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. Certain loans within the prior period real estate consumer mortgage portfolio have been reclassified into the real estate construction acquisition and development portfolio in order to conform to current period presentation. This reclassification was determined necessary based on an analysis of the underlying uses of the collateral of the portfolios. The reclassification did not impact the overall amount of nonperforming loans nor did it impact the allowance for credit losses. A summary of gross loans and leases by segment and class as of the dates indicated follows:

	September 30,				December 31,
	2011		2010		2010
	(In thousands)

Commercial and industrial	$	1,515,932	$	1,453,365	$	1,505,471
Real estate
Consumer mortgages		1,966,124		1,972,483		1,951,563
Home equity		523,030		552,095		543,272
Agricultural		249,715		262,083		252,292
Commercial and industrial-owner occupied		1,329,644		1,375,466		1,331,473
Construction, acquisition and development		976,694		1,335,836		1,174,743
Commercial		1,772,003		1,810,626		1,816,951
Credit cards		103,232		102,672		106,345
All other		660,554		692,336		694,241
Total	$	9,096,928	$	9,556,962	$	9,376,351

The following table shows the Company's loans and leases, net of unearned income, as of September 30, 2011 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	$	57,232	$	217,374	$	316,622	$	56,125	$	24,346	$	87,484	$	271,249	$	472,959	$	1,503,391
Real estate
Consumer mortgages		112,812		276,618		771,982		60,469		86,473		162,699		421,824		73,247		1,966,124
Home equity		60,795		42,713		177,310		27,855		72,339		77,632		62,598		1,788		523,030
Agricultural		6,563		72,995		74,385		4,883		11,760		13,871		59,692		5,566		249,715
Commercial and industrial-owner occupied		118,204		169,721		461,948		69,369		108,567		98,464		243,305		60,066		1,329,644
Construction, acquisition and development		124,744		78,979		259,405		71,312		109,470		115,452		206,783		10,549		976,694
Commercial		198,358		349,499		354,536		233,105		121,314		107,041		361,443		46,707		1,772,003
Credit cards		-		-		-		-		-		-		-		103,232		103,232
All other		14,398		43,002		78,744		623		42,252		25,797		30,369		396,887		632,072
Total	$	693,106	$	1,250,901	$	2,494,932	$	523,741	$	576,521	$	688,440	$	1,657,263	$	1,171,001	$	9,055,905
* excludes the Greater Memphis Area

The Company's loan concentrations which exceed 10% of total loans are reflected in the preceding table. A substantial portion of construction, acquisition and development loans are secured by real estate in markets in which the Company is located. Prior to March of 2010, some of these loans were structured with interest reserves to fund interest costs during the construction and development period. The Company's general loan policy was changed in March of 2010 to prohibit the use of interest reserves on loans made after that time. Additionally, certain of these 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 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, 2011 and December 31, 2010:

	September 30, 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	$	8,595	$	4,103	$	4,084	$	16,782	$	1,486,609	$	1,503,391	$	1,846
Real estate
Consumer mortgages		17,129		6,629		18,284		42,042		1,924,082		1,966,124		4,136
Home equity		1,902		427		1,086		3,415		519,615		523,030		134
Agricultural		3,058		983		2,302		6,343		243,372		249,715		131
Commercial and industrial-owner occupied		7,893		1,331		9,144		18,368		1,311,276		1,329,644		42
Construction, acquisition and development		13,935		5,151		55,383		74,469		902,225		976,694		290
Commercial		13,745		2,848		4,208		20,801		1,751,202		1,772,003		106
Credit cards		629		398		507		1,534		101,698		103,232		257
All other		1,991		900		805		3,696		628,376		632,072		412
Total	$	68,877	$	22,770	$	95,803	$	187,450	$	8,868,455	$	9,055,905	$	7,354

	December 31, 2010
													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	$	13,037	$	848	$	12,000	$	25,885	$	1,465,298	$	1,491,183	$	675
Real estate
Consumer mortgages		16,937		4,481		20,640		42,058		1,909,505		1,951,563		6,521
Home equity		1,258		800		755		2,813		540,459		543,272		173
Agricultural		1,140		3,450		3,527		8,117		244,175		252,292		123
Commercial and industrial-owner occupied		9,260		1,290		7,323		17,873		1,313,600		1,331,473		20
Construction, acquisition and development		22,436		9,837		94,264		126,537		1,048,206		1,174,743		197
Commercial		4,409		4,712		10,507		19,628		1,797,323		1,816,951		-
Credit cards		793		373		780		1,946		104,399		106,345		330
All other		2,058		1,117		847		4,022		661,263		665,285		461
Total	$	71,328	$	26,908	$	150,643	$	248,879	$	9,084,228	$	9,333,107	$	8,500

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 loan show sufficient cash flow, capital and collateral to repay the loan as agreed. 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, 2011 and December 31, 2010:

	September 30, 2011
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,448,253	$	2,657	$	44,873	$	1,049	$	558	$	6,001	$	1,503,391
Real estate
Consumer mortgage		1,781,174		11,819		137,284		5,057		83		30,707		1,966,124
Home equity		503,067		309		16,058		1,002		1,068		1,526		523,030
Agricultural		224,247		2,436		18,815		-		-		4,217		249,715
Commercial and industrial-owner occupied		1,206,806		17,006		82,588		865		-		22,379		1,329,644
Construction, acquisition and development		653,635		18,221		134,932		1,782		123		168,001		976,694
Commercial		1,537,944		26,151		162,076		-		-		45,832		1,772,003
Credit Cards		102,873		11		158		190		-		-		103,232
All other		610,381		108		19,857		483		17		1,226		632,072
Total	$	8,068,380	$	78,718	$	616,641	$	10,428	$	1,849	$	279,889	$	9,055,905

	December 31, 2010
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Impaired		Total
	(In thousands)
Commercial and industrial	$	1,429,443	$	5,764	$	51,562	$	1,577	$	701	$	2,136	$	1,491,183
Real estate
Consumer mortgage		1,813,740		1,867		104,504		3,106		123		28,223		1,951,563
Home equity		527,047		1,231		13,169		613		361		851		543,272
Agricultural		226,054		309		21,614		-		20		4,295		252,292
Commercial and industrial-owner occupied		1,250,265		1,422		62,783		900		30		16,073		1,331,473
Construction, acquisition and development		845,725		1,882		138,929		2,243		1,046		184,918		1,174,743
Commercial		1,688,228		5,565		86,358		98		495		36,207		1,816,951
Credit Cards		106,181		11		146		7		-		-		106,345
All other		641,292		35		22,735		477		44		702		665,285
Total	$	8,527,975	$	18,086	$	501,800	$	9,021	$	2,820	$	273,405	$	9,333,107

The following tables provide details regarding impaired loans and leases, net of unearned income, by segment and class at September 30, 2011 and December 31, 2010:

	September 30, 2011
			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		2011		2011		2011		2011
	(In thousands)
With no related allowance:
Commercial and industrial	$	3,621	$	5,155	$	-	$	3,778	$	4,040	$	38	$	74
Real estate
Consumer mortgage		16,160		18,768		-		16,116		20,937		98		357
Home equity		630		773		-		571		512		-		-
Agricultural		2,788		4,290		-		2,502		2,869		0		18
Commercial and industrial-owner occupied		16,314		22,165		-		13,583		11,145		59		169
Construction, acquisition and development		102,324		138,053		-		107,175		115,296		394		855
Commercial		23,696		30,688		-		18,852		21,533		121		281
All other		776		1,089		-		768		1,246		6		65
Total	$	166,309	$	220,981	$	-	$	163,345	$	177,578	$	716	$	1,819

With an allowance:
Commercial and industrial	$	2,380	$	2,447	$	757	$	1,812	$	3,374	$	20	$	25
Real estate
Consumer mortgage		14,547		15,434		4,050		10,091		15,025		33		282
Home equity		896		896		228		665		469		2		3
Agricultural		1,429		1,449		463		3,674		3,732		0		18
Commercial and industrial-owner occupied		6,065		7,203		1,755		7,724		10,407		51		109
Construction, acquisition and development		65,677		69,151		24,911		73,955		86,241		529		1,494
Commercial		22,136		24,827		6,393		26,552		29,049		354		753
All other		450		450		100		1,038		1,476		3		8
Total	$	113,580	$	121,857	$	38,657	$	125,511	$	149,773	$	992	$	2,692

Total:
Commercial and industrial	$	6,001	$	7,602	$	757	$	5,590	$	7,414	$	58	$	99
Real estate
Consumer mortgage		30,707		34,202		4,050		26,207		35,962		131		639
Home equity		1,526		1,669		228		1,236		981		2		3
Agricultural		4,217		5,739		463		6,176		6,601		-		36
Commercial and industrial-owner occupied		22,379		29,368		1,755		21,307		21,552		110		278
Construction, acquisition and development		168,001		207,204		24,911		181,130		201,537		923		2,349
Commercial		45,832		55,515		6,393		45,404		50,582		475		1,034
All other		1,226		1,539		100		1,806		2,722		9		73
Total	$	279,889	$	342,838	$	38,657	$	288,856	$	327,351	$	1,708	$	4,511


	December 31, 2010
			Unpaid
	Recorded		Principal		Related
	Investment in		Balance of		Allowance for
	Impaired Loans		Impaired Loans		Credit Losses
	(In thousands)
With no related allowance:
Commercial and industrial	$	1,457	$	2,600	$	-
Real estate
Consumer mortgage		11,228		14,273		-
Home equity		290		629		-
Agricultural		1,439		1,981		-
Commercial and industrial-owner occupied		10,920		12,371		-
Construction, acquisition and development		80,204		120,938		-
Commercial		15,795		20,478		-
All other		702		931		-
Total	$	122,035	$	174,201	$	-

With an allowance:
Commercial and industrial	$	679	$	977	$	125
Real estate
Consumer mortgage		16,995		16,644		4,226
Home equity		561		561		41
Agricultural		2,856		3,132		544
Commercial and industrial-owner occupied		5,153		5,298		1,361
Construction, acquisition and development		104,714		123,538		29,195
Commercial		20,412		21,026		5,227
All other		-		-		-
Total	$	151,370	$	171,176	$	40,719

Total:
Commercial and industrial	$	2,136	$	3,577	$	125
Real estate
Consumer mortgage		28,223		30,917		4,226
Home equity		851		1,190		41
Agricultural		4,295		5,113		544
Commercial and industrial-owner occupied		16,073		17,669		1,361
Construction, acquisition and development		184,918		244,476		29,195
Commercial		36,207		41,504		5,227
All other		702		931		-
Total	$	273,405	$	345,377	$	40,719

The following tables provide details regarding impaired construction, acquisition and development loans and leases, net of unearned income, by collateral type at September 30, 2011 and December 31, 2010:

	September 30, 2011
			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		2011		2011		2011		2011
	(In thousands)
With no related allowance:
Multi-family construction	$	-	$	-	$	-	$	3,101	$	7,197	$	18	$	18
One-to-four family construction		10,861		12,864		-		11,611		8,998		47		80
Recreation and all other loans		712		1,169		-		752		513		3		7
Commercial construction		1,925		3,621		-		6,223		12,418		27		82
Commercial acquisition and development		26,276		35,395		-		21,732		20,683		35		84
Residential acquisition and development		62,550		85,004		-		63,756		65,487		264		584
Total	$	102,324	$	138,053	$	-	$	107,175	$	115,296	$	394	$	855

With an allowance:
Multi-family construction	$	-	$	-	$	-	$	-	$	764	$	-	$	-
One-to-four family construction		5,952		6,417		1,733		6,356		5,423		54		98
Recreation and all other loans		-		-		-		-		306		-		2
Commercial construction		5,796		6,036		1,426		7,147		7,862		19		89
Commercial acquisition and development		5,587		5,837		1,711		13,035		15,045		89		420
Residential acquisition and development		48,342		50,861		20,041		47,417		56,841		367		885
Total	$	65,677	$	69,151	$	24,911	$	73,955	$	86,241	$	529	$	1,494

Total:
Multi-family construction	$	-	$	-	$	-	$	3,101	$	7,961	$	18	$	18
One-to-four family construction		16,813		19,281		1,733		17,967		14,421		101		178
Recreation and all other loans		712		1,169		-		752		819		3		9
Commercial construction		7,721		9,657		1,426		13,370		20,280		46		171
Commercial acquisition and development		31,863		41,232		1,711		34,767		35,728		124		504
Residential acquisition and development		110,892		135,865		20,041		111,173		122,328		631		1,469
Total	$	168,001	$	207,204	$	24,911	$	181,130	$	201,537	$	923	$	2,349


`	December 31, 2010
			Unpaid
	Recorded		Principal		Related
	Investment in		Balance of		Allowance for
	Impaired Loans		Impaired Loans		Credit Losses
	(In thousands)
With no related allowance:
Multi-family construction	$	8,293	$	9,975	$	-
One-to-four family construction		6,511		11,749		-
Recreation and all other loans		392		580		-
Commercial construction		11,171		13,062		-
Commercial acquisition and development		7,897		12,501		-
Residential acquisition and development		45,940		73,071		-
Total	$	80,204	$	120,938	$	-

With an allowance:
Multi-family construction	$	1,904	$	6,978	$	4
One-to-four family construction		11,939		14,846		932
Recreation and all other loans		498		498		148
Commercial construction		12,459		12,612		5,246
Commercial acquisition and development		21,575		21,575		8,424
Residential acquisition and development		56,339		67,029		14,441
Total	$	104,714	$	123,538	$	29,195

Total:
Multi-family construction	$	10,197	$	16,953	$	4
One-to-four family construction		18,450		26,595		932
Recreation and all other loans		890		1,078		148
Commercial construction		23,630		25,674		5,246
Commercial acquisition and development		29,472		34,076		8,424
Residential acquisition and development		102,279		140,100		14,441
Total	$	184,918	$	244,476	$	29,195

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, 2011 and December 31, 2010 was $279.9 million and $273.4 million, respectively. At September 30, 2011 and December 31, 2010, $113.6 million and $151.4 million, respectively, of those impaired loans had a valuation allowance of $38.7 million and $40.7 million, respectively. The remaining balance of impaired loans of $166.3 million and $122.0 million at September 30, 2011 and December 31, 2010, respectively, were carried at 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 $59.0 million and $63.7 million at September 30, 2011 and December 31, 2010, 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 because of the borrower's weakened financial condition. The following table presents information concerning NPLs as of the dates indicated:

	September 30,				December 31,
	2011		2010		2010
	(In thousands)

Non-accrual loans and leases	$	314,479	$	347,181	$	347,499
Loans and leases 90 days or more past due, still accruing		7,354		9,910		8,500
Restructured loans and leases still accruing		40,966		52,325		38,376
Total non-performing loans and leases	$	362,799	$	409,416	$	394,375

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 the loan or lease is both well-secured and in the process of collection. At September 30, 2011, the Company's geographic NPL distribution was concentrated primarily in its Alabama and Tennessee markets, including the greater Memphis, Tennessee area, a portion of which is in northwest Mississippi. The following table presents the Company's nonaccrual loans and leases by segment and class as of the dates indicated:

	September 30,				December 31,
	2011		2010		2010
	(In thousands)
Commercial and industrial	$	11,122	$	12,339	$	13,075
Real estate
Consumer mortgages		44,100		25,561		34,021
Home equity		2,634		1,361		811
Agricultural		6,254		4,986		7,589
Commercial and industrial-owner occupied		26,977		15,004		20,338
Construction, acquisition and development		171,566		231,987		211,547
Commercial		49,500		51,590		57,766
Credit cards		551		724		720
All other		1,775		3,629		1,632
Total	$	314,479	$	347,181	$	347,499

In the normal course of business, management will sometime grant concessions, which normally 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. 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. TDR loans may be returned to accrual status if there has been at least a six-month period of sustained repayment performance by the borrower. During the third quarter and first nine months of 2011, 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, 2011
			Pre-Modification		Post-Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
	(Dollars in thousands)
Commercial and industrial		1	$	771	$	759
Real estate
Consumer mortgages		4		2,222		2,222
Agricultural		1		240		240
Commercial and industrial-owner occupied		3		2,113		2,097
Total		9	$	5,346	$	5,318

	Nine months ended September 30, 2011
			Pre-Modification		Post-Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
	(Dollars in thousands)
Commercial and industrial		4	$	2,517	$	2,343
Real estate
Consumer mortgages		19		4,543		4,467
Agricultural		4		2,650		1,483
Commercial and industrial-owner occupied		16		7,773		7,496
Construction, acquisition and development		33		17,411		12,272
Commercial		13		7,158		6,565
All other		6		2,929		2,389
Total		95	$	44,981	$	37,015

The following tables summarize TDRs modified within the third quarter and first nine months of 2011 for which there was a payment default (i.e., 30 days or more past due at any given time during the first nine months of 2011):

	Three months ended September 30, 2011
	Number of		Recorded
	Contracts		Investment
	(Dollars in thousands)
Real estate
Consumer mortgages		1	$	80
Agricultural		1		240
Total		2	$	320

	Nine months ended September 30, 2011
	Number of		Recorded
	Contracts		Investment
	(Dollars in thousands)
Commercial and industrial		2	$	1,466
Real estate
Consumer mortgages		2		184
Agricultural		3		1,381
Commercial and industrial-owner occupied		5		1,286
Construction, acquisition and development		18		4,997
Commercial		2		2,535
Total		32	$	11,849