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:

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

Commercial and industrial	$	1,471,563	$	1,515,932	$	1,484,967
Real estate
Consumer mortgages		1,888,783		1,966,124		1,945,190
Home equity		492,833		523,030		514,362
Agricultural		257,733		249,715		239,487
Commercial and industrial-owner occupied		1,309,631		1,329,644		1,301,575
Construction, acquisition and development		823,692		976,694		908,362
Commercial real estate		1,738,516		1,772,003		1,754,022
Credit cards		101,405		103,232		106,281
All other		632,559		660,554		657,012
Total	$	8,716,715	$	9,096,928	$	8,911,258

The following table shows the Company's loans and leases, net of unearned income, as of September 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	$	56,648	$	180,965	$	359,710	$	35,642	$	17,120	$	78,417	$	243,618	$	490,599	$	1,462,719
Real estate
Consumer mortgages		104,047		267,970		725,919		46,468		82,291		156,255		456,239		49,594		1,888,783
Home equity		59,768		38,429		167,755		23,369		65,077		74,189		62,187		2,059		492,833
Agricultural		7,581		79,884		71,453		3,407		8,979		13,755		67,608		5,066		257,733
Commercial and industrial-owner occupied		113,584		157,272		472,595		79,294		89,868		88,321		254,511		54,186		1,309,631
Construction, acquisition and development		90,104		67,826		252,199		39,001		85,918		96,837		165,807		26,000		823,692
Commercial real estate		208,555		326,943		354,145		204,762		107,523		97,605		386,456		52,527		1,738,516
Credit cards		-		-		-		-		-		-		-		101,405		101,405
All other		31,858		87,114		180,551		7,088		55,497		50,741		95,581		96,227		604,657
Total	$	672,145	$	1,206,403	$	2,584,327	$	439,031	$	512,273	$	656,120	$	1,732,007	$	877,663	$	8,679,969
* 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 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 September 30, 2012 and December 31, 2011:

	September 30, 2012
	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Outstanding		90+ Days Past Due still Accruing
	(In thousands)
Commercial and industrial	$	5,505	$	949	$	4,671	$	11,125	$	1,451,594	$	1,462,719	$	45
Real estate
Consumer mortgages		14,122		5,560		14,521		34,203		1,854,580		1,888,783		1,027
Home equity		1,916		183		169		2,268		490,565		492,833		-
Agricultural		624		837		4,090		5,551		252,182		257,733		-
Commercial and industrial-owner occupied		4,121		1,111		6,807		12,039		1,297,592		1,309,631		119
Construction, acquisition and development		12,513		15,602		13,395		41,510		782,182		823,692		-
Commercial real estate		4,485		1,656		4,208		10,349		1,728,167		1,738,516		-
Credit cards		539		300		525		1,364		100,041		101,405		236
All other		1,793		1,314		779		3,886		600,771		604,657		15
Total	$	45,618	$	27,512	$	49,165	$	122,295	$	8,557,674	$	8,679,969	$	1,442

	December 31, 2011
	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Outstanding		90+ Days Past Due still 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 September 30, 2012 and December 31, 2011:

	September 30, 2012
	Pass		Special Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,403,197	$	10,018	$	42,401	$	867	$	17	$	6,219	$	1,462,719
Real estate
Consumer mortgage		1,703,860		31,993		133,146		3,727		203		15,854		1,888,783
Home equity		467,218		4,788		17,902		1,002		285		1,638		492,833
Agricultural		232,740		4,684		14,727		20		-		5,562		257,733
Commercial and industrial-owner occupied		1,169,863		34,384		83,610		736		49		20,989		1,309,631
Construction, acquisition and development		607,782		42,128		85,326		703		-		87,753		823,692
Commercial real estate		1,517,131		45,500		138,613		70		-		37,202		1,738,516
Credit cards		101,405		-		-		-		-		-		101,405
All other		582,352		6,790		13,759		828		6		922		604,657
Total	$	7,785,548	$	180,285	$	529,484	$	7,953	$	560	$	176,139	$	8,679,969

	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 September 30, 2012 and December 31, 2011:

	September 30, 2012
			Unpaid				Average Recorded Investment				Interest Income Recognized
	Recorded		Principal		Related		Three months		Nine months		Three months		Nine months
	Investment		Balance of		Allowance		ended		ended		ended		ended
	in Impaired		Impaired		for Credit		September 30,		September 30,		September 30,		September 30,
	Loans		Loans		Losses		2012		2012		2012		2012
	(In thousands)
With no related allowance:
Commercial and industrial	$	2,827	$	4,012	$	-	$	2,607	$	2,812	$	-	$	11
Real estate
Consumer mortgage		10,147		12,731		-		10,181		12,041		18		57
Home equity		940		1,084		-		915		832		1		3
Agricultural		4,202		4,712		-		3,939		3,365		2		7
Commercial and industrial-owner occupied		17,932		23,020		-		15,541		12,052		29		80
Construction, acquisition and development		47,064		71,083		-		52,384		57,826		66		226
Commercial		22,316		30,933		-		19,513		18,120		40		105
All other		920		1,383		-		769		756		2		5
Total	$	106,348	$	148,958	$	-	$	105,849	$	107,804	$	158	$	494

With an allowance:
Commercial and industrial	$	3,392	$	4,074	$	2,025	$	6,813	$	6,227	$	19	$	38
Real estate
Consumer mortgage		5,707		6,843		1,338		7,416		12,484		9		81
Home equity		698		698		363		701		555		1		4
Agricultural		1,360		2,493		331		1,854		1,535		4		7
Commercial and industrial-owner occupied		3,057		4,061		696		6,343		11,668		14		48
Construction, acquisition and development		40,689		42,788		10,179		42,078		50,099		82		308
Commercial		14,886		15,664		3,213		18,335		17,161		69		165
All other		2		2		60		165		252		1		3
Total	$	69,791	$	76,623	$	18,205	$	83,705	$	99,981	$	199	$	654

Total:
Commercial and industrial	$	6,219	$	8,086	$	2,025	$	9,420	$	9,039	$	19	$	49
Real estate
Consumer mortgage		15,854		19,574		1,338		17,597		24,525		27		138
Home equity		1,638		1,782		363		1,616		1,387		2		7
Agricultural		5,562		7,205		331		5,793		4,900		6		14
Commercial and industrial-owner occupied		20,989		27,081		696		21,884		23,720		43		128
Construction, acquisition and development		87,753		113,871		10,179		94,462		107,925		148		534
Commercial		37,202		46,597		3,213		37,848		35,281		109		270
All other		922		1,385		60		934		1,008		3		8
Total	$	176,139	$	225,581	$	18,205	$	189,554	$	207,785	$	357	$	1,148

	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 September 30, 2012 and December 31, 2011:

	September 30, 2012
			Unpaid				Average Recorded Investment				Interest Income Recognized
	Recorded		Principal		Related		Three months		Nine months		Three months		Nine months
	Investment		Balance of		Allowance		ended		ended		ended		ended
	in Impaired		Impaired		for Credit		September 30,		September 30,		September 30,		September 30,
	Loans		Loans		Losses		2012		2012		2012		2012
	(In thousands)
With no related allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		9,110		14,174		-		8,632		7,986		10		31
Recreation and all other loans		1,154		1,345		-		751		495		1		4
Commercial construction		5,727		6,637		-		3,902		2,866		17		34
Commercial acquisition and development		13,819		19,296		-		12,049		12,518		10		43
Residential acquisition and development		17,254		29,631		-		27,050		33,961		28		114
Total	$	47,064	$	71,083	$	-	$	52,384	$	57,826	$	66	$	226

With an allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		3,789		4,055		867		4,955		4,649		10		24
Recreation and all other loans		-		-		-		142		48		-		-
Commercial construction		982		982		950		1,075		1,465		5		10
Commercial acquisition and development		6,315		6,396		1,226		8,314		10,148		16		56
Residential acquisition and development		29,603		31,355		7,136		27,592		33,789		51		218
Total	$	40,689	$	42,788	$	10,179	$	42,078	$	50,099	$	82	$	308

Total:
Multi-family construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
One-to-four family construction		12,899		18,229		867		13,587		12,635		20		55
Recreation and all other loans		1,154		1,345		-		893		543		1		4
Commercial construction		6,709		7,619		950		4,977		4,331		22		44
Commercial acquisition and development		20,134		25,692		1,226		20,363		22,666		26		99
Residential acquisition and development		46,857		60,986		7,136		54,642		67,750		79		332
Total	$	87,753	$	113,871	$	10,179	$	94,462	$	107,925	$	148	$	534

	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 September 30, 2012 and December 31, 2011 was $176.1 million and $234.9 million, respectively. At September 30, 2012 and December 31, 2011, $69.8 million and $117.7 million, respectively, of those impaired loans had a valuation allowance of $18.2 million and $39.7 million, respectively. The remaining balance of impaired loans of $106.3 million and $117.2 million at September 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 $43.3 million and $58.0 million at September 30, 2012 and December 31, 2011, respectively. The average recorded investment in impaired loans was $189.6 million and $207.8 million for the three months and nine months ended September 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:

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

Non-accrual loans and leases	$	219,738	$	314,479	$	276,798
Loans and leases 90 days or more past due, still accruing		1,442		7,354		3,434
Restructured loans and leases still accruing		26,147		40,966		42,018
Total non-performing loans and leases	$	247,327	$	362,799	$	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 September 30, 2012, 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:

	September 30,				December 31,
	2012		2011		2011
	(In thousands)
Commercial and industrial	$	8,674	$	11,122	$	12,260
Real estate
Consumer mortgages		35,599		44,100		47,878
Home equity		3,471		2,634		2,036
Agricultural		7,190		6,254		4,179
Commercial and industrial-owner occupied		27,059		26,977		33,112
Construction, acquisition and development		92,351		171,566		133,110
Commercial real estate		40,514		49,500		40,616
Credit cards		465		551		594
All other		4,415		1,775		3,013
Total	$	219,738	$	314,479	$	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 in accordance with the terms of the restructured loan by the borrower and the interest rate at the time of restructure was at or above market for a comparable loan. During the third quarter and first nine 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 September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial		1	$	18	$	18
Real estate
Consumer mortgages		8		1,909		1,802
Agricultural		-		-		-
Commercial and industrial-owner occupied		6		6,505		6,476
Construction, acquisition and development		3		220		218
Commercial real estate		1		368		367
All other		2		187		187
Total		21	$	9,207	$	9,068

	Nine months ended September 30, 2012
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Commercial and industrial		8	$	1,686	$	1,348
Real estate
Consumer mortgages		29		7,924		7,174
Agricultural		2		853		861
Commercial and industrial-owner occupied		23		12,470		11,847
Construction, acquisition and development		35		20,921		20,518
Commercial		9		7,293		7,279
All other		7		825		824
Total		113	$	51,972	$	49,851

	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 September 30, 2012
	Number of Contracts		Recorded Investment
	(Dollars in thousands)
Real estate
Consumer mortgages		6	$	488
Commercial and industrial-owner occupied		1		-
Construction, acquisition and development		11		1,256
All other		1		7
Total		19	$	1,751

	Nine months ended September 30, 2012
	Number of Contracts		Recorded Investment
	(Dollars in thousands)
Commercial and industrial		1	$	129
Real estate
Consumer mortgages		16		1,856
Agricultural		1		170
Commercial and industrial-owner occupied		6		1,610
Construction, acquisition and development		21		5,503
Commercial		3		2,525
All other		1		7
Total		49	$	11,800

	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