(13) INCOME TAXES

Total income taxes for the years ended December 31, 2012, 2011 and 2010 were allocated as follows:

	2012			2011			2010
	(In thousands)
Income tax expense (benefit)	$	33,252		$	4,475		$	(8,705	)
Shareholders' equity for other comprehensive income		(3,943	)		7,600			(3,763	)
Shareholders' equity for stock option plans		32			(7	)		(44	)
Total	$	29,341		$	12,068		$	(12,512	)

The components of income tax expense (benefit) attributable to operations were as follows for the years ended December 31, 2012, 2011 and 2010:

	2012			2011			2010
Current:	(In thousands)
Federal	$	34,316		$	5,643		$	8,865
State		3,389			5,400			(1,520	)
Deferred:
Federal		(4,964	)		(1,626	)		(13,848	)
State		511			(4,942	)		(2,202	)
Total	$	33,252		$	4,475		$	(8,705	)

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:

	2012			2011			2010
	(In thousands)
Tax expense at statutory rates	$	41,141		$	14,715		$	4,983
Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax benefit		2,453			266			(2,419	)
Tax-exempt interest revenue		(7,789	)		(7,881	)		(6,605	)
Tax-exempt earnings on life insurance		(2,790	)		(2,647	)		(2,659	)
Deductible dividends paid on 401(k) plan		(100	)		(331	)		(1,972	)
Other, net		337			353			(33	)
Total	$	33,252		$	4,475		$	(8,705	)

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 were as follows:

	2012			2011
Deferred tax assets:	(In thousands)
Loans, principally due to allowance for credit losses	$	62,206		$	73,911
Other real estate owned		13,027			10,429
Mark to market - securities		4,160			4,165
Accrued liabilities, principally due to compensation arrangements and vacation accruals		19,564			10,681
Other		217			312
Investments, principally due to interest income recognition		516			-
State tax credits (net of federal benefit)		428			1,040
Unrecognized pension expense		31,374			26,428
Total gross deferred tax assets		131,492			126,966
Less: valuation allowance		-			-
Deferred tax assets	$	131,492		$	126,966
Deferred tax liabilities:
Lease transactions	$	34,532		$	37,509
Employment benefits		22,392			26,991
Premises and equipment, principally due to differences in depreciation		26,824			27,221
Mortgage servicing rights		14,313			11,405
Intangible assets		10,439			10,336
Investments, principally due to interest income recognition		-			147
Deferred loan points		2,650			2,656
Other assets, principally due to expense recognition		767			525
Unrealized net losses on available-for-sale securities		26,066			25,064
Total gross deferred tax liabilities		137,983			141,854
Net deferred tax liabilities	$	(6,491	)	$	(14,888	)

The Company has a deferred state tax asset of approximately $428,000 resulting from state tax credit carryforwards. These carryforwards expire in 2032 and 2033.

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, 2012.

The following table presents the activity in unrecognized tax benefits for 2012, 2011 and 2010:

	2012		2011			2010
	(In thousands)
Unrecognized tax benefit, January 1	$	1,102	$	355		$	355
Gross increases - tax positions in prior period		199		873			-
Gross decreases - tax positions in prior period		-		(355	)		-
Gross increases - tax positions in current period		270		229			-
Settlements		-		-			-
Lapse of statute of limitations		-		-			-
Unrecognized tax benefit, December 31	$	1,571	$	1,102		$	355

The balance of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1.6 million, $1.1 million and approximately $355,000 at both December 31, 2012, 2011 and 2010, respectively.

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 $329,000, $26,000 and $28,000 during 2012, 2011, and 2010. The company recognized a total liability for interest of approximately $560,000, $231,000 and $191,000, at December 31, 2012, 2011 and 2010, 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 2009, 2010 and 2011. With few exceptions, the Company is no longer subject to United States federal, states or local examinations by tax authorities for years before 2009. 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.