercial real estate		1,739,533		1,742,001		1,748,881
Credit cards		98,803		100,527		104,884
All other		621,838		640,855		649,143
Total	$	8,614,791	$	8,777,538	$	8,672,752

The following table shows the Company's loans and leases, net of unearned income, as of March 31, 2013 by segment, class and geographical location:

	Alabama								Greater
	and Florida								Memphis				Texas and
	Panhandle		Arkansas*		Mississippi*		Missouri		Area		Tennessee*		Louisiana		Other		Total
	(In thousands)
Commercial and industrial	$	67,205	$	143,745	$	306,645	$	35,560	$	19,227	$	76,051	$	247,124	$	585,359	$	1,480,916
Real estate
Consumer mortgages		109,386		258,666		691,467		43,274		96,676		150,737		459,324		61,782		1,871,312
Home equity		60,717		37,540		161,317		22,605		68,087		67,101		62,430		2,601		482,398
Agricultural		8,644		75,359		63,641		2,374		16,795		12,748		64,950		4,956		249,467
Commercial and industrial-owner occupied		135,104		149,846		456,242		62,728		97,236		87,439		265,658		80,721		1,334,974
Construction, acquisition and development		98,845		67,101		204,082		36,802		75,691		92,434		144,853		8,284		728,092
Commercial real estate		215,684		331,108		273,564		193,049		105,225		90,739		387,550		142,614		1,739,533
Credit cards		-		-		-		-		-		-		-		98,803		98,803
All other		31,975		79,030		160,539		2,943		57,116		41,781		93,920		128,739		596,043
Total	$	727,560	$	1,142,395	$	2,317,497	$	399,335	$	536,053	$	619,030	$	1,725,809	$	1,113,859	$	8,581,538
* 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 loan policy generally 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 ("OREO") 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 March 31, 2013 and December 31, 2012:

	March 31, 2013
													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	$	1,704	$	145	$	2,188	$	4,037	$	1,476,879	$	1,480,916	$	22
Real estate
Consumer mortgages		12,110		2,535		15,155		29,800		1,841,512		1,871,312		842
Home equity		2,429		1,208		377		4,014		478,384		482,398		-
Agricultural		756		170		3,284		4,210		245,257		249,467		-
Commercial and industrial-owner occupied		1,234		1,509		2,951		5,694		1,329,280		1,334,974		-
Construction, acquisition and development		2,965		4,007		12,329		19,301		708,791		728,092		-
Commercial real estate		1,613		58		11,764		13,435		1,726,098		1,739,533		-
Credit cards		420		266		492		1,178		97,625		98,803		261
All other		1,242		333		410		1,985		594,058		596,043		-
Total	$	24,473	$	10,231	$	48,950	$	83,654	$	8,497,884	$	8,581,538	$	1,125

	December 31, 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	$	3,531	$	476	$	4,118	$	8,125	$	1,468,486	$	1,476,611	$	414
Real estate
Consumer mortgages		11,308		3,643		13,821		28,772		1,845,103		1,873,875		512
Home equity		1,337		371		350		2,058		484,016		486,074		-
Agricultural		400		287		3,946		4,633		251,563		256,196		10
Commercial and industrial-owner occupied		2,629		3,587		2,933		9,149		1,323,954		1,333,103		19
Construction, acquisition and development		2,547		2,472		14,790		19,809		715,999		735,808		-
Commercial real estate		4,673		56		10,469		15,198		1,733,683		1,748,881		-
Credit cards		536		379		473		1,388		103,496		104,884		228
All other		2,354		253		445		3,052		618,505		621,557		27
Total	$	29,315	$	11,524	$	51,345	$	92,184	$	8,544,805	$	8,636,989	$	1,210

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 March 31, 2013 and December 31, 2012:

	March 31, 2013
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,430,760	$	14,297	$	31,749	$	546	$	105	$	3,459	$	1,480,916
Real estate
Consumer mortgage		1,691,053		33,895		126,589		3,207		88		16,480		1,871,312
Home equity		458,264		5,269		15,908		893		27		2,037		482,398
Agricultural		218,018		9,508		17,097		-		-		4,844		249,467
Commercial and industrial-owner occupied		1,219,024		33,370		68,024		190		148		14,218		1,334,974
Construction, acquisition and development		577,477		35,525		68,648		626		-		45,816		728,092
Commercial real estate		1,508,593		63,186		117,806		245		-		49,703		1,739,533
Credit cards		98,803		-		-		-		-		-		98,803
All other		576,244		9,535		8,478		547		5		1,234		596,043
Total	$	7,778,236	$	204,585	$	454,299	$	6,254	$	373	$	137,791	$	8,581,538

	December 31, 2012
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,426,498	$	14,663	$	29,876	$	729	$	-	$	4,845	$	1,476,611
Real estate
Consumer mortgage		1,691,682		32,840		131,141		2,907		198		15,107		1,873,875
Home equity		461,151		4,791		17,619		1,057		76		1,380		486,074
Agricultural		227,138		5,729		17,947		-		-		5,382		256,196
Commercial and industrial-owner occupied		1,202,111		31,087		82,816		369		-		16,720		1,333,103
Construction, acquisition and development		567,881		30,846		75,031		715		-		61,335		735,808
Commercial real estate		1,524,262		53,455		120,591		160		-		50,413		1,748,881
Credit cards		104,884		-		-		-		-		-		104,884
All other		600,807		8,397		10,196		601		10		1,546		621,557
Total	$	7,806,414	$	181,808	$	485,217	$	6,538	$	284	$	156,728	$	8,636,989

The following tables provide details regarding impaired loans and leases, net of unearned income, by segment and class as of and for the three months ended March 31, 2013 and as of and for the year ended December 31, 2012:

	March 31, 2013
			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	$	2,085	$	3,800	$	-	$	2,641	$	-
Real estate
Consumer mortgage		10,537		14,357		-		12,331		16
Home equity		1,595		1,739		-		1,476		3
Agricultural		4,289		4,777		-		4,568		4
Commercial and industrial-owner occupied		9,586		12,513		-		12,040		33
Construction, acquisition and development		35,312		52,293		-		42,612		55
Commercial real estate		41,154		56,017		-		39,808		71
All other		1,234		1,683		-		1,247		3
Total	$	105,792	$	147,179	$	-	$	116,723	$	185

With an allowance:
Commercial and industrial	$	1,374	$	1,374	$	763	$	1,465	$	-
Real estate
Consumer mortgage		5,943		6,601		1,962		3,104		2
Home equity		442		442		32		291		-
Agricultural		555		555		215		368		-
Commercial and industrial-owner occupied		4,632		5,553		1,361		4,593		3
Construction, acquisition and development		10,504		12,828		5,864		9,229		25
Commercial real estate		8,549		8,908		1,461		11,037		16
All other		-		-		-		-		-
Total	$	31,999	$	36,261	$	11,658	$	30,087	$	46

Total:
Commercial and industrial	$	3,459	$	5,174	$	763	$	4,106	$	-
Real estate
Consumer mortgage		16,480		20,958		1,962		15,435		18
Home equity		2,037		2,181		32		1,767		3
Agricultural		4,844		5,332		215		4,936		4
Commercial and industrial-owner occupied		14,218		18,066		1,361		16,633		36
Construction, acquisition and development		45,816		65,121		5,864		51,841		80
Commercial real estate		49,703		64,925		1,461		50,845		87
All other		1,234		1,683		-		1,247		3
Total	$	137,791	$	183,440	$	11,658	$	146,810	$	231

	December 31, 2012
			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	$	2,557	$	4,169	$	-	$	2,779	$	12
Real estate
Consumer mortgage		11,307		15,464		-		11,762		77
Home equity		934		1,078		-		858		6
Agricultural		4,435		6,292		-		3,527		8
Commercial and industrial-owner occupied		13,018		16,551		-		12,674		123
Construction, acquisition and development		47,982		69,331		-		54,085		324
Commercial real estate		33,952		45,722		-		19,824		199
All other		1,544		2,165		-		848		9
Total	$	115,729	$	160,772	$	-	$	106,357	$	758

With an allowance:
Commercial and industrial	$	2,288	$	2,288	$	1,241	$	5,368	$	38
Real estate
Consumer mortgage		3,800		3,914		1,103		10,323		88
Home equity		446		446		111		569		5
Agricultural		947		947		92		1,468		12
Commercial and industrial-owner occupied		3,702		4,737		864		9,977		65
Construction, acquisition and development		13,353		16,257		4,350		45,582		377
Commercial real estate		16,461		16,709		2,720		16,953		204
All other		2		2		60		324		3
Total	$	40,999	$	45,300	$	10,541	$	90,564	$	792

Total:
Commercial and industrial	$	4,845	$	6,457	$	1,241	$	8,147	$	50
Real estate
Consumer mortgage		15,107		19,378		1,103		22,085		165
Home equity		1,380		1,524		111		1,427		11
Agricultural		5,382		7,239		92		4,995		20
Commercial and industrial-owner occupied		16,720		21,288		864		22,651		188
Construction, acquisition and development		61,335		85,588		4,350		99,667		701
Commercial real estate		50,413		62,431		2,720		36,777		403
All other		1,546		2,167		60		1,172		12
Total	$	156,728	$	206,072	$	10,541	$	196,921	$	1,550

The following tables provide details regarding impaired real estate construction, acquisition and development loans and leases, net of unearned income, by collateral type as of and for the three months ended March 31, 2013 and as of and for the year ended December 31, 2012:

	March 31, 2013
			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	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		6,771		10,381		-		7,152		11
Recreation and all other loans		938		1,156		-		1,052		1
Commercial construction		3,209		3,869		-		3,210		1
Commercial acquisition and development		10,256		11,635		-		11,701		16
Residential acquisition and development		14,138		25,252		-		19,497		26
Total	$	35,312	$	52,293	$	-	$	42,612	$	55

With an allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		242		400		94		501		-
Recreation and all other loans		-		-		-		-		-
Commercial construction		-		-		-		1,553		9
Commercial acquisition and development		1,615		1,615		467		1,335		2
Residential acquisition and development		8,647		10,813		5,303		5,840		14
Total	$	10,504	$	12,828	$	5,864	$	9,229	$	25

Total:
Multi-family construction	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		7,013		10,781		94		7,653		11
Recreation and all other loans		938		1,156		-		1,052		1
Commercial construction		3,209		3,869		-		4,763		10
Commercial acquisition and development		11,871		13,250		467		13,036		18
Residential acquisition and development		22,785		36,065		5,303		25,337		40
Total	$	45,816	$	65,121	$	5,864	$	51,841	$	80

	December 31, 2012
			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	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		8,475		13,586		-		8,070		53
Recreation and all other loans		1,117		1,335		-		623		5
Commercial construction		5,714		6,646		-		3,585		51
Commercial acquisition and development		13,753		15,786		-		12,145		63
Residential acquisition and development		18,923		31,978		-		29,662		152
Total	$	47,982	$	69,331	$	-	$	54,085	$	324

With an allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		1,130		1,475		290		4,094		29
Recreation and all other loans		-		-		-		69		-
Commercial construction		-		-		0		1,255		15
Commercial acquisition and development		1,711		1,960		563		9,206		74
Residential acquisition and development		10,512		12,822		3,497		30,958		259
Total	$	13,353	$	16,257	$	4,350	$	45,582	$	377

Total:
Multi-family construction	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		9,605		15,061		290		12,164		82
Recreation and all other loans		1,117		1,335		-		692		5
Commercial construction		5,714		6,646		-		4,840		66
Commercial acquisition and development		15,464		17,746		563		21,351		137
Residential acquisition and development		29,435		44,800		3,497		60,620		411
Total	$	61,335	$	85,588	$	4,350	$	99,667	$	701

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 March 31, 2013 and December 31, 2012 was $137.8 million and $156.7 million, respectively. At March 31, 2013 and December 31, 2012, $32.0 million and $41.0 million, respectively, of those impaired loans had a valuation allowance of $11.7 million and $10.5 million, respectively. The remaining balance of impaired loans of $105.8 million and $115.7 million at March 31, 2013 and December 31, 2012, 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 $39.5 million and $47.3 million at March 31, 2013 and December 31, 2012, respectively. The average recorded investment in impaired loans was $146.8 million and $196.9 million for the three months ended March 31, 2013 and the year ended December 31, 2012, respectively.

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 (primarily in the form of reduced interest rates and modified payment terms) because of the borrower's weakened financial condition or bankruptcy proceedings. The following table presents information concerning NPLs as of the dates indicated:

	March 31,				December 31,
	2013		2012		2012
	(In thousands)

Non-accrual loans and leases	$	188,190	$	253,227	$	207,241
Loans and leases 90 days or more past due, still accruing		1,125		1,698		1,210
Restructured loans and leases still accruing		17,702		30,311		25,099
Total non-performing loans and leases	$	207,017	$	285,236	$	233,550

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 March 31, 2013, the Company's geographic NPL distribution was concentrated primarily in its Alabama, Mississippi 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:

	March 31,				December 31,
	2013		2012		2012
	(In thousands)
Commercial and industrial	$	7,009	$	11,025	$	9,311
Real estate
Consumer mortgages		39,012		46,562		36,133
Home equity		4,272		2,687		3,497
Agricultural		6,667		4,254		7,587
Commercial and industrial-owner occupied		20,719		32,842		20,910
Construction, acquisition and development		51,728		115,649		66,635
Commercial real estate		55,318		35,715		57,656
Credit cards		418		509		415
All other		3,047		3,984		5,097
Total	$	188,190	$	253,227	$	207,241

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 periods after the restructure if there has been at least a six-month period of sustained repayment performance by the borrower in accordance with the terms of the restructured loan and the interest rate at the time of restructure was at or above market for a comparable loan. During the first quarter of 2013, 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 March 31, 2013
			Pre-Modification		Post-Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
	(Dollars in thousands)
Commercial and industrial		1	$	48	$	48
Real estate
Home equity		1		15		-
Commercial and industrial-owner occupied		3		573		575
Commercial real estate		1		168		167
Total		6	$	804	$	790

	Year ended December 31, 2012
			Pre-Modification		Post-Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
	(Dollars in thousands)
Commercial and industrial		8	$	1,686	$	1,348
Real estate
Consumer mortgages		38		9,875		9,109
Agricultural		2		853		861
Commercial and industrial-owner occupied		30		14,367		13,741
Construction, acquisition and development		37		21,583		21,159
Commercial real estate		12		8,159		8,132
All other		9		1,855		1,692
Total		136	$	58,378	$	56,042

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 March 31, 2013
	Number of		Recorded
	Contracts		Investment
	(Dollars in thousands)
Commercial and industrial		3	$	129
Real estate
Consumer mortgages		5		451
Commercial and industrial-owner occupied		3		265
Construction, acquisition and development		2		1,523
Commercial real estate		3		3,534
All other		1		1
Total		17	$	5,903


	Year ended December 31, 2012
	Number of		Recorded
	Contracts		Investment
	(Dollars in thousands)
Commercial and industrial		2	$	179
Real estate
Consumer mortgages		18		2,096
Agricultural		1		170
Commercial and industrial-owner occupied		11		2,659
Construction, acquisition and development		21		5,503
Commercial real estate		4		2,525
All other		1		7
Total		58	$	13,139