JACKSON, Miss.--(BUSINESS WIRE)-- Trustmark Corporation (NASDAQ: TRMK) reported net income of $31.0 million in the third quarter of 2016, which represented diluted earnings per share of $0.46. This level of earnings resulted in a return on average tangible common equity of 11.16% and a return on average assets of 0.95%. Diluted earnings per share in the third quarter of 2016 increased 9.5% relative to the same period in the prior year and 15.0% from the prior quarter when a one-time charge related to a voluntary early retirement program (ERP) in that quarter is excluded. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2016, to shareholders of record on December 1, 2016.

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Third Quarter Highlights

• Loans held for investment increased $94.0 million, or 5.2% annualized, from the prior quarter and $707.6 million, or 10.4%, year-over-year
• Credit quality remained solid, reflecting continued reductions in nonperforming assets
• Revenue excluding income on acquired loans increased 2.2% linked quarter, or 8.8% annualized, and 2.7% year-over-year to total $135.5 million in the third quarter
• Core noninterest expense remained well controlled at $96.6 million

Gerard R. Host, President and CEO, stated, “Trustmark achieved another quarter of solid financial results. We continued to maintain and expand customer relationships in our banking business by growing loans while maintaining solid credit quality. Our other lines of business continued to perform well, reflecting strength in insurance and mortgage banking. Core noninterest expense remained well controlled. Thanks to our associates, solid profitability and strong capital base, Trustmark remains well positioned to continue meeting the needs of our customers and creating long-term value for our shareholders.”

Balance Sheet Management

• Diversified legacy loan growth reflects the value of Trustmark’s five-state franchise
• Noninterest-bearing deposits increased to 32.1% of total deposits at September 30; cost of deposits remained steady at 0.13% in the third quarter
• Solid capital base continues to provide flexibility in pursuing growth opportunities

Loans held for investment totaled $7.5 billion at September 30, 2016, reflecting an increase of 5.2% annualized from the prior quarter and 10.4% year-over-year. Compared to the prior quarter, loans to state and other political subdivisions increased $70.6 million reflecting growth in Texas, Mississippi and Alabama. Construction, land development and other land loans increased $48.3 million driven by growth across Trustmark’s five-state franchise. Other loans, which include loans to nonprofits and real estate investment trusts, increased $34.9 million, reflecting growth in Mississippi and Tennessee. Loans secured by nonfarm, nonresidential real estate increased $15.4 million with growth in the Mississippi, Texas and Florida markets. Commercial and industrial loans declined $45.1 million as growth in Alabama, Tennessee and Florida was more than offset with declines in Mississippi and Texas. During the quarter, Trustmark sold the vast majority of its lower-rate, longer-term home mortgages in the secondary market rather than replacing the runoff in its single-family loan portfolio; as a result, the single-family loan portfolio decreased by $27.6 million.

Acquired loans totaled $295.7 million at September 30, 2016, down $43.3 million from the prior quarter. Collectively, loans held for investment and acquired loans totaled $7.8 billion at September 30, 2016, up $50.7 million, or 2.6% annualized, from the prior quarter.

Deposits totaled $9.7 billion at September 30, 2016, up $154.2 million, or 1.6%, from the prior quarter. Trustmark continues to maintain an attractive, low-cost deposit base with a total cost of deposits of 0.13%. The favorable mix of interest-bearing liabilities yielded a total cost of funds of 0.30% for the third quarter of 2016.

Trustmark’s capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses. During the third quarter, Trustmark did not repurchase any of its common shares. The repurchase program, which is subject to market conditions and management discretion, will continue to be implemented through open market repurchases or privately negotiated transactions. At September 30, 2016, Trustmark’s tangible equity to tangible assets ratio was 8.97%, while its total risk-based capital ratio was 13.82%. Tangible book value per share was $16.95 at September 30, 2016, up 5.9% from the prior year.

Credit Quality

• Nonperforming loans and other real estate decreased 16.5% and 6.5%, respectively, from the prior quarter
• Allowance for loan losses represented 256.56% of nonperforming loans, excluding specifically reviewed impaired loans
• Allowance for held for investment and acquired loans represented 1.06% of total held for investment and acquired loans

At September 30, 2016, nonperforming loans totaled $54.4 million, down 16.5% linked quarter and 11.0% year-over-year. Other real estate totaled $65.0 million, reflecting a decline of 6.5% from the prior quarter and 22.6% from the same period one year earlier.

Net charge-offs for the quarter were $5.2 million and resulted from four impaired credits being written down to fair value or charged-off in full. None of these credits were energy related, and a significant portion of the net charge-offs had been provisioned for in previous periods.

Allocation of Trustmark's $70.9 million allowance for loan losses represented 1.02% of commercial loans and 0.68% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 0.95% at September 30, 2016, representing a level Management considers commensurate with the inherent risk in the loan portfolio. Collectively, the allowance for both held for investment and acquired loan losses represented 1.06% of total loans, which include held for investment and acquired loans.

Unless otherwise noted, all of the above credit quality metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Revenue Generation

• Net interest income (FTE) excluding income on acquired loans totaled $95.4 million in the third quarter, up 2.7% from the prior quarter
• Noninterest income totaled $44.7 million in the third quarter, up 1.1% from the prior quarter
• Insurance and mortgage banking revenue demonstrated solid growth, increasing 4.5% and 9.6%, respectively, from the prior quarter

Net interest income (FTE) in the third quarter totaled $102.2 million, which resulted in a net interest margin of 3.52%. Compared to the prior quarter, net interest income (FTE) increased $1.3 million, which reflects continued growth in interest income from both the held for sale and held for investment loan portfolios, in addition to a lower level of interest and recoveries from the acquired loan portfolio. The yield on acquired loans in the third quarter totaled 8.50% and included recoveries from settlement of debt of $1.9 million; this compares to $2.9 million in recoveries from settlement of debt in the prior quarter. The net interest margin (FTE) excluding acquired loans totaled 3.38% in the third quarter, remaining unchanged from the prior quarter.

Service charges on deposit accounts totaled $11.7 million in the third quarter, an increase of $626 thousand, or 5.7%, from the prior quarter and a decline of $723 thousand, or 5.8%, year-over-year. The linked quarter change was attributable to a seasonal increase in occurrences of consumer overdrafts while the year-over-year decline reflected a decrease in consumer and business service charges as well as a reduction in occurrences of consumer overdrafts.

Bank card and other fees totaled $6.8 million in the third quarter, a decline of $680 thousand, or 9.1%, linked quarter and $208 thousand, or 3.0%, year-over-year. The linked quarter decline reflected a seasonal reduction in ATM surcharge revenue as well as reduced revenue from customer derivatives while the change year-over-year included lower ATM surcharge revenue.

Insurance revenue totaled $10.1 million in the third quarter, an increase of $436 thousand, or 4.5%, from the prior quarter and $168 thousand, or 1.7%, from the same period one year earlier. The linked quarter increase was primarily driven by the commercial property and casualty line of business while growth year-over-year reflected increases in group health insurance and other commission income, which were offset in part by reduced commercial property and casualty revenue.

Wealth management revenue totaled $7.6 million in the third quarter, a decrease of $438 thousand, or 5.5%, from the prior quarter and $219 thousand, or 2.8%, from the comparable period in 2015, reflecting in part a decline in trust management revenue.

Mortgage banking revenue in the third quarter totaled $7.4 million, an increase of $643 thousand, or 9.6%, linked quarter and a decrease of $79 thousand, or 1.1%, year-over-year. The growth from the prior quarter reflected increased secondary marketing gains and improved hedge ineffectiveness as well as expanded mortgage servicing income. When compared to levels one year earlier, increased secondary marketing gains and mortgage servicing income were more than offset by unfavorable mortgage servicing hedge ineffectiveness and a lower level of mark-to-market gains on mortgage loans held for sale. Mortgage loan production in the third quarter totaled $487.9 million, up 20.8% from the prior quarter and 16.1% from the comparable period one year earlier.

Noninterest Expense

• Core noninterest expense remained well controlled at $96.6 million
• Results of the previously announced ERP produced savings of $1.9 million during the third quarter

Trustmark’s proactive expense management programs have resulted in lower noninterest expense and improved efficiency levels. During the third quarter, noninterest expense totaled $97.9 million, down $12.3 million, or 11.1% from the prior quarter. Excluding the one-time charge of $9.3 million in second quarter related to the ERP, noninterest expense declined $3.0 million, or 2.9%, linked quarter. The efficiency ratio improved 339 basis points during the quarter to 63.8%.

Core noninterest expense, which excludes ORE expense (gain of $1.3 million), intangible amortization ($1.7 million), expense related to reducing the risk profile of the assets of the Corporation’s defined benefit plan prior to termination ($664 thousand) and additional pension expense related to the ERP ($236 thousand), totaled $96.6 million in the third quarter, a decline of $1.4 million on a comparable basis from the prior quarter.

Salaries and benefits expense totaled $57.3 million, which decreased during the quarter by $9.8 million. Excluding one-time ERP charges of $9.1 million during the second quarter, salary and benefits decreased by $706 thousand. This decrease represents ERP savings of $1.9 million during the quarter offset in part by increased pension cost of $900 thousand related to reducing the risk profile of the assets of the Corporation’s defined benefits plan as well as other non-routine pension expense related to the ERP. Other real estate expense decreased by $2.5 million during the quarter principally due to lower writedown expense of $1.2 million and an increase in the gain on sale of $1.1 million driven by the sale of two properties. Other expense totaled $11.6 million in the quarter, a decrease of $1.1 million from the prior quarter. Excluding ERP charges in the second quarter, other expense decreased by $823 thousand on a comparable basis from the prior quarter.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 26, 2016, at 10:00 a.m. Central Time to discuss the Corporation’s financial results. Interested parties may listen to the conference call by dialing (877) 317-3051 or by clicking on the link provided under the Investor Relations section of our website at www.trustmark.com, which will also include a slide presentation Management will review during the conference call. A replay of the conference call will also be available through Wednesday, November 9, 2016, in archived format at the same web address or by calling (877) 344-7529, passcode 10093856.

Trustmark Corporation is a financial services company providing banking and financial solutions through 194 offices in Alabama, Florida, Mississippi, Tennessee and Texas.

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 conditions in the housing and real estate markets in the regions in which Trustmark operates and the extent and duration of the current volatility in the credit and financial markets as well as crude oil prices, 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 issues relating to the European financial system 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, including those associated with the planned termination of our noncontributory tax-qualified defined benefit pension plan, greater than expected costs or difficulties related to the integration of acquisitions or new products and lines of business, cyber-attacks and other breaches which could affect our information system security, 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.

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands)
(unaudited)
																		Linked Quarter									Year over Year
QUARTERLY AVERAGE BALANCES				9/30/2016					6/30/2016					9/30/2015				$	Change				% Change				$	Change				% Change
Securities AFS-taxable			$	2,249,109				$	2,214,040				$	2,269,763				$	35,069				1.6	%			$	(20,654	)			-0.9	%
Securities AFS-nontaxable				95,233					99,296					116,290					(4,063	)			-4.1	%				(21,057	)			-18.1	%
Securities HTM-taxable				1,115,053					1,122,463					1,151,673					(7,410	)			-0.7	%				(36,620	)			-3.2	%
Securities HTM-nontaxable				34,179					34,785					36,278					(606	)			-1.7	%				(2,099	)			-5.8	%
Total securities				3,493,574					3,470,584					3,574,004					22,990				0.7	%				(80,430	)			-2.3	%
Loans (including loans held for sale)				7,658,089					7,505,409					6,771,947					152,680				2.0	%				886,142				13.1	%
Acquired loans:
Noncovered loans				306,809					335,012					421,262					(28,203	)			-8.4	%				(114,453	)			-27.2	%
Covered loans				10,464					14,728					18,982					(4,264	)			-29.0	%				(8,518	)			-44.9	%
Fed funds sold and rev repos				1,352					1,263					1,167					89				7.0	%				185				15.9	%
Other earning assets				68,706					64,000					58,534					4,706				7.4	%				10,172				17.4	%
Total earning assets				11,538,994					11,390,996					10,845,896					147,998				1.3	%				693,098				6.4	%
Allowance for loan losses				(82,301	)				(83,614	)				(84,482	)				1,313				-1.6	%				2,181				-2.6	%
Cash and due from banks				299,670					271,135					266,174					28,535				10.5	%				33,496				12.6	%
Other assets				1,243,854					1,240,846					1,286,189					3,008				0.2	%				(42,335	)			-3.3	%
Total assets			$	13,000,217				$	12,819,363				$	12,313,777				$	180,854				1.4	%			$	686,440				5.6	%
Interest-bearing demand deposits			$	1,848,084				$	1,830,107				$	1,915,567				$	17,977				1.0	%			$	(67,483	)			-3.5	%
Savings deposits				3,101,161					3,221,850					3,059,183					(120,689	)			-3.7	%				41,978				1.4	%
Time deposits less than $100,000				961,641					978,678					1,072,373					(17,037	)			-1.7	%				(110,732	)			-10.3	%
Time deposits of $100,000 or more				705,704					699,886					712,910					5,818				0.8	%				(7,206	)			-1.0	%
Total interest-bearing deposits				6,616,590					6,730,521					6,760,033					(113,931	)			-1.7	%				(143,443	)			-2.1	%
Fed funds purchased and repos				481,071					488,512					528,232					(7,441	)			-1.5	%				(47,161	)			-8.9	%
Short-term borrowings				311,473					319,288					534,931					(7,815	)			-2.4	%				(223,458	)			-41.8	%
Long-term FHLB advances				751,095					597,269					1,195					153,826				25.8	%				749,900				n/m
Subordinated notes				49,988					49,980					49,955					8				0.0	%				33				0.1	%
Junior subordinated debt securities				61,856					61,856					61,856					—				0.0	%				—				0.0	%
Total interest-bearing liabilities				8,272,073					8,247,426					7,936,202					24,647				0.3	%				335,871				4.2	%
Noninterest-bearing deposits				3,060,331					2,927,469					2,771,186					132,862				4.5	%				289,145				10.4	%
Other liabilities				136,971					131,627					137,134					5,344				4.1	%				(163	)			-0.1	%
Total liabilities				11,469,375					11,306,522					10,844,522					162,853				1.4	%				624,853				5.8	%
Shareholders' equity				1,530,842					1,512,841					1,469,255					18,001				1.2	%				61,587				4.2	%
Total liabilities and equity			$	13,000,217				$	12,819,363				$	12,313,777				$	180,854				1.4	%			$	686,440				5.6	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands)
(unaudited)
																		Linked Quarter									Year over Year
PERIOD END BALANCES				9/30/2016					6/30/2016					9/30/2015				$	Change				% Change				$	Change				% Change
Cash and due from banks			$	383,945				$	322,049				$	220,052				$	61,896				19.2	%			$	163,893				74.5	%
Fed funds sold and rev repos				500					3,198					—					(2,698	)			n/m					500				n/m
Securities available for sale				2,410,947					2,388,306					2,382,822					22,641				0.9	%				28,125				1.2	%
Securities held to maturity				1,143,234					1,173,204					1,178,440					(29,970	)			-2.6	%				(35,206	)			-3.0	%
Loans held for sale (LHFS)				242,097					213,546					173,679					28,551				13.4	%				68,418				39.4	%
Loans held for investment (LHFI)				7,499,204					7,405,181					6,791,643					94,023				1.3	%				707,561				10.4	%
Allowance for loan losses				(70,871	)				(71,796	)				(65,607	)				925				-1.3	%				(5,264	)			8.0	%
Net LHFI				7,428,333					7,333,385					6,726,036					94,948				1.3	%				702,297				10.4	%
Acquired loans:
Noncovered loans				291,825					325,196					400,528					(33,371	)			-10.3	%				(108,703	)			-27.1	%
Covered loans				3,912					13,839					18,645					(9,927	)			-71.7	%				(14,733	)			-79.0	%
Allowance for loan losses, acquired loans				(11,380	)				(12,480	)				(12,185	)				1,100				-8.8	%				805				-6.6	%
Net acquired loans				284,357					326,555					406,988					(42,198	)			-12.9	%				(122,631	)			-30.1	%
Net LHFI and acquired loans				7,712,690					7,659,940					7,133,024					52,750				0.7	%				579,666				8.1	%
Premises and equipment, net				190,930					192,732					196,558					(1,802	)			-0.9	%				(5,628	)			-2.9	%
Mortgage servicing rights				65,514					62,814					69,809					2,700				4.3	%				(4,295	)			-6.2	%
Goodwill				366,156					366,156					365,500					—				0.0	%				656				0.2	%
Identifiable intangible assets				22,366					24,058					30,129					(1,692	)			-7.0	%				(7,763	)			-25.8	%
Other real estate, excluding covered other real estate				64,993					69,502					83,955					(4,509	)			-6.5	%				(18,962	)			-22.6	%
Covered other real estate				—					388					2,865					(388	)			-100.0	%				(2,865	)			-100.0	%
FDIC indemnification asset				—					—					1,749					—				n/m					(1,749	)			-100.0	%
Other assets				558,166					554,456					551,694					3,710				0.7	%				6,472				1.2	%
Total assets			$	13,161,538				$	13,030,349				$	12,390,276				$	131,189				1.0	%			$	771,262				6.2	%
Deposits:
Noninterest-bearing			$	3,111,603				$	2,921,016				$	2,787,454				$	190,587				6.5	%			$	324,149				11.6	%
Interest-bearing				6,574,098					6,610,508					6,624,950					(36,410	)			-0.6	%				(50,852	)			-0.8	%
Total deposits				9,685,701					9,531,524					9,412,404					154,177				1.6	%				273,297				2.9	%
Fed funds purchased and repos				514,918					606,336					534,204					(91,418	)			-15.1	%				(19,286	)			-3.6	%
Short-term borrowings				412,792					360,434					709,845					52,358				14.5	%				(297,053	)			-41.8	%
Long-term FHLB advances				751,075					751,106					1,173					(31	)			0.0	%				749,902				n/m
Subordinated notes				49,993					49,985					49,961					8				0.0	%				32				0.1	%
Junior subordinated debt securities				61,856					61,856					61,856					—				0.0	%				—				0.0	%
Other liabilities				150,442					145,641					144,077					4,801				3.3	%				6,365				4.4	%
Total liabilities				11,626,777					11,506,882					10,913,520					119,895				1.0	%				713,257				6.5	%
Common stock				14,090					14,090					14,076					-				0.0	%				14				0.1	%
Capital surplus				365,553					364,516					360,494					1,037				0.3	%				5,059				1.4	%
Retained earnings				1,172,193					1,157,025					1,130,766					15,168				1.3	%				41,427				3.7	%
Accum other comprehensive loss, net of tax				(17,075	)				(12,164	)				(28,580	)				(4,911	)			40.4	%				11,505				-40.3	%
Total shareholders' equity				1,534,761					1,523,467					1,476,756					11,294				0.7	%				58,005				3.9	%
Total liabilities and equity			$	13,161,538				$	13,030,349				$	12,390,276				$	131,189				1.0	%			$	771,262				6.2	%
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands except per share data)
(unaudited)
			Quarter Ended													Linked Quarter									Year over Year
INCOME STATEMENTS				9/30/2016					6/30/2016				9/30/2015			$	Change				% Change				$	Change				% Change
Interest and fees on LHFS & LHFI-FTE			$	80,649				$	77,777			$	72,951			$	2,872				3.7	%			$	7,698				10.6	%
Interest and fees on acquired loans				6,781					8,051				11,607				(1,270	)			-15.8	%				(4,826	)			-41.6	%
Interest on securities-taxable				19,351					19,402				20,264				(51	)			-0.3	%				(913	)			-4.5	%
Interest on securities-tax exempt-FTE				1,388					1,429				1,609				(41	)			-2.9	%				(221	)			-13.7	%
Interest on fed funds sold and rev repos				5					4				2				1				25.0	%				3				n/m
Other interest income				223					200				392				23				11.5	%				(169	)			-43.1	%
Total interest income-FTE				108,397					106,863				106,825				1,534				1.4	%				1,572				1.5	%
Interest on deposits				3,208					3,122				3,147				86				2.8	%				61				1.9	%
Interest on fed funds pch and repos				411					404				205				7				1.7	%				206				n/m
Other interest expense				2,603					2,428				1,811				175				7.2	%				792				43.7	%
Total interest expense				6,222					5,954				5,163				268				4.5	%				1,059				20.5	%
Net interest income-FTE				102,175					100,909				101,662				1,266				1.3	%				513				0.5	%
Provision for loan losses, LHFI				4,284					2,596				2,514				1,688				65.0	%				1,770				70.4	%
Provision for loan losses, acquired loans				691					607				1,256				84				13.8	%				(565	)			-45.0	%
Net interest income after provision-FTE				97,200					97,706				97,892				(506	)			-0.5	%				(692	)			-0.7	%
Service charges on deposit accounts				11,677					11,051				12,400				626				5.7	%				(723	)			-5.8	%
Insurance commissions				10,074					9,638				9,906				436				4.5	%				168				1.7	%
Wealth management				7,571					8,009				7,790				(438	)			-5.5	%				(219	)			-2.8	%
Bank card and other fees				6,756					7,436				6,964				(680	)			-9.1	%				(208	)			-3.0	%
Mortgage banking, net				7,364					6,721				7,443				643				9.6	%				(79	)			-1.1	%
Other, net				1,274					1,372				1,470				(98	)			-7.1	%				(196	)			-13.3	%
Nonint inc-excl sec gains (losses), net				44,716					44,227				45,973				489				1.1	%				(1,257	)			-2.7	%
Security gains (losses), net				—					—				—				—				n/m					-				n/m
Total noninterest income				44,716					44,227				45,973				489				1.1	%				(1,257	)			-2.7	%
Salaries and employee benefits				57,250					67,018				58,270				(9,768	)			-14.6	%				(1,020	)			-1.8	%
Services and fees				14,947					14,522				14,691				425				2.9	%				256				1.7	%
Net occupancy-premises				6,440					5,928				6,580				512				8.6	%				(140	)			-2.1	%
Equipment expense				6,063					5,896				5,877				167				2.8	%				186				3.2	%
FDIC assessment expense				2,911					2,959				2,559				(48	)			-1.6	%				352				13.8	%
Other real estate expense				(1,313	)				1,193				3,385				(2,506	)			n/m					(4,698	)			n/m
Other expense				11,610					12,663				12,198				(1,053	)			-8.3	%				(588	)			-4.8	%
Total noninterest expense				97,908					110,179				103,560				(12,271	)			-11.1	%				(5,652	)			-5.5	%
Income before income taxes and tax eq adj				44,008					31,754				40,305				12,254				38.6	%				3,703				9.2	%
Tax equivalent adjustment				4,611					4,532				4,056				79				1.7	%				555				13.7	%
Income before income taxes				39,397					27,222				36,249				12,175				44.7	%				3,148				8.7	%
Income taxes				8,415					5,719				7,819				2,696				47.1	%				596				7.6	%
Net income			$	30,982				$	21,503			$	28,430			$	9,479				44.1	%			$	2,552				9.0	%
Per share data
Earnings per share - basic			$	0.46				$	0.32			$	0.42			$	0.14				43.8	%			$	0.04				9.5	%
Earnings per share - diluted			$	0.46				$	0.32			$	0.42			$	0.14				43.8	%			$	0.04				9.5	%
Dividends per share			$	0.23				$	0.23			$	0.23				—				0.0	%				—				0.0	%
Weighted average shares outstanding
Basic				67,625,085					67,619,571				67,557,395
Diluted				67,793,203					67,770,174				67,707,456
Period end shares outstanding				67,626,939					67,623,601				67,557,395
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands)
(unaudited)
			Quarter Ended															Linked Quarter								Year over Year
NONPERFORMING ASSETS (1)				9/30/2016					6/30/2016					9/30/2015				$	Change				% Change			$	Change				% Change
Nonaccrual loans
Alabama			$	1,403				$	1,379				$	1,306				$	24				1.7	%		$	97				7.4	%
Florida				3,719					1,806					7,444					1,913				n/m				(3,725	)			-50.0	%
Mississippi (2)				41,968					54,543					44,955					(12,575	)			-23.1	%			(2,987	)			-6.6	%
Tennessee (3)				6,620					5,345					4,911					1,275				23.9	%			1,709				34.8	%
Texas				700					2,055					2,515					(1,355	)			-65.9	%			(1,815	)			-72.2	%
Total nonaccrual loans				54,410					65,128					61,131					(10,718	)			-16.5	%			(6,721	)			-11.0	%
Other real estate
Alabama				15,574					18,031					23,822					(2,457	)			-13.6	%			(8,248	)			-34.6	%
Florida				25,147					28,052					30,374					(2,905	)			-10.4	%			(5,227	)			-17.2	%
Mississippi (2)				16,659					14,435					13,180					2,224				15.4	%			3,479				26.4	%
Tennessee (3)				6,061					7,432					9,840					(1,371	)			-18.4	%			(3,779	)			-38.4	%
Texas				1,552					1,552					6,739					-				0.0	%			(5,187	)			-77.0	%
Total other real estate				64,993					69,502					83,955					(4,509	)			-6.5	%			(18,962	)			-22.6	%
Total nonperforming assets			$	119,403				$	134,630				$	145,086				$	(15,227	)			-11.3	%		$	(25,683	)			-17.7	%
LOANS PAST DUE OVER 90 DAYS (4)
LHFI			$	953				$	3,382				$	9,224				$	(2,429	)			-71.8	%		$	(8,271	)			-89.7	%
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)			$	25,570				$	23,473				$	15,165				$	2,097				8.9	%		$	10,405				68.6	%
			Quarter Ended															Linked Quarter								Year over Year
ALLOWANCE FOR LOAN LOSSES (4)				9/30/2016					6/30/2016					9/30/2015				$	Change				% Change			$	Change				% Change
Beginning Balance			$	71,796				$	69,668				$	71,166				$	2,128				3.1	%		$	630				0.9	%
Provision for loan losses				4,284					2,596					2,514					1,688				65.0	%			1,770				70.4	%
Charge-offs				(8,279	)				(3,251	)				(11,406	)				(5,028	)			n/m				3,127				-27.4	%
Recoveries				3,070					2,783					3,333					287				10.3	%			(263	)			-7.9	%
Net charge-offs				(5,209	)				(468	)				(8,073	)				(4,741	)			n/m				2,864				-35.5	%
Ending Balance			$	70,871				$	71,796				$	65,607				$	(925	)			-1.3	%		$	5,264				8.0	%
PROVISION FOR LOAN LOSSES (4)
Alabama			$	132				$	1,189				$	(70	)			$	(1,057	)			-88.9	%		$	202				n/m
Florida				31					(364	)				(1,430	)				395				n/m				1,461				n/m
Mississippi (2)				703					(833	)				4,221					1,536				n/m				(3,518	)			-83.3	%
Tennessee (3)				151					726					(1,050	)				(575	)			-79.2	%			1,201				n/m
Texas				3,267					1,878					843					1,389				74.0	%			2,424				n/m
Total provision for loan losses			$	4,284				$	2,596				$	2,514				$	1,688				65.0	%		$	1,770				70.4	%
NET CHARGE-OFFS (4)
Alabama			$	38				$	436				$	163				$	(398	)			-91.3	%		$	(125	)			-76.7	%
Florida				(169	)				(595	)				(1,090	)				426				-71.6	%			921				-84.5	%
Mississippi (2)				2,484					(237	)				7,391					2,721				n/m				(4,907	)			-66.4	%
Tennessee (3)				74					252					448					(178	)			-70.6	%			(374	)			-83.5	%
Texas				2,782					612					1,161					2,170				n/m				1,621				n/m
Total net charge-offs			$	5,209				$	468				$	8,073				$	4,741				n/m			$	(2,864	)			-35.5	%
(1) - Excludes acquired loans and covered other real estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes acquired loans
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands)
(unaudited)
			Quarter Ended																									Nine Months Ended
AVERAGE BALANCES				9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015					9/30/2016					9/30/2015
Securities AFS-taxable			$	2,249,109				$	2,214,040				$	2,211,479				$	2,209,801				$	2,269,763				$	2,224,964				$	2,238,822
Securities AFS-nontaxable				95,233					99,296					105,844					110,290					116,290					100,106					121,373
Securities HTM-taxable				1,115,053					1,122,463					1,142,434					1,145,397					1,151,673					1,126,608					1,138,424
Securities HTM-nontaxable				34,179					34,785					35,841					35,755					36,278					34,932					38,600
Total securities				3,493,574					3,470,584					3,495,598					3,501,243					3,574,004					3,486,610					3,537,219
Loans (including loans held for sale)				7,658,089					7,505,409					7,346,333					7,089,672					6,771,947					7,503,842					6,630,143
Acquired loans:
Noncovered loans				306,809					335,012					361,772					384,306					421,262					334,430					461,774
Covered loans				10,464					14,728					16,663					18,341					18,982					13,939					21,033
Fed funds sold and rev repos				1,352					1,263					382					1,384					1,167					1,000					650
Other earning assets				68,706					64,000					66,702					68,016					58,534					66,477					48,759
Total earning assets				11,538,994					11,390,996					11,287,450					11,062,962					10,845,896					11,406,298					10,699,578
Allowance for loan losses				(82,301	)				(83,614	)				(81,138	)				(78,652	)				(84,482	)				(82,351	)				(83,611	)
Cash and due from banks				299,670					271,135					281,912					272,562					266,174					284,295					276,151
Other assets				1,243,854					1,240,846					1,253,282					1,266,712					1,286,189					1,245,988					1,292,685
Total assets			$	13,000,217				$	12,819,363				$	12,741,506				$	12,523,584				$	12,313,777				$	12,854,230				$	12,184,803
Interest-bearing demand deposits			$	1,848,084				$	1,830,107				$	1,866,043				$	1,917,598				$	1,915,567				$	1,848,078				$	1,896,046
Savings deposits				3,101,161					3,221,850					3,188,916					2,963,318					3,059,183					3,170,389					3,178,675
Time deposits less than $100,000				961,641					978,678					994,406					1,033,233					1,072,373					978,181					1,104,339
Time deposits of $100,000 or more				705,704					699,886					683,170					687,635					712,910					696,288					749,651
Total interest-bearing deposits				6,616,590					6,730,521					6,732,535					6,601,784					6,760,033					6,692,936					6,928,711
Fed funds purchased and repos				481,071					488,512					517,180					563,424					528,232					495,535					482,740
Short-term borrowings				311,473					319,288					413,616					733,365					534,931					347,992					307,821
Long-term FHLB advances				751,095					597,269					501,144					50,078					1,195					616,994					1,217
Subordinated notes				49,988					49,980					49,972					49,964					49,955					49,980					49,947
Junior subordinated debt securities				61,856					61,856					61,856					61,856					61,856					61,856					61,856
Total interest-bearing liabilities				8,272,073					8,247,426					8,276,303					8,060,471					7,936,202					8,265,293					7,832,292
Noninterest-bearing deposits				3,060,331					2,927,469					2,836,283					2,839,894					2,771,186					2,941,795					2,762,064
Other liabilities				136,971					131,627					134,236					141,925					137,134					134,287					136,754
Total liabilities				11,469,375					11,306,522					11,246,822					11,042,290					10,844,522					11,341,375					10,731,110
Shareholders' equity				1,530,842					1,512,841					1,494,684					1,481,294					1,469,255					1,512,855					1,453,693
Total liabilities and equity			$	13,000,217				$	12,819,363				$	12,741,506				$	12,523,584				$	12,313,777				$	12,854,230				$	12,184,803
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands)
(unaudited)
PERIOD END BALANCES				9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015
Cash and due from banks			$	383,945				$	322,049				$	228,498				$	277,751				$	220,052
Fed funds sold and rev repos				500					3,198					—					250					—
Securities available for sale				2,410,947					2,388,306					2,368,120					2,345,422					2,382,822
Securities held to maturity				1,143,234					1,173,204					1,168,203					1,187,818					1,178,440
Loans held for sale (LHFS)				242,097					213,546					191,028					160,189					173,679
Loans held for investment (LHFI)				7,499,204					7,405,181					7,268,022					7,091,385					6,791,643
Allowance for loan losses				(70,871	)				(71,796	)				(69,668	)				(67,619	)				(65,607	)
Net LHFI				7,428,333					7,333,385					7,198,354					7,023,766					6,726,036
Acquired loans:
Noncovered loans				291,825					325,196					349,781					372,711					400,528
Covered loans				3,912					13,839					14,974					17,700					18,645
Allowance for loan losses, acquired loans				(11,380	)				(12,480	)				(13,535	)				(11,992	)				(12,185	)
Net acquired loans				284,357					326,555					351,220					378,419					406,988
Net LHFI and acquired loans				7,712,690					7,659,940					7,549,574					7,402,185					7,133,024
Premises and equipment, net				190,930					192,732					194,453					195,656					196,558
Mortgage servicing rights				65,514					62,814					68,208					74,007					69,809
Goodwill				366,156					366,156					366,156					366,156					365,500
Identifiable intangible assets				22,366					24,058					25,751					27,546					30,129
Other real estate, excluding covered other real estate				64,993					69,502					71,806					77,177					83,955
Covered other real estate				—					388					496					1,651					2,865
FDIC indemnification asset				—					—					506					738					1,749
Other assets				558,166					554,456					542,397					562,350					551,694
Total assets			$	13,161,538				$	13,030,349				$	12,775,196				$	12,678,896				$	12,390,276
Deposits:
Noninterest-bearing			$	3,111,603				$	2,921,016				$	2,874,306				$	2,998,694				$	2,787,454
Interest-bearing				6,574,098					6,610,508					6,759,337					6,589,536					6,624,950
Total deposits				9,685,701					9,531,524					9,633,643					9,588,230					9,412,404
Fed funds purchased and repos				514,918					606,336					466,436					441,042					534,204
Short-term borrowings				412,792					360,434					411,385					412,617					709,845
Long-term FHLB advances				751,075					751,106					501,124					501,155					1,173
Subordinated notes				49,993					49,985					49,977					49,969					49,961
Junior subordinated debt securities				61,856					61,856					61,856					61,856					61,856
Other liabilities				150,442					145,641					142,519					150,970					144,077
Total liabilities				11,626,777					11,506,882					11,266,940					11,205,839					10,913,520
Common stock				14,090					14,090					14,093					14,076					14,076
Capital surplus				365,553					364,516					363,979					361,467					360,494
Retained earnings				1,172,193					1,157,025					1,151,757					1,142,908					1,130,766
Accum other comprehensive loss, net of tax				(17,075	)				(12,164	)				(21,573	)				(45,394	)				(28,580	)
Total shareholders' equity				1,534,761					1,523,467					1,508,256					1,473,057					1,476,756
Total liabilities and equity			$	13,161,538				$	13,030,349				$	12,775,196				$	12,678,896				$	12,390,276
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands except per share data)
(unaudited)
			Quarter Ended																							Nine Months Ended
INCOME STATEMENTS				9/30/2016					6/30/2016				3/31/2016					12/31/2015					9/30/2015				9/30/2016					9/30/2015
Interest and fees on LHFS & LHFI-FTE			$	80,649				$	77,777			$	76,235				$	74,383				$	72,951			$	234,661				$	214,155
Interest and fees on acquired loans				6,781					8,051				7,022					11,910					11,607				21,854					39,242
Interest on securities-taxable				19,351					19,402				20,086					21,149					20,264				58,839					59,581
Interest on securities-tax exempt-FTE				1,388					1,429				1,497					1,565					1,609				4,314					5,086
Interest on fed funds sold and rev repos				5					4				1					4					2				10					4
Other interest income				223					200				230					402					392				653					1,177
Total interest income-FTE				108,397					106,863				105,071					109,413					106,825				320,331					319,245
Interest on deposits				3,208					3,122				3,038					3,000					3,147				9,368					9,598
Interest on fed funds pch and repos				411					404				431					274					205				1,246					527
Other interest expense				2,603					2,428				2,389					1,987					1,811				7,420					5,074
Total interest expense				6,222					5,954				5,858					5,261					5,163				18,034					15,199
Net interest income-FTE				102,175					100,909				99,213					104,152					101,662				302,297					304,046
Provision for loan losses, LHFI				4,284					2,596				2,243					3,043					2,514				9,123					5,332
Provision for loan losses, acquired loans				691					607				1,309					997					1,256				2,607					2,428
Net interest income after provision-FTE				97,200					97,706				95,661					100,112					97,892				290,567					296,286
Service charges on deposit accounts				11,677					11,051				11,081					11,961					12,400				33,809					35,405
Insurance commissions				10,074					9,638				8,593					8,501					9,906				28,305					27,923
Wealth management				7,571					8,009				7,407					7,831					7,790				22,987					23,538
Bank card and other fees				6,756					7,436				6,918					7,156					6,964				21,110					21,142
Mortgage banking, net				7,364					6,721				8,699					4,287					7,443				22,784					25,889
Other, net				1,274					1,372				888					(466	)				1,470				3,534					(18	)
Nonint inc-excl sec gains (losses), net				44,716					44,227				43,586					39,270					45,973				132,529					133,879
Security gains (losses), net				—					—				(310	)				—					—				(310	)				—
Total noninterest income				44,716					44,227				43,276					39,270					45,973				132,219					133,879
Salaries and employee benefits				57,250					67,018				57,201					57,366					58,270				181,469					172,832
Services and fees				14,947					14,522				14,475					13,717					14,691				43,944					43,817
Net occupancy-premises				6,440					5,928				6,188					6,304					6,580				18,556					19,014
Equipment expense				6,063					5,896				6,094					6,105					5,877				18,053					17,754
FDIC assessment expense				2,911					2,959				2,811					2,614					2,559				8,681					8,114
Other real estate expense				(1,313	)				1,193				181					(518	)				3,385				61					5,421
Other expense				11,610					12,663				11,994					13,032					12,198				36,267					36,090
Total noninterest expense				97,908					110,179				98,944					98,620					103,560				307,031					303,042
Income before income taxes and tax eq adj				44,008					31,754				39,993					40,762					40,305				115,755					127,123
Tax equivalent adjustment				4,611					4,532				4,473					4,334					4,056				13,616					12,099
Income before income taxes				39,397					27,222				35,520					36,428					36,249				102,139					115,024
Income taxes				8,415					5,719				8,517					8,570					7,819				22,651					26,844
Net income			$	30,982				$	21,503			$	27,003				$	27,858				$	28,430			$	79,488				$	88,180
Per share data
Earnings per share - basic			$	0.46				$	0.32			$	0.40				$	0.41				$	0.42			$	1.18				$	1.31
Earnings per share - diluted			$	0.46				$	0.32			$	0.40				$	0.41				$	0.42			$	1.17				$	1.30
Dividends per share			$	0.23				$	0.23			$	0.23				$	0.23				$	0.23			$	0.69				$	0.69
Weighted average shares outstanding
Basic				67,625,085					67,619,571				67,609,662					67,557,991					67,557,395				67,618,131					67,546,786
Diluted				67,793,203					67,770,174				67,746,592					67,734,109					67,707,456				67,771,125					67,677,206
Period end shares outstanding				67,626,939					67,623,601				67,639,832					67,559,128					67,557,395				67,626,939					67,557,395
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
($ in thousands)
(unaudited)
			Quarter Ended
NONPERFORMING ASSETS (1)				9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015
Nonaccrual loans
Alabama			$	1,403				$	1,379				$	1,788				$	1,776				$	1,306
Florida				3,719					1,806					4,952					5,180					7,444
Mississippi (2)				41,968					54,543					56,590					40,754					44,955
Tennessee (3)				6,620					5,345					5,849					5,106					4,911
Texas				700					2,055					1,515					2,496					2,515
Total nonaccrual loans				54,410					65,128					70,694					55,312					61,131
Other real estate
Alabama				15,574					18,031					19,137					21,578					23,822
Florida				25,147					28,052					27,907					29,579					30,374
Mississippi (2)				16,659					14,435					14,511					14,312					13,180
Tennessee (3)				6,061					7,432					8,699					9,974					9,840
Texas				1,552					1,552					1,552					1,734					6,739
Total other real estate				64,993					69,502					71,806					77,177					83,955
Total nonperforming assets			$	119,403				$	134,630				$	142,500				$	132,489				$	145,086
LOANS PAST DUE OVER 90 DAYS (4)
LHFI			$	953				$	3,382				$	611				$	2,300				$	9,224
LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)			$	25,570				$	23,473				$	24,110				$	21,812				$	15,165
			Quarter Ended																									Nine Months Ended
ALLOWANCE FOR LOAN LOSSES (4)				9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015					9/30/2016					9/30/2015
Beginning Balance			$	71,796				$	69,668				$	67,619				$	65,607				$	71,166				$	67,619				$	69,616
Provision for loan losses				4,284					2,596					2,243					3,043					2,514					9,123					5,332
Charge-offs				(8,279	)				(3,251	)				(3,363	)				(3,781	)				(11,406	)				(14,893	)				(18,688	)
Recoveries				3,070					2,783					3,169					2,750					3,333					9,022					9,347
Net charge-offs				(5,209	)				(468	)				(194	)				(1,031	)				(8,073	)				(5,871	)				(9,341	)
Ending Balance			$	70,871				$	71,796				$	69,668				$	67,619				$	65,607				$	70,871				$	65,607
PROVISION FOR LOAN LOSSES (4)
Alabama			$	132				$	1,189				$	540				$	1,453				$	(70	)			$	1,861				$	1,314
Florida				31					(364	)				(818	)				(1,357	)				(1,430	)				(1,151	)				(765	)
Mississippi (2)				703					(833	)				1,848					1,842					4,221					1,718					3,538
Tennessee (3)				151					726					138					182					(1,050	)				1,015					(101	)
Texas				3,267					1,878					535					923					843					5,680					1,346
Total provision for loan losses			$	4,284				$	2,596				$	2,243				$	3,043				$	2,514				$	9,123				$	5,332
NET CHARGE-OFFS (4)
Alabama			$	38				$	436				$	63				$	422				$	163				$	537				$	523
Florida				(169	)				(595	)				(674	)				(389	)				(1,090	)				(1,438	)				(579	)
Mississippi (2)				2,484					(237	)				(74	)				925					7,391					2,173					8,562
Tennessee (3)				74					252					8					188					448					334					337
Texas				2,782					612					871					(115	)				1,161					4,265					498
Total net charge-offs			$	5,209				$	468				$	194				$	1,031				$	8,073				$	5,871				$	9,341
(1) - Excludes acquired loans and covered other real estate
(2) - Mississippi includes Central and Southern Mississippi Regions
(3) - Tennessee includes Memphis, Tennessee and Northern Mississippi Regions
(4) - Excludes acquired loans
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
September 30, 2016
(unaudited)
			Quarter Ended																									Nine Months Ended
FINANCIAL RATIOS AND OTHER DATA				9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015				9/30/2016				9/30/2015
Return on equity				8.05	%				5.72	%				7.27	%				7.46	%				7.68	%			7.02	%			8.11	%
Return on average tangible equity				11.16	%				8.08	%				10.26	%				10.61	%				10.96	%			9.85	%			11.62	%
Return on assets				0.95	%				0.67	%				0.85	%				0.88	%				0.92	%			0.83	%			0.97	%
Interest margin - Yield - FTE				3.74	%				3.77	%				3.74	%				3.92	%				3.91	%			3.75	%			3.99	%
Interest margin - Cost				0.21	%				0.21	%				0.21	%				0.19	%				0.19	%			0.21	%			0.19	%
Net interest margin - FTE				3.52	%				3.56	%				3.54	%				3.74	%				3.72	%			3.54	%			3.80	%
Efficiency ratio (1)				63.81	%				67.20	%				66.87	%				66.03	%				67.87	%			65.95	%			66.78	%
Full-time equivalent employees				2,787					2,818					2,946					2,941					2,963
CREDIT QUALITY RATIOS (2)
Net charge-offs/average loans				0.27	%				0.03	%				0.01	%				0.06	%				0.47	%			0.10	%			0.19	%
Provision for loan losses/average loans				0.22	%				0.14	%				0.12	%				0.17	%				0.15	%			0.16	%			0.11	%
Nonperforming loans/total loans (incl LHFS)				0.70	%				0.85	%				0.95	%				0.76	%				0.88	%
Nonperforming assets/total loans (incl LHFS)				1.54	%				1.77	%				1.91	%				1.83	%				2.08	%
Nonperforming assets/total loans (incl LHFS) +ORE				1.53	%				1.75	%				1.89	%				1.81	%				2.06	%
ALL/total loans (excl LHFS)				0.95	%				0.97	%				0.96	%				0.95	%				0.97	%
ALL-commercial/total commercial loans				1.02	%				1.05	%				1.06	%				1.05	%				1.07	%
ALL-consumer/total consumer and home mortgage loans				0.68	%				0.70	%				0.65	%				0.66	%				0.67	%
ALL/nonperforming loans				130.25	%				110.24	%				98.55	%				122.25	%				107.32	%
ALL/nonperforming loans (excl specifically reviewed impaired loans)				256.56	%				231.13	%				203.24	%				210.32	%				206.72	%
CAPITAL RATIOS
Total equity/total assets				11.66	%				11.69	%				11.81	%				11.62	%				11.92	%
Tangible equity/tangible assets				8.97	%				8.97	%				9.01	%				8.79	%				9.01	%
Tangible equity/risk-weighted assets				11.85	%				11.85	%				11.84	%				11.68	%				12.24	%
Tier 1 leverage ratio				9.92	%				9.93	%				9.93	%				10.03	%				10.09	%
Common equity tier 1 capital ratio				12.35	%				12.32	%				12.41	%				12.57	%				13.00	%
Tier 1 risk-based capital ratio				12.97	%				12.94	%				13.04	%				13.21	%				13.66	%
Total risk-based capital ratio				13.82	%				13.82	%				13.92	%				14.07	%				14.66	%
STOCK PERFORMANCE
Market value-Close			$	27.56				$	24.85				$	23.03				$	23.04				$	23.17
Book value			$	22.69				$	22.53				$	22.30				$	21.80				$	21.86
Tangible book value			$	16.95				$	16.76				$	16.50				$	15.98				$	16.00
(1) - The efficiency ratio is noninterest expense to total net interest income (FTE) and noninterest income, excluding security gains (losses), amortization of partnership tax credits, amortization of purchased intangibles, and nonroutine income and expense items.
(2) - Excludes acquired loans and covered other real estate
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIALS September 30, 2016 ($ in thousands) (unaudited)
Note 1 - Securities Available for Sale and Held to Maturity
The following table is a summary of the estimated fair value of securities available for sale and the amortized cost of securities held to maturity ($ in thousands):
			9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015
SECURITIES AVAILABLE FOR SALE
U.S. Government agency obligations
Issued by U.S. Government agencies			$	58,234				$	61,359				$	63,814				$	68,135				$	71,282
Issued by U.S. Government sponsored agencies				283					286					286					281					23,016
Obligations of states and political subdivisions				124,641					129,285					135,655					138,609					147,794
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA				36,788					29,282					25,081					25,812					26,651
Issued by FNMA and FHLMC				561,989					428,542					330,558					225,542					177,411
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				1,374,399					1,474,357					1,540,541					1,582,860					1,630,402
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				254,613					265,195					272,185					279,226					279,609
Asset-backed securities and structured financial products				—					—					—					24,957					26,657
Total securities available for sale			$	2,410,947				$	2,388,306				$	2,368,120				$	2,345,422				$	2,382,822
SECURITIES HELD TO MATURITY
U.S. Government agency obligations
Issued by U.S. Government sponsored agencies			$	3,636				$	31,142				$	63,085				$	101,782				$	101,578
Obligations of states and political subdivisions				52,937					53,473					54,278					55,892					56,661
Mortgage-backed securities
Residential mortgage pass-through securities
Guaranteed by GNMA				16,183					16,415					16,590					17,363					17,783
Issued by FNMA and FHLMC				39,989					42,267					9,871					10,368					10,669
Other residential mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				831,662					824,175					818,201					820,012					808,763
Commercial mortgage-backed securities
Issued or guaranteed by FNMA, FHLMC, or GNMA				198,827					205,732					206,178					182,401					182,986
Total securities held to maturity			$	1,143,234				$	1,173,204				$	1,168,203				$	1,187,818				$	1,178,440

During 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 September 30, 2016, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive loss in the accompanying balance sheet totaled approximately $25.7 million ($15.8 million, net of tax).

Management continues to focus on asset quality as one of the strategic goals of the securities portfolio, which is evidenced by the investment of approximately 95% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moody’s. None of the securities owned by Trustmark are collateralized by assets which are considered sub-prime. Furthermore, outside of stock ownership in the Federal Home Loan Bank of Dallas, Federal Home Loan Bank of Atlanta and Federal Reserve Bank, Trustmark does not hold any other equity investment in a GSE.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2016
($ in thousands)
(unaudited)
Note 2 – Loan Composition
LHFI BY TYPE (excluding acquired loans)			9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015
Loans secured by real estate:
Construction, land development and other land loans			$	766,685			$	718,438			$	697,500			$	824,723			$	785,472
Secured by 1-4 family residential properties				1,592,453				1,620,013				1,640,015				1,649,501				1,638,639
Secured by nonfarm, nonresidential properties				1,916,153				1,900,784				1,893,240				1,736,476				1,604,453
Other real estate secured				317,680				323,734				273,752				211,228				225,523
Commercial and industrial loans				1,421,382				1,466,511				1,368,464				1,343,211				1,270,277
Consumer loans				170,073				166,436				164,544				169,135				169,509
State and other political subdivision loans				875,973				805,401				787,049				734,615				677,539
Other loans				438,805				403,864				443,458				422,496				420,231
LHFI				7,499,204				7,405,181				7,268,022				7,091,385				6,791,643
Allowance for loan losses				(70,871	)			(71,796	)			(69,668	)			(67,619	)			(65,607	)
Net LHFI			$	7,428,333			$	7,333,385			$	7,198,354			$	7,023,766			$	6,726,036

ACQUIRED NONCOVERED LOANS BY TYPE			9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015
Loans secured by real estate:
Construction, land development and other land loans			$	25,040			$	37,682			$	41,097			$	41,623			$	45,299
Secured by 1-4 family residential properties				72,689				73,313				81,314				86,950				96,870
Secured by nonfarm, nonresidential properties				110,606				115,989				126,177				135,626				146,614
Other real estate secured				20,903				24,015				24,374				23,860				23,816
Commercial and industrial loans				39,519				49,639				51,663				55,075				57,748
Consumer loans				3,878				4,295				5,027				5,641				6,295
Other loans				19,190				20,263				20,129				23,936				23,886
Noncovered loans				291,825				325,196				349,781				372,711				400,528
Allowance for loan losses				(11,330	)			(12,218	)			(13,212	)			(11,259	)			(11,417	)
Net noncovered loans			$	280,495			$	312,978			$	336,569			$	361,452			$	389,111

ACQUIRED COVERED LOANS BY TYPE (1)			9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015
Loans secured by real estate:
Construction, land development and other land loans			$	—			$	334			$	387			$	1,021			$	966
Secured by 1-4 family residential properties				3,912				8,363				8,564				10,058				10,546
Secured by nonfarm, nonresidential properties				—				3,709				3,679				4,638				5,363
Other real estate secured				—				1,257				1,132				1,286				1,511
Commercial and industrial loans				—				121				1,143				624				205
Consumer loans				—				—				—				—				—
Other loans				—				55				69				73				54
Covered loans				3,912				13,839				14,974				17,700				18,645
Allowance for loan losses				(50	)			(262	)			(323	)			(733	)			(768	)
Net covered loans			$	3,862			$	13,577			$	14,651			$	16,967			$	17,877

(1) Trustmark’s loss share agreement with the FDIC covering the acquired covered loans other than loans secured by 1-4 family residential properties expired on June 30, 2016. Trustmark’s loss share agreement with the FDIC covering the acquired covered loans secured by 1-4 family residential properties will expire in 2021. Effective July 1, 2016, all acquired covered loans excluding the acquired covered loans secured by 1-4 family residential properties were reclassified to acquired noncovered loans.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2016
($ in thousands)
(unaudited)
Note 2 – Loan Composition (continued)
			September 30, 2016
LHFI - COMPOSITION BY REGION (1)			Total				Alabama				Florida				Mississippi (Central and Southern Regions)				Tennessee (Memphis, TN and Northern MS Regions)				Texas
Loans secured by real estate:
Construction, land development and other land loans			$	766,685			$	138,256			$	64,664			$	269,498			$	55,915			$	238,352
Secured by 1-4 family residential properties				1,592,453				73,672				47,011				1,350,883				103,739				17,148
Secured by nonfarm, nonresidential properties				1,916,153				264,483				164,480				890,783				135,327				461,080
Other real estate secured				317,680				22,415				3,934				144,864				17,762				128,705
Commercial and industrial loans				1,421,382				150,892				18,288				683,042				288,595				280,565
Consumer loans				170,073				20,109				3,688				126,228				17,917				2,131
State and other political subdivision loans				875,973				76,432				29,602				554,403				32,607				182,929
Other loans				438,805				37,715				18,716				300,260				61,811				20,303
Loans			$	7,499,204			$	783,974			$	350,383			$	4,319,961			$	713,673			$	1,331,213
CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION (1)
Lots			$	58,673			$	14,008			$	19,480			$	20,700			$	1,831			$	2,654
Development				49,186				6,315				7,246				20,929				619				14,077
Unimproved land				110,549				15,868				16,764				43,079				17,028				17,810
1-4 family construction				169,657				43,729				9,821				70,614				2,877				42,616
Other construction				378,620				58,336				11,353				114,176				33,560				161,195
Construction, land development and other land loans			$	766,685			$	138,256			$	64,664			$	269,498			$	55,915			$	238,352
LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)
Income producing:
Retail			$	290,139			$	67,751			$	36,384			$	111,629			$	21,601			$	52,774
Office				232,940				32,747				31,247				78,121				6,212				84,613
Nursing homes/assisted living				97,159				—				—				90,351				6,808				—
Hotel/motel				192,610				46,418				21,482				50,589				25,916				48,205
Mini-storage				111,854				9,070				5,445				53,399				183				43,757
Industrial				88,693				9,498				9,236				24,944				5,254				39,761
Health care				25,162				2,587				837				21,738				—				—
Convenience stores				18,980				1,564				—				10,130				1,030				6,256
Other				70,253				5,814				10,879				22,849				2,841				27,870
Total income producing loans				1,127,790				175,449				115,510				463,750				69,845				303,236
Owner-occupied:
Office				144,046				15,775				23,995				77,336				6,971				19,969
Churches				86,329				8,785				2,125				44,829				23,370				7,220
Industrial warehouses				126,365				6,409				3,788				60,487				10,553				45,128
Health care				123,856				20,153				6,963				69,296				7,983				19,461
Convenience stores				87,992				7,466				2,375				53,596				1,204				23,351
Retail				35,657				3,983				5,127				20,749				2,048				3,750
Restaurants				32,028				3,593				1,149				21,656				3,529				2,101
Auto dealerships				14,542				8,944				42				4,393				1,163				—
Other				137,548				13,926				3,406				74,691				8,661				36,864
Total owner-occupied loans				788,363				89,034				48,970				427,033				65,482				157,844
Loans secured by nonfarm, nonresidential properties			$	1,916,153			$	264,483			$	164,480			$	890,783			$	135,327			$	461,080
(1) Excludes acquired loans.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2016
($ in thousands)
(unaudited)
Note 3 – Yields on Earning Assets and Interest-Bearing Liabilities
The following table illustrates the yields on earning assets by category as well as the rates paid on interest-bearing liabilities on a tax equivalent basis:
			Quarter Ended																				Nine Months Ended
			9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015				9/30/2016				9/30/2015
Securities – taxable				2.29	%			2.34	%			2.41	%			2.50	%			2.35	%			2.35	%			2.36	%
Securities – nontaxable				4.27	%			4.29	%			4.25	%			4.25	%			4.18	%			4.27	%			4.25	%
Securities – total				2.36	%			2.41	%			2.48	%			2.57	%			2.43	%			2.42	%			2.44	%
Loans - LHFI & LHFS				4.19	%			4.17	%			4.17	%			4.16	%			4.27	%			4.18	%			4.32	%
Acquired loans				8.50	%			9.26	%			7.46	%			11.74	%			10.46	%			8.38	%			10.87	%
Loans - total				4.36	%			4.39	%			4.33	%			4.57	%			4.65	%			4.36	%			4.76	%
FF sold & rev repo				1.47	%			1.27	%			1.05	%			1.15	%			0.68	%			1.34	%			0.82	%
Other earning assets				1.29	%			1.26	%			1.39	%			2.34	%			2.66	%			1.31	%			3.23	%
Total earning assets				3.74	%			3.77	%			3.74	%			3.92	%			3.91	%			3.75	%			3.99	%
Interest-bearing deposits				0.19	%			0.19	%			0.18	%			0.18	%			0.18	%			0.19	%			0.19	%
FF pch & repo				0.34	%			0.33	%			0.34	%			0.19	%			0.15	%			0.34	%			0.15	%
Other borrowings				0.88	%			0.95	%			0.94	%			0.88	%			1.11	%			0.92	%			1.61	%
Total interest-bearing liabilities				0.30	%			0.29	%			0.28	%			0.26	%			0.26	%			0.29	%			0.26	%
Net interest margin				3.52	%			3.56	%			3.54	%			3.74	%			3.72	%			3.54	%			3.80	%
Net interest margin excluding acquired loans				3.38	%			3.38	%			3.40	%			3.43	%			3.43	%			3.39	%			3.47	%

Reflected in the table above are yields on earning assets and liabilities, along with the net interest margin which equals reported net interest income-FTE, annualized, as a percent of average earning assets. In addition, the table includes net interest margin excluding acquired loans, which equals reported net interest income-FTE excluding interest income on acquired loans, annualized, as a percent of average earning assets excluding average acquired loans. The net interest margin decreased 4 basis points during the third quarter of 2016. The decline was primarily due to a $1.4 million reduction in accretion income and recoveries on settlement of debt for acquired loans during the third quarter of 2016 compared to the second quarter of 2016.

Note 4 – Mortgage Banking

Trustmark utilizes a portfolio of exchange-traded derivative instruments, such as Treasury note futures contracts and option contracts, to achieve a fair value return that offsets the changes in fair value of mortgage servicing rights (MSR) attributable to interest rates. These transactions are considered freestanding derivatives that do not otherwise qualify for hedge accounting under generally accepted accounting principles (GAAP). Changes in the fair value of these exchange-traded derivative instruments, including administrative costs, are recorded in noninterest income in mortgage banking, net and are offset by the changes in the fair value of the MSR. The MSR fair value represents the present value of future cash flows, which among other things includes decay and the effect of changes in interest rates. Ineffectiveness of hedging the MSR fair value is measured by comparing the change in value of hedge instruments to the change in the fair value of the MSR asset attributable to changes in interest rates and other market driven changes in valuation inputs and assumptions. The impact of this strategy resulted in a net negative ineffectiveness of $1.2 million for the quarter ended September 30, 2016 compared to a net positive ineffectiveness of $479 thousand for the quarter ended September 30, 2015.

The following table illustrates the components of mortgage banking revenues included in noninterest income in the accompanying income statements:

			Quarter Ended																									Nine Months Ended
			9/30/2016					6/30/2016					3/31/2016					12/31/2015					9/30/2015					9/30/2016					9/30/2015
Mortgage servicing income, net			$	5,271				$	5,177				$	5,058				$	5,126				$	4,906				$	15,506				$	14,499
Change in fair value-MSR from runoff				(2,862	)				(2,500	)				(2,005	)				(2,091	)				(2,636	)				(7,367	)				(7,436	)
Gain on sales of loans, net				6,410					5,480					2,591					4,656					4,479					14,481					13,309
Other, net				(299	)				498					2,642					(1,433	)				215					2,841					1,666
Mortgage banking income before hedge ineffectiveness				8,520					8,655					8,286					6,258					6,964					25,461					22,038
Change in fair value-MSR from market changes				381					(7,033	)				(6,866	)				2,010					(4,141	)				(13,518	)				(433	)
Change in fair value of derivatives				(1,537	)				5,099					7,279					(3,981	)				4,620					10,841					4,284
Net (negative) positive hedge ineffectiveness				(1,156	)				(1,934	)				413					(1,971	)				479					(2,677	)				3,851
Mortgage banking, net			$	7,364				$	6,721				$	8,699				$	4,287				$	7,443				$	22,784				$	25,889

TRUSTMARK CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIALSSeptember 30, 2016($ in thousands)(unaudited)

Note 5 – Salaries and Employee Benefit Plans

Early Retirement ProgramIn April 2016, Trustmark announced a voluntary early retirement program (ERP) for associates age 60 and above with five or more years of service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $9.3 million (salaries and employee benefits expense of $9.1 million and other miscellaneous expense of $230 thousand), or $0.085 per basic share net of tax, in Trustmark’s second quarter 2016 earnings.

As a result of the ERP, during the third quarter of 2016 Trustmark realized savings of $1.9 million in salaries and employee benefits expense and incurred additional pension expense of $236 thousand, which resulted from additional settlements from pension lump sum elections.

Defined Benefit Pension PlanTrustmark maintains a noncontributory tax-qualified defined benefit pension plan (Trustmark Capital Accumulation Plan, the “Plan”), in which substantially all associates who began employment prior to 2007 participate. The Plan provides retirement benefits that are based on the length of credited service and final average compensation, as defined in the Plan, and vest upon three years of service. Benefit accruals under the plan have been frozen since 2009, with the exception of certain associates covered through plans obtained in acquisitions that were subsequently merged into the Plan. Other than the associates covered through these acquired plans that were merged into the Plan, associates have not earned additional benefits, except for interest as required by law, since the Plan was frozen. Current and former associates who participate in the Plan retain their right to receive benefits that accrued before the Plan was frozen.

On July 26, 2016, the Board of Directors of Trustmark authorized the termination of the Plan, effective as of December 31, 2016. To satisfy commitments made by Trustmark to associates (collectively, the “Continuing Associates”) covered through acquired plans that were merged into the Plan, the Board also approved the spin-off of the portion of the Plan associated with the accrued benefits of the Continuing Associates into a new plan titled the Trustmark Corporation Pension Plan for Certain Employees of Acquired Financial Institutions (the “Spin-Off Plan”), effective as of December 31, 2016, immediately prior to the termination of the Plan.

In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, Trustmark is required to fully fund the Plan on a termination basis and will contribute the additional assets necessary to do so. The final distributions will be made from current plan assets and a one-time pension settlement expense will be recognized when paid by Trustmark during the second quarter of 2017. Further, as a result of Trustmark’s de-risking investment strategy for the Plan as of June 30, 2016, the expected rate of return on plan assets during the second half of 2016 will decrease from 6.0% to 2.5%. Accordingly, Trustmark's increased periodic benefit costs for the Plan during the third quarter of 2016 was $664 thousand. Participants in the Plan will have a choice of receiving a lump sum cash payment or annuity payments under a group annuity contract purchased from an insurance carrier, subject to certain exceptions. As a result of the termination of the Plan, each participant will become fully vested in his or her accrued benefits under the Plan.

The Board reserved the right to defer or revoke the termination of the Plan if circumstances change such that deferral or revocation would be warranted, but has no intent to do so at this time.

Note 6 – Other Noninterest Income and Expense
Other noninterest income consisted of the following for the periods presented ($ in thousands):
			Quarter Ended																				Nine Months Ended
			9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015				9/30/2016				9/30/2015
Partnership amortization for tax credit purposes			$	(2,479	)		$	(2,479	)		$	(2,479	)		$	(3,015	)		$	(2,083	)		$	(7,437	)		$	(7,035	)
(Decrease) increase in FDIC indemnification asset				(72	)			(118	)			(99	)			(827	)			82				(289	)			(2,686	)
Increase in life insurance cash surrender value				1,746				1,702				1,692				1,667				1,687				5,140				5,035
Other miscellaneous income				2,079				2,267				1,774				1,709				1,784				6,120				4,668
Total other, net			$	1,274			$	1,372			$	888			$	(466	)		$	1,470			$	3,534			$	(18	)

Trustmark invests in partnerships that provide income tax credits on a Federal and/or State basis (i.e., new market tax credits, low income housing tax credits and historical tax credits). The income tax credits related to these partnerships are utilized as specifically allowed by income tax law and are recorded as a reduction in income tax expense.

Other noninterest expense consisted of the following for the periods presented ($ in thousands):

		Quarter Ended																				Nine Months Ended
		9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015				9/30/2016				9/30/2015
Loan expense		$	3,336			$	3,024			$	3,043			$	3,356			$	3,416			$	9,403			$	9,479
Amortization of intangibles			1,692				1,692				1,796				1,927				1,942				5,180				5,892
Other miscellaneous expense			6,582				7,947				7,155				7,749				6,840				21,684				20,719
Total other expense		$	11,610			$	12,663			$	11,994			$	13,032			$	12,198			$	36,267			$	36,090

TRUSTMARK CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIALSSeptember 30, 2016($ in thousands)(unaudited)

Note 7 – Non-GAAP Financial Measures

In addition to capital ratios defined by U.S. generally accepted accounting principles (GAAP) and banking regulators, Trustmark utilizes various tangible common equity measures when evaluating capital utilization and adequacy. Tangible common equity, as defined by Trustmark, represents common equity less goodwill and identifiable intangible assets.

Trustmark believes these measures are important because they reflect the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of Trustmark’s capitalization to other organizations. These ratios differ from capital measures defined by banking regulators principally in that the numerator excludes shareholders’ equity associated with preferred securities, the nature and extent of which varies across organizations. In Management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other tangible assets, typically stemming from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators. Because GAAP does not include these capital ratio measures, Trustmark believes there are no comparable GAAP financial measures to these tangible common equity ratios. Despite the importance of these measures to Trustmark, there are no standardized definitions for them and, as a result, Trustmark’s calculations may not be comparable with other organizations. Also there may be limits in the usefulness of these measures to investors. As a result, Trustmark encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure. The following table reconciles Trustmark’s calculation of these measures to amounts reported under GAAP.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
September 30, 2016
($ in thousands)
(unaudited)
Note 7 – Non-GAAP Financial Measures (continued)
					Quarter Ended																				Nine Months Ended
					9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015				9/30/2016				9/30/2016
TANGIBLE EQUITY
AVERAGE BALANCES
Total shareholders' equity					$	1,530,842			$	1,512,841			$	1,494,684			$	1,481,294			$	1,469,255			$	1,512,855			$	1,453,693
Less: Goodwill						(366,156	)			(366,156	)			(366,156	)			(365,945	)			(365,500	)			(366,156	)			(365,500	)
Identifiable intangible assets						(23,311	)			(24,961	)			(26,709	)			(28,851	)			(31,144	)			(24,988	)			(31,304	)
Total average tangible equity					$	1,141,375			$	1,121,724			$	1,101,819			$	1,086,498			$	1,072,611			$	1,121,711			$	1,056,889
PERIOD END BALANCES
Total shareholders' equity					$	1,534,761			$	1,523,467			$	1,508,256			$	1,473,057			$	1,476,756
Less: Goodwill						(366,156	)			(366,156	)			(366,156	)			(366,156	)			(365,500	)
Identifiable intangible assets						(22,366	)			(24,058	)			(25,751	)			(27,546	)			(30,129	)
Total tangible equity		(a)			$	1,146,239			$	1,133,253			$	1,116,349			$	1,079,355			$	1,081,127
TANGIBLE ASSETS
Total assets					$	13,161,538			$	13,030,349			$	12,775,196			$	12,678,896			$	12,390,276
Less: Goodwill						(366,156	)			(366,156	)			(366,156	)			(366,156	)			(365,500	)
Identifiable intangible assets						(22,366	)			(24,058	)			(25,751	)			(27,546	)			(30,129	)
Total tangible assets		(b)			$	12,773,016			$	12,640,135			$	12,383,289			$	12,285,194			$	11,994,647
Risk-weighted assets		(c)			$	9,670,302			$	9,559,816			$	9,431,021			$	9,242,902			$	8,831,355
NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION
Net income					$	30,982			$	21,503			$	27,003			$	27,858			$	28,430			$	79,488			$	88,180
Plus: Intangible amortization net of tax						1,045				1,045				1,109				1,191				1,199				3,199				3,638
Net income adjusted for intangible amortization					$	32,027			$	22,548			$	28,112			$	29,049			$	29,629			$	82,687			$	91,818
Period end common shares outstanding		(d)				67,626,939				67,623,601				67,639,832				67,559,128				67,557,395
TANGIBLE COMMON EQUITY MEASUREMENTS
Return on average tangible equity (1)						11.16	%			8.08	%			10.26	%			10.61	%			10.96	%			9.85	%			11.62	%
Tangible equity/tangible assets		(a)/(b)				8.97	%			8.97	%			9.01	%			8.79	%			9.01	%
Tangible equity/risk-weighted assets		(a)/(c)				11.85	%			11.85	%			11.84	%			11.68	%			12.24	%
Tangible book value		(a)/(d)*1,000			$	16.95			$	16.76			$	16.50			$	15.98			$	16.00
COMMON EQUITY TIER 1 CAPITAL (CET1)
Total shareholders' equity					$	1,534,761			$	1,523,467			$	1,508,256			$	1,473,057			$	1,476,756
AOCI-related adjustments						17,075				12,164				21,573				45,394				28,580
CET1 adjustments and deductions:
Goodwill net of associated deferred tax liabilities (DTLs)						(347,800	)			(348,158	)			(348,515	)			(348,873	)			(348,587	)
Other adjustments and deductions for CET1 (2)						(9,307	)			(10,042	)			(10,861	)			(7,980	)			(8,888	)
CET1 capital		(e)				1,194,729				1,177,431				1,170,453				1,161,598				1,147,861
Additional tier 1 capital instruments plus related surplus						60,000				60,000				60,000				60,000				60,000
Less: additional tier 1 capital deductions						(276	)			(328	)			(434	)			(1,063	)			(1,287	)
Additional tier 1 capital						59,724				59,672				59,566				58,937				58,713
Tier 1 capital					$	1,254,453			$	1,237,103			$	1,230,019			$	1,220,535			$	1,206,574
Common equity tier 1 capital ratio		(e)/(c)				12.35	%			12.32	%			12.41	%			12.57	%			13.00	%
(1) Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity
(2) Includes other intangible assets, net of DTLs, disallowed deferred tax assets (DTAS), threshold deductions and transition adjustments, as applicable.

TRUSTMARK CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIALSSeptember 30, 2016($ in thousands)(unaudited)

Note 7 – Non-GAAP Financial Measures (continued)

Trustmark discloses certain non-GAAP financial measures, including net income adjusted for significant non-routine transactions, because Management uses these measures for business planning purposes, including to manage Trustmark’s business against internal projected results of operations and to measure Trustmark’s performance. Trustmark views net income adjusted for significant non-routine transactions as a measure of our core operating business, which excludes the impact of the items detailed below, as these items are generally not operational in nature. This non-GAAP measure also provides another basis for comparing period-to-period results as presented in the accompanying selected financial data table and the audited consolidated financial statements by excluding potential differences caused by non-operational and unusual or non-recurring items. Readers are cautioned that these adjustments are not permitted under GAAP. Trustmark encourages readers to consider its consolidated financial statements and the notes related thereto in their entirety, and not to rely on any single financial measure.

The following table presents adjustments to net income and select financial ratios as reported in accordance with GAAP resulting from significant non-routine items occurring during the periods presented ($ in thousands, except per share data):

			Quarter Ended																Nine Months Ended
			9/30/2016								9/30/2015								9/30/2016								9/30/2015
			Amount				Diluted EPS				Amount				Diluted EPS				Amount				Diluted EPS				Amount				Diluted EPS
Net Income (GAAP)			$	30,982			$	0.457			$	28,430			$	0.420			$	79,488			$	1.173			$	88,180			$	1.303
Significant non-routine transactions (net of taxes):
Non-routine early retirement program expense				146				0.002				—				—				5,884				0.087				—				—
Non-routine pension expense due to de-risking strategy in Plan assets portfolio				410				0.006				—				—				410				0.006				—				—
Net Income adjusted for significant
non-routine transactions (Non-GAAP)			$	31,538			$	0.465			$	28,430			$	0.420			$	85,782			$	1.266			$	88,180			$	1.303
			Reported				Adjusted				Reported				Adjusted				Reported				Adjusted				Reported				Adjusted
			(GAAP)				(Non-GAAP)				(GAAP)				(Non-GAAP)				(GAAP)				(Non-GAAP)				(GAAP)				(Non-GAAP)
Return on equity				8.05	%			8.20	%			7.68	%		n/a					7.02	%			7.57	%			8.11	%		n/a
Return on average tangible equity				11.16	%			11.36	%			10.96	%		n/a					9.85	%			10.60	%			11.62	%		n/a
Return on assets				0.95	%			0.97	%			0.92	%		n/a					0.83	%			0.89	%			0.97	%		n/a
n/a - not applicable

View source version on businesswire.com: http://www.businesswire.com/news/home/20161025006646/en/

Trustmark Corporation

Investor Contacts:

Louis E. Greer, 601-208-2310

Treasurer and

Principal Financial Officer

or

F. Joseph Rein, Jr., 601-208-6898

Senior Vice President

or

Media Contact:

Melanie A. Morgan, 601-208-2979

Senior Vice President

Source: Trustmark Corporation