Form 8-K TRUSTMARK CORP For: Oct 28

October 28, 2014 4:46 PM

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

October 28, 2014

Date of Report (Date of earliest event reported)

�

TRUSTMARK CORPORATION

(Exact name of registrant as specified in its charter)

Mississippi	000-03683	64-0471500
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

248 East Capitol Street, Jackson, Mississippi	39201
�(Address of principal executive offices)	(Zip Code)
�	�
Registrants telephone number, including area code:	(601) 208-5111

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

�

Item 2.02.��Results of Operations and Financial Condition.

On October 28, 2014, Trustmark Corporation issued a press release announcing its financial results for the period ended�September�30, 2014.��A copy of this press release and the accompanying financial statements and slide presentation are attached hereto as Exhibit 99.1 to this report and incorporated herein by reference.

�

Item 9.01.��Financial Statements and Exhibits.

�

(d) Exhibits

�

Exhibit Number	Description of Exhibits		�
99.1	�	Press release announcing financial results for the period ended�September 30, 2014	�
�	�	�	�
�	�	�	�

�

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

TRUSTMARK CORPORATION

BY:	/s/ Louis E. Greer�
�	Louis E. Greer
�	Treasurer and Principal Financial Officer
�	�
DATE:	October�28, 2014
�	�

�

EXHIBIT INDEX

Exhibit Number	Description of Exhibits
99.1	�	Press release announcing financial results for the period ended�September 30, 2014

�

�	News Release �

�

Trustmark Corporation Announces Third Quarter 2014 Financial Results

�

JACKSON, Miss. October 28, 2014 Trustmark Corporation (NASDAQ: TRMK) reported net income of $33.6 million in the third quarter of 2014, which represented diluted earnings per share of $0.50, an increase of 2.0% from both the prior quarter and third quarter of 2013.��Trustmarks performance during the third quarter of 2014 produced a return on average tangible equity of 13.70% and a return on average assets of 1.10%.��During the first nine months of 2014, Trustmarks net income totaled $95.5 million, which represented diluted earnings per share of $1.41, an increase of 6.0% from the prior year.��Trustmarks Board of Directors declared a quarterly cash dividend of $0.23 per share payable December 15, 2014, to shareholders of record on December 1, 2014.

Gerard R. Host, President and CEO, stated, Trustmark continued to achieve solid financial results in the third quarter, including the sixth consecutive quarter of growth in our legacy loan portfolio, significant��growth in our insurance and wealth management businesses, and improvement in our efficiency ratio.��Thanks to our associates, solid profitability and strong capital base, Trustmark remains well-positioned to continue meeting the needs of our customers and creating value for our shareholders.

Balance Sheet Management

��	Loans held for investment increased at an annualized rate of 9.6% in the third quarter

��	Average noninterest-bearing deposits increased $97.8 million from the prior quarter to represent 28.6% of average total deposits

Loans held for investment totaled $6.3 billion at September 30, 2014, an increase of $146.7 million, or 2.4%, from the prior quarter and $637.0 million, or 11.2%, from one year earlier.��Construction, land development and other land loans increased $49.1 million during the quarter; this growth was driven entirely by commercial and residential construction primarily in Trustmarks Texas, Mississippi and Alabama markets.��The single-family mortgage portfolio increased $43.6 million primarily as a result of growth in Trustmarks Mississippi and Alabama markets.��Loans secured by nonfarm and nonresidential real estate increased $16.4 million as growth in owner occupied real estate in Trustmarks Mississippi and Alabama markets was offset in part by declines in Texas, Florida and Tennessee.��Other real estate secured loans, which include multifamily projects, declined $10.6 million reflecting reductions primarily in Trustmarks Mississippi and Tennessee markets.��Commercial and industrial loans remained relatively stable as growth in Alabama and Tennessee was offset by reductions in Texas and Mississippi.��Consumer loans expanded $3.4 million due principally to growth in Trustmarks Mississippi market.��Other loans, which include lending to states and municipalities, nonprofits and REITS, increased $48.0 million during the third quarter due to growth in Trustmarks Mississippi, Alabama and Tennessee markets.

Acquired loans totaled $592.1 million at September 30, 2014, down $54.4 million from the prior quarter.��Collectively, loans held for investment and acquired loans totaled $6.9 billion at September 30, 2014, up $92.3 million, or 5.6% annualized, from the prior quarter.

Average earning assets during the third quarter increased $149.9 million relative to the prior quarter principally due to increased balances of loans held for investment.��Average deposits in the third quarter declined $204.5 million as the $97.8 million increase in average noninterest-bearing deposits was more than offset by a decline in average interest-bearing deposits of $302.3 million.

Trustmarks capital position remained solid, reflecting the consistent profitability of its diversified financial services businesses.��At September 30, 2014, Trustmarks tangible equity to tangible assets ratio was 8.67%, up 16 basis points from the prior quarter, while the total risk-based capital ratio expanded 16 basis points to 14.70%.��Trustmarks solid capital base provides the opportunity to support organic loan growth in an improving economy and enhance long-term shareholder value.

�

Credit Quality

��	Other real estate declined 9.3% and 16.6% from the prior quarter and year, respectively

��	Allowance for loan losses represented 178.81% of nonperforming loans, excluding impaired loans

Nonperforming loans totaled $88.3 million at September 30, 2014, an increase of $17.2 million from the prior quarter and $14.9 million from one year earlier.��The increase in nonperforming loans was primarily the result of two substandard credit relationships totaling $16.0 million migrating to nonaccrual status. Other real estate totaled $97.0 million, a decrease of $9.9 million, or 9.3%, from the prior quarter.��Relative to levels one year earlier, other real estate decreased $19.3 million, or 16.6%.��Collectively, nonperforming assets totaled $185.4 million, an increase of $7.3 million from the prior quarter and a decrease of $4.4 million from one year earlier.

Trustmarks net recovery position during the third quarter of 2014 totaled $428 thousand and represented -0.03% of average loans.��This compares favorably to net charge-offs in the prior quarter of $1.2 million, or 0.08% of average loans, and to net charge-offs in the third quarter of the prior year of $569 thousand, or 0.04% of average loans.��During the third quarter of 2014, the provision for loan losses for loans held for investment totaled $3.1 million, which represented specific reserves related to the aforementioned credit relationships that migrated to nonaccrual status.

Allocation of Trustmarks $70.1 million allowance for loan losses represented 1.26% of commercial loans and 0.69% of consumer and home mortgage loans, resulting in an allowance to total loans held for investment of 1.11% at September 30, 2014, which represents a level management considers commensurate with the inherent risk in the loan portfolio.��The allowance for loan losses represented 178.81% of nonperforming loans, excluding impaired loans.

All of the above credit quality metrics exclude acquired loans and other real estate covered by FDIC loss-share agreement.

Revenue Generation

��	Total revenue remained stable at $149.1 million despite the mandated reduction in interchange income

��	Insurance and wealth management revenue expanded 11.3% and 4.3%, respectively, from the prior quarter

Net interest income (FTE) in the third quarter totaled $110.1 million, resulting in a net interest margin of 4.14%.��Relative to the prior quarter, interest income (FTE) increased $662 thousand due principally to additional interest and fees on loans held for investment.��The yield on acquired loans totaled 14.98% and included recoveries from settlement of debt of $8.7 million, which represented approximately 5.64% of the total acquired annualized loan yield in the third quarter.��Excluding acquired loans, the net interest margin in the third quarter totaled 3.47%, down eight basis points from the prior quarter, reflecting declining yields on loans held for investment and loans held for sale.

Noninterest income totaled $42.9 million in the third quarter, down $1.2 million from the prior quarter. Bank card and other fees totaled $7.3 million, a decline of $2.6 million, or 26.4%, from the prior quarter, which reflected the impact of decreased interchange income as a result of Trustmark becoming subject to debit card interchange fee standards effective July 1, 2014.��Service charges on deposit accounts totaled $12.7 million in the third quarter, an increase of $897 thousand, or 7.6%, from the prior quarter driven principally by seasonal factors.

�

As a result of increased property and casualty business, insurance revenue in the third quarter totaled $9.2 million, an increase of 11.3% from the prior quarter.��Wealth management revenue totaled $8.0 million, up 4.3% from the prior quarter, due principally to increased brokerage activity.

Mortgage loan production in the third quarter totaled $345.4 million, an increase of 7.2% from the prior quarter, due in part to seasonal factors as well as lower mortgage rates and expanded originations in Trustmarks Alabama markets.��During the third quarter, mortgage banking revenue totaled $5.8 million, reflecting increased mortgage servicing income, expanded secondary marketing gains, and stable mortgage servicing hedge ineffectiveness, which was offset in part by a decline in the fair value of mortgage loans held for sale.

Noninterest Expense

��	Routine noninterest expense remained well-controlled

��	Efficiency ratio improved to 62.80%

Noninterest expense in the third quarter declined $2.6 million, or 2.5%, from the prior quarter to total $100.2 million.��Excluding ORE and intangible amortization of $3.1 million, noninterest expense during the third quarter remained stable at $97.1 million.��Salaries and benefits expense remained well-controlled and totaled $56.7 million in the third quarter, up $541 thousand, or 1.0%, from the prior quarter. Services and fees remained stable at $14.5 million while ORE and foreclosure expense declined $2.9 million from the prior quarter to total $930 thousand.��Equipment expense declined $461 thousand, or 7.5%, from the prior quarter to $5.7 million.��Net occupancy expense increased $404 thousand to $6.8 million during the quarter while other expense declined $267 thousand to $13.0 million.

Appointment of Chief Administrative Officer

During the third quarter, James M. Outlaw was named Executive Vice President and Chief Administrative Officer of Trustmark National Bank.��In this newly created position, Outlaw is responsible for coordinating resources within the organization that support the revenue generating activities of various lines of business and overseeing the Risk Management, Technology, Operations, Human Resources and Corporate Facilities areas of the organization.��In his 18-year tenure with Trustmark, Outlaw served as Chief Information Officer prior to serving as President and Chief Operating Officer of Trustmarks banking operations in Texas.��Host commented, I am delighted that Jim has returned to Jackson as Chief Administrative Officer, overseeing all operational and administrative functions across our organization.��His proven leadership and broad experience, both on the front line and in the back room, will support our efforts to streamline processes to improve efficiency and profitability across the organization.

Additional Information

As previously announced, Trustmark will conduct a conference call with analysts on Wednesday, October 29, 2014, at 10:00 a.m. Central Time to discuss the Corporations 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 12, 2014, in archived format at the same web address or by calling (877) 344-7529, passcode 10008303.

Trustmark Corporation is a financial services company providing banking and financial solutions through 207 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 Trustmarks filings with the Securities and Exchange Commission could have an adverse effect on our business, results of operations and financial condition. Should one or more of these risks materialize, or should any such underlying assumptions prove to be significantly different, actual results may vary significantly from those anticipated, estimated, projected or expected.

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

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

�

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

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

�

Linked Quarter

�

Year over Year

�

QUARTERLY AVERAGE BALANCES

�

9/30/2014

�

6/30/2014

�

9/30/2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

Securities AFS-taxable

�

2,202,020

�

2,205,352

�

3,279,606

�

(3,332

)

�

-0.2

�

(1,077,586

)

�

-32.9

Securities AFS-nontaxable

�

131,305

�

135,956

�

172,055

�

(4,651

)

�

-3.4

�

(40,750

)

�

-23.7

Securities HTM-taxable

�

1,126,309

�

1,120,448

�

59,168

�

5,861

�

0.5

�

1,067,141

�

n/m

�

Securities HTM-nontaxable

�

43,114

�

43,551

�

11,024

�

(437

)

�

-1.0

�

32,090

�

n/m

�

��Total securities

�

3,502,748

�

3,505,307

�

3,521,853

�

(2,559

)

�

-0.1

�

(19,105

)

�

-0.5

Loans (including loans held for sale)

�

6,387,251

�

6,160,781

�

5,784,170

�

226,470

�

3.7

�

603,081

�

10.4

Acquired loans:

�

Noncovered loans

�

585,675

�

664,733

�

888,883

�

(79,058

)

�

-11.9

�

(303,208

)

�

-34.1

Covered loans

�

28,971

�

31,122

�

39,561

�

(2,151

)

�

-6.9

�

(10,590

)

�

-26.8

Fed funds sold and rev repos

�

4,228

�

2,648

�

8,978

�

1,580

�

59.7

�

(4,750

)

�

-52.9

Other earning assets

�

41,871

�

36,259

�

38,226

�

5,612

�

15.5

�

3,645

�

9.5

��Total earning assets

�

10,550,744

�

10,400,850

�

10,281,671

�

149,894

�

1.4

�

269,073

�

2.6

Allowance for loan losses

�

(78,227

)

�

(77,652

)

�

(79,696

)

�

(575

)

�

0.7

�

1,469

�

-1.8

Cash and due from banks

�

272,925

�

304,441

�

272,320

�

(31,516

)

�

-10.4

�

605

�

0.2

Other assets

�

1,345,771

�

1,343,384

�

1,284,813

�

2,387

�

0.2

�

60,958

�

4.7

��Total assets

�

12,091,213

�

11,971,023

�

11,759,108

�

120,190

�

1.0

�

332,105

�

2.8

�

Interest-bearing demand deposits

�

1,808,710

�

1,826,019

�

1,842,379

�

(17,309

)

�

-0.9

�

(33,669

)

�

-1.8

Savings deposits

�

3,050,743

�

3,260,634

�

2,995,110

�

(209,891

)

�

-6.4

�

55,633

�

1.9

Time deposits less than $100,000

�

1,187,794

�

1,225,706

�

1,380,954

�

(37,912

)

�

-3.1

�

(193,160

)

�

-14.0

Time deposits of $100,000 or more

�

874,333

�

911,531

�

993,948

�

(37,198

)

�

-4.1

�

(119,615

)

�

-12.0

��Total interest-bearing deposits

�

6,921,580

�

7,223,890

�

7,212,391

�

(302,310

)

�

-4.2

�

(290,811

)

�

-4.0

Fed funds purchased and repos

�

540,870

�

387,289

�

364,446

�

153,581

�

39.7

�

176,424

�

48.4

Short-term borrowings

�

181,114

�

59,465

�

59,324

�

121,649

�

n/m

�

121,790

�

n/m

�

Long-term FHLB advances

�

8,050

�

8,291

�

8,620

�

(241

)

�

-2.9

�

(570

)

�

-6.6

Subordinated notes

�

49,923

�

49,915

�

49,890

�

0.0

�

0.1

Junior subordinated debt securities

�

61,856

�

61,856

�

61,856

�

0.0

�

0.0

��Total interest-bearing liabilities

�

7,763,393

�

7,790,706

�

7,756,527

�

(27,313

)

�

-0.4

�

6,866

�

0.1

Noninterest-bearing deposits

�

2,774,745

�

2,676,907

�

2,479,082

�

97,838

�

3.7

�

295,663

�

11.9

Other liabilities

�

140,218

�

111,170

�

190,143

�

29,048

�

26.1

�

(49,925

)

�

-26.3

��Total liabilities

�

10,678,356

�

10,578,783

�

10,425,752

�

99,573

�

0.9

�

252,604

�

2.4

Shareholders' equity

�

1,412,857

�

1,392,240

�

1,333,356

�

20,617

�

1.5

�

79,501

�

6.0

��Total liabilities and equity

�

12,091,213

�

11,971,023

�

11,759,108

�

120,190

�

1.0

�

332,105

�

2.8

�

Linked Quarter

�

Year over Year

�

PERIOD END BALANCES

�

9/30/2014

�

6/30/2014

�

9/30/2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

Cash and due from banks

�

237,497

�

322,960

�

335,695

�

(85,463

)

�

-26.5

�

(98,198

)

�

-29.3

Fed funds sold and rev repos

�

4,013

�

5,000

�

7,867

�

(987

)

�

-19.7

�

(3,854

)

�

-49.0

Securities available for sale

�

2,363,895

�

2,376,431

�

3,372,101

�

(12,536

)

�

-0.5

�

(1,008,206

)

�

-29.9

Securities held to maturity

�

1,169,640

�

1,156,790

�

69,980

�

12,850

�

1.1

�

1,099,660

�

n/m

�

Loans held for sale (LHFS)

�

135,562

�

142,103

�

119,986

�

(6,541

)

�

-4.6

�

15,576

�

13.0

Loans held for investment (LHFI)

�

6,333,651

�

6,187,000

�

5,696,641

�

146,651

�

2.4

�

637,010

�

11.2

Allowance for loan losses

�

(70,134

)

�

(66,648

)

�

(68,632

)

�

(3,486

)

�

5.2

�

(1,502

)

�

2.2

Net LHFI

�

6,263,517

�

6,120,352

�

5,628,009

�

143,165

�

2.3

�

635,508

�

11.3

Acquired loans:

�

Noncovered loans

�

564,542

�

616,911

�

837,875

�

(52,369

)

�

-8.5

�

(273,333

)

�

-32.6

Covered loans

�

27,607

�

29,628

�

37,250

�

(2,021

)

�

-6.8

�

(9,643

)

�

-25.9

Allowance for loan losses, acquired loans

�

(11,949

)

�

(11,179

)

�

(5,333

)

�

(770

)

�

6.9

�

(6,616

)

�

n/m

�

Net acquired loans

�

580,200

�

635,360

�

869,792

�

(55,160

)

�

-8.7

�

(289,592

)

�

-33.3

Net LHFI and acquired loans

�

6,843,717

�

6,755,712

�

6,497,801

�

88,005

�

1.3

�

345,916

�

5.3

Premises and equipment, net

�

200,474

�

201,639

�

208,837

�

(1,165

)

�

-0.6

�

(8,363

)

�

-4.0

Mortgage servicing rights

�

67,090

�

65,049

�

63,150

�

2,041

�

3.1

�

3,940

�

6.2

Goodwill

�

365,500

�

365,500

�

372,463

�

0.0

�

(6,963

)

�

-1.9

Identifiable intangible assets

�

35,357

�

37,506

�

44,424

�

(2,149

)

�

-5.7

�

(9,067

)

�

-20.4

Other real estate, excluding covered other real estate

�

97,037

�

106,970

�

116,329

�

(9,933

)

�

-9.3

�

(19,292

)

�

-16.6

Covered other real estate

�

4,146

�

3,872

�

5,092

�

274

�

7.1

�

(946

)

�

-18.6

FDIC indemnification asset

�

8,154

�

10,866

�

17,085

�

(2,712

)

�

-25.0

�

(8,931

)

�

-52.3

Other assets

�

564,234

�

569,598

�

574,387

�

(5,364

)

�

-0.9

�

(10,153

)

�

-1.8

��Total assets

�

12,096,316

�

12,119,996

�

11,805,197

�

(23,680

)

�

-0.2

�

291,119

�

2.5

�

Deposits:

�

Noninterest-bearing

�

2,723,480

�

2,729,199

�

2,643,612

�

(5,719

)

�

-0.2

�

79,868

�

3.0

Interest-bearing

�

6,789,745

�

7,131,167

�

7,143,622

�

(341,422

)

�

-4.8

�

(353,877

)

�

-5.0

Total deposits

�

9,513,225

�

9,860,366

�

9,787,234

�

(347,141

)

�

-3.5

�

(274,009

)

�

-2.8

Fed funds purchased and repos

�

607,851

�

559,316

�

342,465

�

48,535

�

8.7

�

265,386

�

77.5

Short-term borrowings

�

316,666

�

61,227

�

60,698

�

255,439

�

n/m

�

255,968

�

n/m

�

Long-term FHLB advances

�

8,003

�

8,236

�

8,562

�

(233

)

�

-2.8

�

(559

)

�

-6.5

Subordinated notes

�

49,928

�

49,920

�

49,896

�

0.0

�

0.1

Junior subordinated debt securities

�

61,856

�

61,856

�

61,856

�

0.0

�

0.0

Other liabilities

�

123,689

�

119,184

�

164,972

�

4,505

�

3.8

�

(41,283

)

�

-25.0

��Total liabilities

�

10,681,218

�

10,720,105

�

10,475,683

�

(38,887

)

�

-0.4

�

205,535

�

2.0

Common stock

�

14,051

�

14,051

�

13,998

�

0.0

�

0.4

Capital surplus

�

354,251

�

353,196

�

343,759

�

1,055

�

0.3

�

10,492

�

3.1

Retained earnings

�

1,081,161

�

1,063,201

�

1,023,983

�

17,960

�

1.7

�

57,178

�

5.6

Accum other comprehensive

�

��loss, net of tax

�

(34,365

)

�

(30,557

)

�

(52,226

)

�

(3,808

)

�

12.5

�

17,861

�

-34.2

��Total shareholders' equity

�

1,415,098

�

1,399,891

�

1,329,514

�

15,207

�

1.1

�

85,584

�

6.4

��Total liabilities and equity

�

12,096,316

�

12,119,996

�

11,805,197

�

(23,680

)

�

-0.2

�

291,119

�

2.5

�

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, 2014 ($ in thousands except per share data) (unaudited)

�

Quarter Ended

�

Linked Quarter

�

Year over Year

�

INCOME STATEMENTS

�

9/30/2014

�

6/30/2014

�

9/30/2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

Interest and fees on LHFS & LHFI-FTE

�

70,197

�

69,618

�

68,417

�

579

�

0.8

�

1,780

�

2.6

Interest and fees on acquired loans

�

23,200

�

23,250

�

19,183

�

(50

)

�

-0.2

�

4,017

�

20.9

Interest on securities-taxable

�

19,712

�

19,522

�

18,654

�

190

�

1.0

�

1,058

�

5.7

Interest on securities-tax exempt-FTE

�

1,845

�

1,912

�

1,960

�

(67

)

�

-3.5

�

(115

)

�

-5.9

Interest on fed funds sold and rev repos

�

50.0

�

12.5

Other interest income

�

386

�

379

�

372

�

1.8

�

3.8

��Total interest income-FTE

�

115,349

�

114,687

�

108,594

�

662

�

0.6

�

6,755

�

6.2

Interest on deposits

�

3,606

�

3,970

�

4,970

�

(364

)

�

-9.2

�

(1,364

)

�

-27.4

Interest on fed funds pch and repos

�

180

�

110

�

106

�

63.6

�

69.8

Other interest expense

�

1,425

�

1,375

�

1,389

�

3.6

�

2.6

��Total interest expense

�

5,211

�

5,455

�

6,465

�

(244

)

�

-4.5

�

(1,254

)

�

-19.4

��Net interest income-FTE

�

110,138

�

109,232

�

102,129

�

906

�

0.8

�

8,009

�

7.8

Provision for loan losses, LHFI

�

3,058

�

351

�

(3,624

)

�

2,707

�

n/m

�

6,682

�

n/m

�

Provision for loan losses, acquired loans

�

1,145

�

3,784

�

3,292

�

(2,639

)

�

-69.7

�

(2,147

)

�

-65.2

��Net interest income after provision-FTE

�

105,935

�

105,097

�

102,461

�

838

�

0.8

�

3,474

�

3.4

Service charges on deposit accounts

�

12,743

�

11,846

�

13,852

�

897

�

7.6

�

(1,109

)

�

-8.0

Insurance commissions

�

9,240

�

8,300

�

8,227

�

940

�

11.3

�

1,013

�

12.3

Wealth management

�

8,038

�

7,710

�

7,520

�

328

�

4.3

�

518

�

6.9

Bank card and other fees

�

7,279

�

9,894

�

8,929

�

(2,615

)

�

-26.4

�

(1,650

)

�

-18.5

Mortgage banking, net

�

5,842

�

6,191

�

8,440

�

(349

)

�

-5.6

�

(2,598

)

�

-30.8

Other, net

�

(160

)

�

199

�

165

�

(359

)

�

n/m

�

(325

)

�

n/m

�

��Nonint inc-excl sec gains (losses), net

�

42,982

�

44,140

�

47,133

�

(1,158

)

�

-2.6

�

(4,151

)

�

-8.8

Security gains (losses), net

�

(89

)

�

(89

)

�

n/m

�

(89

)

�

n/m

�

��Total noninterest income

�

42,893

�

44,140

�

47,133

�

(1,247

)

�

-2.8

�

(4,240

)

�

-9.0

Salaries and employee benefits

�

56,675

�

56,134

�

56,043

�

541

�

1.0

�

632

�

1.1

Services and fees

�

14,489

�

14,543

�

13,580

�

(54

)

�

-0.4

�

909

�

6.7

Net occupancy-premises

�

6,817

�

6,413

�

6,644

�

404

�

6.3

�

173

�

2.6

Equipment expense

�

5,675

�

6,136

�

6,271

�

(461

)

�

-7.5

�

(596

)

�

-9.5

FDIC assessment expense

�

2,644

�

2,468

�

2,376

�

176

�

7.1

�

268

�

11.3

ORE/Foreclosure expense

�

930

�

3,836

�

3,079

�

(2,906

)

�

-75.8

�

(2,149

)

�

-69.8

Other expense

�

12,964

�

13,231

�

13,531

�

(267

)

�

-2.0

�

(567

)

�

-4.2

��Total noninterest expense

�

100,194

�

102,761

�

101,524

�

(2,567

)

�

-2.5

�

(1,330

)

�

-1.3

Income before income taxes and tax eq adj

�

48,634

�

46,476

�

48,070

�

2,158

�

4.6

�

564

�

1.2

Tax equivalent adjustment

�

3,909

�

3,944

�

3,700

�

(35

)

�

-0.9

�

209

�

5.6

Income before income taxes

�

44,725

�

42,532

�

44,370

�

2,193

�

5.2

�

355

�

0.8

Income taxes

�

11,136

�

9,635

�

11,336

�

1,501

�

15.6

�

(200

)

�

-1.8

Net income

�

33,589

�

32,897

�

33,034

�

692

�

2.1

�

555

�

1.7

�

Per share data

�

��Earnings per share - basic

�

0.50

�

0.49

�

0.49

�

0.01

�

2.0

�

0.01

�

2.0

�

��Earnings per share - diluted

�

0.50

�

0.49

�

0.49

�

0.01

�

2.0

�

0.01

�

2.0

�

��Dividends per share

�

0.23

�

0.23

�

0.23

�

0.0

�

0.0

�

Weighted average shares outstanding

�

��Basic

�

67,439,788

�

67,439,659

�

67,177,013

�

��Diluted

�

67,608,612

�

67,582,714

�

67,382,478

�

Period end shares outstanding

�

67,439,788

�

67,439,788

�

67,181,694

�

OTHER FINANCIAL DATA

�

Return on equity

�

9.43

�

9.48

�

9.83

�

Return on average tangible equity

�

13.70

�

13.90

�

14.92

�

Return on assets

�

1.10

�

1.10

�

1.11

�

Interest margin - Yield - FTE

�

4.34

�

4.42

�

4.19

�

Interest margin - Cost

�

0.20

�

0.21

�

0.25

�

Net interest margin - FTE

�

4.14

�

4.21

�

3.94

�

Efficiency ratio (1)

�

62.80

�

64.31

�

65.32

�

Full-time equivalent employees

�

3,067

�

3,095

�

3,110

�

STOCK PERFORMANCE

�

Market value-Close

�

23.04

�

24.69

�

25.60

�

Book value

�

20.98

�

20.76

�

19.79

�

Tangible book value

�

15.04

�

14.78

�

13.58

�

(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.

�

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, 2014 ($ in thousands) (unaudited)

�

Quarter Ended

�

Linked Quarter

�

Year over Year

�

NONPERFORMING ASSETS�(1)

�

9/30/2014

�

6/30/2014

�

9/30/2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

Nonaccrual loans

�

��Alabama

�

852

�

772

�

n/m

�

771

�

n/m

�

��Florida

�

10,986

�

11,041

�

14,619

�

(55

)

�

-0.5

�

(3,633

)

�

-24.9

��Mississippi (2)

�

65,751

�

49,430

�

43,132

�

16,321

�

33.0

�

22,619

�

52.4

��Tennessee (3)

�

5,901

�

4,244

�

5,596

�

1,657

�

39.0

�

305

�

5.5

��Texas

�

4,824

�

6,323

�

9,953

�

(1,499

)

�

-23.7

�

(5,129

)

�

-51.5

��Total nonaccrual loans

�

88,314

�

71,118

�

73,381

�

17,196

�

24.2

�

14,933

�

20.3

Other real estate

�

��Alabama

�

24,256

�

24,541

�

25,308

�

(285

)

�

-1.2

�

(1,052

)

�

-4.2

��Florida

�

36,608

�

43,207

�

39,198

�

(6,599

)

�

-15.3

�

(2,590

)

�

-6.6

��Mississippi (2)

�

16,419

�

18,723

�

25,439

�

(2,304

)

�

-12.3

�

(9,020

)

�

-35.5

��Tennessee (3)

�

11,347

�

12,073

�

14,615

�

(726

)

�

-6.0

�

(3,268

)

�

-22.4

��Texas

�

8,407

�

8,426

�

11,769

�

(19

)

�

-0.2

�

(3,362

)

�

-28.6

��Total other real estate

�

97,037

�

106,970

�

116,329

�

(9,933

)

�

-9.3

�

(19,292

)

�

-16.6

��Total nonperforming assets

�

185,351

�

178,088

�

189,710

�

7,263

�

4.1

�

(4,359

)

�

-2.3

�

LOANS PAST DUE OVER 90 DAYS�(4)

�

LHFI

�

3,839

�

1,936

�

2,344

�

1,903

�

98.3

�

1,495

�

63.8

�

LHFS-Guaranteed GNMA serviced loans

�

(no obligation to repurchase)

�

24,979

�

21,810

�

18,432

�

3,169

�

14.5

�

6,547

�

35.5

�

Quarter Ended

�

Linked Quarter

�

Year over Year

�

ALLOWANCE FOR LOAN LOSSES (4)

�

9/30/2014

�

6/30/2014

�

9/30/2013

�

$ Change

�

% Change

�

$ Change

�

% Change

�

Beginning Balance

�

66,648

�

67,518

�

72,825

�

(870

)

�

-1.3

�

(6,177

)

�

-8.5

Provision for loan losses

�

3,058

�

351

�

(3,624

)

�

2,707

�

n/m

�

6,682

�

n/m

�

Charge-offs

�

(3,216

)

�

(3,820

)

�

(3,817

)

�

604

�

-15.8

�

601

�

-15.7

Recoveries

�

3,644

�

2,599

�

3,248

�

1,045

�

40.2

�

396

�

12.2

Net recoveries (charge-offs)

�

428

�

(1,221

)

�

(569

)

�

1,649

�

n/m

�

997

�

n/m

�

Ending Balance

�

70,134

�

66,648

�

68,632

�

3,486

�

5.2

�

1,502

�

2.2

�

PROVISION FOR LOAN LOSSES (4)

�

Alabama

�

1,093

�

696

�

550

�

397

�

57.0

�

543

�

98.7

Florida

�

(147

)

�

(2,014

)

�

(2,642

)

�

1,867

�

-92.7

�

2,495

�

-94.4

Mississippi (2)

�

4,679

�

2,877

�

(1,051

)

�

1,802

�

62.6

�

5,730

�

n/m

�

Tennessee (3)

�

244

�

(277

)

�

(150

)

�

521

�

n/m

�

394

�

n/m

�

Texas

�

(2,811

)

�

(931

)

�

(331

)

�

(1,880

)

�

n/m

�

(2,480

)

�

n/m

�

��Total provision for loan losses

�

3,058

�

351

�

(3,624

)

�

2,707

�

n/m

�

6,682

�

n/m

�

NET CHARGE-OFFS (4)

�

Alabama

�

172

�

132

�

n/m

�

30.3

Florida

�

(89

)

�

(525

)

�

(138

)

�

436

�

-83.0

�

-35.5

Mississippi (2)

�

462

�

1,518

�

375

�

(1,056

)

�

-69.6

�

23.2

Tennessee (3)

�

(153

)

�

(39

)

�

-44.8

�

201

�

n/m

�

Texas

�

(1,021

)

�

353

�

(1,078

)

�

n/m

�

(1,374

)

�

n/m

�

��Total net (recoveries) charge-offs

�

(428

)

�

1,221

�

569

�

(1,649

)

�

n/m

�

(997

)

�

n/m

�

CREDIT QUALITY RATIOS�(1)

�

Net charge offs/average loans

�

-0.03

�

0.08

�

0.04

�

Provision for loan losses/average loans

�

0.19

�

0.02

�

-0.25

�

Nonperforming loans/total loans (incl LHFS)

�

1.37

�

1.12

�

1.26

�

Nonperforming assets/total loans (incl LHFS)

�

2.87

�

2.81

�

3.26

�

Nonperforming assets/total loans (incl LHFS) +ORE

�

2.82

�

2.77

�

3.20

�

ALL/total loans (excl LHFS)

�

1.11

�

1.08

�

1.20

�

ALL-commercial/total commercial loans

�

1.26

�

1.20

�

1.39

�

ALL-consumer/total consumer and home mortgage loans

�

0.69

�

0.75

�

0.73

�

ALL/nonperforming loans

�

79.41

�

93.71

�

93.53

�

ALL/nonperforming loans -

�

��(excl impaired loans)

�

178.81

�

159.71

�

161.96

�

CAPITAL RATIOS

�

Total equity/total assets

�

11.70

�

11.55

�

11.26

�

Tangible equity/tangible assets

�

8.67

�

8.51

�

8.01

�

Tangible equity/risk-weighted assets

�

12.24

�

12.19

�

11.66

�

Tier 1 leverage ratio

�

9.54

�

9.43

�

8.78

�

Tier 1 common risk-based capital ratio

�

12.74

�

12.61

�

11.92

�

Tier 1 risk-based capital ratio

�

13.47

�

13.34

�

12.69

�

Total risk-based capital ratio

�

14.70

�

14.54

�

14.02

�

(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, 2014 ($ in thousands) (unaudited)

�

Quarter Ended

�

Nine Months Ended

�

AVERAGE BALANCES

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

9/30/2014

�

9/30/2013

�

Securities AFS-taxable

�

2,202,020

�

2,205,352

�

2,136,392

�

3,026,186

�

3,279,606

�

2,181,495

�

3,126,539

�

Securities AFS-nontaxable

�

131,305

�

135,956

�

149,744

�

160,989

�

172,055

�

138,934

�

170,616

�

Securities HTM-taxable

�

1,126,309

�

1,120,448

�

1,118,747

�

265,792

�

59,168

�

1,121,862

�

55,865

�

Securities HTM-nontaxable

�

43,114

�

43,551

�

31,039

�

21,172

�

11,024

�

39,279

�

13,043

�

��Total securities

�

3,502,748

�

3,505,307

�

3,435,922

�

3,474,139

�

3,521,853

�

3,481,570

�

3,366,063

�

Loans (including loans held for sale)

�

6,387,251

�

6,160,781

�

5,950,720

�

5,847,557

�

5,784,170

�

6,167,850

�

5,753,759

�

Acquired loans:

�

Noncovered loans

�

585,675

�

664,733

�

751,723

�

812,426

�

888,883

�

666,769

�

790,943

�

Covered loans

�

28,971

�

31,122

�

33,805

�

34,640

�

39,561

�

31,282

�

44,229

�

Fed funds sold and rev repos

�

4,228

�

2,648

�

6,460

�

11,094

�

8,978

�

4,437

�

7,477

�

Other earning assets

�

41,871

�

36,259

�

36,820

�

32,118

�

38,226

�

38,335

�

35,893

�

��Total earning assets

�

10,550,744

�

10,400,850

�

10,215,450

�

10,211,974

�

10,281,671

�

10,390,243

�

9,998,364

�

Allowance for loan losses

�

(78,227

)

�

(77,652

)

�

(79,736

)

�

(78,742

)

�

(79,696

)

�

(78,533

)

�

(83,547

)

Cash and due from banks

�

272,925

�

304,441

�

407,078

�

275,051

�

272,320

�

327,657

�

275,711

�

Other assets

�

1,345,771

�

1,343,384

�

1,376,024

�

1,360,712

�

1,284,813

�

1,354,948

�

1,260,227

�

��Total assets

�

12,091,213

�

11,971,023

�

11,918,816

�

11,768,995

�

11,759,108

�

11,994,315

�

11,450,755

�

Interest-bearing demand deposits

�

1,808,710

�

1,826,019

�

1,900,504

�

1,803,956

�

1,842,379

�

1,844,741

�

1,786,215

�

Savings deposits

�

3,050,743

�

3,260,634

�

3,193,098

�

2,952,472

�

2,995,110

�

3,167,637

�

2,941,931

�

Time deposits less than $100,000

�

1,187,794

�

1,225,706

�

1,280,513

�

1,344,488

�

1,380,954

�

1,230,997

�

1,356,729

�

Time deposits of $100,000 or more

�

874,333

�

911,531

�

947,509

�

961,075

�

993,948

�

910,857

�

972,553

�

��Total interest-bearing deposits

�

6,921,580

�

7,223,890

�

7,321,624

�

7,061,991

�

7,212,391

�

7,154,232

�

7,057,428

�

Fed funds purchased and repos

�

540,870

�

387,289

�

282,816

�

361,758

�

364,446

�

404,604

�

315,113

�

Short-term borrowings

�

181,114

�

59,465

�

65,010

�

63,531

�

59,324

�

102,288

�

59,319

�

Long-term FHLB advances

�

8,050

�

8,291

�

8,406

�

8,507

�

8,620

�

8,248

�

7,606

�

Subordinated notes

�

49,923

�

49,915

�

49,907

�

49,898

�

49,890

�

49,915

�

49,882

�

Junior subordinated debt securities

�

61,856

�

61,856

�

61,856

�

61,856

�

61,856

�

61,856

�

74,043

�

��Total interest-bearing liabilities

�

7,763,393

�

7,790,706

�

7,789,619

�

7,607,541

�

7,756,527

�

7,781,143

�

7,563,391

�

Noninterest-bearing deposits

�

2,774,745

�

2,676,907

�

2,630,785

�

2,611,209

�

2,479,082

�

2,694,673

�

2,377,583

�

Other liabilities

�

140,218

�

111,170

�

130,749

�

203,270

�

190,143

�

127,414

�

175,344

�

��Total liabilities

�

10,678,356

�

10,578,783

�

10,551,153

�

10,422,020

�

10,425,752

�

10,603,230

�

10,116,318

�

Shareholders' equity

�

1,412,857

�

1,392,240

�

1,367,663

�

1,346,975

�

1,333,356

�

1,391,085

�

1,334,437

�

��Total liabilities and equity

�

12,091,213

�

11,971,023

�

11,918,816

�

11,768,995

�

11,759,108

�

11,994,315

�

11,450,755

�

PERIOD END BALANCES

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

Cash and due from banks

�

237,497

�

322,960

�

423,819

�

345,761

�

335,695

�

Fed funds sold and rev repos

�

4,013

�

5,000

�

7,253

�

7,867

�

Securities available for sale

�

2,363,895

�

2,376,431

�

2,382,441

�

2,194,154

�

3,372,101

�

Securities held to maturity

�

1,169,640

�

1,156,790

�

1,155,569

�

1,168,728

�

69,980

�

Loans held for sale (LHFS)

�

135,562

�

142,103

�

120,446

�

149,169

�

119,986

�

Loans held for investment (LHFI)

�

6,333,651

�

6,187,000

�

5,923,766

�

5,798,881

�

5,696,641

�

Allowance for loan losses

�

(70,134

)

�

(66,648

)

�

(67,518

)

�

(66,448

)

�

(68,632

)

�

Net LHFI

�

6,263,517

�

6,120,352

�

5,856,248

�

5,732,433

�

5,628,009

�

Acquired loans:

�

Noncovered loans

�

564,542

�

616,911

�

713,647

�

769,990

�

837,875

�

Covered loans

�

27,607

�

29,628

�

32,670

�

34,216

�

37,250

�

Allowance for loan losses, acquired loans

�

(11,949

)

�

(11,179

)

�

(10,540

)

�

(9,636

)

�

(5,333

)

�

Net acquired loans

�

580,200

�

635,360

�

735,777

�

794,570

�

869,792

�

Net LHFI and acquired loans

�

6,843,717

�

6,755,712

�

6,592,025

�

6,527,003

�

6,497,801

�

Premises and equipment, net

�

200,474

�

201,639

�

203,771

�

207,283

�

208,837

�

Mortgage servicing rights

�

67,090

�

65,049

�

67,614

�

67,834

�

63,150

�

Goodwill

�

365,500

�

365,500

�

365,500

�

372,851

�

372,463

�

Identifiable intangible assets

�

35,357

�

37,506

�

39,697

�

41,990

�

44,424

�

Other real estate, excluding covered other real estate

�

97,037

�

106,970

�

111,536

�

106,539

�

116,329

�

Covered other real estate

�

4,146

�

3,872

�

4,759

�

5,108

�

5,092

�

FDIC indemnification asset

�

8,154

�

10,866

�

13,487

�

14,347

�

17,085

�

Other assets

�

564,234

�

569,598

�

576,390

�

582,363

�

574,387

�

��Total assets

�

12,096,316

�

12,119,996

�

12,057,054

�

11,790,383

�

11,805,197

�

Deposits:

�

Noninterest-bearing

�

2,723,480

�

2,729,199

�

2,879,341

�

2,663,503

�

2,643,612

�

Interest-bearing

�

6,789,745

�

7,131,167

�

7,242,778

�

7,196,399

�

7,143,622

�

Total deposits

�

9,513,225

�

9,860,366

�

10,122,119

�

9,859,902

�

9,787,234

�

Fed funds purchased and repos

�

607,851

�

559,316

�

259,341

�

251,587

�

342,465

�

Short-term borrowings

�

316,666

�

61,227

�

59,671

�

66,385

�

60,698

�

Long-term FHLB advances

�

8,003

�

8,236

�

8,341

�

8,458

�

8,562

�

Subordinated notes

�

49,928

�

49,920

�

49,912

�

49,904

�

49,896

�

Junior subordinated debt securities

�

61,856

�

61,856

�

61,856

�

61,856

�

61,856

�

Other liabilities

�

123,689

�

119,184

�

121,919

�

137,338

�

164,972

�

��Total liabilities

�

10,681,218

�

10,720,105

�

10,683,159

�

10,435,430

�

10,475,683

�

Common stock

�

14,051

�

14,051

�

14,051

�

14,038

�

13,998

�

Capital surplus

�

354,251

�

353,196

�

352,402

�

349,680

�

343,759

�

Retained earnings

�

1,081,161

�

1,063,201

�

1,045,939

�

1,034,966

�

1,023,983

�

Accum other comprehensive

�

��loss, net of tax

�

(34,365

)

�

(30,557

)

�

(38,497

)

�

(43,731

)

�

(52,226

)

�

��Total shareholders' equity

�

1,415,098

�

1,399,891

�

1,373,895

�

1,354,953

�

1,329,514

�

��Total liabilities and equity

�

12,096,316

�

12,119,996

�

12,057,054

�

11,790,383

�

11,805,197

�

See Notes to Consolidated Financials�

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands except per share data) (unaudited)

�

Quarter Ended

�

Nine Months Ended

�

INCOME STATEMENTS

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

9/30/2014

�

9/30/2013

�

Interest and fees on LHFS & LHFI-FTE

�

70,197

�

69,618

�

66,185

�

67,038

�

68,417

�

206,000

�

203,579

�

Interest and fees on acquired loans

�

23,200

�

23,250

�

16,786

�

23,384

�

19,183

�

63,236

�

52,952

�

Interest on securities-taxable

�

19,712

�

19,522

�

19,220

�

19,078

�

18,654

�

58,454

�

53,740

�

Interest on securities-tax exempt-FTE

�

1,845

�

1,912

�

1,920

�

1,963

�

1,960

�

5,677

�

5,952

�

Interest on fed funds sold and rev repos

�

Other interest income

�

386

�

379

�

375

�

367

�

372

�

1,140

�

1,099

�

��Total interest income-FTE

�

115,349

�

114,687

�

104,491

�

111,844

�

108,594

�

334,527

�

317,339

�

Interest on deposits

�

3,606

�

3,970

�

4,365

�

4,768

�

4,970

�

11,941

�

14,950

�

Interest on fed funds pch and repos

�

180

�

110

�

104

�

106

�

366

�

275

�

Other interest expense

�

1,425

�

1,375

�

1,363

�

1,370

�

1,389

�

4,163

�

4,392

�

��Total interest expense

�

5,211

�

5,455

�

5,804

�

6,242

�

6,465

�

16,470

�

19,617

�

��Net interest income-FTE

�

110,138

�

109,232

�

98,687

�

105,602

�

102,129

�

318,057

�

297,722

�

Provision for loan losses, LHFI

�

3,058

�

351

�

(805

)

�

(1,983

)

�

(3,624

)

�

2,604

�

(11,438

)

Provision for loan losses, acquired loans

�

1,145

�

3,784

�

4,169

�

3,292

�

4,992

�

1,870

�

��Net interest income after provision-FTE

�

105,935

�

105,097

�

99,429

�

103,416

�

102,461

�

310,461

�

307,290

�

Service charges on deposit accounts

�

12,743

�

11,846

�

11,568

�

13,114

�

13,852

�

36,157

�

38,462

�

Insurance commissions

�

9,240

�

8,300

�

8,097

�

7,343

�

8,227

�

25,637

�

23,483

�

Wealth management

�

8,038

�

7,710

�

8,135

�

8,145

�

7,520

�

23,883

�

21,335

�

Bank card and other fees

�

7,279

�

9,894

�

9,081

�

9,580

�

8,929

�

26,254

�

26,381

�

Mortgage banking, net

�

5,842

�

6,191

�

6,829

�

5,186

�

8,440

�

18,862

�

28,318

�

Other, net

�

(160

)

�

199

�

(21

)

�

(4,802

)

�

165

�

(3,171

)

��Nonint inc-excl sec gains (losses), net

�

42,982

�

44,140

�

43,689

�

38,566

�

47,133

�

130,811

�

134,808

�

Security gains (losses), net

�

(89

)

�

389

�

107

�

300

�

378

�

��Total noninterest income

�

42,893

�

44,140

�

44,078

�

38,673

�

47,133

�

131,111

�

135,186

�

Salaries and employee benefits

�

56,675

�

56,134

�

56,726

�

56,687

�

56,043

�

169,535

�

165,040

�

Services and fees

�

14,489

�

14,543

�

13,165

�

14,476

�

13,580

�

42,197

�

39,428

�

Net occupancy-premises

�

6,817

�

6,413

�

6,606

�

6,659

�

6,644

�

19,836

�

19,302

�

Equipment expense

�

5,675

�

6,136

�

6,138

�

6,400

�

6,271

�

17,949

�

18,138

�

FDIC assessment expense

�

2,644

�

2,468

�

2,416

�

2,228

�

2,376

�

7,528

�

6,773

�

ORE/Foreclosure expense

�

930

�

3,836

�

3,315

�

3,009

�

3,079

�

8,081

�

12,030

�

Other expense

�

12,964

�

13,231

�

13,252

�

15,408

�

13,531

�

39,447

�

50,153

�

��Total noninterest expense

�

100,194

�

102,761

�

101,618

�

104,867

�

101,524

�

304,573

�

310,864

�

Income before income taxes and tax eq adj

�

48,634

�

46,476

�

41,889

�

37,222

�

48,070

�

136,999

�

131,612

�

Tax equivalent adjustment

�

3,909

�

3,944

�

3,783

�

3,747

�

3,700

�

11,636

�

11,090

�

Income before income taxes

�

44,725

�

42,532

�

38,106

�

33,475

�

44,370

�

125,363

�

120,522

�

Income taxes

�

11,136

�

9,635

�

9,103

�

5,436

�

11,336

�

29,874

�

31,501

�

Net income

�

33,589

�

32,897

�

29,003

�

28,039

�

33,034

�

95,489

�

89,021

�

Per share data

�

��Earnings per share - basic

�

0.50

�

0.49

�

0.43

�

0.42

�

0.49

�

1.42

�

1.33

�

��Earnings per share - diluted

�

0.50

�

0.49

�

0.43

�

0.42

�

0.49

�

1.41

�

1.33

�

��Dividends per share

�

0.23

�

0.23

�

0.23

�

0.23

�

0.23

�

0.69

�

0.69

�

Weighted average shares outstanding

�

��Basic

�

67,439,788

�

67,439,659

�

67,410,147

�

67,249,877

�

67,177,013

�

67,429,973

�

66,778,622

�

��Diluted

�

67,608,612

�

67,582,714

�

67,550,483

�

67,449,778

�

67,382,478

�

67,580,209

�

66,962,534

�

Period end shares outstanding

�

67,439,788

�

67,439,788

�

67,439,562

�

67,372,980

�

67,181,694

�

67,439,788

�

67,181,694

�

OTHER FINANCIAL DATA

�

Return on equity

�

9.43

�

9.48

�

8.60

�

8.26

�

9.83

�

9.18

�

8.92

Return on average tangible equity

�

13.70

�

13.90

�

12.93

�

12.59

�

14.92

�

13.52

�

13.25

Return on assets

�

1.10

�

1.10

�

0.99

�

0.95

�

1.11

�

1.06

�

1.04

Interest margin - Yield - FTE

�

4.34

�

4.42

�

4.15

�

4.35

�

4.19

�

4.30

�

4.24

Interest margin - Cost

�

0.20

�

0.21

�

0.23

�

0.24

�

0.25

�

0.21

�

0.26

Net interest margin - FTE

�

4.14

�

4.21

�

3.92

�

4.10

�

3.94

�

4.09

�

3.98

Efficiency ratio (1)

�

62.80

�

64.31

�

68.32

�

68.38

�

65.32

�

65.07

�

66.28

Full-time equivalent employees

�

3,067

�

3,095

�

3,114

�

3,110

�

3,110

�

STOCK PERFORMANCE

�

Market value-Close

�

23.04

�

24.69

�

25.35

�

26.84

�

25.60

�

Book value

�

20.98

�

20.76

�

20.37

�

20.11

�

19.79

�

Tangible book value

�

15.04

�

14.78

�

14.36

�

13.95

�

13.58

�

(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.

�

See Notes to Consolidated Financials

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

�

Quarter Ended

�

NONPERFORMING ASSETS�(1)

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

Nonaccrual loans

�

��Alabama

�

852

�

��Florida

�

10,986

�

11,041

�

9,956

�

12,278

�

14,619

�

��Mississippi (2)

�

65,751

�

49,430

�

44,168

�

42,307

�

43,132

�

��Tennessee (3)

�

5,901

�

4,244

�

5,206

�

4,390

�

5,596

�

��Texas

�

4,824

�

6,323

�

4,572

�

6,249

�

9,953

�

��Total nonaccrual loans

�

88,314

�

71,118

�

63,998

�

65,238

�

73,381

�

Other real estate

�

��Alabama

�

24,256

�

24,541

�

24,103

�

25,912

�

25,308

�

��Florida

�

36,608

�

43,207

�

42,013

�

34,480

�

39,198

�

��Mississippi (2)

�

16,419

�

18,723

�

22,287

�

22,766

�

25,439

�

��Tennessee (3)

�

11,347

�

12,073

�

13,000

�

12,892

�

14,615

�

��Texas

�

8,407

�

8,426

�

10,133

�

10,489

�

11,769

�

��Total other real estate

�

97,037

�

106,970

�

111,536

�

106,539

�

116,329

�

��Total nonperforming assets

�

185,351

�

178,088

�

175,534

�

171,777

�

189,710

�

LOANS PAST DUE OVER 90 DAYS�(4)

�

LHFI

�

3,839

�

1,936

�

1,870

�

3,298

�

2,344

�

LHFS-Guaranteed GNMA serviced loans

�

(no obligation to repurchase)

�

24,979

�

21,810

�

20,109

�

21,540

�

18,432

�

Quarter Ended

�

Nine Months Ended

�

ALLOWANCE FOR LOAN LOSSES�(4)

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

9/30/2014

�

9/30/2013

�

Beginning Balance

�

66,648

�

67,518

�

66,448

�

68,632

�

72,825

�

66,448

�

78,738

�

Provision for loan losses

�

3,058

�

351

�

(805

)

�

(1,983

)

�

(3,624

)

�

2,604

�

(11,438

)

Charge-offs

�

(3,216

)

�

(3,820

)

�

(3,016

)

�

(3,305

)

�

(3,817

)

�

(10,052

)

�

(10,173

)

Recoveries

�

3,644

�

2,599

�

4,891

�

3,104

�

3,248

�

11,134

�

11,505

�

Net recoveries (charge-offs)

�

428

�

(1,221

)

�

1,875

�

(201

)

�

(569

)

�

1,082

�

1,332

�

Ending Balance

�

70,134

�

66,648

�

67,518

�

66,448

�

68,632

�

70,134

�

68,632

�

PROVISION FOR LOAN LOSSES (4)

�

Alabama

�

1,093

�

696

�

472

�

332

�

550

�

2,261

�

1,458

�

Florida

�

(147

)

�

(2,014

)

�

(3,499

)

�

(2,350

)

�

(2,642

)

�

(5,660

)

�

(9,742

)

Mississippi (2)

�

4,679

�

2,877

�

1,983

�

3,336

�

(1,051

)

�

9,539

�

(3,491

)

Tennessee (3)

�

244

�

(277

)

�

(915

)

�

(117

)

�

(150

)

�

(948

)

�

(863

)

Texas

�

(2,811

)

�

(931

)

�

1,154

�

(3,184

)

�

(331

)

�

(2,588

)

�

1,200

�

��Total provision for loan losses

�

3,058

�

351

�

(805

)

�

(1,983

)

�

(3,624

)

�

2,604

�

(11,438

)

�

NET CHARGE-OFFS (4)

�

Alabama

�

172

�

132

�

311

�

210

�

Florida

�

(89

)

�

(525

)

�

(2,524

)

�

(634

)

�

(138

)

�

(3,138

)

�

(2,413

)

Mississippi (2)

�

462

�

1,518

�

676

�

393

�

375

�

2,656

�

376

�

Tennessee (3)

�

)

�

506

�

(153

)

�

134

�

199

�

Texas

�

(1,021

)

�

(81

)

�

(138

)

�

353

�

(1,045

)

�

296

�

��Total net (recoveries) charge-offs

�

(428

)

�

1,221

�

(1,875

)

�

201

�

569

�

(1,082

)

�

(1,332

)

�

CREDIT QUALITY RATIOS�(1)

�

Net charge offs/average loans

�

-0.03

�

0.08

�

-0.13

�

0.01

�

0.04

�

-0.02

�

-0.03

Provision for loan losses/average loans

�

0.19

�

0.02

�

-0.05

�

-0.13

�

-0.25

�

0.06

�

-0.27

Nonperforming loans/total loans (incl LHFS)

�

1.37

�

1.12

�

1.06

�

1.10

�

1.26

�

Nonperforming assets/total loans (incl LHFS)

�

2.87

�

2.81

�

2.90

�

2.89

�

3.26

�

Nonperforming assets/total loans (incl LHFS) +ORE

�

2.82

�

2.77

�

2.85

�

2.84

�

3.20

�

ALL/total loans (excl LHFS)

�

1.11

�

1.08

�

1.14

�

1.15

�

1.20

�

ALL-commercial/total commercial loans

�

1.26

�

1.20

�

1.33

�

1.30

�

1.39

�

ALL-consumer/total consumer and home mortgage loans

�

0.69

�

0.75

�

0.65

�

0.75

�

0.73

�

ALL/nonperforming loans

�

79.41

�

93.71

�

105.50

�

101.86

�

93.53

�

ALL/nonperforming loans -

�

��(excl impaired loans)

�

178.81

�

159.71

�

180.86

�

190.70

�

161.96

�

CAPITAL RATIOS

�

Total equity/total assets

�

11.70

�

11.55

�

11.39

�

11.49

�

11.26

�

Tangible equity/tangible assets

�

8.67

�

8.51

�

8.31

�

8.26

�

8.01

�

Tangible equity/risk-weighted assets

�

12.24

�

12.19

�

12.08

�

11.88

�

11.66

�

Tier 1 leverage ratio

�

9.54

�

9.43

�

9.14

�

9.06

�

8.78

�

Tier 1 common risk-based capital ratio

�

12.74

�

12.61

�

12.37

�

12.21

�

11.92

�

Tier 1 risk-based capital ratio

�

13.47

�

13.34

�

13.11

�

12.97

�

12.69

�

Total risk-based capital ratio

�

14.70

�

14.54

�

14.34

�

14.18

�

14.02

�

(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 NOTES TO CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

�

Note 1 Business Combinations

Oxford, Mississippi Branches

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

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 ($ in thousands):

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

SECURITIES AVAILABLE FOR SALE

�

U.S. Treasury securities

�

100

�

100

�

100

�

502

�

503

�

U.S. Government agency obligations

�

��Issued by U.S. Government agencies

�

83,011

�

117,489

�

123,368

�

129,293

�

133,013

�

��Issued by U.S. Government sponsored agencies

�

30,779

�

40,848

�

40,601

�

40,179

�

132,425

�

Obligations of states and political subdivisions

�

165,463

�

171,229

�

172,437

�

171,738

�

212,991

�

Mortgage-backed securities

�

��Residential mortgage pass-through securities

�

��Guaranteed by GNMA

�

12,828

�

13,492

�

14,263

�

14,474

�

48,240

�

��Issued by FNMA and FHLMC

�

213,420

�

225,229

�

232,488

�

241,118

�

214,795

�

��Other residential mortgage-backed securities

�

��Issued or guaranteed by FNMA, FHLMC, or GNMA

�

1,603,138

�

1,543,619

�

1,530,068

�

1,290,741

�

2,048,275

�

��Commercial mortgage-backed securities

�

��Issued or guaranteed by FNMA, FHLMC, or GNMA

�

221,641

�

229,283

�

232,072

�

242,172

�

354,131

�

Asset-backed securities and structured financial products

�

33,515

�

35,142

�

37,044

�

63,937

�

227,728

�

��Total securities available for sale

�

2,363,895

�

2,376,431

�

2,382,441

�

2,194,154

�

3,372,101

�

SECURITIES HELD TO MATURITY

�

U.S. Government agency obligations

�

��Issued by U.S. Government sponsored agencies

�

100,767

�

100,563

�

100,361

�

100,159

�

Obligations of states and political subdivisions

�

64,538

�

65,193

�

65,757

�

65,987

�

30,229

�

Mortgage-backed securities

�

��Residential mortgage pass-through securities

�

��Guaranteed by GNMA

�

13,368

�

13,959

�

12,177

�

9,433

�

2,420

�

��Issued by FNMA and FHLMC

�

11,816

�

12,165

�

12,395

�

12,724

�

564

�

��Other residential mortgage-backed securities

�

��Issued or guaranteed by FNMA, FHLMC, or GNMA

�

836,966

�

822,444

�

822,135

�

837,393

�

��Commercial mortgage-backed securities

�

��Issued or guaranteed by FNMA, FHLMC, or GNMA

�

142,185

�

142,466

�

142,744

�

143,032

�

36,767

�

��Total securities held to maturity

�

1,169,640

�

1,156,790

�

1,155,569

�

1,168,728

�

69,980

�

During the fourth quarter of 2013, Trustmark reclassified approximately $1.099 billion of securities available for sale to securities held to maturity. The securities were transferred at fair value, which became the cost basis for the securities held to maturity. At the date of transfer, the net unrealized holding loss on the available for sale securities totaled approximately $46.6 million ($28.8 million, net of tax). The net unrealized holding loss is amortized over the remaining life of the securities as a yield adjustment in a manner consistent with the amortization or accretion of the original purchase premium or discount on the associated security. There were no gains or losses recognized as a result of the transfer.��At September 30, 2014, the net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive (loss) income in the accompanying balance sheet totaled approximately $41.9 million ($25.9 million, net of tax).

During the fourth quarter of 2013, Trustmark sold $135.6 million of Collateralized Loan Obligations (CLO) generating a net gain of $1.3 million. These securities were identified as available for sale and had been carried in the asset-backed securities and structured financial products line item in the table shown above. This sale left Trustmark with a CLO balance of $25.9 million at December 31, 2013, which was subsequently sold in its entirety for a gain of $389 thousand in January 2014.

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 93% of the portfolio in GSE-backed obligations and other Aaa rated securities as determined by Moodys. 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 FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

Note 3 Loan Composition

�

LHFI BY TYPE (excluding acquired loans)

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

Loans secured by real estate:

�

��Construction, land development and other land loans

�

580,794

�

531,651

�

592,658

�

596,889

�

572,057

�

��Secured by 1-4 family residential properties

�

1,625,480

�

1,581,859

�

1,533,781

�

1,485,564

�

1,482,963

�

��Secured by nonfarm, nonresidential properties

�

1,560,901

�

1,544,516

�

1,461,947

�

1,415,139

�

1,408,342

�

��Other real estate secured

�

239,819

�

250,383

�

193,221

�

189,362

�

196,328

�

Commercial and industrial loans

�

1,246,753

�

1,250,146

�

1,207,367

�

1,157,614

�

1,132,863

�

Consumer loans

�

168,813

�

165,372

�

160,153

�

165,308

�

164,612

�

Other loans

�

911,091

�

863,073

�

774,639

�

789,005

�

739,476

�

��LHFI

�

6,333,651

�

6,187,000

�

5,923,766

�

5,798,881

�

5,696,641

�

��Allowance for loan losses

�

(70,134

)

�

(66,648

)

�

(67,518

)

�

(66,448

)

�

(68,632

)

��Net LHFI

�

6,263,517

�

6,120,352

�

5,856,248

�

5,732,433

�

5,628,009

�

ACQUIRED NONCOVERED LOANS BY TYPE

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

Loans secured by real estate:

�

��Construction, land development and other land loans

�

64,808

�

75,353

�

88,683

�

98,928

�

106,655

�

��Secured by 1-4 family residential properties

�

120,366

�

133,191

�

145,213

�

157,914

�

168,573

�

��Secured by nonfarm, nonresidential properties

�

214,806

�

226,967

�

271,696

�

287,136

�

301,686

�

��Other real estate secured

�

28,036

�

30,918

�

34,787

�

33,948

�

35,051

�

Commercial and industrial loans

�

103,185

�

114,212

�

135,114

�

149,495

�

186,649

�

Consumer loans

�

11,236

�

14,733

�

15,024

�

18,428

�

22,251

�

Other loans

�

22,105

�

21,537

�

23,130

�

24,141

�

17,010

�

��Noncovered loans

�

564,542

�

616,911

�

713,647

�

769,990

�

837,875

�

��Allowance for loan losses

�

(11,136

)

�

(9,770

)

�

(9,952

)

�

(7,249

)

�

(3,007

)

��Net noncovered loans

�

553,406

�

607,141

�

703,695

�

762,741

�

834,868

�

ACQUIRED COVERED LOANS BY TYPE

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

Loans secured by real estate:

�

��Construction, land development and other land loans

�

1,721

�

2,130

�

2,239

�

2,363

�

2,585

�

��Secured by 1-4 family residential properties

�

14,114

�

14,565

�

15,572

�

16,416

�

17,785

�

��Secured by nonfarm, nonresidential properties

�

8,270

�

8,831

�

10,629

�

10,945

�

12,120

�

��Other real estate secured

�

2,949

�

2,376

�

2,470

�

2,644

�

2,817

�

Commercial and industrial loans

�

327

�

336

�

361

�

394

�

478

�

Consumer loans

�

119

�

151

�

Other loans

�

226

�

1,390

�

1,350

�

1,335

�

1,314

�

��Covered loans

�

27,607

�

29,628

�

32,670

�

34,216

�

37,250

�

��Allowance for loan losses

�

(813

)

�

(1,409

)

�

(588

)

�

(2,387

)

�

(2,326

)

��Net covered loans

�

26,794

�

28,219

�

32,082

�

31,829

�

34,924

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

Note 3 Loan Composition (continued)

�

September 30, 2014

�

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

�

580,794

�

56,496

�

59,822

�

251,931

�

36,868

�

175,677

�

Secured by 1-4 family residential properties

�

1,625,480

�

34,915

�

50,888

�

1,392,033

�

128,966

�

18,678

�

Secured by nonfarm, nonresidential properties

�

1,560,901

�

81,220

�

169,716

�

796,158

�

145,197

�

368,610

�

Other real estate secured

�

239,819

�

7,236

�

4,527

�

155,652

�

27,064

�

45,340

�

Commercial and industrial loans

�

1,246,753

�

78,335

�

10,269

�

797,307

�

96,445

�

264,397

�

Consumer loans

�

168,813

�

16,028

�

2,804

�

130,710

�

16,512

�

2,759

�

Other loans

�

911,091

�

51,840

�

46,230

�

665,139

�

58,723

�

89,159

�

Loans

�

6,333,651

�

326,070

�

344,256

�

4,188,930

�

509,775

�

964,620

�

CONSTRUCTION, LAND DEVELOPMENT AND OTHER LAND LOANS BY REGION�(1)

�

Lots

�

51,089

�

4,319

�

26,551

�

14,983

�

1,154

�

4,082

�

Development

�

58,350

�

836

�

6,924

�

31,889

�

956

�

17,745

�

Unimproved land

�

121,841

�

6,529

�

21,474

�

60,039

�

23,518

�

10,281

�

1-4 family construction

�

120,747

�

21,721

�

4,724

�

59,896

�

2,836

�

31,570

�

Other construction

�

228,767

�

23,091

�

149

�

85,124

�

8,404

�

111,999

�

��Construction, land development and other land loans

�

580,794

�

56,496

�

59,822

�

251,931

�

36,868

�

175,677

�

LOANS SECURED BY NONFARM, NONRESIDENTIAL PROPERTIES BY REGION (1)

�

Income producing:

�

��Retail

�

186,564

�

18,070

�

38,968

�

63,805

�

16,490

�

49,231

�

��Office

�

205,957

�

9,897

�

44,271

�

83,556

�

8,010

�

60,223

�

��Nursing homes/assisted living

�

111,338

�

92,345

�

5,848

�

13,145

�

��Hotel/motel

�

107,720

�

11,853

�

16,067

�

46,106

�

23,744

�

9,950

�

��Industrial

�

68,183

�

4,262

�

6,086

�

32,871

�

141

�

24,823

�

��Health care

�

29,204

�

5,147

�

24,014

�

��Convenience stores

�

9,225

�

248

�

5,782

�

1,266

�

1,929

�

��Other

�

144,033

�

4,677

�

20,756

�

68,070

�

4,327

�

46,203

�

��Total income producing loans

�

862,224

�

54,154

�

126,148

�

416,549

�

59,869

�

205,504

�

Owner-occupied:

�

��Office

�

116,451

�

5,965

�

15,652

�

54,700

�

8,285

�

31,849

�

��Churches

�

90,977

�

2,895

�

3,345

�

41,791

�

32,092

�

10,854

�

��Industrial warehouses

�

115,273

�

332

�

4,115

�

61,568

�

7,830

�

41,428

�

��Health care

�

120,906

�

11,122

�

8,666

�

66,029

�

16,469

�

18,620

�

��Convenience stores

�

53,291

�

522

�

1,572

�

32,919

�

2,818

�

15,460

�

��Retail

�

30,268

�

1,333

�

3,906

�

18,532

�

3,080

�

3,417

�

��Restaurants

�

35,077

�

241

�

2,062

�

27,657

�

4,076

�

1,041

�

��Auto dealerships

�

8,123

�

160

�

6,367

�

1,569

�

��Other

�

128,311

�

4,656

�

4,090

�

70,046

�

9,109

�

40,410

�

��Total owner-occupied loans

�

698,677

�

27,066

�

43,568

�

379,609

�

85,328

�

163,106

�

��Loans secured by nonfarm, nonresidential properties

�

1,560,901

�

81,220

�

169,716

�

796,158

�

145,197

�

368,610

�

(1) Excludes acquired loans.

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ 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																		�	�	Nine Months Ended						�
�	�	9/30/2014		�	�	6/30/2014		�	�	3/31/2014		�	�	12/31/2013		�	�	9/30/2013		�	�	9/30/2014		�	�	9/30/2013		�
Securities taxable	�	�	2.35	%	�	�	2.35	%	�	�	2.39	%	�	�	2.30	%	�	�	2.22	%	�	�	2.37	%	�	�	2.26	%
Securities nontaxable	�	�	4.20	%	�	�	4.27	%	�	�	4.31	%	�	�	4.28	%	�	�	4.25	%	�	�	4.26	%	�	�	4.33	%
Securities total	�	�	2.44	%	�	�	2.45	%	�	�	2.50	%	�	�	2.40	%	�	�	2.32	%	�	�	2.46	%	�	�	2.37	%
Loans - LHFI & LHFS	�	�	4.36	%	�	�	4.53	%	�	�	4.51	%	�	�	4.55	%	�	�	4.69	%	�	�	4.47	%	�	�	4.73	%
Acquired loans	�	�	14.98	%	�	�	13.40	%	�	�	8.67	%	�	�	10.95	%	�	�	8.20	%	�	�	12.11	%	�	�	8.48	%
Loans - total	�	�	5.29	%	�	�	5.43	%	�	�	5.00	%	�	�	5.36	%	�	�	5.18	%	�	�	5.24	%	�	�	5.21	%
FF sold & rev repo	�	�	0.84	%	�	�	0.91	%	�	�	0.31	%	�	�	0.50	%	�	�	0.35	%	�	�	0.60	%	�	�	0.30	%
Other earning assets	�	�	3.66	%	�	�	4.19	%	�	�	4.13	%	�	�	4.53	%	�	�	3.86	%	�	�	3.98	%	�	�	4.09	%
��Total earning assets	�	�	4.34	%	�	�	4.42	%	�	�	4.15	%	�	�	4.35	%	�	�	4.19	%	�	�	4.30	%	�	�	4.24	%
�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�
Interest-bearing deposits	�	�	0.21	%	�	�	0.22	%	�	�	0.24	%	�	�	0.27	%	�	�	0.27	%	�	�	0.22	%	�	�	0.28	%
FF pch & repo	�	�	0.13	%	�	�	0.11	%	�	�	0.11	%	�	�	0.11	%	�	�	0.12	%	�	�	0.12	%	�	�	0.12	%
Other borrowings	�	�	1.88	%	�	�	3.07	%	�	�	2.99	%	�	�	2.96	%	�	�	3.07	%	�	�	2.50	%	�	�	3.08	%
��Total interest-bearing liabilities	�	�	0.27	%	�	�	0.28	%	�	�	0.30	%	�	�	0.33	%	�	�	0.33	%	�	�	0.28	%	�	�	0.35	%
�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�
Net interest margin	�	�	4.14	%	�	�	4.21	%	�	�	3.92	%	�	�	4.10	%	�	�	3.94	%	�	�	4.09	%	�	�	3.98	%
Net interest margin excluding acquired loans	�	�	3.47	%	�	�	3.55	%	�	�	3.52	%	�	�	3.48	%	�	�	3.52	%	�	�	3.52	%	�	�	3.57	%

�

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 7 basis points during the third quarter of 2014 primarily due to declining yields on loans held for investment and loans held for sale.

During the third quarter of 2014, the yield on average acquired loans includes approximately $8.7 million in recoveries, or an annualized 5.64% of the average acquired loan balance.��Excluding the recoveries on acquired loans, the yield on average acquired loans totaled 9.34%.

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 $583 thousand and $1.3 million for the quarters ended September 30, 2014 and 2013, respectively.

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

�

Quarter Ended

�

Nine Months Ended

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

9/30/2014

�

9/30/2013

�

Mortgage servicing income, net

�

4,674

�

4,592

�

4,539

�

4,688

�

4,552

�

13,805

�

13,204

�

Change in fair value-MSR from runoff

�

(2,364

)

�

(2,391

)

�

(1,812

)

�

(2,182

)

�

(2,407

)

�

(6,567

)

�

(7,623

)

Gain on sales of loans, net

�

3,272

�

2,749

�

1,839

�

2,202

�

6,465

�

7,860

�

24,227

�

Other, net

�

(323

)

�

695

�

400

�

(533

)

�

(1,485

)

�

772

�

(4,186

)

��Mortgage banking income before hedge ineffectiveness

�

5,259

�

5,645

�

4,966

�

4,175

�

7,125

�

15,870

�

25,622

�

Change in fair value-MSR from market changes

�

700

�

(3,038

)

�

(723

)

�

3,937

�

287

�

(3,061

)

�

7,881

�

Change in fair value of derivatives

�

(117

)

�

3,584

�

2,586

�

(2,926

)

�

1,028

�

6,053

�

(5,185

)

��Net positive hedge ineffectiveness

�

583

�

546

�

1,863

�

1,011

�

1,315

�

2,992

�

2,696

�

��Mortgage banking, net

�

5,842

�

6,191

�

6,829

�

5,186

�

8,440

�

18,862

�

28,318

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

�

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						�
�	�	9/30/2014		�	�	6/30/2014		�	�	3/31/2014		�	�	12/31/2013		�	�	9/30/2013		�	�	9/30/2014		�	�	9/30/2013		�
Partnership amortization for tax credit purposes	�	$	(3,006	)	�	$	(3,006	)	�	$	(3,006	)	�	$	(5,642	)	�	$	(2,388	)	�	$	(9,018	)	�	$	(6,726	)
(Decrease) increase in FDIC indemnification asset	�	�	(452	)	�	�	(999	)	�	�	(688	)	�	�	(2,429	)	�	�	211	�	�	�	(2,139	)	�	�	(3,471	)
Other miscellaneous income	�	�	3,298	�	�	�	4,204	�	�	�	3,673	�	�	�	3,269	�	�	�	2,342	�	�	�	11,175	�	�	�	7,026	�
��Total other, net	�	$	(160	)	�	$	199	�	�	$	(21	)	�	$	(4,802	)	�	$	165	�	�	$	18	�	�	$	(3,171	)

�

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 or historical tax credits).��These investments are recorded based on the equity method of accounting, which requires the equity in partnership losses to be recognized when incurred and are recorded as a reduction in other income.��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.

During the third quarter of 2014, other noninterest income included a write-down of the FDIC indemnification asset of $452 thousand on acquired covered loans obtained from Heritage as a result of loan pay-offs, improved cash flow projections and lower loss expectations for loan pools.

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

�

Quarter Ended

�

Nine Months Ended

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

9/30/2014

�

9/30/2013

�

Loan expense

�

3,070

�

3,107

�

3,464

�

4,419

�

3,390

�

9,641

�

10,652

�

Non-routine transaction expenses on acquisitions

�

7,920

�

Amortization of intangibles

�

2,150

�

2,190

�

2,293

�

2,434

�

2,466

�

6,633

�

6,380

�

Other miscellaneous expense

�

7,744

�

7,934

�

7,495

�

8,555

�

7,675

�

23,173

�

25,201

�

��Total other expense

�

12,964

�

13,231

�

13,252

�

15,408

�

13,531

�

39,447

�

50,153

�

Note 7 Non-GAAP Financial Measures

In addition to capital ratios defined by 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 Trustmarks 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.

�

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, Trustmarks 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 Trustmarks calculation of these measures to amounts reported under GAAP.

�

�	TRUSTMARK CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL INFORMATION September�30, 2014 ($ in thousands) (unaudited)

�

Note 7 - Non-GAAP Financial Measures (continued)

�

Quarter Ended

�

Nine Months Ended

�

9/30/2014

�

6/30/2014

�

3/31/2014

�

12/31/2013

�

9/30/2013

�

9/30/2014

�

9/30/2013

�

TANGIBLE EQUITY

�

AVERAGE BALANCES

�

Total shareholders' equity

�

1,412,857

�

1,392,240

�

1,367,663

�

1,346,975

�

1,333,356

�

1,391,085

�

1,334,437

�

Less:

Goodwill

�

(365,500

)

�

(365,500

)

�

(372,720

)

�

(372,468

)

�

(368,482

)

�

(367,880

)

�

(353,485

)

�

Identifiable intangible assets

�

(36,553

)

�

(38,711

)

�

(41,015

)

�

(43,532

)

�

(45,988

)

�

(38,743

)

�

(43,232

)

��Total average tangible equity

�

1,010,804

�

988,029

�

953,928

�

930,975

�

918,886

�

984,462

�

937,720

�

PERIOD END BALANCES

�

Total shareholders' equity

�

1,415,098

�

1,399,891

�

1,373,895

�

1,354,953

�

1,329,514

�

Less:

Goodwill

�

(365,500

)

�

(365,500

)

�

(365,500

)

�

(372,851

)

�

(372,463

)

�

Identifiable intangible assets

�

(35,357

)

�

(37,506

)

�

(39,697

)

�

(41,990

)

�

(44,424

)

�

��Total tangible equity

(a)

�

1,014,241

�

996,885

�

968,698

�

940,112

�

912,627

�

TANGIBLE ASSETS

�

Total assets

�

12,096,316

�

12,119,996

�

12,057,054

�

11,790,383

�

11,805,197

�

Less:

Goodwill

�

(365,500

)

�

(365,500

)

�

(365,500

)

�

(372,851

)

�

(372,463

)

�

Identifiable intangible assets

�

(35,357

)

�

(37,506

)

�

(39,697

)

�

(41,990

)

�

(44,424

)

�

��Total tangible assets

(b)

�

11,695,459

�

11,716,990

�

11,651,857

�

11,375,542

�

11,388,310

�

Risk-weighted assets

(c)

�

8,287,608

�

8,175,622

�

8,016,482

�

7,916,378

�

7,825,839

�

NET INCOME ADJUSTED FOR INTANGIBLE AMORTIZATION

�

Net income

�

33,589

�

32,897

�

29,003

�

28,039

�

33,034

�

95,489

�

89,021

�

Plus:

Intangible amortization net of tax

�

1,328

�

1,353

�

1,417

�

1,503

�

1,523

�

4,098

�

3,939

�

��Net income adjusted for intangible amortization

�

34,917

�

34,250

�

30,420

�

29,542

�

34,557

�

99,587

�

92,960

�

Period end common shares outstanding

(d)

�

67,439,788

�

67,439,788

�

67,439,562

�

67,372,980

�

67,181,694

�

TANGIBLE COMMON EQUITY MEASUREMENTS

�

Return on average tangible equity 1

�

13.70

�

13.90

�

12.93

�

12.59

�

14.92

�

13.52

�

13.25

Tangible equity/tangible assets

(a)/(b)

�

8.67

�

8.51

�

8.31

�

8.26

�

8.01

�

Tangible equity/risk-weighted assets

(a)/(c)

�

12.24

�

12.19

�

12.08

�

11.88

�

11.66

�

Tangible book value

(a)/(d)*1,000

�

15.04

�

14.78

�

14.36

�

13.95

�

13.58

�

TIER 1 COMMON RISK-BASED CAPITAL

�

Total shareholders' equity

�

1,415,098

�

1,399,891

�

1,373,895

�

1,354,953

�

1,329,514

�

Eliminate qualifying AOCI

�

34,365

�

30,557

�

38,497

�

43,731

�

52,226

�

Qualifying tier 1 capital

�

60,000

�

60,000

�

60,000

�

60,000

�

60,000

�

Disallowed goodwill

�

(365,500

)

�

(365,500

)

�

(365,500

)

�

(372,851

)

�

(372,463

)

�

Adj to goodwill allowed for deferred taxes

�

15,503

�

15,150

�

14,798

�

14,445

�

14,093

�

Other disallowed intangibles

�

(35,357

)

�

(37,506

)

�

(39,697

)

�

(41,990

)

�

(44,424

)

�

Disallowed servicing intangible

�

(6,709

)

�

(6,505

)

�

(6,761

)

�

(6,783

)

�

(6,315

)

�

Disallowed deferred taxes

�

(1,234

)

�

(5,134

)

�

(23,969

)

�

(24,647

)

�

(39,476

)

�

Total tier 1 capital

�

1,116,166

�

1,090,953

�

1,051,263

�

1,026,858

�

993,155

�

Less:

Qualifying tier 1 capital

�

(60,000

)

�

(60,000

)

�

(60,000

)

�

(60,000

)

�

(60,000

)

�

Total tier 1 common capital

(e)

�

1,056,166

�

1,030,953

�

991,263

�

966,858

�

933,155

�

Tier 1 common risk-based capital ratio

(e)/(c)

�

12.74

�

12.61

�

12.37

�

12.21

�

11.92

�

1�Calculation = ((net income adjusted for intangible amortization/number of days in period)*number of days in year)/total average tangible equity

�

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