OVERVIEW

The Company is a regional financial holding company with $13.4 billion in assets headquartered in Tupelo, Mississippi. The Company's wholly-owned banking subsidiary has commercial banking operations in Mississippi, Tennessee, Alabama, Arkansas, Texas, Louisiana, Florida, and Missouri. The Bank and its consumer finance, credit insurance, insurance agency and brokerage subsidiaries provide commercial banking, leasing, mortgage origination and servicing, insurance, brokerage and trust services to corporate customers, local governments, individuals and other financial institutions through an extensive network of branches and offices. The Bank's insurance agency subsidiary also operates an office in Illinois.
Management's discussion and analysis provides a narrative discussion of the Company's financial condition and results of operations for the previous three years. For a complete understanding of the following discussion, you should refer to the Consolidated Financial Statements and related Notes presented elsewhere in this Report. This discussion and analysis is based on reported financial information, and certain amounts for prior years have been reclassified to conform with the current financial statement presentation. The information that follows is provided to enhance comparability of financial information between years and to provide a better understanding of the Company's operations.
As a financial holding company, the financial condition and operating results of the Company are heavily influenced by economic trends nationally and in the specific markets in which the Company's subsidiaries provide financial services. Generally, during the past several years, the pressures of the national and regional economic cycle have created a difficult operating environment for the financial services industry. The Company is not immune to such pressures and the continuing economic downturn has had a negative impact on the Company and its customers in all of the markets that it serves. While this impact has been reflected in the Company's credit quality measures during the past two years, the Company's allowance for credit losses, net charge-offs, total non-performing loans and leases ("NPLs") and total non-performing assets ("NPAs") decreased at December 31, 2012, when compared to December 31, 2011 and 2010. Management believes that the Company is better positioned with respect to overall credit quality as evidenced by the improvement in credit quality metrics at December 31, 2012 compared to December 31, 2011. Management believes, however, that continued weakness in the economic environment could adversely affect the strength of the credit quality of the Company's assets overall. Therefore, management will continue to focus on early identification and resolution of any credit issues.
The largest source of the Company's revenue is derived from the operation of its principal operating subsidiary, the Bank. The financial condition and operating results of the Bank are affected by the level and volatility of interest rates on loans, investment securities, deposits and other borrowed funds, and the impact of economic downturns on loan demand, collateral value and creditworthiness of existing borrowers. The financial services industry is highly competitive and heavily regulated. The Company's success depends on its ability to

compete aggressively within its markets while maintaining sufficient asset quality and cost controls to generate net income.
During 2012, the Company's debit card revenue decreased by $10.2 million compared to 2011 as a result of the impact of the Durbin Amendment. The $10.2 million decrease is based on management's assumptions that revenue associated with consumer signature activity would be 58% of the level prior to the implementation of the Durbin Amendment, revenue associated with business signature activity would be 12% of the level prior to the implementation of the Durbin Amendment and revenue associated with consumer and business PIN activity would be 80% of the level prior to the implementation of the Durbin Amendment. The information that follows is provided to enhance comparability of financial information between periods and to provide a better understanding of the Company's operations.

SELECTED FINANCIAL INFORMATION
                                                       At or for the Year Ended December 31,
                                      2012             2011             2010             2009             2008
Earnings Summary:                                 (Dollars in thousands, except per share amounts)
Interest revenue                  $    486,424     $    537,853     $    582,762     $    615,414     $    705,413
Interest expense                        71,833          102,940          141,620          170,515          264,577
Net interest revenue                   414,591          434,913          441,142          444,899          440,836
Provision for credit losses             28,000          130,081          204,016          117,324           56,176
Net interest revenue, after
 provision for credit losses           386,591          304,832          237,126          327,575          384,660
Noninterest revenue                    280,149          270,845          264,144          275,276          245,607
Noninterest expense                    549,193          533,633          487,033          490,017          455,913
Income before income taxes             117,547           42,044           14,237          112,834          174,354
Income tax expense (benefit)            33,252            4,475           (8,705 )         30,105           53,943
Net income                        $     84,295     $     37,569     $     22,942     $     82,729     $    120,411

Balance Sheet - Year-End
Balances:
Total assets                      $ 13,397,198     $ 12,995,851     $ 13,615,010     $ 13,167,867     $ 13,480,218
Total securities                     2,434,032        2,513,518        2,709,081        1,993,594        2,316,380
Loans and leases, net of
unearned income                      8,636,989        8,870,311        9,333,107        9,775,136        9,691,277
Total deposits                      11,088,146       10,955,189       11,490,021       10,677,702        9,711,872
Long-term debt                          33,500           33,500          110,000          112,771          286,312
Total shareholders' equity           1,449,052        1,262,912        1,222,244        1,276,296        1,240,260

Balance Sheet - Average
Balances:
Total assets                        13,067,276       13,280,047       13,304,836       13,203,659       13,200,801
Total securities                     2,490,898        2,620,404        2,157,096        2,179,479        2,417,390
Loans and leases, net of
unearned income                      8,719,399        9,159,431        9,621,529        9,734,580        9,429,963
Total deposits                      10,936,694       11,251,406       11,107,445       10,155,730        9,803,999
Long-term debt                          33,500           66,673          111,547          290,582          278,845
Total shareholders' equity           1,413,667        1,240,768        1,241,321        1,255,605        1,224,280

Common Share Data:
Basic earnings per share          $       0.90     $       0.45     $       0.28     $       0.99     $       1.46
Diluted earnings per share                0.90             0.45             0.27             0.99             1.45
Cash dividends per share                  0.04             0.14             0.88             0.88             0.87
Book value per share                     15.33            15.13            14.64            15.29            14.92
Tangible book value per share            12.23            11.68            11.17            11.78            11.35
Dividend payout ratio                     4.44            31.11           314.29            88.89            60.00

Financial Ratios:
Return on average assets                  0.65 %           0.28 %           0.17 %           0.63 %           0.91 %
Return on average shareholders'
equity                                    5.96 %           3.03 %           1.85 %           6.59 %           9.84 %
Total shareholders' equity to
total assets                             10.82 %           9.72 %           8.98 %           9.69 %           9.20 %
Tangible shareholders' equity
to tangible assets                        8.83 %           7.67 %           7.00 %           7.63 %           7.15 %
Net interest margin-fully
taxable equivalent                        3.57 %           3.69 %           3.70 %           3.77 %           3.75 %

Credit Quality Ratios:
Net charge-offs to average
loans and leases                          0.67 %           1.44 %           1.90 %           0.76 %           0.40 %
Provision for credit losses to
average loans and leases                  0.32 %           1.42 %           2.12 %           1.21 %           0.60 %
Allowance for credit losses to
net loans and leases                      1.90 %           2.20 %           2.11 %           1.80 %           1.37 %
Allowance for credit losses to
NPLs                                     70.42 %          60.55 %          49.93 %          94.41 %         207.45 %
Allowance for credit losses to
NPAs                                     48.83 %          39.33 %          37.31 %          71.64 %         120.36 %
NPLs to net loans and leases              2.70 %           3.63 %           4.23 %           1.91 %           0.66 %
NPAs to net loans and leases              3.90 %           5.59 %           5.65 %           2.51 %           1.14 %

Capital Ratios:
Tier 1 capital                           13.77 %          11.77 %          10.61 %          11.17 %          10.79 %
Total capital                            15.03 %          13.03 %          11.87 %          12.42 %          12.04 %
Tier 1 leverage capital                  10.25 %           8.85 %           8.07 %           8.95 %           8.65 %

In addition to financial ratios based on measures defined by U.S. GAAP, the Company utilizes tangible shareholders' equity and tangible asset measures when evaluating the performance of the Company. Tangible shareholders' equity is defined by the Company as total shareholders' equity less goodwill and identifiable intangible assets. Tangible assets are defined by the Company as total assets less goodwill and identifiable intangible assets. Management believes the ratio of tangible shareholders' equity to tangible assets to be important to investors who are interested in evaluating the adequacy of the Company's capital levels. Tangible book value per share is defined by the Company as tangible shareholders' equity divided by total common shares outstanding. Management believes that tangible book value per share is important to investors who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. The following table reconciles tangible assets and tangible shareholders' equity as presented above to U.S. GAAP financial measure as reflected in the Company's unaudited consolidated financial statements:

                                                                           December 31,
                                             2012             2011             2010             2009             2008
                                                                          (In thousands)
Tangible Assets:
  Total assets                           $ 13,397,198     $ 12,995,851     $ 13,615,010     $ 13,167,867     $ 13,480,218
  Less: Goodwill                              275,173          271,297          270,097          270,097          268,966
        Identifiable intangible assets         17,329           16,613           19,624           23,533           28,164
  Total tangible assets                  $ 13,104,696     $ 12,707,941     $ 13,325,289     $ 12,874,237     $ 13,183,088

Tangible Shareholders' Equity
  Total shareholders' equity             $  1,449,052     $  1,262,912     $  1,222,244     $  1,276,296     $  1,240,260
  Less: Goodwill                              275,173          271,297          270,097          270,097          268,966
        Identifiable intangible assets         17,329           16,613           19,624           23,533           28,164
  Total tangible shareholders' equity    $  1,156,550     $    975,002     $    932,523     $    982,666     $    943,130

Total shares outstanding                   94,437,552       83,483,796       83,481,737       83,450,296       83,105,100

Tangible shareholders' equity to
  tangible assets                                8.83 %           7.67 %           7.00 %           7.63 %           7.15 %

Tangible book value per share            $      12.25     $      11.68     $      11.17     $      11.78     $      11.35

FINANCIAL HIGHLIGHTS

The Company reported net income of $84.3 million for 2012 compared to $37.6 million for 2011 and $22.9 million for 2010. The decreased provision for credit losses was the most significant factor contributing to the increase in earnings in both 2012 compared to 2011 and 2011 compared to 2010, as the provision for credit losses was $28.0 million in 2012 compared to $130.1 million in 2011 and $204.0 million in 2010. Net charge-offs decreased to $58.7 million, or 0.67% of average loans and leases, in 2012 from $131.9 million, or 1.44% of average loans and leases, in 2011 compared to $183.1 million, or 1.90% of average loans and leases, in 2010. The decrease in the provision for credit losses from 2011 to 2012 and from 2010 to 2011 reflected the impact of significant decreases in NPL formation during both 2012 and 2011, as NPLs decreased to $233.6 million at December 31, 2012 after having decreased to $322.3 million at December 31, 2011 from $394.4 million at December 30, 2010. The impact of the economic environment continues to be evident on real estate consumer mortgage, commercial and construction, acquisition and development loans and more specifically on residential construction, acquisition and development loans. Prior to 2012, many of these loans had become collateral-dependant, requiring recognition of additional loan loss provisions or charge-offs to reflect the decline in real estate values. During 2012, the Company continued its focus on improving credit quality and reducing NPLs, especially in the real estate construction, acquisition and development loan portfolio, as evidenced by the decrease in that portfolio's nonaccrual loans of $66.5 million to $66.6 million at December 31, 2012 from $133.1 million at December 31, 2011.
The primary source of revenue for the Company is net interest revenue earned by the Bank. Net interest revenue is the difference between interest earned on loans, investments and other earning assets and interest paid on

deposits and other obligations. Net interest revenue for 2012 was $414.6 million, compared to $434.9 million for 2011 and $441.1 million for 2010. Net interest revenue is affected by the general level of interest rates, changes in interest rates and changes in the amount and composition of interest earning assets and interest bearing liabilities. One of the Company's long-term objectives is to manage those assets and liabilities to maximize net interest revenue, while balancing interest rate, credit, liquidity and capital risks. The Company experienced an increase in lower rate savings deposits and a decrease in higher rate average demand deposits, other time deposits and long-term borrowing, which resulted in a decrease in interest expense of $31.1 million, or 30.2%, in 2012 compared to 2011. The 4.7% decrease in net interest revenue in 2012 compared to 2011 was a result of the decrease in interest expense being more than offset by the decrease in interest revenue that resulted from the declining interest rate environment combined with the low loan demand and loans re-pricing at lower rates, both at maturity and, in some cases, prior to maturity, as interest revenue decreased $51.4 million, or 9.6%, in 2012 compared to 2011. While loan demand has been weak, the Company has managed to replace some loan runoff with new loan production, primarily in its Alabama, Texas and Louisiana markets.
The Company attempts to diversify its revenue stream by increasing the amount of revenue received from mortgage lending operations, insurance agency activities, brokerage and securities activities and other activities that generate fee income. Management believes this diversification is important to reduce the impact of fluctuations in net interest revenue on the overall operating results of the Company. Noninterest revenue for 2012 was $280.1 million, compared to $270.8 million for 2011 and $264.1 million for 2010. One of the primary contributors to the increase in noninterest revenue was the increase in mortgage lending revenue to $56.9 million in 2012 compared to $17.1 million in 2011. The increase in mortgage lending revenue was primarily related to the increase in mortgage originations. Mortgage origination volume increased in 2012 to $2.0 billion from $1.2 billion in 2011. The increased level of mortgage origination volume resulted in an increase in origination revenue to $53.3 million in 2012 from $24.3 million in 2011. Also contributing to the increase in mortgage lending revenue in 2012 compared to 2011 was the change in fair value of MSRs. The fair value of MSRs decreased $3.2 million in 2012 compared to a decrease of $14.0 million in 2011.
The increase in noninterest revenue was somewhat offset by the decreases in securities gains, service charges and credit card, debit card and merchant fees. Securities gains decreased to approximately $442,000 in 2012 from $12.1 million in 2011. During the second quarter of 2011, the Company determined that it no longer had the intent to hold until maturity all securities that were previously classified as held-to-maturity. As a result of this determination, all securities were classified as available-for-sale and recorded at fair value at December 31, 2012 and 2011.
Service charges and credit card, debit card and merchant fee income decreased 14.7% and 25.2%, respectively, in 2012 compared to 2011. Service charges decreased primarily as a result of a lower volume of items processed and changes in banking regulations related to overdraft fees. Credit card, debit card and merchant fee income decreased primarily as a result of the impact of the implementation of the Durbin Amendment, which reduced debit card revenue by $10.2 million in 2012. Insurance commissions increased 3.7% in 2012 compared to 2011 and increased 5.8% in 2011 compared to 2010 as a result of new policies written and growth from existing customers coupled with the revenue contributed by the acquisition of certain assets of The Securance Group, Inc. on July 2, 2012. Other miscellaneous income decreased 8.9% in 2012 compared to 2011 primarily as a result of gains of $2.2 million on the dispositions of fixed assets during 2011. No such gains were recognized in 2012.
Noninterest expense for 2012 was $549.2 million, an increase of 2.9% from $533.6 million for 2011, which was an increase of 9.6% from $487.0 million for 2010. The increase in noninterest expense in 2012 compared to 2011 was primarily a result of increases in salaries and employee benefits and foreclosed property expense. The increase in salaries and employee benefits was primarily related to increases in employee benefits and incentive compensation during 2012 compared to 2011, including the cost of employee health care benefits and pension expenses. Foreclosed property expense increased $11.6 million, or 41.8%, to $39.4 million in 2012 compared to $27.8 million in 2011 primarily as a result of the Company experiencing losses on the sale of other real estate owned ("OREO"). This increase was somewhat offset by the decreases in prepayment penalty on Federal Home Loan Bank ("FHLB") borrowings, deposit insurance assessments and other miscellaneous expense. A $9.8 million prepayment penalty was recorded in 2011 related to the early repayment of FHLB advances during the second quarter of 2011, and no such prepayment was recorded in 2012. The decrease in deposit insurance assessments in 2012 compared to 2011 was a result of improvement evidenced in various variables utilized by the FDIC in calculating the deposit insurance assessment. Other miscellaneous expense in 2011 included $3.1 million recorded as a result of the closure of 22 branch offices during the third quarter of 2011 under the Company's branch optimization project with no such expense recorded in 2012. Income tax expense increased in 2012 and 2011

primarily as a result of the increase in pretax income in 2012 compared to 2011 and in 2011 compared to 2010. The major components of net income are discussed in more detail in the various sections that follow.
The Company continued its commitment to maintaining a strong capital base as its total shareholders' equity to total assets ratio was 10.82%, 9.72%, and 8.98% at December 31, 2012, 2011 and 2010, respectively. Also, noninterest bearing demand deposits and savings deposits increased 12.1% and 15.5%, respectively, at December 31, 2012 compared to December 31, 2011.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's consolidated financial statements are prepared in accordance with U.S. GAAP, which require the Company to make estimates and assumptions (see Note 1 to the Company's Consolidated Financial Statements included elsewhere in this Report). Management believes that its determination of the allowance for credit losses, valuation of other real estate owned, the annual goodwill impairment assessment, the assessment for other-than-temporary impairment of securities, the valuation of mortgage servicing rights and the estimation of pension and other postretirement benefit amounts involve a higher degree of judgment and complexity than the Company's other significant accounting policies. Further, these estimates can be materially impacted by changes in market conditions or the actual or perceived financial condition of the Company's borrowers, subjecting the Company to significant volatility of earnings.

Allowance for Credit Losses
The allowance for credit losses is established through the provision for credit losses, which is a charge against earnings. Provisions for credit losses are made to reserve for estimated probable losses on loans and leases. The allowance for credit losses is a significant estimate and is regularly evaluated by the Company for adequacy by taking into consideration factors such as changes in the nature and volume of the loan and lease portfolio; trends in actual and forecasted portfolio credit quality, including delinquency, charge-off and bankruptcy rates; and current economic conditions that may affect a borrower's ability to pay. In determining an adequate allowance for credit losses, management makes numerous assumptions, estimates and assessments. The use of different estimates or assumptions could produce different provisions for credit losses. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Provision for Credit Losses and Allowance for Credit Losses" included herein for more information. At December 31, 2012, the allowance for credit losses was $164.5 million, representing 1.90% of total loans and leases, net of unearned income.

Other Real Estate Owned
OREO, consisting of assets that have been acquired through foreclosure or in satisfaction of loans, is carried at the lower of cost or fair value, less estimated selling costs. Fair value is based on independent appraisals and other relevant factors. OREO is revalued on an annual basis or more often if market conditions necessitate. Valuation adjustments required at foreclosure are charged to the allowance for credit losses. Subsequent valuation adjustments on the periodic revaluation of the property are charged to net income as noninterest expense. Significant judgments and complex estimates are required in estimating the fair value of OREO, and the period of time within which such estimates can be considered current is significantly shortened during periods of market volatility, as experienced during the past two years. As a result, the net proceeds realized from sales transactions could differ significantly from appraisals, comparable sales, and other estimates used to determine the fair value of OREO.

Goodwill
The Company's policy is to assess goodwill for impairment at the reporting segment level on an annual basis or sooner if an event occurs or circumstances change which indicate that the fair value of a reporting segment is below its carrying amount. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. Accounting standards require management to estimate the fair value of each reporting segment in assessing impairment at least annually. The Company's annual assessment date is during the Company's fourth quarter. The Company's annual goodwill impairment evaluation performed during the fourth quarter of 2012 indicated no impairment of goodwill for its reporting segments as the estimated fair value exceeded the respective carrying value by 23% for the Company's Community Banking reporting segment and by 26% for the Company's Insurance Agencies reporting segment. Therefore, no goodwill impairment was recorded during 2012.

In the current environment, forecasting cash flows, credit losses and growth in addition to valuing the Company's assets with any degree of assurance is very difficult and subject to significant changes over very short periods of time. Management will continue to update its analysis as circumstances change. If market conditions continue to be volatile and unpredictable, impairment of goodwill related to the Company's reporting segments may be necessary in future periods. Goodwill was $275.2 million at December 31, 2012.

Assessment for Other-Than-Temporary Impairment of Securities Securities are evaluated periodically to determine whether a decline in their value is other-than-temporary. The term "other-than-temporary" is not intended to indicate a permanent decline in value. Rather, it means that the prospects for near-term recovery of value are not necessarily favorable. Management reviews criteria such as the magnitude and duration of the decline, as well as the reasons for the decline, and whether the Company would be required to sell the securities before a full recovery of costs in order to predict whether the loss in value is other-than-temporary. Once a decline in value is determined to be other-than-temporary, the impairment is separated into
(a) the amount of the impairment related to the credit loss and (b) the amount of the impairment related to all other factors. The value of the security is reduced by the other-than-temporary impairment with the amount of the impairment related to credit loss recognized as a charge to earnings and the amount of the impairment related to all other factors recognized in other comprehensive income.

Mortgage Servicing Rights
The Company recognizes as assets the rights to service mortgage loans for others, known as mortgage servicing rights ("MSRs"). The Company records MSRs at fair value on a recurring basis with subsequent remeasurement of MSRs based on change in fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 860, Transfers and Servicing ("FASB ASC 860"). An estimate of the fair value of the Company's MSRs is determined utilizing assumptions about factors such as mortgage interest rates, discount rates, mortgage loan prepayment speeds, market trends and industry . . .