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Trustmark Corporation Announces First Quarter 2020 Financial Results

April 28, 2020 4:30 PM

Position of strength and stability allows for proactive response to COVID-19 pandemic

JACKSON, Miss.--(BUSINESS WIRE)-- Trustmark Corporation (Nasdaq: TRMK) reported net income of $22.2 million in the first quarter of 2020, representing diluted earnings per share of $0.35. During the first quarter, the provision and expense for credit losses totaled $27.4 million, primarily due to the impact of the COVID-19 pandemic on expected credit losses. This increased provision and expense for credit losses reduced after-tax net income by approximately $0.32 per diluted share. First quarter results also include a one-time, pre-tax charge of $4.4 million related to a voluntary early retirement program which reduced earnings by $0.05 per diluted share. In addition, Trustmark reported positive net mortgage servicing hedge ineffectiveness of $9.9 million in the first quarter which increased earnings by $0.12 per diluted share.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200428005936/en/

Printer friendly version of earnings release with consolidated financial statements and notes: https://www.businesswire.com/news/home/52210509/en

COVID-19 Response

Gerard R. Host, President and CEO, stated, “Trustmark has been proactive in responding to the COVID-19 pandemic, and we are taking comprehensive action to support customers, associates and the communities we serve. We remain committed to serving customers as our branches continue to offer drive-thru service, our ATM and ITM network remains accessible and our robust digital and mobile banking options provide additional convenience for our customers. Approximately 45% of Trustmark associates are working remotely, and essential employees in our offices are taking additional precautions to stay safe and healthy. We are working with customers to provide flexibility in these uncertain circumstances, and we are serving our local economies by participating in the SBA’s Paycheck Protection Program. SBA commitments were secured for approximately 6,000 requests totaling over $800 million with an average loan size of $137 thousand, and we continue to assist customers in completing applications for the Paycheck Protection Program. We are committed to doing everything in our power to ensure the safety of our customers and associates and support our local economies through these challenging times.”

First Quarter Highlights

Mr. Host stated, “For over 130 years, we have been committed to meeting the banking and financial needs of our customers and communities. During the COVID-19 pandemic, we remain focused on providing support, advice and solutions to meet our customers’ unique needs. Trustmark entered this crisis from a position of strength and stability with a solid capital base and ample liquidity. During the first quarter, we experienced strong growth in our fee businesses and posted increases in both loan and deposit balances. I would like to thank our dedicated associates for working diligently in these unprecedented circumstances to serve our customers. Trustmark has weathered many storms over the years, and we remain well-positioned to continue serving customers and creating long-term value for shareholders.”

Balance Sheet Management

Loans held for investment totaled $9.6 billion at March 31, 2020, reflecting an increase of 2.5% linked-quarter and 6.4% year-over-year. During the first quarter of 2020, Trustmark reclassified $72.6 million of acquired loans to loans held for investment with the adoption of FASB ASC Topic 326, “Financial Instruments – Credit Losses.” Excluding this reclassification, loans held for investment increased $159.7 million, or 1.7%, from the prior quarter and $500.3 million, or 5.6%, from the comparable period one year earlier.

The linked-quarter growth reflects increases in other real estate secured loans and loans secured by nonfarm, nonresidential properties, which were principally the result of the migration of construction loans as projects were completed. Trustmark’s loan portfolio is diversified by loan type and geography.

Deposits totaled $11.6 billion at March 31, 2020, up $330.2 million, or 2.9%, from the prior quarter. Trustmark maintains a strong liquidity position as loans held for investment represented 82.7% of total deposits at March 31, 2020. Interest-bearing deposit costs totaled 0.71% for the first quarter, a decrease of 14 basis points linked-quarter. Trustmark continues to maintain an attractive, low-cost deposit base with approximately 59% of deposit balances in checking accounts. The total cost of interest-bearing liabilities was 0.75% for the first quarter of 2020, a decrease of 13 basis points from the prior quarter.

During the first quarter, Trustmark repurchased $27.5 million, or approximately 887 thousand of its common shares in open market transactions. On March 9, 2020, Trustmark suspended its share repurchase program to ensure ample capital to support customers during the COVID-19 pandemic. Trustmark’s capital position remained solid, reflecting the strength and diversity of its financial services businesses. At March 31, 2020, Trustmark’s tangible equity to tangible assets ratio was 9.27%, while the total risk-based capital ratio was 12.78%. Trustmark’s Board of Directors declared a quarterly cash dividend of $0.23 per share payable June 15, 2020, to shareholders of record on June 1, 2020.

Credit Quality

Effective January 1, 2020, Trustmark adopted the CECL methodology for estimating credit losses, which resulted in a net $26.6 million increase for credit losses primarily due to the creation of reserves for unfunded commitments. This one-time cumulative adjustment resulted in an after-tax decrease of $19.9 million in retained earnings. Primarily due to economic uncertainties related to the COVID-19 pandemic, Trustmark increased its provision for credit losses by $20.6 million and its credit loss expense related to off-balance sheet credit exposures by $6.8 million, resulting in total credit loss expenses of $27.4 million in the quarter.

Allocation of Trustmark's $100.6 million allowance for credit losses on loans held for investment represented 0.97% of commercial loans and 1.35% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.05% at March 31, 2020, representing a level management considers commensurate with the present risk in the loan portfolio.

Nonperforming loans totaled $53.0 million at March 31, 2020, down $234 thousand from the prior quarter and $3.4 million year-over-year. Other real estate totaled $24.8 million, reflecting a $4.4 million decrease from the prior quarter and down $7.3 million from the prior year. Collectively, nonperforming assets totaled $77.8 million, reflecting a linked-quarter decrease of $4.6 million and a year-over-year decrease of $10.7 million.

Revenue Generation

Revenue in the first quarter totaled $169.2 million, up 10.5% from the prior quarter and up 15.7% from the same quarter in the prior year. The linked-quarter and year-over-year increases primarily reflect higher mortgage banking revenue as well as higher insurance commissions and wealth management revenue. Net interest income (FTE) in the first quarter totaled $107.1 million, resulting in a net interest margin of 3.52%, down 4 basis points from the prior quarter. Relative to the prior quarter, net interest income (FTE) decreased $1.7 million as a $4.3 million reduction in interest income more than offset a $2.6 million reduction in interest expense.

Noninterest income in the first quarter totaled $65.3 million, an increase of $17.7 million from the prior quarter and an increase of $23.8 million year-over-year. The linked-quarter change primarily reflects a $19.6 million increase in mortgage banking revenue. Mortgage banking revenue in the first quarter included $9.9 million in positive net hedge ineffectiveness. Mortgage loan production in the first quarter totaled $457.2 million, down 8.3% linked-quarter and up 61.3% year-over-year. Gain on sale of loans, net totaled $14.3 million in the first quarter, up $6.4 million from the prior quarter. Mortgage banking revenue totaled $27.5 million in the first quarter.

Insurance revenue totaled $11.6 million in the first quarter, up 23.3%, or $2.2 million, from the fourth quarter of 2019 and 6.2%, or $679 thousand, year-over-year. The linked-quarter and year-over-year increases primarily reflect growth in property and casualty commissions. Wealth management revenue in the first quarter totaled $8.5 million, an increase of $774 thousand, or 10.0%, from the prior quarter. The growth reflects both higher trust management fees and brokerage and investment services revenue.

Bank card and other fees decreased $2.8 million, or 34.6%, from the prior quarter and $1.8 million, or 25.5%, year-over-year, reflecting lower customer derivative revenue. Service charges on deposit accounts experienced a seasonal decrease of $862 thousand, or 7.9%, from the prior quarter and $233 thousand, or 2.3%, year-over-year.

Noninterest Expense

During the first quarter, Trustmark completed a voluntary early retirement program. Of those eligible for the program, 107 associates, or 3.8% of the workforce, retired by March 31, 2020. A one-time, pre-tax charge of $4.4 million related to this program was incurred during the first quarter, reflecting $4.3 million in salaries and employee benefits and $102 thousand in other expense. The result of this program is expected to produce pre-tax savings of approximately $2.9 million for the remainder of 2020 and $4.0 million for 2021.

Salaries and employee benefits – excluding $4.3 million of the voluntary early retirement charge – totaled $64.9 million, an increase of 4.1% from the prior quarter. The increase primarily reflects higher insurance commissions and a seasonal increase in payroll taxes. Services and fees rose $430 thousand linked-quarter, and other real estate expense, net decreased $197 thousand linked-quarter.

Trustmark remains focused on optimizing its delivery channels and reallocating resources to reflect changing customer preferences. In the first quarter of 2020, Trustmark closed five branches as customers continued to migrate to mobile and digital banking channels and embraced the convenience of remote options. Trustmark remains committed to investments that promote profitable revenue growth, reengineering processes to enhance operational efficiency, realigning delivery channels to support changing customer preferences and managing the franchise for the long-term.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, April 29, 2020 at 8:30 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. A replay of the conference call will also be available through Wednesday, May 13, 2020, in archived format at the same web address or by calling (877) 344-7529, passcode 10142197.

Trustmark is a financial services company providing banking and financial solutions through 188 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,” “project,” “potential,” “seek,” “continue,” “could,” “would,” “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 any or all of our business, results of operations financial condition and liquidity. 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. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the novel coronavirus (COVID-19) pandemic, and also by the effectiveness of varying governmental responses in ameliorating the impact of the pandemic on our customers and the economies where they operate.

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, an increase in unemployment levels and slowdowns in economic growth, the effects of the COVID-19 pandemic on the domestic and global economy, as well as the effectiveness of actions of federal, state and local governments and agencies (including the Board of Governors of the Federal Reserve Board (FRB) to mitigate its spread and economic impact, local, state and national economic and market conditions, 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, levels of and volatility in 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 related to the European financial system and monetary and other governmental actions designed to address credit, securities, and/or commodity 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, particularly with respect to the COVID-19 pandemic, changes in our ability to control expenses, 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, pandemics or other health crises, acts of war or terrorism, and other risks described in our filings with the Securities and Exchange Commission (SEC).

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
March 31, 2020
($ in thousands)
(unaudited)
Linked Quarter Year over Year
QUARTERLY AVERAGE BALANCES

3/31/2020

12/31/2019

3/31/2019

$ Change

% Change

$ Change

% Change

Securities AFS-taxable

$

1,620,422

$

1,551,358

$

1,753,268

$

69,064

4.5

%

$

(132,846

)

-7.6

%

Securities AFS-nontaxable

22,056

23,300

40,159

(1,244

)

-5.3

%

(18,103

)

-45.1

%

Securities HTM-taxable

694,740

734,474

866,665

(39,734

)

-5.4

%

(171,925

)

-19.8

%

Securities HTM-nontaxable

25,673

25,703

28,710

(30

)

-0.1

%

(3,037

)

-10.6

%

Total securities

2,362,891

2,334,835

2,688,802

28,056

1.2

%

(325,911

)

-12.1

%

Loans (including loans held for sale) (1)

9,678,174

9,467,437

9,038,204

210,737

2.2

%

639,970

7.1

%

Acquired loans (1)

—

77,797

104,316

(77,797

)

-100.0

%

(104,316

)

-100.0

%

Fed funds sold and rev repos

164

184

277

(20

)

-10.9

%

(113

)

-40.8

%

Other earning assets

187,327

227,116

243,493

(39,789

)

-17.5

%

(56,166

)

-23.1

%

Total earning assets

12,228,556

12,107,369

12,075,092

121,187

1.0

%

153,464

1.3

%

Allowance for credit losses (ACL), loans held for investment (LHFI) (1)

(85,015

)

(86,211

)

(82,227

)

1,196

1.4

%

(2,788

)

-3.4

%

Other assets

1,498,725

1,445,075

1,447,611

53,650

3.7

%

51,114

3.5

%

Total assets

$

13,642,266

$

13,466,233

$

13,440,476

$

176,033

1.3

%

$

201,790

1.5

%

Interest-bearing demand deposits

$

3,184,134

$

3,167,256

$

2,899,467

$

16,878

0.5

%

$

284,667

9.8

%

Savings deposits

3,646,936

3,448,899

3,786,835

198,037

5.7

%

(139,899

)

-3.7

%

Time deposits

1,617,307

1,663,741

1,881,556

(46,434

)

-2.8

%

(264,249

)

-14.0

%

Total interest-bearing deposits

8,448,377

8,279,896

8,567,858

168,481

2.0

%

(119,481

)

-1.4

%

Fed funds purchased and repos

247,513

164,754

84,352

82,759

50.2

%

163,161

n/m

Other borrowings

85,279

79,512

90,804

5,767

7.3

%

(5,525

)

-6.1

%

Junior subordinated debt securities

61,856

61,856

61,856

—

0.0

%

—

0.0

%

Total interest-bearing liabilities

8,843,025

8,586,018

8,804,870

257,007

3.0

%

38,155

0.4

%

Noninterest-bearing deposits

2,910,951

3,017,824

2,824,220

(106,873

)

-3.5

%

86,731

3.1

%

Other liabilities

248,220

205,786

221,199

42,434

20.6

%

27,021

12.2

%

Total liabilities

12,002,196

11,809,628

11,850,289

192,568

1.6

%

151,907

1.3

%

Shareholders' equity

1,640,070

1,656,605

1,590,187

(16,535

)

-1.0

%

49,883

3.1

%

Total liabilities and equity

$

13,642,266

$

13,466,233

$

13,440,476

$

176,033

1.3

%

$

201,790

1.5

%

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
Linked Quarter Year over Year
PERIOD END BALANCES

3/31/2020

12/31/2019

3/31/2019

$ Change

% Change

$ Change

% Change

Cash and due from banks

$

404,341

$

358,916

$

454,047

$

45,425

12.7

%

$

(49,706

)

-10.9

%

Fed funds sold and rev repos

2,000

—

—

2,000

n/m

2,000

n/m

Securities available for sale

1,833,779

1,602,404

1,723,445

231,375

14.4

%

110,334

6.4

%

Securities held to maturity

704,276

738,099

884,319

(33,823

)

-4.6

%

(180,043

)

-20.4

%

Loans held for sale (LHFS)

325,389

226,347

172,683

99,042

43.8

%

152,706

88.4

%

Loans held for investment (LHFI) (1)

9,567,920

9,335,628

8,995,014

232,292

2.5

%

572,906

6.4

%

ACL LHFI (1)

(100,564

)

(84,277

)

(79,005

)

(16,287

)

-19.3

%

(21,559

)

-27.3

%

Net LHFI

9,467,356

9,251,351

8,916,009

216,005

2.3

%

551,347

6.2

%

Acquired loans (1)

—

72,601

93,201

(72,601

)

-100.0

%

(93,201

)

-100.0

%

Allowance for loan losses, acquired loans (1)

—

(815

)

(1,297

)

815

100.0

%

1,297

100.0

%

Net acquired loans

—

71,786

91,904

(71,786

)

-100.0

%

(91,904

)

-100.0

%

Net LHFI and acquired loans

9,467,356

9,323,137

9,007,913

144,219

1.5

%

459,443

5.1

%

Premises and equipment, net

190,179

189,791

189,743

388

0.2

%

436

0.2

%

Mortgage servicing rights

56,437

79,394

86,842

(22,957

)

-28.9

%

(30,405

)

-35.0

%

Goodwill

381,717

379,627

379,627

2,090

0.6

%

2,090

0.6

%

Identifiable intangible assets

7,537

7,343

10,092

194

2.6

%

(2,555

)

-25.3

%

Other real estate

24,847

29,248

32,139

(4,401

)

-15.0

%

(7,292

)

-22.7

%

Operating lease right-of-use assets

30,839

31,182

33,861

(343

)

-1.1

%

(3,022

)

-8.9

%

Other assets

591,132

532,389

503,306

58,743

11.0

%

87,826

17.4

%

Total assets

$

14,019,829

$

13,497,877

$

13,478,017

$

521,952

3.9

%

$

541,812

4.0

%

Deposits:
Noninterest-bearing

$

2,977,058

$

2,891,215

$

2,867,778

$

85,843

3.0

%

$

109,280

3.8

%

Interest-bearing

8,598,706

8,354,342

8,667,037

244,364

2.9

%

(68,331

)

-0.8

%

Total deposits

11,575,764

11,245,557

11,534,815

330,207

2.9

%

40,949

0.4

%

Fed funds purchased and repos

421,821

256,020

46,867

165,801

64.8

%

374,954

n/m

Other borrowings

84,230

85,396

83,265

(1,166

)

-1.4

%

965

1.2

%

Junior subordinated debt securities

61,856

61,856

61,856

—

0.0

%

—

0.0

%

ACL on off-balance sheet credit exposures (1)

36,421

—

—

36,421

n/m

36,421

n/m

Operating lease liabilities

32,055

32,354

34,921

(299

)

-0.9

%

(2,866

)

-8.2

%

Other liabilities

155,283

155,992

129,265

(709

)

-0.5

%

26,018

20.1

%

Total liabilities

12,367,430

11,837,175

11,890,989

530,255

4.5

%

476,441

4.0

%

Common stock

13,209

13,376

13,499

(167

)

-1.2

%

(290

)

-2.1

%

Capital surplus

229,403

256,400

272,268

(26,997

)

-10.5

%

(42,865

)

-15.7

%

Retained earnings

1,402,089

1,414,526

1,342,176

(12,437

)

-0.9

%

59,913

4.5

%

Accum other comprehensive income (loss), net of tax

7,698

(23,600

)

(40,915

)

31,298

n/m

48,613

n/m

Total shareholders' equity

1,652,399

1,660,702

1,587,028

(8,303

)

-0.5

%

65,371

4.1

%

Total liabilities and equity

$

14,019,829

$

13,497,877

$

13,478,017

$

521,952

3.9

%

$

541,812

4.0

%

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands except per share data)
(unaudited)
Quarter Ended Linked Quarter Year over Year
INCOME STATEMENTS 3/31/2020 12/31/2019 3/31/2019 $ Change % Change $ Change % Change
Interest and fees on LHFS & LHFI-FTE

$

109,357

$

111,383

$

109,890

$

(2,026

)

-1.8

%

$

(533

)

-0.5

%

Interest and fees on acquired loans (1)

—

2,138

1,916

(2,138

)

-100.0

%

(1,916

)

-100.0

%

Interest on securities-taxable

12,948

12,884

14,665

64

0.5

%

(1,717

)

-11.7

%

Interest on securities-tax exempt-FTE

457

484

646

(27

)

-5.6

%

(189

)

-29.3

%

Interest on fed funds sold and rev repos

—

1

2

(1

)

-100.0

%

(2

)

-100.0

%

Other interest income

740

896

1,603

(156

)

-17.4

%

(863

)

-53.8

%

Total interest income-FTE

123,502

127,786

128,722

(4,284

)

-3.4

%

(5,220

)

-4.1

%

Interest on deposits

14,957

17,716

19,570

(2,759

)

-15.6

%

(4,613

)

-23.6

%

Interest on fed funds pch and repos

625

504

288

121

24.0

%

337

n/m

Other interest expense

860

826

825

34

4.1

%

35

4.2

%

Total interest expense

16,442

19,046

20,683

(2,604

)

-13.7

%

(4,241

)

-20.5

%

Net interest income-FTE

107,060

108,740

108,039

(1,680

)

-1.5

%

(979

)

-0.9

%

Provision for credit losses, LHFI (1)

20,581

3,661

1,611

16,920

n/m

18,970

n/m

Provision for loan losses, acquired loans (1)

—

(2

)

78

2

100.0

%

(78

)

-100.0

%

Net interest income after provision-FTE

86,479

105,081

106,350

(18,602

)

-17.7

%

(19,871

)

-18.7

%

Service charges on deposit accounts

10,032

10,894

10,265

(862

)

-7.9

%

(233

)

-2.3

%

Bank card and other fees

5,355

8,192

7,191

(2,837

)

-34.6

%

(1,836

)

-25.5

%

Mortgage banking, net

27,483

7,914

3,442

19,569

n/m

24,041

n/m

Insurance commissions

11,550

9,364

10,871

2,186

23.3

%

679

6.2

%

Wealth management

8,537

7,763

7,483

774

10.0

%

1,054

14.1

%

Other, net

2,307

3,451

2,239

(1,144

)

-33.1

%

68

3.0

%

Nonint inc-excl sec gains (losses), net

65,264

47,578

41,491

17,686

37.2

%

23,773

57.3

%

Security gains (losses), net

—

—

—

—

n/m

—

n/m

Total noninterest income

65,264

47,578

41,491

17,686

37.2

%

23,773

57.3

%

Salaries and employee benefits

69,148

62,319

60,954

6,829

11.0

%

8,194

13.4

%

Services and fees

19,930

19,500

16,968

430

2.2

%

2,962

17.5

%

Net occupancy-premises

6,286

6,461

6,454

(175

)

-2.7

%

(168

)

-2.6

%

Equipment expense

5,616

5,880

5,924

(264

)

-4.5

%

(308

)

-5.2

%

Other real estate expense, net

1,294

1,491

1,752

(197

)

-13.2

%

(458

)

-26.1

%

Credit loss expense related to off-balance sheet credit exposures (1)

6,783

—

—

6,783

n/m

6,783

n/m

Other expense

14,753

14,376

13,969

377

2.6

%

784

5.6

%

Total noninterest expense

123,810

110,027

106,021

13,783

12.5

%

17,789

16.8

%

Income before income taxes and tax eq adj

27,933

42,632

41,820

(14,699

)

-34.5

%

(13,887

)

-33.2

%

Tax equivalent adjustment

3,108

3,149

3,231

(41

)

-1.3

%

(123

)

-3.8

%

Income before income taxes

24,825

39,483

38,589

(14,658

)

-37.1

%

(13,764

)

-35.7

%

Income taxes

2,607

5,537

5,250

(2,930

)

-52.9

%

(2,643

)

-50.3

%

Net income

$

22,218

$

33,946

$

33,339

$

(11,728

)

-34.5

%

$

(11,121

)

-33.4

%

Per share data
Earnings per share - basic

$

0.35

$

0.53

$

0.51

$

(0.18

)

-34.0

%

$

(0.16

)

-31.4

%

Earnings per share - diluted

$

0.35

$

0.53

$

0.51

$

(0.18

)

-34.0

%

$

(0.16

)

-31.4

%

Dividends per share

$

0.23

$

0.23

$

0.23

—

0.0

%

—

0.0

%

Weighted average shares outstanding
Basic

63,756,629

64,255,716

65,239,470

Diluted

63,913,603

64,435,276

65,378,500

Period end shares outstanding

63,396,912

64,200,111

64,789,943

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
Quarter Ended Linked Quarter Year over Year
NONPERFORMING ASSETS (1) 3/31/2020 12/31/2019 3/31/2019 $ Change % Change $ Change % Change
Nonaccrual loans
Alabama

$

4,769

$

1,870

$

2,971

$

2,899

n/m

$

1,798

60.5

%

Florida

254

267

408

(13

)

-4.9

%

(154

)

-37.7

%

Mississippi (2)

40,815

41,493

41,145

(678

)

-1.6

%

(330

)

-0.8

%

Tennessee (3)

6,153

8,980

8,806

(2,827

)

-31.5

%

(2,653

)

-30.1

%

Texas

1,001

616

3,093

385

62.5

%

(2,092

)

-67.6

%

Total nonaccrual loans

52,992

53,226

56,423

(234

)

-0.4

%

(3,431

)

-6.1

%

Other real estate
Alabama

6,229

8,133

6,878

(1,904

)

-23.4

%

(649

)

-9.4

%

Florida

4,835

5,877

8,120

(1,042

)

-17.7

%

(3,285

)

-40.5

%

Mississippi (2)

13,296

14,919

15,421

(1,623

)

-10.9

%

(2,125

)

-13.8

%

Tennessee (3)

487

319

994

168

52.7

%

(507

)

-51.0

%

Texas

—

—

726

—

n/m

(726

)

-100.0

%

Total other real estate

24,847

29,248

32,139

(4,401

)

-15.0

%

(7,292

)

-22.7

%

Total nonperforming assets

$

77,839

$

82,474

$

88,562

$

(4,635

)

-5.6

%

$

(10,723

)

-12.1

%

LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

708

$

642

$

670

$

66

10.3

%

$

38

5.7

%

LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)

$

43,564

$

41,648

$

40,793

$

1,916

4.6

%

$

2,771

6.8

%

Quarter Ended Linked Quarter Year over Year
ACL LHFI (1)(4) 3/31/2020 12/31/2019 3/31/2019 $ Change % Change $ Change % Change
Beginning Balance

$

84,277

$

83,226

$

79,290

$

1,051

1.3

%

$

4,987

6.3

%

CECL adoption adjustments:
LHFI

(3,039

)

—

—

(3,039

)

n/m

(3,039

)

n/m

Acquired loan transfers

1,822

—

—

1,822

n/m

1,822

n/m

Provision for credit losses

20,581

3,661

1,611

16,920

n/m

18,970

n/m

Charge-offs

(5,545

)

(4,619

)

(4,033

)

(926

)

-20.0

%

(1,512

)

-37.5

%

Recoveries

2,468

2,009

2,137

459

22.8

%

331

15.5

%

Net (charge-offs) recoveries

(3,077

)

(2,610

)

(1,896

)

(467

)

-17.9

%

(1,181

)

-62.3

%

Ending Balance

$

100,564

$

84,277

$

79,005

$

16,287

19.3

%

$

21,559

27.3

%

NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

(1,080

)

$

(132

)

$

(15

)

$

(948

)

n/m

$

(1,065

)

n/m

Florida

64

357

227

(293

)

-82.1

%

(163

)

-71.8

%

Mississippi (2)

126

(1,792

)

(2,130

)

1,918

n/m

2,256

n/m

Tennessee (3)

(2,186

)

(131

)

(50

)

(2,055

)

n/m

(2,136

)

n/m

Texas

(1

)

(912

)

72

911

99.9

%

(73

)

n/m

Total net (charge-offs) recoveries

$

(3,077

)

$

(2,610

)

$

(1,896

)

$

(467

)

-17.9

%

$

(1,181

)

-62.3

%

(1) Excludes acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
n/m - percentage changes greater than +/- 100% are considered not meaningful
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
Quarter Ended
AVERAGE BALANCES 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Securities AFS-taxable

$

1,620,422

$

1,551,358

$

1,570,803

$

1,661,464

$

1,753,268

Securities AFS-nontaxable

22,056

23,300

25,096

31,474

40,159

Securities HTM-taxable

694,740

734,474

778,098

821,357

866,665

Securities HTM-nontaxable

25,673

25,703

26,088

27,035

28,710

Total securities

2,362,891

2,334,835

2,400,085

2,541,330

2,688,802

Loans (including loans held for sale) (1)

9,678,174

9,467,437

9,436,287

9,260,028

9,038,204

Acquired loans (1)

—

77,797

82,641

91,217

104,316

Fed funds sold and rev repos

164

184

3,662

34,057

277

Other earning assets

187,327

227,116

176,163

316,604

243,493

Total earning assets

12,228,556

12,107,369

12,098,838

12,243,236

12,075,092

ACL LHFI (1)

(85,015

)

(86,211

)

(83,756

)

(81,996

)

(82,227

)

Other assets

1,498,725

1,445,075

1,447,977

1,467,462

1,447,611

Total assets

$

13,642,266

$

13,466,233

$

13,463,059

$

13,628,702

$

13,440,476

Interest-bearing demand deposits

$

3,184,134

$

3,167,256

$

3,085,758

$

3,048,876

$

2,899,467

Savings deposits

3,646,936

3,448,899

3,568,403

3,801,187

3,786,835

Time deposits

1,617,307

1,663,741

1,753,083

1,840,065

1,881,556

Total interest-bearing deposits

8,448,377

8,279,896

8,407,244

8,690,128

8,567,858

Fed funds purchased and repos

247,513

164,754

142,064

51,264

84,352

Other borrowings

85,279

79,512

78,404

81,352

90,804

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

Total interest-bearing liabilities

8,843,025

8,586,018

8,689,568

8,884,600

8,804,870

Noninterest-bearing deposits

2,910,951

3,017,824

2,932,754

2,898,266

2,824,220

Other liabilities

248,220

205,786

206,091

240,091

221,199

Total liabilities

12,002,196

11,809,628

11,828,413

12,022,957

11,850,289

Shareholders' equity

1,640,070

1,656,605

1,634,646

1,605,745

1,590,187

Total liabilities and equity

$

13,642,266

$

13,466,233

$

13,463,059

$

13,628,702

$

13,440,476

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
PERIOD END BALANCES 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Cash and due from banks

$

404,341

$

358,916

$

486,263

$

404,413

$

454,047

Fed funds sold and rev repos

2,000

—

—

75,499

—

Securities available for sale

1,833,779

1,602,404

1,553,705

1,643,725

1,723,445

Securities held to maturity

704,276

738,099

785,422

825,536

884,319

Loans held for sale (LHFS)

325,389

226,347

292,800

240,380

172,683

Loans held for investment (LHFI) (1)

9,567,920

9,335,628

9,223,668

9,116,759

8,995,014

ACL LHFI (1)

(100,564

)

(84,277

)

(83,226

)

(80,399

)

(79,005

)

Net LHFI

9,467,356

9,251,351

9,140,442

9,036,360

8,916,009

Acquired loans (1)

—

72,601

81,004

87,884

93,201

Allowance for loan losses, acquired loans (1)

—

(815

)

(1,249

)

(1,398

)

(1,297

)

Net acquired loans

—

71,786

79,755

86,486

91,904

Net LHFI and acquired loans

9,467,356

9,323,137

9,220,197

9,122,846

9,007,913

Premises and equipment, net

190,179

189,791

188,423

189,820

189,743

Mortgage servicing rights

56,437

79,394

73,016

79,283

86,842

Goodwill

381,717

379,627

379,627

379,627

379,627

Identifiable intangible assets

7,537

7,343

8,345

9,101

10,092

Other real estate

24,847

29,248

31,974

31,243

32,139

Operating lease right-of-use assets

30,839

31,182

33,180

32,762

33,861

Other assets

591,132

532,389

531,834

514,723

503,306

Total assets

$

14,019,829

$

13,497,877

$

13,584,786

$

13,548,958

$

13,478,017

Deposits:
Noninterest-bearing

$

2,977,058

$

2,891,215

$

3,064,127

$

2,909,141

$

2,867,778

Interest-bearing

8,598,706

8,354,342

8,190,056

8,657,488

8,667,037

Total deposits

11,575,764

11,245,557

11,254,183

11,566,629

11,534,815

Fed funds purchased and repos

421,821

256,020

376,712

51,800

46,867

Other borrowings

84,230

85,396

76,685

79,012

83,265

Junior subordinated debt securities

61,856

61,856

61,856

61,856

61,856

ACL on off-balance sheet credit exposures (1)

36,421

—

—

—

—

Operating lease liabilities

32,055

32,354

34,319

33,878

34,921

Other liabilities

155,283

155,992

135,669

137,233

129,265

Total liabilities

12,367,430

11,837,175

11,939,424

11,930,408

11,890,989

Common stock

13,209

13,376

13,390

13,418

13,499

Capital surplus

229,403

256,400

257,370

260,619

272,268

Retained earnings

1,402,089

1,414,526

1,395,460

1,369,329

1,342,176

Accum other comprehensive income (loss), net of tax

7,698

(23,600

)

(20,858

)

(24,816

)

(40,915

)

Total shareholders' equity

1,652,399

1,660,702

1,645,362

1,618,550

1,587,028

Total liabilities and equity

$

14,019,829

$

13,497,877

$

13,584,786

$

13,548,958

$

13,478,017

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands except per share data)
(unaudited)
Quarter Ended
INCOME STATEMENTS 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Interest and fees on LHFS & LHFI-FTE

$

109,357

$

111,383

$

116,432

$

114,873

$

109,890

Interest and fees on acquired loans (1)

—

2,138

2,309

2,010

1,916

Interest on securities-taxable

12,948

12,884

13,184

13,916

14,665

Interest on securities-tax exempt-FTE

457

484

485

551

646

Interest on fed funds sold and rev repos

—

1

23

214

2

Other interest income

740

896

1,044

1,820

1,603

Total interest income-FTE

123,502

127,786

133,477

133,384

128,722

Interest on deposits

14,957

17,716

20,385

21,500

19,570

Interest on fed funds pch and repos

625

504

547

81

288

Other interest expense

860

826

830

831

825

Total interest expense

16,442

19,046

21,762

22,412

20,683

Net interest income-FTE

107,060

108,740

111,715

110,972

108,039

Provision for credit losses, LHFI (1)

20,581

3,661

3,039

2,486

1,611

Provision for loan losses, acquired loans (1)

—

(2

)

(140

)

106

78

Net interest income after provision-FTE

86,479

105,081

108,816

108,380

106,350

Service charges on deposit accounts

10,032

10,894

11,065

10,379

10,265

Bank card and other fees

5,355

8,192

8,349

8,004

7,191

Mortgage banking, net

27,483

7,914

8,171

10,295

3,442

Insurance commissions

11,550

9,364

11,072

11,089

10,871

Wealth management

8,537

7,763

7,691

7,742

7,483

Other, net

2,307

3,451

1,989

2,130

2,239

Nonint inc-excl sec gains (losses), net

65,264

47,578

48,337

49,639

41,491

Security gains (losses), net

—

—

—

—

—

Total noninterest income

65,264

47,578

48,337

49,639

41,491

Salaries and employee benefits

69,148

62,319

62,495

61,949

60,954

Services and fees

19,930

19,500

18,838

18,009

16,968

Net occupancy-premises

6,286

6,461

6,831

6,403

6,454

Equipment expense

5,616

5,880

5,971

5,958

5,924

Other real estate expense, net

1,294

1,491

531

132

1,752

Credit loss expense related to off-balance sheet credit exposures (1)

6,783

—

—

—

—

Other expense

14,753

14,376

12,187

13,650

13,969

Total noninterest expense

123,810

110,027

106,853

106,101

106,021

Income before income taxes and tax eq adj

27,933

42,632

50,300

51,918

41,820

Tax equivalent adjustment

3,108

3,149

3,249

3,248

3,231

Income before income taxes

24,825

39,483

47,051

48,670

38,589

Income taxes

2,607

5,537

6,016

6,530

5,250

Net income

$

22,218

$

33,946

$

41,035

$

42,140

$

33,339

Per share data
Earnings per share - basic

$

0.35

$

0.53

$

0.64

$

0.65

$

0.51

Earnings per share - diluted

$

0.35

$

0.53

$

0.64

$

0.65

$

0.51

Dividends per share

$

0.23

$

0.23

$

0.23

$

0.23

$

0.23

Weighted average shares outstanding
Basic

63,756,629

64,255,716

64,358,540

64,677,889

65,239,470

Diluted

63,913,603

64,435,276

64,514,605

64,815,029

65,378,500

Period end shares outstanding

63,396,912

64,200,111

64,262,779

64,398,846

64,789,943

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
($ in thousands)
(unaudited)
Quarter Ended
NONPERFORMING ASSETS (1) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Nonaccrual loans
Alabama

$

4,769

$

1,870

$

2,936

$

2,327

$

2,971

Florida

254

267

311

330

408

Mississippi (2)

40,815

41,493

43,895

39,373

41,145

Tennessee (3)

6,153

8,980

10,193

8,455

8,806

Texas

1,001

616

1,695

2,403

3,093

Total nonaccrual loans

52,992

53,226

59,030

52,888

56,423

Other real estate
Alabama

6,229

8,133

6,501

6,451

6,878

Florida

4,835

5,877

6,983

7,826

8,120

Mississippi (2)

13,296

14,919

17,646

15,511

15,421

Tennessee (3)

487

319

844

815

994

Texas

—

—

—

640

726

Total other real estate

24,847

29,248

31,974

31,243

32,139

Total nonperforming assets

$

77,839

$

82,474

$

91,004

$

84,131

$

88,562

LOANS PAST DUE OVER 90 DAYS (1)
LHFI

$

708

$

642

$

878

$

1,245

$

670

LHFS-Guaranteed GNMA serviced loans
(no obligation to repurchase)

$

43,564

$

41,648

$

36,445

$

38,355

$

40,793

Quarter Ended
ACL LHFI (1)(4) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Beginning Balance

$

84,277

$

83,226

$

80,399

$

79,005

$

79,290

CECL adoption adjustments:
LHFI

(3,039

)

—

—

—

—

Acquired loan transfers

1,822

—

—

—

—

Provision for credit losses

20,581

3,661

3,039

2,486

1,611

Charge-offs

(5,545

)

(4,619

)

(2,892

)

(2,937

)

(4,033

)

Recoveries

2,468

2,009

2,680

1,845

2,137

Net (charge-offs) recoveries

(3,077

)

(2,610

)

(212

)

(1,092

)

(1,896

)

Ending Balance

$

100,564

$

84,277

$

83,226

$

80,399

$

79,005

NET (CHARGE-OFFS) RECOVERIES (1)
Alabama

$

(1,080

)

$

(132

)

$

(329

)

$

(278

)

$

(15

)

Florida

64

357

136

130

227

Mississippi (2)

126

(1,792

)

391

(907

)

(2,130

)

Tennessee (3)

(2,186

)

(131

)

(483

)

(44

)

(50

)

Texas

(1

)

(912

)

73

7

72

Total net (charge-offs) recoveries

$

(3,077

)

$

(2,610

)

$

(212

)

$

(1,092

)

$

(1,896

)

(1) Excludes acquired loans.
(2) Mississippi includes Central and Southern Mississippi Regions.
(3) Tennessee includes Memphis, Tennessee and Northern Mississippi Regions.
(4) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials
TRUSTMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL INFORMATION
March 31, 2020
(unaudited)
Quarter Ended
FINANCIAL RATIOS AND OTHER DATA 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019
Return on equity

5.45

%

8.13

%

9.96

%

10.53

%

8.50

%

Return on average tangible equity

7.34

%

10.85

%

13.31

%

14.14

%

11.55

%

Return on assets

0.66

%

1.00

%

1.21

%

1.24

%

1.01

%

Interest margin - Yield - FTE

4.06

%

4.19

%

4.38

%

4.37

%

4.32

%

Interest margin - Cost

0.54

%

0.62

%

0.71

%

0.73

%

0.69

%

Net interest margin - FTE

3.52

%

3.56

%

3.66

%

3.64

%

3.63

%

Efficiency ratio (1)

63.50

%

68.08

%

64.98

%

64.55

%

68.08

%

Full-time equivalent employees

2,761

2,844

2,835

2,819

2,839

CREDIT QUALITY RATIOS (2)
Net charge-offs/average loans

0.13

%

0.11

%

0.01

%

0.05

%

0.09

%

Provision for credit losses/average loans (3)

0.86

%

0.15

%

0.13

%

0.11

%

0.07

%

Nonperforming loans/total loans (incl LHFS)

0.54

%

0.56

%

0.62

%

0.57

%

0.62

%

Nonperforming assets/total loans (incl LHFS)

0.79

%

0.86

%

0.96

%

0.90

%

0.97

%

Nonperforming assets/total loans (incl LHFS) +ORE

0.78

%

0.86

%

0.95

%

0.90

%

0.96

%

ACL LHFI/total loans (excl LHFS) (3)

1.05

%

0.90

%

0.90

%

0.88

%

0.88

%

ACL LHFI-commercial/total commercial loans (3)

0.97

%

0.98

%

0.98

%

0.96

%

0.96

%

ACL LHFI-consumer/total consumer and home mortgage loans (3)

1.35

%

0.61

%

0.61

%

0.60

%

0.57

%

ACL LHFI/nonperforming loans (3)

189.77

%

158.34

%

140.99

%

152.02

%

140.02

%

ACL LHFI/nonperforming loans (excl individually evaluated loans) (3)

468.84

%

410.52

%

357.15

%

383.19

%

342.97

%

CAPITAL RATIOS (3)
Total equity/total assets

11.79

%

12.30

%

12.11

%

11.95

%

11.77

%

Tangible equity/tangible assets

9.27

%

9.72

%

9.53

%

9.34

%

9.15

%

Tangible equity/risk-weighted assets

11.05

%

11.58

%

11.50

%

11.39

%

11.35

%

Tier 1 leverage ratio

10.21

%

10.48

%

10.34

%

10.03

%

10.05

%

Common equity tier 1 capital ratio

11.35

%

11.93

%

11.83

%

11.76

%

11.88

%

Tier 1 risk-based capital ratio

11.88

%

12.48

%

12.38

%

12.31

%

12.45

%

Total risk-based capital ratio

12.78

%

13.25

%

13.15

%

13.07

%

13.21

%

STOCK PERFORMANCE
Market value-Close

$

23.30

$

34.51

$

34.11

$

33.25

$

33.63

Book value

$

26.06

$

25.87

$

25.60

$

25.13

$

24.49

Tangible book value

$

19.92

$

19.84

$

19.57

$

19.10

$

18.48

(1) See Note 8 – Non-GAAP Financial Measures in the Notes to Consolidated Financials for Trustmark’s efficiency ratio calculation.
(2) Excludes acquired loans.
(3) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.
See Notes to Consolidated Financials

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands)
(unaudited)

Note 1 – Recently Effective Accounting Pronouncements

ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” was adopted by Trustmark on January 1, 2020. At the date of adoption, Trustmark recorded a decrease to its ACL, LHFI of $3.0 million and an increase to its ACL on off-balance sheet credit exposures of $29.6 million resulting in a one-time cumulative effect adjustment of $26.6 million ($19.9 million, net of tax) through retained earnings.

In accordance with the amendments of ASU 2016-13, Trustmark estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts including the COVID-19 pandemic effects. Trustmark uses a third-party software application to calculate the quantitative portion of the ACL using a methodology and assumptions specific to each loan pool. The qualitative portion of the ACL is based on general economic conditions and other internal and external factors affecting Trustmark as a whole as well as specific LHFI. The total quantitative and qualitative portions of the ACL reflect Management’s expectations of future conditions based on reasonable and supportable forecasts.

During the first quarter of 2020, based upon the factors discussed above, Trustmark recorded a provision for credit losses of $20.6 million and a credit loss expense related to off-balance sheet credit exposures of $6.8 million.

Upon adoption of FASB ASC Topic 326, Trustmark elected to account for its existing acquired loans as purchased credit deteriorated loans included within the LHFI portfolio. As a result, acquired loans of $72.6 million, as well as the necessary calculated allowance of $1.8 million, were transferred during the first quarter of 2020. The acquired loans and related allowance transferred were acquired in the BancTrust Financial Group, Inc. merger on February 13, 2013. LHFI presented in prior periods exclude acquired loans and thus may not be comparable to the current period presentation.

In accordance with FASB ASC Subtopic 326-20, “Financial Instruments – Credit Losses – Measured at Amortized Cost,” Trustmark has developed an allowance for credit losses methodology effective January 1, 2020, which replaces its previous allowance for loan losses methodology. The ACL for LHFI is adjusted through the provision for credit losses and reduced by the charge off of loan amounts, net of recoveries. Prior periods present the allowance for loan losses and provision for loan losses methodology under the incurred loss model and thus may not be comparable to the current period presentation.

Trustmark’s estimated allowance for credit losses on securities available for sale and held to maturity under ASU 2016-13 was deemed immaterial due to the composition of these portfolios. Both portfolios consist primarily of U.S. government agency guaranteed mortgage-backed securities for which the risk of loss is minimal. Therefore, Trustmark did not recognize a cumulative effect adjustment through retained earnings related to the available for sale or held to maturity securities.

Trustmark has elected the five-year phase-in transition period related to adopting the CECL methodology for its regulatory capital.

Note 2 - 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:

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

SECURITIES AVAILABLE FOR SALE

U.S. Government agency obligations

$

21,190

$

22,327

$

24,697

$

26,646

$

28,008

Obligations of states and political subdivisions

23,572

25,465

35,001

38,698

50,954

Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA

71,971

69,252

63,391

65,716

66,176

Issued by FNMA and FHLMC

967,329

713,356

589,962

624,364

645,958

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

634,075

658,226

705,601

751,371

784,566

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

115,642

113,778

135,053

136,930

147,783

Total securities available for sale

$

1,833,779

$

1,602,404

$

1,553,705

$

1,643,725

$

1,723,445

SECURITIES HELD TO MATURITY

U.S. Government agency obligations

$

—

$

3,781

$

3,770

$

3,758

$

3,747

Obligations of states and political subdivisions

31,758

31,781

31,806

32,860

35,352

Mortgage-backed securities

Residential mortgage pass-through securities

Guaranteed by GNMA

10,492

10,820

10,994

11,184

11,710

Issued by FNMA and FHLMC

91,971

96,631

102,048

106,755

111,962

Other residential mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

463,175

485,324

510,770

536,166

559,690

Commercial mortgage-backed securities

Issued or guaranteed by FNMA, FHLMC, or GNMA

106,880

109,762

126,034

134,813

161,858

Total securities held to maturity

$

704,276

$

738,099

$

785,422

$

825,536

$

884,319

At March 31, 2020, the net unamortized, unrealized loss included in accumulated other comprehensive income (loss) in the accompanying balance sheet for securities held to maturity previously transferred from securities available for sale totaled approximately $11.2 million ($8.4 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 97.7% 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
March 31, 2020
($ in thousands)
(unaudited)

Note 3 – Loan Composition

LHFI consisted of the following during the periods presented:

LHFI BY TYPE (1)

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Loans secured by real estate:

Construction, land development and other land loans

$

1,136,389

$

1,162,791

$

1,135,999

$

1,111,297

$

1,209,761

Secured by 1-4 family residential properties

1,852,065

1,855,913

1,820,455

1,818,126

1,810,872

Secured by nonfarm, nonresidential properties

2,575,422

2,475,245

2,442,308

2,326,312

2,241,072

Other real estate secured

838,573

724,480

668,667

635,839

528,032

Commercial and industrial loans

1,476,777

1,477,896

1,491,367

1,533,318

1,558,057

Consumer loans

170,678

175,738

176,894

176,133

176,619

State and other political subdivision loans

938,637

967,944

978,456

982,187

982,626

Other loans

579,379

495,621

509,522

533,547

487,975

LHFI

9,567,920

9,335,628

9,223,668

9,116,759

8,995,014

ACL LHFI

(100,564

)

(84,277

)

(83,226

)

(80,399

)

(79,005

)

Net LHFI

$

9,467,356

$

9,251,351

$

9,140,442

$

9,036,360

$

8,916,009

(1) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

The following table presents the LHFI composition by region at March 31, 2020 and reflects each region’s diversified mix of loans:

March 31, 2020

LHFI - COMPOSITION BY REGION

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

$

1,136,389

$

358,297

$

89,884

$

308,049

$

23,554

$

356,605

Secured by 1-4 family residential properties

1,852,065

131,161

40,346

1,584,995

82,329

13,234

Secured by nonfarm, nonresidential properties

2,575,422

658,690

280,670

961,998

167,424

506,640

Other real estate secured

838,573

251,741

25,144

341,864

9,276

210,548

Commercial and industrial loans

1,476,777

214,041

20,612

699,930

315,542

226,652

Consumer loans

170,678

23,787

6,393

118,257

19,954

2,287

State and other political subdivision loans

938,637

109,422

38,763

582,098

26,717

181,637

Other loans

579,379

81,214

15,561

368,269

84,000

30,335

Loans

$

9,567,920

$

1,828,353

$

517,373

$

4,965,460

$

728,796

$

1,527,938

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION

Lots

$

74,865

$

18,309

$

23,768

$

25,757

$

1,647

$

5,384

Development

63,640

14,326

7,505

29,130

4,938

7,741

Unimproved land

106,812

28,543

16,678

29,752

11,323

20,516

1-4 family construction

240,948

98,982

20,878

85,674

4,335

31,079

Other construction

650,124

198,137

21,055

137,736

1,311

291,885

Construction, land development and other land loans

$

1,136,389

$

358,297

$

89,884

$

308,049

$

23,554

$

356,605

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands)
(unaudited)

Note 3 – Loan Composition (continued)

March 31, 2020

Total

Alabama

Florida

Mississippi
(Central and
Southern
Regions)

Tennessee
(Memphis,
TN and
Northern MS
Regions)

Texas

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION

Non-owner occupied:

Retail

$

443,057

$

162,375

$

41,536

$

137,615

$

27,531

$

74,000

Office

210,317

45,026

34,397

59,339

12,686

58,869

Hotel/motel

353,666

136,120

100,735

65,604

40,207

11,000

Mini-storage

109,009

12,112

3,520

49,479

420

43,478

Industrial

188,403

63,245

13,418

38,613

2,243

70,884

Health care

42,520

15,414

4,535

18,815

—

3,756

Convenience stores

27,116

3,496

—

11,243

410

11,967

Nursing homes/senior living

57,123

18,696

—

19,856

—

18,571

Other

66,085

5,238

6,892

11,120

5,959

36,876

Total non-owner occupied loans

1,497,296

461,722

205,033

411,684

89,456

329,401

Owner-occupied:

Office

166,804

38,751

38,062

53,284

10,763

25,944

Churches

103,009

24,506

6,250

46,790

11,201

14,262

Industrial warehouses

152,128

12,425

3,517

49,776

16,829

69,581

Health care

129,995

15,391

6,006

93,260

2,515

12,823

Convenience stores

104,925

13,026

8,071

62,871

640

20,317

Retail

68,057

17,945

6,636

24,610

2,707

16,159

Restaurants

59,617

4,200

1,833

36,612

15,497

1,475

Auto dealerships

31,366

7,947

295

12,883

10,241

—

Nursing homes/senior living

179,065

58,271

—

115,015

5,779

—

Other

83,160

4,506

4,967

55,213

1,796

16,678

Total owner-occupied loans

1,078,126

196,968

75,637

550,314

77,968

177,239

Loans secured by nonfarm, nonresidential properties

$

2,575,422

$

658,690

$

280,670

$

961,998

$

167,424

$

506,640

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands)
(unaudited)

Note 4 – 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

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Securities – taxable

2.25

%

2.24

%

2.23

%

2.25

%

2.27

%

Securities – nontaxable

3.85

%

3.92

%

3.76

%

3.78

%

3.80

%

Securities – total

2.28

%

2.27

%

2.26

%

2.28

%

2.31

%

Loans - LHFI & LHFS

4.54

%

4.67

%

4.90

%

4.98

%

4.93

%

Acquired loans

—

10.90

%

11.08

%

8.84

%

7.45

%

Loans - total

4.54

%

4.72

%

4.95

%

5.01

%

4.96

%

FF sold & rev repo

—

2.16

%

2.49

%

2.52

%

2.93

%

Other earning assets

1.59

%

1.57

%

2.35

%

2.31

%

2.67

%

Total earning assets

4.06

%

4.19

%

4.38

%

4.37

%

4.32

%

Interest-bearing deposits

0.71

%

0.85

%

0.96

%

0.99

%

0.93

%

FF pch & repo

1.02

%

1.21

%

1.53

%

0.63

%

1.38

%

Other borrowings

2.35

%

2.32

%

2.35

%

2.33

%

2.19

%

Total interest-bearing liabilities

0.75

%

0.88

%

0.99

%

1.01

%

0.95

%

Net interest margin

3.52

%

3.56

%

3.66

%

3.64

%

3.63

%

Net interest margin excluding acquired loans

3.52

%

3.52

%

3.61

%

3.60

%

3.60

%

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 excluding acquired loans remained flat at 3.52% for the first quarter of 2020 when compared to the fourth quarter of 2019, as the decline in the yield on the loans held for investment and held for sale portfolio was offset by lower costs of interest-bearing deposits.

Note 5 – 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 positive ineffectiveness of $9.9 million primarily due to widening spreads between mortgage and ten-year Treasury rates during the first quarter of 2020.

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

Quarter Ended

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Mortgage servicing income, net

$

5,819

$

5,854

$

5,688

$

5,734

$

5,607

Change in fair value-MSR from runoff

(2,607

)

(2,950

)

(3,569

)

(2,918

)

(2,398

)

Gain on sales of loans, net

14,339

7,984

9,799

7,532

4,981

Mortgage banking income before hedge ineffectiveness

17,551

10,888

11,918

10,348

8,190

Change in fair value-MSR from market changes

(23,999

)

4,048

(8,054

)

(8,209

)

(8,863

)

Change in fair value of derivatives

33,931

(7,022

)

4,307

8,156

4,115

Net positive (negative) hedge ineffectiveness

9,932

(2,974

)

(3,747

)

(53

)

(4,748

)

Mortgage banking, net

$

27,483

$

7,914

$

8,171

$

10,295

$

3,442

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands)
(unaudited)

Note 6 – Salaries and Employee Benefit Plans

Early Retirement Program

In January 2020, Trustmark announced a voluntary early retirement program for associates age 60 and above with five or more years of continuous service. The cost of this program is reflected in a one-time, pre-tax charge of approximately $4.4 million (salaries and benefits of $4.3 million and other miscellaneous expense of $102 thousand; or $0.05 per basic share net of tax) in Trustmark’s first quarter 2020 earnings. The pre-tax salary and employee benefits expense savings resulting from the implementation of the early retirement program are expected to total approximately $2.9 million ($0.03 per basic share net of tax) and $4.0 million ($0.05 per basic share net of tax) for the remainder of 2020 and for the year ended 2021, respectively.

Note 7 – Other Noninterest Income and Expense

Other noninterest income consisted of the following for the periods presented:

Quarter Ended

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Partnership amortization for tax credit purposes

$

(1,161

)

$

(1,630

)

$

(1,994

)

$

(2,010

)

$

(2,010

)

Increase in life insurance cash surrender value

1,722

1,802

1,814

1,803

1,783

Other miscellaneous income

1,746

3,279

2,169

2,337

2,466

Total other, net

$

2,307

$

3,451

$

1,989

$

2,130

$

2,239

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:

Quarter Ended

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Loan expense

$

2,799

$

2,968

$

2,886

$

3,003

$

2,697

Amortization of intangibles

812

1,002

1,021

992

1,101

FDIC assessment expense

1,590

1,450

1,400

1,836

1,758

Other miscellaneous expense

9,552

8,956

6,880

7,819

8,413

Total other expense

$

14,753

$

14,376

$

12,187

$

13,650

$

13,969

Note 8 – 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
March 31, 2020
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

Quarter Ended

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

TANGIBLE EQUITY

AVERAGE BALANCES

Total shareholders' equity

$

1,640,070

$

1,656,605

$

1,634,646

$

1,605,745

$

1,590,187

Less: Goodwill

(380,671

)

(379,627

)

(379,627

)

(379,627

)

(379,627

)

Identifiable intangible assets

(8,049

)

(7,882

)

(8,706

)

(9,631

)

(10,666

)

Total average tangible equity

$

1,251,350

$

1,269,096

$

1,246,313

$

1,216,487

$

1,199,894

PERIOD END BALANCES

Total shareholders' equity

$

1,652,399

$

1,660,702

$

1,645,362

$

1,618,550

$

1,587,028

Less: Goodwill

(381,717

)

(379,627

)

(379,627

)

(379,627

)

(379,627

)

Identifiable intangible assets

(7,537

)

(7,343

)

(8,345

)

(9,101

)

(10,092

)

Total tangible equity

(a)

$

1,263,145

$

1,273,732

$

1,257,390

$

1,229,822

$

1,197,309

TANGIBLE ASSETS

Total assets

$

14,019,829

$

13,497,877

$

13,584,786

$

13,548,958

$

13,478,017

Less: Goodwill

(381,717

)

(379,627

)

(379,627

)

(379,627

)

(379,627

)

Identifiable intangible assets

(7,537

)

(7,343

)

(8,345

)

(9,101

)

(10,092

)

Total tangible assets

(b)

$

13,630,575

$

13,110,907

$

13,196,814

$

13,160,230

$

13,088,298

Risk-weighted assets

(c)

$

11,427,297

$

11,002,877

$

10,935,018

$

10,796,903

$

10,548,472

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

Net income

$

22,218

$

33,946

$

41,035

$

42,140

$

33,339

Plus: Intangible amortization net of tax

609

752

766

744

826

Net income adjusted for intangible amortization

$

22,827

$

34,698

$

41,801

$

42,884

$

34,165

Period end common shares outstanding

(d)

63,396,912

64,200,111

64,262,779

64,398,846

64,789,943

TANGIBLE COMMON EQUITY MEASUREMENTS

Return on average tangible equity (1)

7.34

%

10.85

%

13.31

%

14.14

%

11.55

%

Tangible equity/tangible assets

(a)/(b)

9.27

%

9.72

%

9.53

%

9.34

%

9.15

%

Tangible equity/risk-weighted assets

(a)/(c)

11.05

%

11.58

%

11.50

%

11.39

%

11.35

%

Tangible book value

(a)/(d)*1,000

$

19.92

$

19.84

$

19.57

$

19.10

$

18.48

COMMON EQUITY TIER 1 CAPITAL (CET1)

Total shareholders' equity

$

1,652,399

$

1,660,702

$

1,645,362

$

1,618,550

$

1,587,028

CECL transition adjustment (3)

26,476

—

—

—

—

AOCI-related adjustments

(7,698

)

23,600

20,858

24,816

40,915

CET1 adjustments and deductions:

Goodwill net of associated deferred tax liabilities (DTLs)

(367,825

)

(365,738

)

(365,741

)

(365,745

)

(365,748

)

Other adjustments and deductions for CET1 (2)

(6,269

)

(5,896

)

(6,671

)

(8,268

)

(9,099

)

CET1 capital

(e)

1,297,083

1,312,668

1,293,808

1,269,353

1,253,096

Additional tier 1 capital instruments plus related surplus

60,000

60,000

60,000

60,000

60,000

Tier 1 capital

$

1,357,083

$

1,372,668

$

1,353,808

$

1,329,353

$

1,313,096

Common equity tier 1 capital ratio

(e)/(c)

11.35

%

11.93

%

11.83

%

11.76

%

11.88

%

(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.

(3) See Note 1 – Recently Effective Accounting Pronouncements in the Notes to Consolidated Financials for additional details.

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands except per share data)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

Trustmark discloses certain non-GAAP financial measures 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 these as measures of our core operating business, which exclude the impact of the items detailed below, as these items are generally not operational in nature. These non-GAAP financial measures also provide 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 pre-tax pre-provision income during the periods presented:

Quarter Ended

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Net interest income (GAAP)

$

103,952

$

105,591

$

108,466

$

107,724

$

104,808

Noninterest income (GAAP)

65,264

47,578

48,337

49,639

41,491

Pre-tax pre-provision revenue

(a)

$

169,216

$

153,169

$

156,803

$

157,363

$

146,299

Noninterest expense (GAAP)

$

123,810

$

110,027

$

106,853

$

106,101

$

106,021

Less:

Voluntary early retirement program

(4,375

)

—

—

—

—

Credit loss expense related to off-balance sheet credit exposures

(6,783

)

—

—

—

—

Adjusted noninterest expense (Non-GAAP)

(b)

$

112,652

$

110,027

$

106,853

$

106,101

$

106,021

Pre-tax pre-provision income (Non-GAAP)

(a)-(b)

$

56,564

$

43,142

$

49,950

$

51,262

$

40,278

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:

Quarter Ended

3/31/2020

3/31/2019

Amount

Diluted EPS

Amount

Diluted EPS

Net Income (GAAP)

$

22,218

$

0.35

$

33,339

$

0.51

Significant non-routine transactions (net of taxes):

Voluntary early retirement program

3,281

0.05

—

—

Net Income adjusted for significant

non-routine transactions (Non-GAAP)

$

25,499

$

0.40

$

33,339

$

0.51

Reported

Adjusted

Reported

Adjusted

(GAAP)

(Non-GAAP)

(GAAP)

(Non-GAAP)

Return on equity

5.45

%

6.25

%

8.50

%

n/a

Return on average tangible equity

7.34

%

8.39

%

11.55

%

n/a

Return on assets

0.66

%

0.75

%

1.01

%

n/a

n/a - not applicable

TRUSTMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIALS
March 31, 2020
($ in thousands)
(unaudited)

Note 8 – Non-GAAP Financial Measures (continued)

The following table presents Trustmark’s calculation of its efficiency ratio for the periods presented:

Quarter Ended

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Total noninterest expense (GAAP)

$

123,810

$

110,027

$

106,853

$

106,101

$

106,021

Less:

Other real estate expense, net

(1,294

)

(1,491

)

(531

)

(132

)

(1,752

)

Amortization of intangibles

(812

)

(1,002

)

(1,021

)

(992

)

(1,101

)

Voluntary early retirement program

(4,375

)

—

—

—

—

Credit loss expense related to off-balance sheet exposures

(6,783

)

—

—

—

—

Charitable contributions resulting in state tax credits

(375

)

—

—

—

—

Adjusted noninterest expense (Non-GAAP)

(c)

$

110,171

$

107,534

$

105,301

$

104,977

$

103,168

Net interest income (GAAP)

$

103,952

$

105,591

$

108,466

$

107,724

$

104,808

Add:

Tax equivalent adjustment

3,108

3,149

3,249

3,248

3,231

Net interest income-FTE (Non-GAAP)

(a)

$

107,060

$

108,740

$

111,715

$

110,972

$

108,039

Noninterest income (GAAP)

$

65,264

$

47,578

$

48,337

$

49,639

$

41,491

Add:

Partnership amortization for tax credit purposes

1,161

1,630

1,994

2,010

2,010

Adjusted noninterest income (Non-GAAP)

(b)

$

66,425

$

49,208

$

50,331

$

51,649

$

43,501

Adjusted revenue (Non-GAAP)

(a)+(b)

$

173,485

$

157,948

$

162,046

$

162,621

$

151,540

Efficiency ratio (Non-GAAP)

(c)/((a)+(b))

63.50

%

68.08

%

64.98

%

64.55

%

68.08

%

Trustmark Investor Contacts:

Louis E. Greer

Treasurer and Principal Financial Officer

601-208-2310

F. Joseph Rein, Jr.

Senior Vice President

601-208-6898

Trustmark Media Contact:

Melanie A. Morgan

Senior Vice President

601-208-2979

Source: Trustmark Corporation

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