Forward-Looking Statements

 

Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future” or the negative of those terms or other words of similar meaning. You should read statements that contain these words carefully because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements include, but are not limited to, statements relating to anticipated future operating and financial performance measures, including net interest margin, credit quality, business initiatives, growth opportunities and growth rates, among other things, and encompass any estimate, prediction, expectation, projection, opinion, anticipation, outlook or statement of belief included therein as well as the management assumptions underlying these forward-looking statements. You should be aware that the occurrence of the events described under the caption “Risk Factors” in Trustmark’s filings with the Securities and Exchange Commission could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

Risks that could cause actual results to differ materially from current expectations of Management include, but are not limited to, changes in the level of nonperforming assets and charge-offs, local, state and national economic and market conditions, including the extent and duration of the current volatility in the credit and financial markets, changes in our ability to measure the fair value of assets in our portfolio, material changes in the level and/or volatility of market interest rates, the performance and demand for the products and services we offer, including the level and timing of withdrawals from our deposit accounts, the costs and effects of litigation and of unexpected or adverse outcomes in such litigation, our ability to attract noninterest-bearing deposits and other low-cost funds, competition in loan and deposit pricing, as well as the entry of new competitors into our markets through de novo expansion and acquisitions, economic conditions, including the potential impact of the European financial crisis on the U.S. economy and the markets we serve, and monetary and other governmental actions designed to address the level and volatility of interest rates and the volatility of securities, currency and other markets, the enactment of legislation and changes in existing regulations, or enforcement practices, or the adoption of new regulations, changes in accounting standards and practices, including changes in the interpretation of existing standards, that affect our consolidated financial statements, changes in consumer spending, borrowings and savings habits, technological changes, changes in the financial performance or condition of our borrowers, changes in our ability to control expenses, changes in our compensation and benefit plans, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, natural disasters, environmental disasters, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Except as required by law, we undertake no obligation to update or revise any of this information, whether as the result of new information, future events or developments or otherwise.

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

Trustmark Corporation and Subsidiaries

Consolidated Balance Sheets

($ in thousands)

See notes to consolidated financial statements.

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Trustmark Corporation and Subsidiaries

Consolidated Statements of Income

($ in thousands except per share data)

(Unaudited)

See notes to consolidated financial statements.

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Trustmark Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

($ in thousands)

(Unaudited)

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Trustmark Corporation and Subsidiaries

Consolidated Statements of Changes in Shareholders' Equity

($ in thousands)

(Unaudited)

See notes to consolidated financial statements.

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Trustmark Corporation and Subsidiaries

Consolidated Statements of Cash Flows

($ in thousands)

(Unaudited)

See notes to consolidated financial statements.

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Trustmark Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Business, Basis of Financial Statement Presentation and Principles of Consolidation

Trustmark Corporation (Trustmark) is a multi-bank holding company headquartered in Jackson, Mississippi.  Through its subsidiaries, Trustmark operates as a financial services organization providing banking and financial solutions to corporate institutions and individual customers through 209 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

Note 2 – Business Combinations

Somerville Bank & Trust Company

Immediately following the close of business on December 31, 2013, Trustmark National Bank (TNB), a subsidiary of Trustmark, completed its merger with Somerville Bank & Trust Company (Somerville), also a subsidiary of Trustmark, with TNB as the surviving entity in the merger.  Somerville, headquartered in Somerville, Tennessee, provided banking services in the eastern Memphis metropolitan statistical area (MSA) through five offices.  At December 31, 2013, Somerville had total assets of $219.6 million.  TNB and Somerville were both wholly owned subsidiaries of Trustmark; as such, the merger represented a business reorganization between affiliates under common control.

Oxford, Mississippi Branches

On July 26, 2013, TNB completed its acquisition of two branches of SOUTHBank, F.S.B. (SOUTHBank), located in Oxford, Mississippi.  As a result of this acquisition, TNB assumed deposit accounts of approximately $11.7 million in addition to purchasing the two physical branch offices.  The transaction was not material to Trustmark’s consolidated financial statements and was not considered a business combination in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, “Business Combinations.”

BancTrust Financial Group, Inc.

On February 15, 2013, Trustmark completed its merger with BancTrust Financial Group, Inc. (BancTrust), a 26-year-old bank holding company headquartered in Mobile, Alabama.  In accordance with the terms of the definitive agreement, the holders of BancTrust common stock received 0.125 of a share of Trustmark common stock for each share of BancTrust common stock in a tax-free exchange.  Trustmark issued approximately 2.24 million shares of its common stock for all issued and outstanding shares of BancTrust common stock.  The total value of the 2.24 million shares of Trustmark common stock issued to the BancTrust shareholders on the acquisition date was approximately $53.5 million, based on a closing stock price of $23.83 per share of Trustmark common stock on February 15, 2013.  At closing, Trustmark repurchased the $50.0 million of BancTrust preferred stock and associated warrant issued to the U.S. Department of Treasury under the Capital Purchase Program for approximately $52.6 million.

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The acquisition of BancTrust was consistent with Trustmark’s strategic plan to selectively expand the Trustmark franchise. The acquisition provided Trustmark entry into more than 15 markets in Alabama and enhanced the Trustmark franchise in the Florida Panhandle.

This acquisition was accounted for under the acquisition method in accordance with FASB ASC Topic 805.  Accordingly, the assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition date.

Trustmark recorded fair value adjustments based on the estimated fair value of certain acquired loans, premises and equipment, net and other real estate.  During 2013, these measurement period adjustments resulted in a decrease in acquired noncovered loans of $6.8 million, a decrease in premises and equipment, net of $627 thousand, a decrease in other real estate of $2.6 million, an increase in the deferred tax asset of $3.4 million and an increase in goodwill of $6.3 million.  Trustmark also recorded an adjustment to transfer $1.6 million of acquired property from premises and equipment, net to other real estate during 2013.  During the first quarter of 2014, Trustmark recorded an additional measurement period adjustment that resulted in a $7.4 million decrease in goodwill with a corresponding increase in the deferred tax asset.  These measurement period adjustments were presented on a retrospective basis, consistent with applicable accounting guidance.  The purchase price allocation was finalized during the first quarter of 2014.

The statement of assets purchased and liabilities assumed in the BancTrust acquisition is presented below at their adjusted estimated fair values as of the acquisition date of February 15, 2013 ($ in thousands):

The excess of the consideration paid over the estimated fair value of the net assets acquired was $74.2 million, which was recorded as goodwill under FASB ASC Topic 805.  The identifiable intangible assets acquired represent the core deposit intangible at fair value at the acquisition date.  The core deposit intangible is being amortized on an accelerated basis over the estimated useful life, currently expected to be approximately 10 years.

Loans, excluding loans held for sale (LHFS), acquired from BancTrust were evaluated under a fair value process involving various degrees of deterioration in credit quality since origination, and also for those loans for which it was probable at acquisition that Trustmark would not be able to collect all contractually required payments.  These loans, with the exception of revolving credit agreements and leases, are referred to as acquired impaired loans and are accounted for in accordance with FASB ASC Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.”  Refer to Note 5 – Acquired Loans for further information on acquired loans.

The operations of BancTrust are included in Trustmark’s operating results from February 15, 2013. Trustmark’s noninterest expense during the first quarter of 2013 included non-routine BancTrust transaction expenses totaling approximately $9.4 million (change in control and severance expense of $1.4 million included in salaries and benefits; professional fees, contract termination and other expenses of $7.9 million included in other expense).

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Fair Value of Acquired Financial Instruments

For financial instruments measured at fair value, Trustmark utilized Level 2 inputs to determine the fair value of securities available for sale, time deposits (included in deposits above) and Federal Home Loan Bank (FHLB) advances.  Level 3 inputs were used to determine the fair value of acquired loans, identifiable intangible assets, and other real estate.  The methodology and significant assumptions used in estimating the fair values of these financial assets and liabilities are as follows:

Securities Available for Sale

Estimated fair values for securities available for sale are based on quoted market prices where available.  If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable instruments.

Acquired Loans

Fair value of acquired loans is determined using a discounted cash flow model based on assumptions regarding the amount and timing of principal and interest payments, estimated prepayments, estimated default rates, estimated loss severity in the event of defaults and current market rates.

Identifiable Intangible Assets

The fair value assigned to the identifiable intangible assets, in this case core deposit intangibles, represent the future economic benefit of the potential cost savings from acquiring core deposits in the acquisition compared to the cost of obtaining alternative funding from market sources.

Other Real Estate

Other real estate was initially recorded at its estimated fair value on the acquisition date based on similar market comparable valuations less estimated selling costs.

Time Deposits

Time deposits were valued by projecting expected cash flows into the future based on each account’s contracted rate and then determining the present value of those expected cash flows using current rates for deposits with similar maturities.

FHLB Advances

FHLB advances were valued by projecting expected cash flows into the future based on each advance’s contracted rate and then determining the present value of those expected cash flows using current rates for advances with similar maturities.

Please refer to Note 16 – Fair Value for more information on Trustmark’s classification of financial instruments based on valuation inputs within the fair value hierarchy.

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Note 3 – Securities Available for Sale and Held to Maturity

The following table is a summary of the amortized cost and estimated fair value of securities available for sale and held to maturity ($ in thousands):

During the fourth quarter of 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity.  The securities were transferred at fair value, which became the cost basis for the securities held to maturity.  At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax).  The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security.  There were no gains or losses recognized as a result of the transfer.  At March 31, 2014, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss in the accompanying balance sheet totaled approximately $45.0 million ($27.8 million, net of tax).

During the first quarter of 2014, Trustmark sold its remaining $25.9 million of Collateralized Loan Obligations (CLO) generating a net gain of $389 thousand. These securities were identified as available for sale and had been carried in the asset-backed securities and structured financial products line item in the table shown above.

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Temporarily Impaired Securities

The table below includes securities with gross unrealized losses segregated by length of impairment ($ in thousands):

The unrealized losses shown above are primarily due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality.  Because Trustmark does not intend to sell these securities and it is more likely than not that Trustmark will not be required to sell the investments before recovery of their amortized cost bases, which may be maturity, Trustmark does not consider these investments to be other-than-temporarily impaired at March 31, 2014.  There were no other-than-temporary impairments for the three months ended March 31, 2014 and 2013.

Security Gains and Losses

Realized gains and losses are determined using the specific identification method and are included in noninterest income as securities gains, net.

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Contractual Maturities

The amortized cost and estimated fair value of securities available for sale and held to maturity at March 31, 2014, by contractual maturity, are shown below ($ in thousands).  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Note 4 – Loans Held for Investment (LHFI) and Allowance for Loan Losses, LHFI

For the periods presented, LHFI consisted of the following ($ in thousands):

Loan Concentrations

Trustmark does not have any loan concentrations other than those reflected in the preceding table, which exceed 10% of total LHFI.  At March 31, 2014, Trustmark's geographic loan distribution was concentrated primarily in its five key market regions, Alabama, Florida, Mississippi, Tennessee and Texas.  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 are susceptible to changes in market conditions in these areas.

Nonaccrual/Impaired LHFI

At March 31, 2014 and December 31, 2013, the carrying amounts of nonaccrual LHFI, which are individually evaluated for impairment, were $64.0 million and $65.2 million, respectively.  Of this total, all commercial nonaccrual LHFI over $500 thousand were specifically evaluated for impairment (specifically evaluated impaired LHFI) using a fair value approach.  The remaining nonaccrual LHFI were not specifically reviewed and not written down to fair value less cost to sell.  No material interest income was recognized in the income statement on impaired or nonaccrual loans for each of the periods ended March 31, 2014 and 2013.

All of Trustmark’s specifically evaluated impaired LHFI are collateral dependent loans.  At March 31, 2014 and December 31, 2013, specifically evaluated impaired LHFI totaled $27.6 million and $31.6 million, respectively.  In addition, these specifically evaluated impaired LHFI had a related allowance of $1.8 million and $2.2 million at the end of the respective periods.  For collateral dependent loans, when a loan is deemed impaired, the full difference between the carrying amount of the loan and the most likely estimate of the asset’s fair value less cost to sell is charged off.  Charge-offs related to specifically evaluated impaired LHFI totaled $46 thousand and $986 thousand for the first three months of 2014 and 2013, respectively.  Provision recapture on specifically evaluated impaired LFHI totaled $536 thousand and $1.3 million for the first three months of 2014 and 2013, respectively.

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Fair value estimates for specifically evaluated impaired LHFI are derived from appraised values based on the current market value or as is value of the property, normally from recently received and reviewed appraisals.  Current appraisals are ordered on an annual basis based on the inspection date.  Appraisals are obtained from state-certified appraisers and are based on certain assumptions, which may include construction or development status and the highest and best use of the property.  These appraisals are reviewed by Trustmark’s Appraisal Review Department to ensure they are acceptable, and values are adjusted down for costs associated with asset disposal.  Once this estimated net realizable value has been determined, the value used in the impairment assessment is updated.  At the time a specifically evaluated impaired LHFI is deemed to be impaired, the full difference between book value and the most likely estimate of the asset’s net realizable value is charged off.  As subsequent events dictate and estimated net realizable values decline, required reserves may be established or further adjustments recorded.

At March 31, 2014 and December 31, 2013, nonaccrual LHFI not specifically reviewed for impairment and not written down to fair value less cost to sell, totaled $36.4 million and $33.7 million, respectively.  In addition, these nonaccrual LHFI had allocated allowance for loan losses of $3.7 million and $3.0 million at the end of the respective periods.

The following table details LHFI individually and collectively evaluated for impairment at March 31, 2014 and December 31, 2013 ($ in thousands):

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At March 31, 2014 and December 31, 2013, the carrying amount of LHFI individually evaluated for impairment consisted of the following ($ in thousands):

A troubled debt restructuring (TDR) occurs when a borrower is experiencing financial difficulties, and for related economic or legal reasons, a concession is granted to the borrower that Trustmark would not otherwise consider.  Whatever the form of concession that might be granted by Trustmark, Management’s objective is to enhance collectibility by obtaining more cash or other value from the borrower or by increasing the probability of receipt by granting the concession than by not granting it.  Other concessions may arise from court proceedings or may be imposed by law.  In addition, TDRs also include those credits that are extended or renewed to a borrower who is not able to obtain funds from sources other than Trustmark at a market interest rate for new debt with similar risk.

All loans whose terms have been modified in a troubled debt restructuring are evaluated for impairment under FASB ASC Topic 310. Accordingly, Trustmark measures any loss on the restructuring in accordance with that guidance.  A TDR in which Trustmark receives physical possession of the borrower’s assets, regardless of whether formal foreclosure or repossession proceedings take place, is accounted for in accordance with FASB ASC Subtopic 310-40, “Troubled Debt Restructurings by Creditors.”  Thus, the loan is treated as if assets have been received in satisfaction of the loan and reported as a foreclosed asset.

A TDR may be returned to accrual status if Trustmark is reasonably assured of repayment of principal and interest under the modified terms and the borrower has demonstrated sustained performance under those terms for a period of at least six months. Otherwise, the restructured loan must remain on nonaccrual.

At March 31, 2014 and December 31, 2013, LHFI classified as TDRs totaled $13.4 million and $14.8 million, respectively, and were primarily comprised of credits with interest-only payments for an extended period of time totaling $9.1 million and $11.1 million, respectively.  The remaining TDRs at March 31, 2014 and December 31, 2013 resulted from real estate loans discharged through Chapter 7 bankruptcy that were not reaffirmed or from payment or maturity extensions.

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For TDRs, Trustmark had a related loan loss allowance of $1.6 million at the end of each respective period.  LHFI classified as TDRs are charged down to the most likely fair value estimate less an estimated cost to sell for collateral dependent loans, which would approximate net realizable value.  There were no specific charge-offs related to TDRs for the three months ended March 31, 2014 compared to $60 thousand for the three months ended March 31, 2013.

The following table illustrates the impact of modifications classified as TDRs as well as those TDRs modified within the last 12 months for which there was a payment default during the period for the three months ended March 31, 2014 and 2013 ($ in thousands):

 

		Three Months Ended March 31, 2014
Troubled Debt Restructurings		Number of Contracts				Pre-Modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
Secured by 1-4 family residential properties			10			$	703			$	694
		Three Months Ended March 31, 2013
Troubled Debt Restructurings		Number of Contracts				Pre-Modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
Secured by 1-4 family residential properties			2			$	249			$	193
Secured by nonfarm, nonresidential properties			1				952				952
Commercial and industrial			2				944				937
Other loans			1				2,490				2,490
Total			6			$	4,635			$	4,572

 

		Three Months Ended March 31,
		2014								2013
Troubled Debt Restructurings that Subsequently Defaulted		Number of Contracts				Recorded Investment				Number of Contracts				Recorded Investment
Construction, land development and other land loans			-			$	-				4			$	236
Secured by 1-4 family residential properties			-				-				19				1,506
Total			-			$	-				23			$	1,742

 

Trustmark’s TDRs have resulted primarily from allowing the borrower to pay interest-only for an extended period of time rather than from forgiveness.  Accordingly, as shown above, these TDRs have a similar recorded investment for both the pre-modification and post-modification disclosure.  Trustmark has utilized loans 90 days or more past due to define payment default in determining TDRs that have subsequently defaulted.

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		March 31, 2014
		Accruing				Nonaccrual				Total
Construction, land development and other land loans		$	-			$	4,757			$	4,757
Secured by 1-4 family residential properties			1,540				4,141				5,681
Secured by nonfarm, nonresidential properties			-				2,215				2,215
Other loans secured by real estate			-				164				164
Commercial and industrial			-				542				542
Total Troubled Debt Restructurings by Type		$	1,540			$	11,819			$	13,359
		December 31, 2013
		Accruing				Nonaccrual				Total
Construction, land development and other land loans		$	-			$	6,247			$	6,247
Secured by 1-4 family residential properties			1,320				4,201				5,521
Secured by nonfarm, nonresidential properties			-				2,292				2,292
Other loans secured by real estate			-				167				167
Commercial and industrial			-				549				549
Total Troubled Debt Restructurings by Type		$	1,320			$	13,456			$	14,776

		March 31, 2014
						Commercial LHFI
						Pass -				Special Mention -				Substandard -				Doubtful -
						Categories 1-6				Category 7				Category 8				Category 9				Subtotal
Loans secured by real estate:
Construction, land development and other land loans						$	484,794			$	5,165			$	44,352			$	262			$	534,573
Secured by 1-4 family residential properties							123,788				1,566				7,414				185				132,953
Secured by nonfarm, nonresidential properties							1,368,632				9,660				81,973				308				1,460,573
Other							183,131				-				6,680				238				190,049
Commercial and industrial loans							1,150,067				19,826				35,808				1,662				1,207,363
Consumer loans							253				-				-				-				253
Other loans							761,979				60				6,998				561				769,598
						$	4,072,644			$	36,277			$	183,225			$	3,216			$	4,295,362
		Consumer LHFI
						Past Due				Past Due
		Current				30-89 Days				90 Days or More				Nonaccrual				Subtotal				Total LHFI
Loans secured by real estate:
Construction, land development and other land loans		$	57,524			$	399			$	-			$	162			$	58,085			$	592,658
Secured by 1-4 family residential properties			1,370,812				7,232				1,430				21,354				1,400,828				1,533,781
Secured by nonfarm, nonresidential properties			1,374				-				-				-				1,374				1,461,947
Other			3,172				-				-				-				3,172				193,221
Commercial and industrial loans			3				-				1				-				4				1,207,367
Consumer loans			158,100				1,383				284				133				159,900				160,153
Other loans			5,041				-				-				-				5,041				774,639
		$	1,596,026			$	9,014			$	1,715			$	21,649			$	1,628,404			$	5,923,766

		December 31, 2013
						Commercial LHFI
						Pass -				Special Mention -				Substandard -				Doubtful -
						Categories 1-6				Category 7				Category 8				Category 9				Subtotal
Loans secured by real estate:
Construction, land development and other land loans						$	493,380			$	4,383			$	47,610			$	318			$	545,691
Secured by 1-4 family residential properties							119,640				479				7,839				110				128,068
Secured by nonfarm, nonresidential properties							1,313,470				12,620				87,203				399				1,413,692
Other							178,951				-				6,756				235				185,942
Commercial and industrial loans							1,099,429				18,771				37,209				2,187				1,157,596
Consumer loans							496				-				-				-				496
Other loans							777,395				60				4,126				669				782,250
						$	3,982,761			$	36,313			$	190,743			$	3,918			$	4,213,735
		Consumer LHFI
						Past Due				Past Due
		Current				30-89 Days				90 Days or More				Nonaccrual				Subtotal				Total LHFI
Loans secured by real estate:
Construction, land development and other land loans		$	50,850			$	131			$	-			$	217			$	51,198			$	596,889
Secured by 1-4 family residential properties			1,327,624				8,937				2,996				17,939				1,357,496				1,485,564
Secured by nonfarm, nonresidential properties			1,439				8				-				-				1,447				1,415,139
Other			3,418				2				-				-				3,420				189,362
Commercial and industrial loans			13				5				-				-				18				1,157,614
Consumer loans			162,348				2,012				302				150				164,812				165,308
Other loans			6,755				-				-				-				6,755				789,005
		$	1,552,447			$	11,095			$	3,298			$	18,306			$	1,585,146			$	5,798,881

		March 31, 2014
		Past Due
						90 Days												Current
		30-89 Days				or More (1)				Total				Nonaccrual				Loans				Total LHFI
Loans secured by real estate:
Construction, land development and other land loans		$	2,530			$	154			$	2,684			$	11,259			$	578,715			$	592,658
Secured by 1-4 family residential properties			7,969				1,431				9,400				24,585				1,499,796				1,533,781
Secured by nonfarm, nonresidential properties			1,418				-				1,418				20,701				1,439,828				1,461,947
Other			63				-				63				1,307				191,851				193,221
Commercial and industrial loans			1,874				-				1,874				5,451				1,200,042				1,207,367
Consumer loans			1,382				284				1,666				134				158,353				160,153
Other loans			4				-				4				561				774,074				774,639
Total		$	15,240			$	1,869			$	17,109			$	63,998			$	5,842,659			$	5,923,766

		December 31, 2013
		Past Due
						90 Days												Current
		30-89 Days				or More (1)				Total				Nonaccrual				Loans				Total LHFI
Loans secured by real estate:
Construction, land development and other land loans		$	923			$	-			$	923			$	13,327			$	582,639			$	596,889
Secured by 1-4 family residential properties			9,437				2,996				12,433				21,603				1,451,528				1,485,564
Secured by nonfarm, nonresidential properties			2,044				-				2,044				21,809				1,391,286				1,415,139
Other			5				-				5				1,327				188,030				189,362
Commercial and industrial loans			1,007				-				1,007				6,286				1,150,321				1,157,614
Consumer loans			2,012				302				2,314				151				162,843				165,308
Other loans			17				-				17				735				788,253				789,005
Total		$	15,445			$	3,298			$	18,743			$	65,238			$	5,714,900			$	5,798,881

		Three Months Ended March 31,
		2014				2013
Balance at January 1,		$	66,448			$	78,738
Loans charged-off			(3,016	)			(3,325	)
Recoveries			4,891				4,455
Net recoveries			1,875				1,130
Provision for loan losses, LHFI			(805	)			(2,968	)
Balance at March 31,		$	67,518			$	76,900

		March 31, 2014								December 31, 2013
		Covered				Noncovered				Covered				Noncovered
Loans secured by real estate:
Construction, land development and other land loans		$	2,239			$	88,683			$	2,363			$	98,928
Secured by 1-4 family residential properties			15,572				145,213				16,416				157,914
Secured by nonfarm, nonresidential properties			10,629				271,696				10,945				287,136
Other			2,470				34,787				2,644				33,948
Commercial and industrial loans			361				135,114				394				149,495
Consumer loans			49				15,024				119				18,428
Other loans			1,350				23,130				1,335				24,141
Acquired loans			32,670				713,647				34,216				769,990
Less allowance for loan losses, acquired loans			1,800				8,740				2,387				7,249
Net acquired loans		$	30,870			$	704,907			$	31,829			$	762,741

At acquisition date:		February 15, 2013
Contractually required principal and interest		$	1,256,669
Nonaccretable difference			201,324
Cash flows expected to be collected			1,055,345
Accretable yield			98,394
FASB ASC Topic 310-20 discount			12,716
Fair value of loans at acquisition		$	944,235

		Covered								Noncovered
		Acquired Impaired				Acquired Not ASC 310-30 (1)				Acquired Impaired				Acquired Not ASC 310-30 (1)
Carrying value, net at January 1, 2013		$	45,391			$	2,460			$	72,942			$	6,696
Loans acquired (2)			-				-				790,335				153,900
Accretion to interest income			5,150				159				35,538				2,628
Payments received, net			(18,976	)			(819	)			(229,618	)			(39,281	)
Other			(3,202	)			(137	)			(24,177	)			(858	)
Less change in allowance for loan losses, acquired loans			1,803				-				(5,364	)			-
Carrying value, net at December 31, 2013			30,166				1,663				639,656				123,085
Loans acquired			-				-				-				-
Accretion to interest income			1,020				1				11,689				456
Payments received, net			(2,763	)			171				(42,834	)			(4,748	)
Other			25				-				(13,417	)			(7,489	)
Less change in allowance for loan losses, acquired loans			587				-				(1,491	)			-
Carrying value, net at March 31, 2014		$	29,035			$	1,835			$	593,603			$	111,304

		Three Months Ended March 31,
		2014				2013
Accretable yield at January 1,		$	(109,006	)		$	(26,383	)
Additions due to acquisition (1)			-				(98,394	)
Accretion to interest income			12,709				7,816
Disposals			2,883				1,575
Reclassification to / (from) nonaccretable difference (2)			(11,904	)			(2,556	)
Accretable yield at March 31,		$	(105,318	)		$	(117,942	)

		Covered				Noncovered				Total
Balance at January 1, 2014		$	2,387			$	7,249			$	9,636
Provision for loan losses, acquired loans			(474	)			537				63
Loans charged-off			(53	)			729				676
Recoveries			(60	)			225				165
Net (charge-offs) recoveries			(113	)			954				841
Balance at March 31, 2014		$	1,800			$	8,740			$	10,540

		Covered				Noncovered				Total
Balance at January 1, 2013		$	4,190			$	1,885			$	6,075
Provision for loan losses, acquired loans			(564	)			694				130
Loans charged-off			862				(642	)			220
Recoveries			9				24				33
Net recoveries (charge-offs)			871				(618	)			253
Balance at March 31, 2013		$	4,497			$	1,961			$	6,458

		March 31, 2014
						Commercial Loans
						Pass -				Special Mention -				Substandard -				Doubtful -
						Categories 1-6				Category 7				Category 8				Category 9				Subtotal
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans						$	203			$	-			$	1,110			$	796			$	2,109
Secured by 1-4 family residential properties							1,802				374				1,403				-				3,579
Secured by nonfarm, nonresidential properties							5,333				105				4,549				-				9,987
Other							857				128				722				2				1,709
Commercial and industrial loans							227				27				107				-				361
Consumer loans							-				-				-				-				-
Other loans							247				-				435				665				1,347
Total covered loans							8,669				634				8,326				1,463				19,092
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans							34,577				1,456				38,280				8,363				82,676
Secured by 1-4 family residential properties							33,574				1,611				15,828				214				51,227
Secured by nonfarm, nonresidential properties							176,764				6,787				84,451				3,694				271,696
Other							29,228				910				4,266				285				34,689
Commercial and industrial loans							105,176				1,886				22,509				5,543				135,114
Consumer loans							-				-				-				-				-
Other loans							20,720				-				1,004				1,351				23,075
Total noncovered loans							400,039				12,650				166,338				19,450				598,477
Total acquired loans						$	408,708			$	13,284			$	174,664			$	20,913			$	617,569
		Consumer Loans
						Past Due				Past Due												Total
		Current				30-89 Days				90 Days or More				Nonaccrual				Subtotal				Acquired Loans
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans		$	130			$	-			$	-			$	-			$	130			$	2,239
Secured by 1-4 family residential properties			10,804				753				431				5				11,993				15,572
Secured by nonfarm, nonresidential properties			469				-				173				-				642				10,629
Other			676				85				-				-				761				2,470
Commercial and industrial loans			-				-				-				-				-				361
Consumer loans			44				5				-				-				49				49
Other loans			3				-				-				-				3				1,350
Total covered loans			12,126				843				604				5				13,578				32,670
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans			5,371				135				501				-				6,007				88,683
Secured by 1-4 family residential properties			87,982				3,135				2,786				83				93,986				145,213
Secured by nonfarm, nonresidential properties			-				-				-				-				-				271,696
Other			98				-				-				-				98				34,787
Commercial and industrial loans			-				-				-				-				-				135,114
Consumer loans			14,781				236				7				-				15,024				15,024
Other loans			55				-				-				-				55				23,130
Total noncovered loans			108,287				3,506				3,294				83				115,170				713,647
Total acquired loans		$	120,413			$	4,349			$	3,898			$	88			$	128,748			$	746,317

		December 31, 2013
						Commercial Loans
						Pass -				Special Mention -				Substandard -				Doubtful -
						Categories 1-6				Category 7				Category 8				Category 9				Subtotal
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans						$	228			$	-			$	1,126			$	771			$	2,125
Secured by 1-4 family residential properties							1,629				430				1,798				-				3,857
Secured by nonfarm, nonresidential properties							5,446				109				4,723				-				10,278
Other							832				134				717				2				1,685
Commercial and industrial loans							254				28				112				-				394
Consumer loans							-				-				-				-				-
Other loans							271				-				414				646				1,331
Total covered loans							8,660				701				8,890				1,419				19,670
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans							39,075				2,506				42,486				8,445				92,512
Secured by 1-4 family residential properties							33,810				2,983				17,422				538				54,753
Secured by nonfarm, nonresidential properties							184,594				9,027				88,952				4,563				287,136
Other							28,156				1,437				4,071				184				33,848
Commercial and industrial loans							116,818				2,248				24,084				6,039				149,189
Consumer loans							21				-				-				-				21
Other loans							21,881				-				882				1,306				24,069
Total noncovered loans							424,355				18,201				177,897				21,075				641,528
Total acquired loans						$	433,015			$	18,902			$	186,787			$	22,494			$	661,198
		Consumer Loans
						Past Due				Past Due												Total
		Current				30-89 Days				90 Days or More				Nonaccrual				Subtotal				Acquired Loans
Covered Loans: (1)
Loans secured by real estate:
Construction, land development and other land loans		$	133			$	77			$	28			$	-			$	238			$	2,363
Secured by 1-4 family residential properties			11,179				428				952				-				12,559				16,416
Secured by nonfarm, nonresidential properties			495				-				172				-				667				10,945
Other			617				342				-				-				959				2,644
Commercial and industrial loans			-				-				-				-				-				394
Consumer loans			119				-				-				-				119				119
Other loans			4				-				-				-				4				1,335
Total covered loans			12,547				847				1,152				-				14,546				34,216
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans			5,813				108				495				-				6,416				98,928
Secured by 1-4 family residential properties			95,987				3,599				3,466				109				103,161				157,914
Secured by nonfarm, nonresidential properties			-				-				-				-				-				287,136
Other			100				-				-				-				100				33,948
Commercial and industrial loans			306				-				-				-				306				149,495
Consumer loans			18,076				239				92				-				18,407				18,428
Other loans			72				-				-				-				72				24,141
Total noncovered loans			120,354				3,946				4,053				109				128,462				769,990
Total acquired loans		$	132,901			$	4,793			$	5,205			$	109			$	143,008			$	804,206

		March 31, 2014
		Past Due
						90 Days												Current				Total Acquired
		30-89 Days				or More (1)				Total				Nonaccrual (2)				Loans				Loans
Covered loans:
Loans secured by real estate:
Construction, land development and other land loans		$	1			$	553			$	554			$	445			$	1,240			$	2,239
Secured by 1-4 family residential properties			1,275				535				1,810				5				13,757				15,572
Secured by nonfarm, nonresidential properties			2,429				487				2,916				-				7,713				10,629
Other			358				301				659				-				1,811				2,470
Commercial and industrial loans			39				-				39				74				248				361
Consumer loans			5				-				5				-				44				49
Other loans			435				665				1,100				-				250				1,350
Total covered loans			4,542				2,541				7,083				524				25,063				32,670
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans			1,476				28,046				29,522				230				58,931				88,683
Secured by 1-4 family residential properties			5,146				4,838				9,984				530				134,699				145,213
Secured by nonfarm, nonresidential properties			5,728				14,990				20,718				293				250,685				271,696
Other			100				2,662				2,762				283				31,742				34,787
Commercial and industrial loans			7,640				2,999				10,639				958				123,517				135,114
Consumer loans			236				7				243				-				14,781				15,024
Other loans			169				89				258				19				22,853				23,130
Total noncovered loans			20,495				53,631				74,126				2,313				637,208				713,647
Total acquired loans		$	25,037			$	56,172			$	81,209			$	2,837			$	662,271			$	746,317

		December 31, 2013
		Past Due
						90 Days												Current				Total Acquired
		30-89 Days				or More (1)				Total				Nonaccrual (2)				Loans				Loans
Covered loans:
Loans secured by real estate:
Construction, land development and other land loans		$	87			$	553			$	640			$	445			$	1,278			$	2,363
Secured by 1-4 family residential properties			873				1,142				2,015				-				14,401				16,416
Secured by nonfarm, nonresidential properties			1,905				793				2,698				-				8,247				10,945
Other			710				2				712				-				1,932				2,644
Commercial and industrial loans			13				-				13				41				340				394
Consumer loans			-				-				-				-				119				119
Other loans			-				646				646				-				689				1,335
Total covered loans			3,588				3,136				6,724				486				27,006				34,216
Noncovered loans:
Loans secured by real estate:
Construction, land development and other land loans			2,116				31,744				33,860				67				65,001				98,928
Secured by 1-4 family residential properties			5,067				7,589				12,656				116				145,142				157,914
Secured by nonfarm, nonresidential properties			7,978				15,421				23,399				461				263,276				287,136
Other			40				1,922				1,962				33				31,953				33,948
Commercial and industrial loans			743				3,387				4,130				1,170				144,195				149,495
Consumer loans			239				92				331				-				18,097				18,428
Other loans			-				153				153				20				23,968				24,141
Total noncovered loans			16,183				60,308				76,491				1,867				691,632				769,990
Total acquired loans		$	19,771			$	63,444			$	83,215			$	2,353			$	718,638			$	804,206

		Three Months Ended March 31,
		2014				2013
Balance at beginning of period		$	67,834			$	47,341
Origination of servicing assets			2,315				5,521
Change in fair value:
Due to market changes			(723	)			1,127
Due to runoff			(1,812	)			(2,460	)
Balance at end of period		$	67,614			$	51,529

		Three Months Ended March 31,
		2014				2013
Balance at beginning of period		$	106,539			$	78,189
Additions (1)			13,694				49,980
Disposals			(7,594	)			(8,162	)
Writedowns			(1,103	)			(1,601	)
Balance at end of period		$	111,536			$	118,406
Loss, net on the sale of other real estate included in ORE/Foreclosure expense		$	(415	)		$	(15	)

		March 31,				December 31,
		2014				2013
Construction, land development and other land properties		$	68,216			$	65,273
1-4 family residential properties			13,994				14,696
Nonfarm, nonresidential properties			29,152				26,433
Other real estate properties			174				137
Total other real estate, excluding covered other real estate		$	111,536			$	106,539

		March 31,				December 31,
		2014				2013
Alabama		$	24,103			$	25,912
Florida			42,013				34,480
Mississippi (1)			22,287				22,766
Tennessee (2)			13,000				12,892
Texas			10,133				10,489
Total other real estate, excluding covered other real estate		$	111,536			$	106,539

		Three Months Ended March 31,
		2014				2013
Balance at beginning of period		$	5,108			$	5,741
Transfers from covered loans			98				947
FASB ASC 310-30 adjustment for the residual recorded investment			(52	)			(246	)
Net transfers from covered loans			46				701
Disposals			(315	)			(203	)
Writedowns			(80	)			(360	)
Balance at end of period		$	4,759			$	5,879
Loss, net on the sale of covered other real estate included in ORE/Foreclosure expense		$	(120	)		$	(59	)

		March 31,				December 31,
		2014				2013
Construction, land development and other land properties		$	725			$	733
1-4 family residential properties			1,586				1,981
Nonfarm, nonresidential properties			2,448				2,394
Total covered other real estate		$	4,759			$	5,108

		Three Months Ended March 31,
		2014				2013
Balance at beginning of period		$	14,347			$	21,774
(Amortization) accretion			(332	)			54
Transfers to FDIC claims			(139	)			(270	)
Change in expected cash flows			(239	)			(1,335	)
Change in FDIC true-up provision			(150	)			(25	)
Balance at end of period		$	13,487			$	20,198

		March 31,				December 31,
		2014				2013
Noninterest-bearing demand deposits		$	2,879,341			$	2,663,503
Interest-bearing demand			1,833,146				1,923,701
Savings			3,229,737				2,997,294
Time			2,179,895				2,275,404
Total		$	10,122,119			$	9,859,902

		Three Months Ended March 31,
		2014				2013
Net periodic benefit cost
Service cost		$	124			$	150
Interest cost			1,321				990
Expected return on plan assets			(1,558	)			(1,541	)
Recognized net loss due to settlement			375				-
Recognized net actuarial loss			736				1,395
Net periodic benefit cost		$	998			$	994

		Three Months Ended March 31,
		2014				2013
Net periodic benefit cost
Service cost		$	73			$	149
Interest cost			554				484
Amortization of prior service cost			63				63
Recognized net actuarial loss			170				259
Net periodic benefit cost		$	860			$	955